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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2000
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from ______ to ______.
Commission File Number 001-15469
THERMOVIEW INDUSTRIES, INC.
(Exact name of Registrant as specified in its charter)
DELAWARE 61-1325129
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification Number)
5611 Fern Valley Road 40228
Louisville, Kentucky (Zip Code)
(Address of principal executive offices)
502-968-2020
(Registrant's telephone number, including area code)
1101 Herr Lane 40222
Louisville, Kentucky (Former Zip Code)
(Former address of principal executive offices)
502-412-5600
(Registrant's former telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes [X] No [ ]
As of October 31, 2000, 7,726,461 shares of the Registrant's common stock,
$.001 par value, were issued and outstanding.
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<PAGE>
THERMOVIEW INDUSTRIES, INC.
TABLE OF CONTENTS
Part I Financial Information
Item 1. Financial Statements..................................1
Condensed Consolidated Balance Sheets......................1
Condensed Consolidated Statements of Operations............3
Condensed Consolidated Statements of Cash Flows............4
Notes to Condensed Consolidated Financial Statements.......5
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations.......................17
Item 3. Quantitative and Qualitative Disclosures About
Market Risk...............................................27
Part II Other Information
Item 1. Legal Proceedings....................................28
Item 2. Changes in Securities and Use of Proceeds............28
Item 3. Defaults Upon Senior Securities......................28
Item 4. Submission of Matters to a Vote of Security Holders..28
Item 5. Other Information....................................28
Item 6. Exhibits and Reports on Form 8-K.....................30
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<PAGE>
Item 1. Financial Statements
ThermoView Industries, Inc.
Condensed Consolidated Balance Sheets
September 30,
December 31, 2000
Assets 1999 (Unaudited)
-----------------------------
Current assets:
Cash and equivalents $3,331,721 $ 866,411
Receivables:
Trade, net of allowance for doubtful accounts
of $276,000 in 1999 and $288,700 in 2000 5,062,127 5,110,039
Finance, net of unearned interest of $149,000
in 1999 and $122,992 in 2000 60,000 40,441
Related party 55,554 9,164
Other 337,482 283,007
Costs in excess of billings on uncompleted
contracts 1,274,073 1,487,373
Inventories, net of reserves of $165,000 in
2000 2,300,643 2,090,491
Prepaid expenses and other current assets 342,978 531,513
Deferred income taxes 322,000 -
-----------------------------
Total current assets 13,086,578 10,418,439
Property and equipment, net of accumulated
depreciation of $1,169,604 in 1999 and
$1,785,318 in 2000 3,679,179 3,218,797
Other assets:
Goodwill, net of accumulated amortization of
$3,645,468 in 1999 and $4,999,383 in 2000 74,162,341 61,224,397
Deferred income taxes 1,406,000 -
Finance receivables, net of unearned interest
of $1,092,411 and reserves of $200,000 in
1999 and unearned interest of $951,526 and
reserves of $483,017 in 2000 932,411 318,106
Other assets 704,675 702,110
-----------------------------
77,205,427 62,244,613
-----------------------------
Total assets $93,971,184 $75,881,849
=============================
1
<PAGE>
September 30,
December 31, 2000
1999 (Unaudited)
------------------------------
Liabilities and stockholders' equity
Current liabilities:
Accounts payable $3,444,402 $3,759,807
Due to sellers of acquired businesses 1,000,000 450,000
Accrued expenses 3,278,924 4,284,848
Billings in excess of costs on uncompleted
contracts 930,732 1,455,369
Income taxes payable 116,784 100,349
Current portion of long-term debt 358,920 15,304,187
-----------------------------
Total current liabilities 9,129,762 25,354,560
Long-term debt 21,399,874 7,683,072
Due to sellers of acquired businesses 7,085,000 -
Other long-term liabilities 32,542 424,289
Mandatorily redeemable preferred stock:
Series C, $.001 par value (aggregate
redemption amount and liquidation preference
of $6,000,000); convertible; 25,000 shares
authorized; 6,000 shares issued and
outstanding 4,648,550 5,867,855
Series D, $.001 par value (aggregate
redemption amount and liquidation preference
of $5,696,580); 2,000,000 shares authorized;
1,139,316 shares issued and outstanding - 5,696,580
Series E, $.001 par value (aggregate
redemption amount and liquidation preference
of $1,583,342); 500,000 shares authorized;
300,000 shares issued and outstanding - 1,583,342
Stockholders' equity:
Preferred stock, 2,475,000 shares authorized:
Series A, $.001 par value; none issued - -
Series B, $.001 par value; none issued - -
Common stock, $.001 par value; 25,000,000 shares
authorized; 7,389,592 shares issued and
outstanding in 1999 and 7,726,461 shares
issued and outstanding in 2000 7,390 7,726
Paid-in capital 59,794,361 57,229,578
Accumulated deficit (8,126,295) (27,965,153)
-----------------------------
Total stockholders' equity 51,675,456 29,272,151
-----------------------------
Total liabilities and stockholders' equity $93,971,184 $75,881,849
=============================
See accompanying notes.
2
<PAGE>
ThermoView Industries, Inc.
Condensed Consolidated Statements of Operations
(Unaudited)
For the three For the nine months
months ended ended
September 30, September 30,
--------------------- -------------------------
1999 2000 1999 2000
---- ---- ---- ----
Revenues $29,080,710 $26,384,581 $79,277,016 $75,091,069
Cost of revenues earned 13,092,905 12,449,583 35,595,264 35,798,957
------------------------ -------------------------
Gross profit 15,987,805 13,934,998 43,681,752 39,292,112
Selling, general and
administrative
expenses 14,481,404 12,230,914 39,871,078 39,938,060
Unusual charges - - - 10,745,000
Depreciation expense 244,023 257,507 683,554 803,230
Amortization expense 741,844 758,524 2,296,728 2,504,773
---------------------- -------------------------
Income (loss) from
operations 520,534 688,053 830,392 (14,698,951)
Interest expense (1,039,293) (1,270,204) (1,897,132) (3,512,529)
Interest income 47,089 32,109 147,755 137,622
----------------------- ------------------------
Loss before income taxes (471,670) (550,042) (918,985) (18,073,858)
Income tax provision
(benefit) (7,000) 36,000 330,000 1,765,000
----------------------- ------------------------
Net loss (464,670) (586,042) (1,248,985) (19,838,858)
Less preferred stock
dividends:
Series A and B cash
dividends 425,977 - 1,272,052 -
Series C cash
dividends 60,875 - 204,481 100,800
Series C non-cash
dividends 496,755 541,619 1,961,045 1,551,689
Series D undeclared
dividends - (180,000) - -
Series E undeclared
dividends - 83,342 - 83,342
------------------------- -------------------------
Net loss attributable
to common
stockholders $(1,448,277) $(1,031,003) $(4,686,563) $(21,574,689)
========================= ========================
Basic and diluted loss
per common share $ (0.27) $ (.13) $ (0.95)$ (2.71)
======================= =======================
Weighted average shares
outstanding 5,340,564 8,010,510 4,948,555 7,954,513
======================= =======================
See accompanying notes.
3
<PAGE>
ThermoView Industries, Inc.
Condensed Consolidated Statements of Cash Flows
(Unaudited)
For the nine months ended
September 30,
1999 2000
--------------------------
Operating activities
Net loss $(1,248,985) $(19,838,858)
Adjustments to reconcile net loss to net
cash provided by (used in) operations:
Depreciation and amortization 2,980,282 3,308,003
Deferred income taxes 86,000 1,728,000
Accretion of debt discount 399,999 1,199,997
Unusual charges - 10,745,000
Loss on finance receivables - 380,000
Other - 148,934
Changes in operating assets and
liabilities (840,655) 1,781,934
--------------------------
Net cash provided by (used in) operating
activities 1,376,641 (546,990)
Investing activities
Acquisitions of businesses, net of cash
acquired (20,753,675) (1,012,620)
Payments for purchases of property and
equipment (1,496,645) (685,615)
Other 154,654 196,320
---------------------------
Net cash used in investing activities (22,095,666) (1,501,915)
Financing activities
Increase in long-term debt 19,387,232 -
Payments of long-term debt (6,337,833) (315,605)
Proceeds from issuance of mandatorily
redeemable preferred stock and detachable
stock purchase warrants, net of fees 5,405,060 -
Proceeds from issuance of detachable stock
warrants related to senior subordinated
debt, net of fees 4,460,548 -
Proceeds from issuance of common stock 2,900 -
Deferred financing costs (1,322,095) -
Preferred stock dividends paid in cash (1,476,533) (100,800)
---------------------------
Net cash provided by (used in) financing
activities 20,119,279 (416,405)
---------------------------
Net decrease in cash and equivalents (599,746) (2,465,310)
Cash and equivalents at beginning of period 1,302,797 3,331,721
---------------------------
Cash and equivalents at end of period $ 703,051 $ 866,411
===========================
See accompanying notes.
4
<PAGE>
THERMOVIEW INDUSTRIES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2000
(UNAUDITED)
1. Basis of Presentation and Management's Plans
The accompanying unaudited condensed consolidated financial statements of
ThermoView Industries, Inc. ("ThermoView" or "the Company"), have been prepared
assuming that the Company will continue as a going concern, which contemplates
the realization of assets and the satisfaction of liabilities in the ordinary
course of business. The carrying amounts of assets and liabilities presented in
the financial statements do not purport to represent realizable or settlement
values. However, the Company has suffered recurring operating losses, has a
working capital deficit at September 30, 2000, and used cash in its operations
during the nine month period ended September 30, 2000. The Company also violated
debt covenants at certain dates during the six month period ended June 30, 2000.
Although lenders have waived the defaults, the debt covenant violations together
with the other factors mentioned above currently raise substantial doubt about
the Company's ability to continue as a going concern. The consolidated financial
statements do not include any adjustments that might result from the outcome of
this uncertainty.
It is management's opinion that the going concern basis of reporting its
financial condition and results of operations is appropriate at this time based
upon, among other things, the Company successfully implementing the plans
described below. The Company plans to increase cash flows and to take steps
towards achieving better operating results through increased management focus on
improving the Company's retail segment's operating results, the closure of
unprofitable operations, and reduction of corporate administrative expenditures.
As more fully discussed in Note 8, steps have already been taken by management
to close unprofitable operations. Steps have also been taken to reduce
administrative expenditures principally by terminating corporate employees.
Also, as more fully discussed in Note 6, the Company is exploring possibilities
to refinance its $15 million credit facility owed to PNC Bank, N.A.
These unaudited condensed consolidated financial statements have been
prepared in accordance with accounting principles generally accepted in the
United States for interim financial information and with the instructions in
Article 10 of Regulation S-X. Accordingly, they do not include all of the
information and footnotes required by accounting principles generally accepted
in the United States for complete financial statements. In the opinion of
management, all adjustments (consisting of normal recurring accruals),
considered necessary for a fair presentation have been included. ThermoView's
business is subject to seasonal variations. The demand for replacement windows
and related home improvement products is generally lower during the winter
months due to inclement weather. Demand for replacement windows is generally
higher in the second and third quarters. Operating results for the three and
nine month periods ended September 30, 2000, are not necessarily indicative of
the results that may be expected for the year ended December 31, 2000.
5
<PAGE>
THERMOVIEW INDUSTRIES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2000
(UNAUDITED)
1. Basis of Presentation and Management's Plans (Continued)
For further information, refer to the consolidated financial statements
and footnotes thereto included in the Company's Annual Report on Form 10-K for
the year ended December 31, 1999.
Results of operations for the nine month period ended September 30, 1999,
includes the operating results of the Thermo-Shield Companies from acquisition
date on March 1, 1999. Assuming Thermo-Shield Companies had been acquired as of
January 1, 1999, the Company's consolidated results of operations for the nine
months ended September 30, 1999 are as shown:
Revenues $81,778,832
Net loss (1,221,026)
Net loss applicable to common stockholders (4,658,604)
Basic and diluted loss per common share (.93)
2. Inventories
Inventories consist principally of components for the manufacturing of
windows such as glass, vinyl and other composites.
3. Loss per Common Share
Loss per common share is calculated in accordance with Statement of
Financial Accounting Standards ("SFAS") No. 128, "Earnings Per Share." The
Company calculates basic earnings per common share using the weighted average
number of shares outstanding for the period. The weighted average number of
shares outstanding for the three and nine month periods ended September 30,
2000, includes shares related to a stock purchase warrant that can be exercised
for nominal cash consideration. Diluted earnings per common share include both
the weighted average number of shares and any common share equivalents such as
options or warrants in the calculation. As the Company recorded losses for the
three and nine month periods ended September 30, 1999 and 2000, common share
equivalents outstanding would be anti-dilutive, and as such, have not been
included in weighted average shares outstanding.
4. Income Taxes
The income tax provision (benefit) for the three and nine month periods
ended September 30, 1999 differs from the amount computed by applying the
statutory U.S. Federal income tax rate to loss before income taxes primarily as
a result of state taxes and non-deductible goodwill amortization.
At December 31, 1999, the Company reported $1,728,000 of deferred income
tax assets. Due to operating losses incurred during the nine month period ended
September 30, 2000, the Company is forecasting a taxable loss for the year
ending December 31, 2000. Management has concluded that it is more likely than
not that the Company's deferred tax assets will not be realized and,
accordingly, the deferred tax assets at September 30, 2000, have been fully
offset by a valuation allowance. As a result, the income tax provision for the
nine month period ended September 30, 2000 includes the effect of recognizing a
valuation allowance against the deferred tax assets that existed at December 31,
1999.
6
<PAGE>
THERMOVIEW INDUSTRIES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2000
(UNAUDITED)
5. Segment Information
For the three and nine month periods ended September 30, 1999 and 2000,
the Company's business units had separate management teams and infrastructures
that operate primarily in the vinyl replacement windows, doors and related home
improvement products industry in various states in the Midwest and in Southern
California. The business units have been aggregated into three reportable
operating segments: manufacturing, retail and financial services.
Manufacturing
The manufacturing segment includes the businesses that manufacture and
sell vinyl replacement windows to the Company's retail segment and to
unaffiliated customers.
Retail
The retail segment includes the businesses that design, sell and install
vinyl replacement windows, doors and related home improvement products to
commercial and retail customers.
Financial Services
During 1999 and the first half of 2000, the financial services segment
financed a relatively small portion of the credit sales of the retail segment.
Key Home Credit, ThermoView's Owensboro, Kentucky, finance subsidiary, was
closed in July 2000 since expanding the subsidiary would have required
considerable capital. Management decided that the Company could more effectively
employ capital to expand its high margin retail business.
7
<PAGE>
THERMOVIEW INDUSTRIES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2000
(UNAUDITED)
5. Segment Information (Continued)
Segment information for the three month and nine month periods ended
September 30, was as follows:
For the three
months ended Manufac- Financial
September 30, 1999 turing Retail Services Corporate Consolidated
------------------ ---------- ----------- ---------- --------- ------------
Revenues from
external customers $2,239,491 $26,804,414 $ 36,605 $ 200 $29,080,710
Intersegment
revenues 2,612,205 - - - 2,612,205
Income (loss) from
operations 346,124 1,699,593 (72,378)(1,452,805) 520,534
Total assets 11,394,095 70,213,855 1,447,546 3,199,529 86,255,025
For the three
months ended
September 30, 2000
------------------
Revenues from
external customers $1,912,578 $24,471,309 $ 694 $ - $26,384,581
Intersegment
revenues 516,312 - - - 516,312
Income (loss) from
operations 13,892 1,681,485 (18,654) (988,670) 688,053
Total assets 7,847,708 67,023,721 416,826 593,594 75,881,849
For the nine
months ended
September 30, 1999
------------------
Revenues from
external customers $5,661,985 $73,516,784 $ 70,607 $ 27,640 $79,277,016
Intersegment
revenues 6,956,487 - - - 6,956,487
Income (loss) from
operations 578,548 4,293,710 (236,276)(3,805,590) 830,392
Total assets 11,394,095 70,213,855 1,447,546 3,199,529 86,255,025
For the nine
months ended
September 30, 2000
------------------
Revenues from
external customers $5,019,418 $70,040,587 $ 31,063 $ - $75,091,069
Intersegment
revenues 3,627,797 - - - 3,627,797
Restructuring
charges 3,843,652 6,901,348 - - 10,745,000
Loss from operations(5,056,928) (5,291,866) (551,634)(3,798,523) (14,698,951)
Total assets 7,847,708 67,023,721 416,826 593,594 75,881,849
8
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THERMOVIEW INDUSTRIES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2000
(UNAUDITED)
6. Financing Arrangements
The Company is required to maintain certain financial ratios and to comply
with various other covenants and restrictions under the terms of its financing
agreements, including restrictions as to the payment of dividends, and the
incurrence of additional indebtedness. The Company violated covenants at certain
dates during the six month period ended June 30, 2000. The Company's principal
lenders, PNC Bank, N.A., and GE Capital Equity Investments, Inc. ("GE"), have
waived these covenant violations through June 30, 2000. Debt covenants have been
amended with the most restrictive covenants being a requirement to pay PNC Bank,
N.A., $5 million by December 27, 2000 and a debt service coverage test as
defined in the amended debt agreement. The Company has complied with the
covenants at the September 30, 2000 quarterly measurement date; however, it is
reasonably possible the Company may not be able to comply in the future. In this
event, PNC Bank, N.A., and GE will have the right to demand payment of the total
amounts due them, including the amounts classified as long-term obligations in
the accompanying condensed consolidated balance sheet as of September 30, 2000.
In August 2000, PNC Bank, N.A., extended the maturity date of $10 million
of ThermoView's $15 million credit facility from May 1, 2001 to July 1, 2001. In
connection with waiving defaults at June 30, 2000, as noted above, PNC Bank,
N.A. is requiring the Company to repay $5 million of the credit facility by
December 27, 2000. By its terms, the entire $15 million credit facility is now a
current obligation and is included in the current portion of long-term debt as
of September 30, 2000.
PNC Bank, N.A. is also not permitting the payment of any cash dividends on
the Company's Series C, Series D or Series E preferred stock until the earlier
of repayment of the entire $15 million credit facility or September 30, 2001.
Management is exploring possibilities to refinance the entire $15 million credit
facility prior to December 31, 2000. Alternatives to a complete refinancing
before December 31, 2000, would be to, with PNC Bank's approval, refinance only
the $5 million portion due December 2000 or to sell Company assets to raise
sufficient funds to retire the $5 million or to attempt to renegotiate more
workable terms with PNC Bank, N.A.. Although management intends to aggressively
pursue these alternatives, there is no assurance that sufficient funds will be
available by December 2000 to retire the $5 million of debt (see Note 1
describing going concern uncertainty). Four stockholders of the Company (one of
whom is also a director of the Company) continue to guarantee a total of $3
million of the credit facility for fees equal to an annual rate of 10%.
The Series C mandatorily redeemable preferred stock has a quarterly
dividend payment requirement to be paid with 70% cash and 30% Company common
stock. The annual dividend rate is 9.6%. Also, in conjunction with the issuance
of the Series C preferred stock, the Company issued warrants to purchase up to a
total of 400,000 shares of common stock at $21.00 per share (the number of
shares and exercise price being subject to adjustment in certain circumstances)
at any time until April 22, 2004. Additionally, the Company and the two funds
who purchased the Series C preferred stock entered into a registration rights
agreement whereby the Company agreed to register 150% of the shares of common
stock issuable upon conversion of the Series C preferred stock and exercise of
the warrants. The Company filed a registration statement on Form S-1 with the
9
<PAGE>
THERMOVIEW INDUSTRIES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2000
(UNAUDITED)
6. Financing Arrangements (Continued)
Securities and Exchange Commission (SEC) in December 1999 registering the
aforementioned shares. The Company has agreed to keep the registration statement
effective for four years after the date the SEC declared the registration
statement effective unless the funds have sold all of the common stock covered
by the registration statement or unless the funds may sell the common stock
without volume restrictions pursuant to Rule 144 under the Securities Act of
1933, as amended. For every month in which (i) the Company has failed to keep
the registration statement effective as required, or (ii) the common stock is
not listed or quoted on a national securities exchange, the funds have the right
to require the Company to pay them a cash penalty equal to 2% of the product of
the number of shares of Series C preferred stock then outstanding and $1,000.
The registration rights agreement also grants the funds certain other demand and
piggy-back registration rights.
As mentioned above, the Series C preferred stock agreement contains terms
that require increases in the number of common shares exercisable under stock
purchase warrants and adjustments to the exercise price of such warrants, as
well as increases in the number of common shares issuable upon conversion of the
preferred shares, in certain circumstances. Also, the GE subordinated debt
agreement contains terms that require increases in the number of common shares
exercisable under a stock purchase warrant in certain circumstances. In May
2000, one of the stipulated circumstances occurred causing increases.
Accordingly, the two funds holding the mandatorily redeemable preferred stock
now have warrants to purchase 600,000 shares (increased from 400,000 shares) of
common stock at $12.00 per share (reduced from $18.00 per share) and are
entitled to convert their preferred shares into 500,000 shares (increased from
400,000 shares) of common stock. Also, GE now has warrants to purchase 561,343
shares (increased from 555,343 shares) of common stock at $.03 per share. An
additional 306,000 shares of common stock have been reserved for future issuance
to accommodate the foregoing reset provisions.
In August 2000, the two funds holding the mandatorily redeemable preferred
stock agreed to be paid dividends with 100% Company common stock until such time
as the normal quarterly dividend payments of part cash, part common stock are
again permitted in accordance with terms of the PNC Bank, N.A. agreement.
Payment of the dividend in common stock will be dilutive. Assuming the stock
dividend continues for four quarters at a market trading price of $.50 per
share, the Company would be required to issue approximately 806,000 additional
shares of its common stock to the two funds in lieu of cash dividends. Also in
August 2000, the two funds temporarily waived their right to keep their
registration effective, and will not impose the penalties permitted under the
agreement during the waiver period which extends through May 31, 2001.
In April 2000, the Company completed negotiations to satisfy its
obligations under certain earn-out provisions with previous owners of the
Company's subsidiaries. As a result of the negotiations, the Board of Directors
authorized 1,500,000 shares of 12% Series D cumulative preferred stock ($.001
par value and $5.00 stated value), and the Company then issued 1,417,000 shares
to the previous owners in lieu of cash to satisfy $7,085,000 of obligations to
them. An additional 22,316 shares of Series D preferred stock have been issued
to compensate the previous owners for interest earned amounting to $111,580
prior to settlement of the obligations. The Series D preferred stock is senior
to the common stock of the Company and is on parity with the Series C preferred
stock and Series E preferred stock discussed below. The Series D preferred stock
10
<PAGE>
THERMOVIEW INDUSTRIES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2000
(UNAUDITED)
6. Financing Arrangements (Continued)
will pay cumulative dividends at the rate of $.60 per share annually, or an
annual rate of 12% subject to the availability of such funds and the consent of
the senior lender of the Company. As previously discussed, the senior lender is
not currently permitting payment of these dividends. The shares of Series D
preferred stock are redeemable by the Company at its option, in whole or in
part, for cash or common stock that equals the liquidation value of the shares
redeemed. The shares of Series D preferred stock are not convertible into common
stock, have no voting rights and contain no registration rights. A venture
capital firm loaned one of the previous owners $1,500,000 at 12% interest, and
collateralized the loan with the previous owner's 1,113,500 shares of 12% Series
D cumulative preferred stock. A stockholder, who also is a director of the
Company, and a stockholder and former director of the Company have an ownership
interest in the venture capital firm.
In September 2000, holders of approximately $5.7 million, or about 79% of
the Series D preferred stock, agreed to the restructure of terms. As a result of
the agreement, dividends payable to the holders of the stock will not begin to
accrue until October 2001. Accordingly, the Series D undeclared dividends in the
accompanying condensed consolidated statement of operations for the three months
ended September 30, 2000, reflects a reversal of the dividends no longer due
that had been reflected as undeclared dividends in the prior quarter. Also, the
Series D preferred stock was revised to add a mandatory redemption provision
which requires 20% annual redemption of this preferred stock, in addition to
other series of preferred stock on a parity basis, over a period of five years,
beginning October 1, 2001. Penalties in the form of a 2% increase per annum in
the dividend rate, limited to a maximum adjusted dividend rate of 16% per annum,
will apply to those portions of preferred stock that are not timely redeemed,
which also applies to the Series C preferred stock discussed above and the
Series E preferred stock discussed below.
The remaining approximate 21% or $1.5 million of the Series D preferred
stock was converted into 300,000 shares of 12% Series E cumulative preferred
stock ($.001 par value and $5.00 stated value). The Series E preferred stock is
senior to the common stock of the Company and is on parity with the Series C and
Series D preferred stock. The Series E preferred stock will pay cumulative
dividends at the rate of $.60 per share annually, or an annual rate of 12%
subject to the availability of such funds and the consent of the senior lender
of the Company. As previously discussed, the senior lender is not currently
permitting payment of cash dividends on any preferred stock. The undeclared
dividends remaining at September 30, 2000, represent the cumulative dividends
undeclared on the 300,000 shares of Series D at the date of conversion into
Series E (September 30, 2000). The shares of Series E preferred stock are not
convertible into common stock, have no voting rights and contain no registration
rights. The Series E has a mandatory redemption provision which requires 20%
annual redemption of this preferred stock, in addition to other series of
preferred stock on a parity basis, over a period of five years, beginning
October 1, 2001.
In July 2000, a stockholder/director of the Company loaned a previous
owner $183,000 at 9% interest as a partial temporary advance toward the $450,000
amount reflected as due to sellers of acquired businesses in the accompanying
condensed consolidated balance sheet as of September 30, 2000.
11
<PAGE>
THERMOVIEW INDUSTRIES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2000
(UNAUDITED)
6. Financing Arrangements (Continued)
In September 2000, all existing acquisition agreements providing for
additional consideration to be paid if the acquired entities' results of
operations exceed certain targeted levels were revised. Under the revised
agreements, all prior owners have agreed to take Series D preferred stock, as
restructured with respect to terms, in full settlement of future obligations
that may become due to the prior owners.
7. Contingencies
The Company entered into a 90-day listing agreement in October 1999 with
IPO.COM, Inc. under which the Company authorized IPO.COM to include its
prospectus on the IPO.COM web site. In addition to hosting the Company's
prospectus, IPO.COM provided summary material relating to the Company and its
initial public offering on its web site. The IPO.COM web site also provided a
direct link to the Company's web site. Although the Company did not intend to
create an agency relationship with IPO.COM, and while the Company believes that
IPO.COM is not and has not acted as its agent, the listing agreement may have
created an agency relationship. If IPO.COM is deemed the Company's agent
pursuant to the listing agreement, the summarized material contained in the
IPO.COM web site relating to the Company and its initial public offering and the
information contained in the Company's web site could constitute a prospectus
that does not meet the requirements of the Securities Act of 1933. If the
summarized materials relating to the Company in the IPO.COM web site or the
materials contained in the Company's web site did constitute a violation of the
Securities Act of 1933, investors in the initial public offering would have the
right, for a period of one year from the date of their purchase of common stock,
to obtain recovery of the consideration they paid for their common stock or, if
these persons had already sold the common stock, to sue the Company for damages
resulting from their purchase of common stock. These damages could total up to
approximately $6.9 million, plus interest, if these investors seek recovery or
damages after an entire loss of their investment. Any recovery or damages could
adversely impact the Company's liquidity during the period in which a refund is
paid. Although the Company cannot be certain as to the ultimate disposition of
this matter, it is the opinion of the Company's management, based upon the
information available to it, including the advice of legal counsel, that the
expected outcome of this matter will not significantly affect the results of
operations and financial condition of the Company.
On March 3, 2000, Pro Futures Bridge Capital Fund, L.P. and Bridge Capital
Partners, Inc. Defined Benefit Pension Plan filed an action titled PRO FUTURES
BRIDGE CAPITAL FUND, L.P. V. THERMOVIEW INDUSTRIES, INC., ET AL., Civil Action
No. 00CV0559 (Colo. Dist. Ct., March 3, 2000) against ThermoView, its directors,
certain officers, an employee and a stockholder alleging breach of contract,
common law fraud, fraudulent misstatements and omissions in connection with the
sale of securities, negligent misrepresentations and breach of fiduciary duty.
These claims are in connection with the mandatory conversion of ThermoView's 10%
Series A convertible preferred stock, held by the two funds, into common stock
upon completion of the initial public offering in December 1999, and purchases
by the two funds of ThermoView's common stock from ThermoView stockholders. The
12
<PAGE>
THERMOVIEW INDUSTRIES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2000
(UNAUDITED)
7. Contingencies (Continued)
funds are seeking rescission of their purchases of the Series A preferred stock
in the amount of $3,250,000, plus interest and unspecified damages in connection
with their purchases of the common stock. ThermoView filed a notice to dismiss
certain claims and an answer denying liability in the remainder of the claims.
ThermoView also exercised an election for the removal of the action to the US
District Court of Colorado, and the matter was designated by the US District
Court as Civil Action No. 00-B-722. Pro Futures filed a motion to remand the
action back to the original venue. The Court rendered an opinion which dismissed
certain named individuals due to lack of personal jurisdiction in Colorado
courts and retained venue within the US District Court. The Court has entered a
scheduling order establishing a trial date in December 2001. The matter is
currently in the initial discovery phase, with depositions of ThermoView
officers tentatively scheduled for early December 2000. While ThermoView
believes that the claims are without merit and intends to vigorously defend the
suit, it is too early in the process to predict the likely outcome of the
matter.
An employee of an affiliate of Thomas Construction, Inc. (Thomas), a
subsidiary of ThermoView, has filed suit against both the affiliate and Thomas
claiming sexual harassment. The Company intends to defend this claim vigorously
and does not expect the outcome to have a material adverse effect on the results
of operations and financial condition of the Company.
The Company is subject to other legal proceedings and claims which have
arisen in the ordinary course of its business and have not been finally
adjudicated. Although there can be no assurance as to the ultimate disposition
of these matters, it is the opinion of the Company's management, based upon the
information available at this time, that the expected outcome of these matters,
individually or in the aggregate, will not have a material adverse effect on the
results of operations and financial condition of the Company.
8. Unusual Charges
As a result of the Company's decisions to reduce emphasis on the
manufacturing segment and to enhance cash flow and profitability of the
Company's retail operations, the Company recorded unusual charges of $10,745,000
in the quarter ended June 30, 2000.
The unusual charges specifically relate to management's and the Board's
decisions to close and abandon two ThermoView subsidiaries as follows:
Operation Activity
Precision Window Mfg., Inc. Manufacturer of windows in St.
(Precision) Louis, Missouri
American Home Developers Co., Retailer of primarily textured
Inc. coatings in Los Angeles, California
(American Home Developers)
13
<PAGE>
THERMOVIEW INDUSTRIES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2000
(UNAUDITED)
8. Unusual Charges (Continued)
The Company's results of operations for the three and nine month periods
ended September 30, include the following amounts for these entities:
Income (Loss)from
For the three months Operations Before
ended September 30, 1999 Revenues Unusual Charges
------------------------ -------- ---------------
Precision $1,882,629 $ 117,471
American Home Developers 1,230,448 (36,909)
For the three months
ended September 30, 2000
------------------------
Precision 164,275 (309,796)
American Home Developers - (97,964)
For the nine months
ended September 30, 1999
------------------------
Precision 5,523,615 414,256
American Home Developers 3,416,221 (119,355)
For the nine months
ended September 30, 2000
------------------------
Precision 2,874,652 (1,676,161)
American Home Developers 1,473,200 (426,300)
The unusual charges consist of the following:
American
Home
Precision Developers Total
Goodwill write-off $ 3,075,484 $6,891,348 $9,966,832
Write down of tangible assets to
net realizable value 568,168 10,000 578,168
Additional warranty reserve 200,000 - 200,000
----------- ---------- ----------
$ 3,843,652 $6,901,348 $10,745,000
=========== ========== ============
Precision had significant operating losses in 2000, and management had not
been successful in locating a purchaser of the business. Because of the poor
operating performance of Precision in the first half of 2000 and anticipated
future losses, management and the Board decided in June 2000 to close this
subsidiary and abandon the business. The Company substantially completed this
process in August 2000. The writedown of tangible assets to net realizable value
noted above relates to Precision's inventories and equipment expected to be sold
below cost based on estimates of selling prices. Precision's warranty reserve
has been adjusted for the expected increase in warranty costs which will occur
as a result of having to use an outside party to perform warranty work once
Precision is closed. Precision's manufacturing facilities are leased under an
agreement which expires in December 2004 and has remaining rental payments of
$1,040,000 as of September 30, 2000. The Company believes this facility can be
subleased for rents at least equal to the rental obligation and, therefore,
expects no significant loss on this commitment.
14
<PAGE>
THERMOVIEW INDUSTRIES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2000
(UNAUDITED)
8. Unusual Charges (Continued)
American Home Developers incurred losses and had negative cash flow in the
first six months of 2000. Since this subsidiary sold to a different customer
base and the development of its product mix was moving contrary to the
diversified home improvement product mix of ThermoView's other southern
California locations, management concluded in June 2000 that closing this
unprofitable operation and abandoning its underlying business was a better
alternative than trying to merge the subsidiary with other ThermoView
businesses. The operation was closed in July 2000.
9. Stockholders' Equity
In March 2000, 12,500 shares of common stock having a fair value of
$50,000 were issued to satisfy the Company's obligation for royalty payments
under a license agreement with Research Frontiers Incorporated.
On April 30, 2000, 18,000 shares of common stock having a fair value of
$43,884 were issued as additional consideration for a 1998 acquisition. In
addition, 76,263 shares of common stock were taken back by ThermoView relating
to a 1999 acquisition that did not achieve its first year's targeted earnings
for the year ended February 29, 2000. The 76,263 shares were originally valued
at $1,298,469, and this amount has now been reversed from goodwill and
stockholders' equity.
In June 2000, the Company's stockholders approved a reduction in preferred
authorized shares from 50 million to 5 million and a reduction in common
authorized shares from 100 million to 25 million. In addition, the Company's
stockholders authorized the Company to issue up to 3.75 million shares of common
stock in one or more private placements.
On June 20, 2000, the Board of Directors approved, subject to stockholder
approval, the 2000 stock option plan (the "2000 Plan"). Under the 2000 Plan,
qualified or non-qualified stock options may be granted to key employees and
nonemployee directors of the Company. The exercise price and terms of any
options granted are determined at the date of grant.
The remaining 68,275 shares available for grant under the 1999 Plan as of
the close of business on September 30, 2000, were transferred to and reserved
for issuance under the 2000 Plan. After transfer of 1999 Plan remaining shares
to the 2000 Plan, 1,400,000 shares are to be reserved for issuance under the
2000 Plan.
15
<PAGE>
THERMOVIEW INDUSTRIES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2000
(UNAUDITED)
9. Stockholders' Equity (Continued)
In September 2000, 496,998 option shares were granted under the 1999 Plan
to key employees and directors. The exercise price of the options is $.625 per
share which was the fair value of the Company's common stock on the date of
grant. The options vested immediately and expire ten years from the date of
grant.
In August 2000, 45,000 shares of common stock having a fair value of
$36,585 were issued as consideration for various investment banking services to
be provided. Also, warrants to purchase 200,000 shares of common stock were
issued for these services. The warrants are immediately exercisable as follows:
50,000 shares at $4 per share; 50,000 shares at $5 per share; 50,000 shares at
$6 per share; and 50,000 shares at $7 per share. The warrants expire two years
after the effective date of a registration statement registering the underlying
shares. The $7,000 approximate value of the warrants has been expensed and also
included as an increase to paid-in capital in the accompanying condensed
consolidated balance sheet at September 30, 2000.
In October 2000, the Company issued warrants to purchase 200,000 shares of
common stock at $12 per share to satisfy certain obligations with its
underwriters arising in connection with the Company's December 2, 1999 public
offering of common stock. The warrants expire two years after the issuance date.
In October 2000, the Company issued warrants to purchase 340,000 shares of
common stock at $12 per share and agreed to the payment of $60,000 to WestPark
Capital, Inc. (WestPark) for WestPark to act as the Company's non-exclusive
financial advisor. The warrants expire two years after the issuance date. In
addition to the above compensation, various contingent fee arrangements were
agreed upon to be paid to WestPark for raising debt or equity capital for the
Company or for providing merger and acquisition candidates to the Company. The
agreement is for two years. The fair value of these warrants and the other
warrants above issued in October 2000 is not significant.
16
<PAGE>
Item 2. Management's Discussion And Analysis Of Financial Condition And
Results Of Operations
This report on Form 10-Q contains statements which constitute
"forward-looking statements" within the meaning of the Private Securities
Litigation Reform Act of 1995. Such statements can be identified by the use of
forward-looking terminology such as "believes," "expects," "may," "estimates,"
"will," "should," "plans" or "anticipates" or the negative thereof or other
variations thereon or comparable terminology, or by discussions of strategy.
Readers are cautioned that any such forward-looking statements are not
guarantees of future performance and involve significant risks and
uncertainties, and that actual results may vary materially from those in the
forward-looking statements as a result of any number of factors, most of which
are beyond the control of management. These factors include operating losses,
continued and increased expenses, non-cash dividends and interest related to our
financings, restrictions imposed by our line of credit and subordinated debt,
quality control of the manufacturing of our products and delays in their
delivery, and our inability to meet obligations to the former owners of acquired
businesses for satisfying future period financial targets.
Although we believe that the expectations and assumptions reflected in the
forward-looking statements are reasonable, we cannot guarantee future results,
levels of activity, performance or achievements.
The following should be read in conjunction with the response to Part I,
Item 1. of this Report and the Company's audited consolidated financial
statements contained in the Company's Annual Report on Form 10-K. Any
capitalized terms used but not defined in this Item have the same meaning given
to them in the Form 10-K.
Overview
We design, manufacture, sell and install custom vinyl replacement windows
for residential and retail commercial customers. We also sell and install
replacement doors, home textured coatings, vinyl siding, patio decks, patio
enclosures, cabinet refacings and kitchen and bathroom remodeling products. We
have financed a portion of our customers' purchases through Key Home Credit, our
consumer finance subsidiary. However, our finance subsidiary was closed in July
2000 since expanding the subsidiary would have required considerable capital.
Business Segments
Our subsidiaries have separate management teams and infrastructures and
operate in three reportable operating segments: retail, manufacturing and
financial services.
Retail. Our retail segment consists of our subsidiaries that design, sell
and install custom vinyl replacement windows, doors and related home improvement
products to commercial and retail customers. Our retail segment derives its
revenues from the sale and installation of thermal replacement windows, storm
windows and doors, patio decks, patio enclosures, vinyl siding and other home
improvement products. Our retail segment recognizes revenues on the completed
contract method. A contract is considered complete when the home improvement
product has been installed. Gross profit in the retail segment represents
revenues after deducting product and installation labor costs.
17
<PAGE>
Manufacturing. Our manufacturing segment manufactures and sells vinyl
replacement windows to our retail segment and to unaffiliated customers. Our
manufacturing segment is comprised of two subsidiaries:
Subsidiary Activity
Thermal Line Windows, LLP Manufactures vinyl windows and
(Thermal Line) sells primarily to unaffiliated
customers.
Precision Window Mfg., Inc. Manufactured vinyl windows and
(Precision) sold primarily to our retail
segment. This business was
closed in August 2000.
In January 2000, we decided to shift more to outsourced manufacturing.
Consistent with this shift and because of operating losses incurred in 2000 by
Precision, the Board decided in June 2000 to close Precision.
Thermal Line, located in Mandan, North Dakota, is a profitable
manufacturer with a sound dealer base and quality products. We currently intend
to continue operating this subsidiary.
All but one of our retail subsidiaries, including those subsidiaries that
purchased windows from Precision, are now purchasing their windows from
unaffiliated window manufacturers. We believe we can achieve lower product costs
and consistent product quality from these high volume unaffiliated window
manufacturers. Thermal Line sells windows to our retail subsidiary, Leingang
Siding and Window, Inc. It is not practical for Thermal Line to expand its
output to produce windows for more of our own retail subsidiaries since Thermal
Line has capacity limitations beyond the volume of profitable business
manufactured for primarily unaffiliated customers.
0ur manufacturing segment recognizes revenue when products are shipped.
Gross profit in the manufacturing segment represents revenues after deducting
product costs (primarily glass, vinyl and hardware), window fabrication labor
and other manufacturing expenses.
Financial Services. Our financial services segment financed credit sales
of our retail segment. We closed Key Home Credit, ThermoView's Owensboro,
Kentucky, finance subsidiary, in July 2000 since expanding the subsidiary would
have required considerable capital. We decided that we could more effectively
employ capital to expand our retail business.
18
<PAGE>
Historical Results Of Operations
For the three For the nine
months ended months ended
September 30, September 30,
--------------------------------------
1999 2000 1999 2000
---- ---- ---- ----
(In thousands)
Revenues...................... $29,081 $26,385 $79,277 $ 75,091
Cost of revenues earned....... 13,093 12,450 35,595 35,799
-------------------------------------
Gross profit.................. 15,988 13,935 43,682 39,292
Selling, general and
administrative expenses..... 14,481 12,231 39,871 39,938
Restructuring charges......... - - - 10,745
Depreciation expense.......... 244 257 684 803
Amortization expense.......... 742 759 2,297 2,505
-------------------------------------
Income (loss) from operations. 521 688 830 (14,699)
Interest expense.............. (1,039) (1,270) (1,897) (3,513)
Interest income............... 47 32 148 138
-------------------------------------
Loss before income taxes...... (471) (550) (919) (18,074)
Income tax provision (benefit) (7) 36 330 1,765
-------------------------------------
Net loss...................... (464) (586) (1,249) (19,839)
Less preferred stock dividends:
Series A and B cash dividends 426 - 1,272 -
Series C cash dividends..... 61 - 205 101
Series C non-cash dividends. 497 542 1,961 1,552
Series D undeclared dividends - (180) - -
Series E undeclared dividends - 83 - 83
--------------------------------------
Net loss attributable to
common stockholders........ $(1,448) $(1,031) $(4,687) $(21,575)
======================================
Three Months Ended September 30, 2000 Compared to September 30, 1999
Revenues. Revenues decreased from $29.1 million in the third quarter of
1999 to $26.4 million in the third quarter of 2000. This revenue decrease of
$2.7 million is due primarily to fluctuations in quarterly revenues for certain
subsidiaries. Revenues from Thermo-Shield decreased $1.9 million due to changing
its lead generation strategy, which should improve its long-term performance but
have an adverse effect on short-term operating performance and cash flows, and
the closing of two of its branch operations that were unprofitable. Revenues
also decreased by $1.2 million from the third quarter of 1999 to the third
quarter of 2000 at American Home Developers, our retail subsidiary that we
closed in July 2000.
19
<PAGE>
Gross Profit. Gross profit, which represents revenues less cost of
revenues earned, decreased from $16.0 million in the third quarter of 1999 to
$13.9 million in the third quarter of 2000. This decline principally results
from less revenue as explained above, and the poor operating performance at
Precision. As a percentage of revenues, gross profit decreased from 55.0% in the
third quarter of 1999 to 52.8% in the third quarter of 2000. This decrease
results primarily because some costs at our subsidiaries are fixed and these
fixed costs are more significant relative to the lower volumes in the third
quarter of 2000 compared to the third quarter of 1999, and because of the
production inefficiencies at Precision.
Cost of revenues earned includes the cost of glass, vinyl, hardware,
fabrication labor and manufacturing overhead for the manufacturing segment. For
the retail segment, cost of revenues earned includes the cost of vinyl windows,
doors, textured coating, vinyl siding, and other home improvement products
purchased plus installation costs and other indirect materials and labor.
Selling, General and Administrative Expenses. Selling, general and
administrative expenses decreased from $14.5 million in the third quarter of
1999 to $12.2 million in the third quarter of 2000. The decrease in selling,
general and administrative expenses is due to lower expenses relative to the
lower volumes at Thermo-Shield, reduced expenses in 2000 related to closed
operations and lower expenses at the corporate office due to cost cutting
efforts.
Selling, general and administrative expenses include sales commissions,
advertising expenses, rent expense, corporate operating costs and other general
and administrative expenses.
Depreciation Expense. Depreciation expense increased from $244,000 in the
third quarter of 1999 to $258,000 in the third quarter of 2000 as a result of
capital expenditures in 1999 and 2000.
Amortization Expense. Amortization expense increased from $742,000 in the
third quarter of 1999 to $759,000 in the third quarter of 2000. This increase
results from additional amortization expense in the third quarter of 2000 at
several subsidiaries as the former owners secured an increase to our purchase
price of their entities by achieving post-acquisition earnings targets. This
increase was partially offset by reduced amortization related to operations
closed during the third quarter of 2000.
Interest Expense. Interest expense increased from $1.0 million in the
third quarter of 1999 to $1.3 million in the third quarter of 2000 primarily as
a result of somewhat higher rates charged on the PNC Bank credit facility in
2000.
Income Tax Provision. The provision (benefit) for income taxes in the
third quarter of 1999 differs from the amount computed by applying the statutory
U.S. Federal income tax rate to loss before income taxes primarily as a result
of state taxes and non-deductible goodwill amortization. Due to operating losses
incurred during 2000, we are now forecasting a taxable loss for the year ending
December 31, 2000. Management has concluded that it is more likely than not that
our deferred tax assets will not be realized and, accordingly, deferred tax
assets have been fully offset by a valuation allowance as of September 30, 2000.
20
<PAGE>
Series A and B Cash Dividends. There were no cash dividends for the third
quarter of 2000 on our Series A and Series B preferred stock since the preferred
stock was converted into shares of our common stock effective December 31, 1999.
Series C Cash Dividends. PNC Bank did not permit us to pay cash dividends
on the Series C preferred stock for the third quarter of 2000.
Series C Non-Cash Dividends. Non-cash dividends of $542,000 for the third
quarter of 2000 and $497,000 for the third quarter of 1999 represent accretion
of the discount on the mandatorily redeemable Series C preferred stock related
to the value of the detachable stock purchase warrants issued to the Series C
preferred stockholders and stock dividends paid to these stockholders.
Series D Undeclared Dividends. PNC Bank is currently not permitting
payment of dividends on our Series D preferred stock which was issued in April
2000. In September 2000, holders of approximately 79% of the Series D preferred
stock agreed to restructure their stock such that dividends payable to the
holders will not begin to accrue until October 2001. Accordingly, the third
quarter includes reversal of the $180,000 of undeclared dividends reported in
the second quarter of 2000.
Series E Undeclared Dividends. The amount reported as dividends for the
three months ended September 30, 2000, represents 12% cumulative dividends on
300,000 shares of Series D preferred stock that were unpaid at the time of their
conversion to Series E preferred stock on September 30, 2000.
Nine Months Ended September 30, 2000 Compared to September 30, 1999
Revenues. Revenues decreased from $79.3 million in the first nine months
of 1999 to $75.1 million in the first nine months of 2000. Revenues decreased
$4.2 million or 5.3% due primarily to fluctuations in revenues for certain
subsidiaries. Rolox and ThermoView of Missouri collectively reported $1.7
million less revenues in the first nine months of 2000 than in the similar
period in 1999. This reduced revenue was due to the negative effects of their
window supplier's quality control and delivery problems. Their window supplier
was our manufacturer (Precision) located in St. Louis, Missouri. Precision's
inability to produce and deliver windows resulted from its plant relocation in
the first quarter of 2000. Revenues from Thermo-Shield decreased $2.0 million
due to changing its lead generation strategy and the closing of two of its
branch operations that were unprofitable. Additionally, American Home
Developers' revenue decreased $1.9 million in the first nine months of 2000 as
compared to the first nine months of 1999 as the operation was being closed.
We partially offset the revenue reduction discussed above by $2.1 million
more revenue reported in the first nine months of 2000 due principally to
product diversification in several of our retail subsidiaries.
Gross Profit. Gross profit decreased from $43.7 million in the first nine
months of 1999 to $39.3 million in the first nine months of 2000. This decline
principally results from less revenue at Thermo-Shield and American Home
Developers as explained above, and the poor operating performance at Precision,
Rolox and ThermoView of Missouri. As a percentage of revenues, gross profit
decreased from 55.1% in the first nine months of 1999 to 52.3% in the first nine
months of 2000. This decrease results primarily because some costs at our
subsidiaries are fixed and these fixed costs are more significant relative to
the lower volumes in the first nine months of 2000 compared to the first nine
months of 1999.
21
<PAGE>
Selling, General and Administrative Expenses. Selling, general and
administrative expenses remained constant at $39.9 million in the first nine
months of 1999 and the first nine months of 2000. Selling, general and
administrative expenses as a percentage of revenue increased from 50.3% in the
first nine months of 1999 to 53.2% in the first nine months of 2000. The
increase in selling, general and administrative expenses as a percentage of
revenues in the first nine months of 2000 results primarily from the fixed
nature of certain expenses relative to the lower volumes.
Unusual Charges. Unusual charges for the first nine months of 2000
amounting to $10.7 million represent primarily goodwill write offs for two of
our subsidiaries which we closed, Precision and American Home Developers, plus
other asset write offs and expense accruals required by these closures.
Depreciation Expense. Depreciation expense increased from $684,000 in the
first nine months of 1999 to $803,000 in the first nine months of 2000 as a
result of capital expenditures in 1999 and 2000.
Amortization Expense. Amortization expense increased from $2.3 million in
the first nine months of 1999 to $2.5 million in the first nine months of 2000.
This increase primarily results from additional amortization expense in the
first nine months of 2000 at several subsidiaries as the former owners secured
an increase to our purchase price of their entities by achieving
post-acquisition earnings targets. This increase was partially offset by reduced
amortization related to operations closed in 2000.
Interest Expense. Interest expense increased from $1.9 million in the
first nine months of 1999 to $3.5 million in the first nine months of 2000
primarily as a result of interest, including accreted discount, on the $10.0
million senior subordinated promissory note with GE Capital, which began
accruing in mid-1999, as well as interest on additional amounts borrowed under
the PNC Bank credit facility in the first quarter of 1999. Also, we are being
charged somewhat higher interest rates on the PNC credit facility in 2000.
Income Tax Provision. The provision for income taxes in the first nine
months of 1999 differs from the amount computed by applying the statutory U.S.
Federal income tax rate to loss before income taxes primarily as a result of
state taxes and non-deductible goodwill amortization. At December 31, 1999, we
reported $1.7 million of deferred income tax assets. Due to operating losses
incurred during 2000, we are now forecasting a taxable loss for the year ending
December 31, 2000. Management has concluded that it is more likely than not that
our deferred tax assets will not be realized. As a result, the income tax
provision for the nine month period ended September 30, 2000, includes the
effects of recognizing a valuation allowance against the deferred tax assets
that existed at December 31, 1999, and no additional deferred income taxes have
been recorded for the nine month period ended September 30, 2000.
22
<PAGE>
Series A and B Cash Dividends. There were no cash dividends for the first
three quarters of 2000 on our Series A and Series B preferred stock, since the
preferred stock was converted into shares of our common stock effective December
31, 1999.
Series C Cash Dividends. PNC Bank did not permit us to pay any cash
dividends on our Series C preferred stock in the second and third quarters of
2000. The first quarter of 1999 did not have any cash dividends on the Series C
preferred stock since it was issued in April 1999.
Series C Non-Cash Dividends. Non-cash dividends of $1.6 million for the
first three quarters of 2000 represent accretion of the discount on the
mandatorily redeemable Series C preferred stock related to the value of the
detachable stock purchase warrants issued to the Series C preferred stockholders
and stock dividends paid to these stockholders. Non-cash dividends of $2.0
million for 1999 relate to a beneficial conversion feature of the mandatorily
redeemable Series C convertible preferred stock issued in April 1999, as well as
accretion of the discount of the stock and stock dividends.
Series D Undeclared Dividends. PNC Bank is currently not permitting
payment of these dividends on our Series D preferred stock which was issued in
April 2000. There is no amount reported as undeclared dividends for the nine
months ended September 30, 2000 since the stock was restructured such that
dividends payable to the holders will not begin to accrue until October 2001.
Series E Undeclared Dividends. The amount reported as dividends for the
nine months ended September 30, 2000, represents 12% cumulative dividends on the
300,000 shares of Series D preferred stock that were unpaid at the time of
conversion to Series E preferred stock on September 30, 2000.
Liquidity And Capital Resources
As of September 30, 2000, we had cash and equivalents of $866,000, a
working capital deficit of $14.9 million, $7.7 million of long-term debt, net of
current maturities, and $13.1 million of mandatorily redeemable preferred stock.
Our operating activities for the nine months ended September 30, 2000, used
$547,000 of cash. Our operating activities for the nine months ended September
30, 1999, provided $1.4 million of cash.
The use of cash for investing activities for the nine months ended
September 30, 2000, relates primarily to additional consideration paid under
terms of a 1999 acquisition agreement which accounts for the use of $1.0 million
of cash. Investing activities also included investments in property and
equipment of $686,000 in the nine months ended September 30, 2000, and $196,000
of cash provided by other investing activities. During the nine months ended
September 30, 1999, we used $20.8 million for acquisitions, invested $1.5
million in property and equipment and had $155,000 of cash provided by other
investing activities.
Financing activities in the nine months ended September 30, 2000, utilized
$416,000 of cash, comprised of a payment of $101,000 for preferred stock cash
dividends and $316,000 for repayment of debt. The major sources of cash provided
by financing activities for the nine months ended September 30, 1999, were
borrowings of $9.7 million from our PNC Bank credit facility, net proceeds on
borrowings from GE Capital of $9.4 million, and net proceeds from issuance of
mandatorily redeemable Series C convertible preferred stock and detachable stock
purchase warrants of $5.4 million. These sources were offset by the repayment of
$2.3 million of debt, exclusive of refinanced debt, the payment of $1.5 million
of preferred dividends and deferred financing costs of $954,000 exclusive of
fees related to GE Capital accounted for above.
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As of the date of this Form 10-Q, we have borrowed the entire amount
available to us under our $15 million PNC Bank line of credit. The $15 million
line of credit and $10 million subordinated debt owed to GE Capital require us
to comply with affirmative and negative covenants. We must maintain various
financial ratios and these lenders may restrict us from incurring other debt. We
may not pay cash dividends on our common stock, and as discussed below, cash
dividends on our preferred stock, while the line of credit and the subordinated
debt are outstanding. We are also subject to other restrictions, including
restrictions pertaining to significant corporate transactions and management
changes.
We violated PNC Bank and GE Capital covenants at certain dates during the
six month period ended June 30, 2000. The covenant violations resulted largely
from losses during the twelve-month period prior to covenant measurement dates.
Because of losses, we currently have no excess cash available for unanticipated
working capital purposes. PNC Bank and GE Capital have waived these covenant
violations and have amended financial covenants to accommodate compliance in the
future. The most restrictive of the amended covenants is the requirement to
repay $5 million of the PNC Bank line of credit in December 2000 as well as to
meet debt service coverage ratios as defined in the debt agreements. Although we
complied with debt service ratio requirements at our September 30, 2000
quarterly measurement date, it is reasonably possible we may not be able to
comply with amended debt covenants in the future. In this event, PNC Bank and GE
Capital will have the right to demand payment of the total amounts due them
including the amounts classified as long-term obligations at September 30, 2000.
We have secured the line of credit by substantially all of our personal
property and by a pledge to PNC Bank of all of our ownership interests in our
subsidiaries. The line of credit requires that any company acquired by us must
become a borrower under the line of credit. Additionally, the line of credit
obligates us to pay a quarterly unused loan fee and other fees and expenses.
Four stockholders of the Company (one of whom is also a director of the Company)
guarantee a total of $3 million of the credit facility for fees equal to an
annual rate of 10%.
If we default under the line of credit, PNC Bank could, among other items,
cease all advances, accelerate all amounts owed to PNC Bank and increase the
interest rate on the line of credit. If we default under the subordinated debt
documents, GE Capital could, among other items, accelerate all amounts owed to
GE Capital, subject to the rights of PNC Bank as our senior lender under the
line of credit. Under either the PNC Bank line of credit or the GE Capital
subordinated debt, an event of default could result in the loss of our
subsidiaries because of the pledge of our ownership in all of our subsidiaries
to PNC Bank and on a subordinated basis to GE Capital.
In August 2000, PNC Bank extended the maturity date of $10 million of our
$15 million line of credit from May 1, 2001 to July 1, 2001. In connection with
waiving defaults at June 30, 2000, PNC Bank is requiring us to repay $5 million
of the line of credit by December 27, 2000. Based on its terms, we have included
the entire $15 million of the line of credit in the current portion of long-term
debt as of September 30, 2000. PNC Bank is also not permitting the payment of
any cash dividends on our Series C, Series D or Series E preferred stock until
the earlier of repayment of the entire $15 million line of credit or September
30, 2001.
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We have suffered recurring operating losses, have a working capital
deficit at September 30, 2000, and used cash in operations during the nine month
period ended September 30, 2000. As previously discussed, we also violated debt
covenants during the six months ended June 30, 2000. Although lenders have
waived the defaults, the debt covenant violations together with these other
factors currently raise substantial doubt about our ability to continue as a
going concern.
We plan to increase cash flows and to take steps toward achieving
profitable operating results through increased management focus on improving our
retail segment's operating results, the closure of unprofitable operations, and
reduction of corporate administrative expenditures. We have already taken steps
to close the following unprofitable operations:
o Precision Window Mfg., Inc., our window manufacturer in St. Louis,
Missouri.
o American Home Developers Co., Inc., our retail subsidiary that sells
primarily textured coatings in Los Angeles, California.
o Key Home Credit, our finance subsidiary in Owensboro, Kentucky.
We have taken steps to reduce administrative expenditures principally by
terminating corporate employees.
We may dispose of some of our assets to generate sufficient funds to
satisfy the requirement to repay $5 million of our PNC Bank line of credit by
December 27, 2000. PNC Bank would need to approve such a sale, and the sale may
result in a loss to us. Although $5 million is the only amount due in December
2000, we are exploring the possibility of refinancing the entire $15 million
credit facility prior to December 31, 2000. Alternatives to a refinancing before
December 31, 2000, would be to refinance only the $5 million portion due
December 2000, with PNC Bank's approval, or to sell our assets as discussed
above. Although we intend to aggressively pursue these alternatives, there is no
assurance that we will have sufficient funds available by December 27, 2000 to
retire the $5 million.
In August 2000, the two funds holding the mandatorily redeemable preferred
stock agreed to be paid dividends with 100% of our common stock until such time
as the normal quarterly dividend payments of part cash, part common stock are
again permitted in accordance with terms of the PNC Bank agreement. Payment of
the dividend in common stock will be dilutive. Assuming the stock dividend
continues for four quarters at a market trading price of $.50 per share, we
would be required to issue approximately 806,000 additional shares of our common
stock to the two funds in lieu of cash dividends. Also in August 2000, the two
funds temporarily waived their right to keep their registration statement
effective, and will not impose the penalties permitted under the agreement
during the waiver period which extends through May 31, 2001.
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<PAGE>
Except for the $5 million required payment to PNC Bank by December 27,
2000, and the $10 million due by July 1, 2001, we believe that our cash flow
from operations will allow us to meet our anticipated needs during at least the
next 12 months for:
o payment of the interest on our line of credit and subordinated debt;
o working capital requirements; and
o planned property and equipment capital expenditures.
Originally, we intended to continue our acquisition program with a
combination of cash, common stock and seller debt used to finance our
acquisitions and we anticipated the cash needed for acquisitions to come
principally from an expanded bank line and future common stock offerings.
Currently, we do not have an expanded bank line nor do we anticipate a common
stock offering in the near term to fund acquisitions or unanticipated operating
needs. Due to our current liquidity problems, unavailable capital, and our need
to focus on improving the profitability of existing operations, we have decided
to suspend acquisition activity and the opening of new retail market locations
in the near term. In terms of improving the profitability of existing
operations, management is in particular focusing attention on Thermo-Shield as
this subsidiary transitions to a new lead generation strategy. An unsuccessful
transition will adversely impact future profitability and cash flow and would
then potentially result in asset impairment issues at this subsidiary. Our
investment in this subsidiary amounts to $5.9 million at September 30, 2000.
We will need additional sources of financing in the longer term to expand
the market areas of our existing retail subsidiaries and to make further
acquisitions should we determine to do so in the future. Any required additional
financing may not be available on terms favorable to us, or at all. If adequate
funds are not available on acceptable terms, we may be unable to fund additional
acquisitions, successfully promote our products, open new locations, or develop
new or enhanced products, any of which could lower our revenues and net income,
if we achieve profitability in the future. If we raise additional funds by
issuing equity securities, stockholders may experience dilution of their
ownership interest and the newly issued securities may have rights superior to
those of our common stock. If we issue or incur debt to raise funds, we may be
subject to limitations on our operations.
Pending Litigation
ThermoView does not anticipate any significant adverse effect on our
results of operations or cash flow during the next twelve months because of the
Pro Futures litigation or the harassment claim described in Part II - Other
Information, Item 1. Legal Proceedings. Although ThermoView believes the claims
in this litigation are without merit and intends to vigorously defend the suits,
an adverse outcome, thereafter, in these actions could have a material adverse
effect on our results of operations and cash flow.
The shares in the initial public offering may have been offered or sold in
violation of the Securities Act of 1933.
ThermoView entered into a 90-day listing agreement in October 1999 with
IPO.COM, Inc. under which ThermoView authorized IPO.COM to include its
prospectus on the IPO.COM web site. In addition to hosting ThermoView's
prospectus, IPO.COM provided summary material relating to ThermoView and its
initial public offering on its web site. The IPO.COM web site also provided a
26
<PAGE>
direct link to the ThermoView web site. Although ThermoView did not intend to
create an agency relationship with IPO.COM, and while ThermoView believes that
IPO.COM is not and has not acted as its agent, the listing agreement may have
created an agency relationship. If IPO.COM is deemed ThermoView's agent pursuant
to the listing agreement, the summarized material contained in the IPO.COM web
site relating to ThermoView and the initial public offering and the information
contained in the ThermoView web site could constitute a prospectus that does not
meet the requirements of the Securities Act of 1933. If the summarized materials
relating to ThermoView in the IPO.COM web site or the materials contained in the
ThermoView web site did constitute a violation of the Securities Act of 1933,
investors in the initial public offering would have the right, for a period of
one year from the date of their purchase of common stock, to obtain recovery of
the consideration they paid for their common stock or, if these persons had
already sold the common stock, to sue ThermoView for damages resulting from
their purchase of common stock. These damages could total up to approximately
$6.9 million, plus interest, based on the initial public offering price of $5.50
per share for 1,255,000 shares, if these investors seek recovery or damages
after an entire loss of their investment. Any recovery or damages could
adversely impact ThermoView's liquidity during the period in which a refund is
paid. Although ThermoView cannot be certain as to the ultimate disposition of
this matter, it is the opinion of ThermoView's management, based upon the
information available to it, including the advice of legal counsel, that the
expected outcome of this matter will not significantly affect the results of
operations and financial condition of ThermoView.
Seasonality
Historically, our results of operations have fluctuated on a seasonal
basis. We have experienced lower levels of sales and profitability during the
period from mid-November to mid-March, impacting the first and fourth quarters
of each year. Inclement weather conditions in the winter and spring months in
our markets located in the north central United States, which limit our ability
to install exterior home improvement products, reduces demand for windows,
doors, vinyl siding and related products. Our intention is to expand our
southern California markets and to enter other markets in the Southwest and
southern United States to reduce the impact of seasonality if we have the
available capital.
Item 3. Quantitative And Qualitative Disclosures About Market Risk
Changes in interest rates expose us to market risk. As of September 30,
2000, approximately 60% of our debt portfolio consisted of variable-rate debt
and approximately 40% consisted of fixed-rate debt. With respect to the
variable-rate debt, a hypothetical 100 basis point increase in interest rates
would increase our annual interest expense by approximately $150,000 as of
September 30, 2000.
Interest rate changes would result in gains or losses in the market value
of our fixed-rate debt due to the differences between the current market
interest rates and the rates governing these instruments. With respect to our
fixed-rate debt outstanding at September 30, 2000, a 10% change in interest
rates would not have resulted in a significant change in the fair value of our
fixed-rate debt.
27
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Part II - OTHER INFORMATION
Item 1. Legal Proceedings
On March 3, 2000, Pro Futures Bridge Capital Fund, L.P. and Bridge Capital
Partners, Inc. Defined Benefit Pension Plan filed an action titled PRO FUTURES
BRIDGE CAPITAL FUND, L.P. V. THERMOVIEW INDUSTRIES, INC., ET AL., Civil Action
No. 00CV0559 (Colo. Dist. Ct., March 3, 2000) against ThermoView, its directors,
certain officers, an employee and a stockholder alleging breach of contract,
common law fraud, fraudulent misstatements and omissions in connection with the
sale of securities, negligent misrepresentations and breach of fiduciary duty.
These claims are in connection with the mandatory conversion of ThermoView's 10%
Series A convertible preferred stock, held by the two funds, into common stock
upon completion of the initial public offering in December 1999, and purchases
by the two funds of ThermoView's common stock from ThermoView stockholders. The
funds are seeking rescission of their purchases of the Series A preferred stock
in the amount of $3,250,000, plus interest and unspecified damages in connection
with their purchases of the common stock. ThermoView filed a notice to dismiss
certain claims and an answer denying liability in the remainder of the claims.
ThermoView also exercised an election for the removal of the action to the US
District Court of Colorado, and the matter was designated by the US District
Court as Civil Action No. 00-B-722. Pro Futures filed a motion to remand the
action back to the original venue. The court rendered an opinion which dismissed
certain named individual defendants due to lack of personal jurisdiction in
Colorado courts and retained venue with the US District Court. The court has
entered a scheduling order establishing a trial date in December 2001. The
matter is currently in the initial discovery phase, with depositions of
ThermoView officers tentatively scheduled for early December 2000. While
ThermoView believes that the claims are without merit and intends to vigorously
defend the suit, it is too early in the process to predict the likely outcome of
the matter.
An employee of an affiliate of Thomas Construction, Inc. (Thomas), a
subsidiary of ThermoView, has filed suit against both the affiliate and Thomas
claiming sexual harassment. The Company intends to defend this claim vigorously
and does not expect the outcome to have a material adverse effect on the results
of operations and financial condition of the Company.
Item 2. Changes in Securities and Use of Proceeds
None.
Item 3. Defaults Upon Senior Securities
None.
Item 4. Submission of Matters to a Vote of Security Holders
None.
Item 5. Other Information
We announced a change of address and telephone number for the principal
executive office. Effective September 28, 2000, the location of our
principal executive office is 5611 Fern Valley Road, Louisville, Kentucky
40228. You should send correspondence to us via the United States Postal
Service at PO Box 34749, Louisville, Kentucky 40232-4749. Our telephone
number, including area code, is (502) 968-2020.
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We appointed George T. Underhill, III, age 45, to our Board of Directors
effective October 9, 2000. Mr. Underhill is the treasurer of Underhill
Associates, located in Louisville, Kentucky and is a partner in numerous
real estate entities. Mr. Underhill received a B.A degree in Business
and Accounting from Miami University of Ohio in 1977 and received a J.D
degree from the University of Louisville in 1980. Mr. Underhill
maintains licenses for the practice of law, real estate and public
accounting in the Commonwealth of Kentucky. Mr. Underhill is currently
the Vice Chairman of the Board of Directors of Palladium Communications,
a multi-state licensee of telecommunications, and is founder and
director of Premiere Technologies, located in Louisville, Kentucky. Mr.
Underhill also maintains director positions with numerous charitable and
civic organizations located within the Louisville, Kentucky metropolitan
area. Mr. Underhill will serve in Class II of our directors.
In July 2000, our Chairman, Stephen A. Hoffmann, made a loan to our
President, Charles L. Smith, in the amount of $183,000. Mr. Hoffmann
loaned the funds as a partial advance of the earn out award of $450,000
that we owe to Mr. Smith. Repayment of this advance is contingent upon
our satisfaction of the earn out award that we owe to Mr. Smith. The
loan includes an interest rate of 9% until Mr. Smith pays the advance in
full.
On June 20, 2000, our Board approved, subject to stockholder approval, the
2000 stock option plan. We may grant under the 2000 plan, qualified or
non-qualified stock options to our key employees and nonemployee
directors. We determine the exercise price and terms of any options
granted at the date of grant.
We transferred to the 2000 plan the remaining 68,275 shares available for
grant under the 1999 plan as of the close of business on September 30,
2000. After the transfer of the shares from the 1999 plan to the 2000
plan, we have an aggregate of 1,400,000 shares reserved for issuance under
the 2000 plan.
In September 2000, we granted options to purchase 496,998 shares under the
1999 plan to key employees and directors. The exercise price of the
options is $.625 per share, which was the fair value of our common stock
on the date of grant. The options vested immediately and expire ten years
from the date of grant.
In August 2000, we issued 45,000 shares of our common stock having a fair
value of $36,585 as consideration for various investment banking services.
Also, we issued warrants to purchase 200,000 shares of common stock for
these services. The warrants are immediately exercisable as follows:
50,000 shares at $4 per share; 50,000 shares at $5 per share; 50,000
shares at $6 per share; and 50,000 shares at $7 per share. The warrants
expire two years after the effective date of a registration statement
registering the underlying shares. We have expensed the $7,000 approximate
value of the warrants and have included as an increase to our paid-in
capital the $7,000 approximate value of the warrants.
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In October 2000, we issued warrants to purchase 200,000 shares of our
common stock at $12 per share to satisfy obligations with our underwriters
arising in connection with our initial public offering of common stock.
The warrants expire two years after the issuance date.
In October 2000, we issued warrants to purchase 340,000 shares of our
common stock at $12 per share and agreed to the payment of $60,000 to
WestPark Capital, Inc., for WestPark to act as our non-exclusive financial
advisor. We agreed to pay to WestPark contingent fees for raising debt or
equity capital for us or for providing us merger and acquisitions
candidates. The agreement is for two years.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits.
Reference is made to the Index of Exhibits immediately preceding the
exhibits hereto (beginning on page 31), which index is incorporated herein
by reference.
(b) Reports on Form 8-K.
We filed a Form 8-K on September 1, 2000, reporting Item 5. Other Events
related to the following matter. We announced the appointment of Charles
L. Smith and Bruce C. Merrick to our Board of Directors effective August
30, 2000.
Mr. Smith currently serves as our President and Chief Operating Officer
and will fill a vacancy in our Class III directors.
Mr. Merrick is the President of Dant Clayton Corporation, a private
manufacturer of spectator seating located in Louisville, Kentucky, which
he founded in 1979. Mr. Merrick is currently a member of several national
and widely-known Boards, including D.D. Williamson, the global
manufacturer of caramel coloring; Western Kentucky University's Board of
Advisors; Actor's Theatre of Louisville's President elect; Custom Quality
Services - Metro United Way Agency; and the Western Kentucky University
Student Life Foundation. In addition to his professional and philanthropic
duties, Mr. Merrick was recognized as Entrepreneur of the Year for the
Manufacturing Division of Kentucky and Southern Indiana. Mr. Merrick fills
a vacancy in our Class I directors.
30
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
ThermoView Industries, Inc.
Date: November 14, 2000 By: /s/ John H. Cole
-----------------------
John H. Cole,
Chief Financial Officer
(principal financial and accounting officer)
31
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INDEX TO EXHIBITS
Exhibit
Number Description of Exhibits
3.1 -- Certificate of Amendment to Restated Certificate of Incorporation of
ThermoView Industries, Inc., dated June 22, 2000
4.1 -- Certificate of Designation of Series D Preferred Stock dated April
14, 2000
4.2 -- Amended Certificate of Designation of Series D Preferred Stock dated
September 26, 2000
4.3 -- Certificate of Designation of Series E Preferred Stock dated
September 26, 2000
4.4 -- 2000 Employee Stock Option Plan
4.5 -- 2000 Employee Stock Option Plan Grant Certificate
10.1 -- Sixth Amendment to Loan Agreement and Amendment to Note dated as
of August 15, 2000 by and among Borrowers and PNC Bank, N.A.
10.2 -- Amendment No. 3 and Waiver dated as of September 6, 2000 by and
between the registrant and GE Capital Equity Investments, Inc.
10.3 -- Letter Agreement dated September 6, 2000 by and among registrant and
Brown Simpson Strategic Growth Fund, Ltd. and Brown Simpson
Strategic Growth Fund, LP
10.4 -- Client Service Agreement by and among registrant and Continental
Capital & Equity Corporation dated March 4, 2000
10.5 -- Agent Agreement dated August 24, 2000 by and among registrant and
Continental Capital & Equity Corporation
10.6 -- Release and Settlement Agreement dated September 15, 2000 by and
among registrant and Joseph Charles & Associates
10.7 -- Release and Settlement Agreement dated September 26, 2000 by and
among Registrant and WestPark Capital, Inc.
10.8 -- Letter Engagement Agreement dated October 1, 2000 by and among
registrant and WestPark Capital, Inc.
10.9* -- Form of Agreement regarding earn out dated as of September 26, 2000
by and between registrant and each individual identified in the
footnote below
10.10** -- Form of Waiver Agreement dated as of September 26, 2000 by and
between registrant and each individual identified in the footnote
below
10.11 -- Common Stock Purchase warrant dated as of October 1, 2000 by and
among registrant and Joseph Charles & Associates
10.12 -- Consultant Warrant dated as of October 1, 2000 by and among
registrant and WestPark Capital, Inc.
10.13 -- Series E Preferred Stock Agreement dated as of September 30, 2000 by
and among registrant and Rodney H. Thomas
27.1 -- Financial Data Schedule
----------
* Each person identified below, together with the registrant, executed a
separate agreement regarding earn out, dated as of September 26, 2000, as
described in Exhibit No. 10.9: Steven B. Hoyt, Joel S. Kron, Alvin W.
Leingang (September 29, 2000), Michael S. Haines, Bradley A. Smith, Rodney
H. Thomas, Charles L. Smith, George Jenkins.
** Each person identified below, together with the registrant, executed a
separate waiver agreement, dated as of September 26, 2000, as described in
Exhibit No. 10.10: Steven B. Hoyt, Alvin W. Leingang (September 29, 2000),
Michael S. Haines, Bradley A. Smith, Rodney H. Thomas.
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3.1
CERTIFICATE OF AMENDMENT
TO
RESTATED CERTIFICATE OF INCORPORATION
OF
THERMOVIEW INDUSTRIES, INC.
THERMOVIEW INDUSTRIES, INC. (the "Company"), a corporation organized and
existing under and by virtue of the General Corporation Law of the State of
Delaware (the "DGCL"), DOES HEREBY CERTIFY:
FIRST: That the Board of Directors of the Company, by unanimous written
consent of its members, filed with the minutes of the Board, duly adopted
resolutions setting forth a proposed amendment to the Company's Restated
Certificate of Incorporation, declaring said amendment to be advisable and
proposing stockholder consideration of such amendment at the Company's 2000
Annual Meeting of Stockholders. The resolution setting forth the proposed
amendment is as follows:
RESOLVED, That the Company's Restated Certificate of Incorporation, as
amended, be further amended by changing the first paragraph of Article 4 so
that, as amended, the first paragraph of said Article shall be and read as
follows:
"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").
SECOND: That thereafter, the Company's 2000 Annual Meeting of Stockholders
was duly called and held, upon notice in accordance with Section 222 of the
DGCL, at which meeting the necessary number of shares as required by statute
were voted in favor of the amendment.
THIRD: That said amendment was duly adopted in accordance with the
provisions of Section 242 of the DGCL.
IN WITNESS WHEREOF, said THERMOVIEW INDUSTRIES, INC. has caused this
certificate to be signed by Nelson E. Clemmens, its President, this ___ day
of June, 2000.
THERMOVIEW INDUSTRIES, INC.
By:_______________________________
Nelson E. Clemmens, President
<PAGE>
4.1
CERTIFICATE OF DESIGNATION
CERTIFICATE OF THE VOTING POWERS, DESIGNATIONS, PREFERENCES
AND RELATIVE, PARTICIPATING, OPTIONAL OR OTHER
SPECIAL RIGHTS, AND QUALIFICATIONS, LIMITATIONS OR
RESTRICTIONS THEREOF, OF 12% SERIES D CUMULATIVE
PREFERRED STOCK
OF
THERMOVIEW INDUSTRIES, INC.
Pursuant to Section 151 of the General Corporation Law
of the State of Delaware
Pursuant to Section 141(f) of the General Corporation Law of the State of
Delaware (the "DGCL"), the Board of Directors of ThermoView Industries, Inc., a
Delaware corporation (the "Company"), hereby unanimously consents to, adopts and
ratifies the following resolution:
RESOLVED, that pursuant to the authority expressly granted to and vested
in the Board of Directors of the Company by the provisions of Section 4.2
of Article IV of the Restated Certificate of Incorporation of the Company
(the "Restated Certificate of Incorporation"), and Section 151(g) of the
DGCL, such Board of Directors hereby creates, from the 50,000,000
authorized shares of Preferred Stock, par value $.001 per share (the
"Preferred Stock"), of the Company authorized to be issued pursuant to the
Restated Certificate of Incorporation, a series of Preferred Stock, and
hereby fixes by this certificate of designation (this "Certificate of
Designation") the voting powers, designations, preferences and relative,
participating, optional or other special rights, and qualifications,
limitations or restrictions thereof, of the shares of such series as
follows:
The series of Preferred Stock hereby established shall consist of
1,500,000 shares designated as "12% Cumulative Series D Preferred
Stock" (hereinafter called the "Series D Preferred Stock"), which
shall have a stated value of $5.00 per share. The relative rights,
preferences and limitations of such series shall be as follows:
12% CUMULATIVE SERIES D PREFERRED STOCK
(1) Ranking. The Series D Preferred Stock will, with respect to payment of
dividends and amounts upon liquidation, dissolution or winding up, rank (i)
senior to the Common Stock of the Company, $.001 par value (the "Common Stock")
and to shares of all other series of Preferred Stock issued by the Company the
terms of which specifically provide that the capital stock of such series rank
junior to such Series D Preferred Stock with respect to dividend rights or
distributions upon dissolution of the Company ("Junior Stock"); (ii) on a parity
with (a) all shares of the Company's 9.6% Cumulative Convertible Series C
Preferred Stock and (b) the shares of all capital stock issued by the Company
whether or not the dividend rates, dividend payment dates, or redemption or
liquidation prices per share thereof shall be different from those of the Series
D Preferred Stock, if the holders of stock of such class or series shall be
entitled by the terms thereof to the receipt of dividends or of amounts
distributable upon liquidation, dissolution or winding up, as the case may be,
in proportion to their respective dividend rates or liquidation prices, without
preference or priority of one over the other as between the holders of such
stock and the holders of shares of Series D Preferred Stock (collectively (a)
and (b) being "Parity Stock"); and (iii) junior to all capital stock issued by
the Company the terms of which specifically provide that the shares rank senior
to the Series D Preferred Stock with respect to dividends and distributions upon
dissolution of the Company ("Senior Stock").
(2) Dividends.
---------
(a) Holders of shares of Series D Preferred Stock will be entitled to
receive, when, as and if declared by the Board of Directors of the Company and
only with the consent of PNC Bank, N.A. or any successor lender thereto, out of
funds of the Company legally available for payment, subject to the prior and
superior rights of Senior Stock, but pari passu with Parity Stock, and in
preference to Junior Stock, cumulative cash dividends at the rate per annum of
$0.60 per share of Series D Preferred Stock. Dividends on the Series D Preferred
Stock will be payable quarterly in arrears on the last calendar day of April,
July, October and January of each year, commencing July 31, 2000 (and in the
case of any accumulated and unpaid dividends not paid on the corresponding
dividend payment date, at such additional times and for such interim periods, if
any, as determined by the Board of Directors). Each such dividend will be
payable to holders of record as they appear on the stock records of the Company
at the close of business on such record dates, not more than 60 days nor less
than 10 days preceding the payment dates thereof, as shall be fixed by the Board
of Directors of the Company. Dividends will accrue from the date of the original
issuance of the Series D Preferred Stock. Dividends will be cumulative from such
date, whether or not in any dividend period or periods there shall be funds of
the Company legally available for the payment of such dividends. Accumulations
of dividends on shares of Series D Preferred Stock will not bear interest.
Dividends payable on the Series D Preferred Stock for any period greater or less
than a full dividend period will be computed on the basis of actual days.
Dividends payable on the Series D Preferred Stock for each full dividend period
will be computed by dividing the annual dividend rate by four.
(b) Except as provided in the next sentence, no dividend will be
declared or paid on any Parity Stock unless full cumulative dividends have been
declared and paid or are contemporaneously declared and funds sufficient for
payment set aside on the Series D Preferred Stock for all prior dividend
periods. If accrued dividends on the Series D Preferred Stock for all prior
periods have not been paid in full, then any dividends declared on the Series D
Preferred Stock for any dividend period and on any Parity Stock will be declared
ratably in proportion to accumulated and unpaid dividends on the Series D
Preferred Stock and such Parity Stock.
(c) So long as the shares of the Series D Preferred Stock shall be
outstanding, unless (i) full cumulative dividends shall have been paid or
declared and set apart for payment on all outstanding shares of the Series D
Preferred Stock and any Parity Stock, (ii) sufficient funds have been paid or
set apart for the payment of the dividend for the current dividend period with
respect to the Series D Preferred Stock and any Parity Stock and (iii) the
Company is not in default or in arrears with respect to the mandatory or
optional redemption or mandatory repurchase or other mandatory retirement of, or
with respect to any sinking or other analogous fund for, the Series D Preferred
Stock or any Parity Stock, the Company may not declare any dividends on any
Junior Stock, or make any payment on account of, or set apart money for, the
purchase, redemption or other retirement of, or for a sinking or other analogous
fund for, any shares of Junior Stock or make any distribution in respect
thereof, whether in cash or property or in obligations or stock of the Company,
other than (x) Junior Stock which is neither convertible into, nor exchangeable
or exercisable for, any securities of the Company other than Junior Stock, or
(y) Common Stock acquired in connection with the cashless exercise of options
under employee incentive or benefit plans of the Company or any subsidiary or
any other redemption or purchase or other acquisition of Common Stock made in
the ordinary course of business, which has been approved by the Board of
Directors of the Company, for the purpose of any employee incentive or benefit
plan of the Company. The limitations in this paragraph do not restrict the
Company's ability to take the actions in this paragraph with respect to any
Parity Stock. As used in this subparagraph (c), the term "dividend" with respect
to Junior Stock does not include dividends payable solely in shares of Junior
Stock on Junior Stock, or in options, warrants on rights to holders of Junior
Stock to subscribe for or purchase any Junior Stock.
(3) Redemption.
----------
(a) The shares of Series D Preferred Stock will be redeemable at the
option of the Company in whole or in part, for cash or for such number of shares
of Common Stock as equals the Liquidation Preference (defined hereinafter in
paragraph (4)) of the Series D Preferred Stock to be redeemed (without regard to
accumulated and unpaid dividends) as of the opening of business on the date set
for such redemption. In order to exercise its redemption option, the Company
must notify the holders of record of its Series D Preferred Stock in writing
(the "Conditions Satisfaction Notice") prior to the opening of business on the
second trading day after the conditions in the preceding sentences have, from
time to time, been satisfied.
(b) Notice of redemption (the "Redemption Notice") will be given by
mail to the holders of the Series D Preferred Stock not less than 30 nor more
than 60 days prior to the date selected by the Company to redeem the Series D
Preferred Stock. The Redemption Notice shall be deemed to have been given when
deposited in the United States mail, first-class mail, postage prepaid, whether
or not such notice is actually received. The Company's right to exercise its
redemption option will not be affected by changes in the closing price of the
Common Stock following such 30-day period. If fewer than all of the shares of
Series D Preferred Stock are to be redeemed, the shares to be redeemed shall be
selected by lot or pro rata or in some other equitable manner determined by the
Board of Directors of the Company; provided, however, that the Company shall not
be required to effect the redemption in any manner that results in additional
fractional shares being outstanding. If full cumulative dividends on the
outstanding shares of Series D Preferred Stock shall not have been paid or
declared and set apart for payment for all regular dividend payment dates to and
including the last dividend payment date prior to the date fixed for redemption,
the Corporation shall not call for redemption any shares of Series D Preferred
Stock unless all such shares then outstanding are called for simultaneous
redemption.
(c) On the redemption date, the Company must pay, in cash, on each
share of Series D Preferred Stock to be redeemed any accumulated and unpaid
dividends through the redemption date. In the case of a redemption date falling
after a dividend payment record date and prior to the related payment date, the
holders of the Series D Preferred Stock at the close of business on such record
date will be entitled to receive the dividend payable on such shares on the
corresponding dividend payment date, notwithstanding the redemption of such
shares following such dividend payment record date. Except as provided for in
the preceding sentence, no payment or allowance will be made for accumulated and
unpaid dividends on any shares of Series D Preferred Stock called for redemption
or on the shares of Common Stock issuable upon such redemption.
(d) On and after the date fixed for redemption, provided that the
Company has made available at the office of its registrar and transfer agent a
sufficient number of shares of Common Stock and an amount of cash to effect the
redemption, dividends will cease to accrue on the Series D Preferred Stock
called for redemption (except that, in the case of a redemption date after a
dividend payment record date and prior to the related dividend payment date,
holders of Series D Preferred Stock on the dividend payment record date will be
entitled on such dividend payment date to receive the dividend payable on such
shares), such shares shall be cancelled and shall no longer be deemed to be
outstanding and all rights of the holders of such shares of Series D Preferred
Stock shall cease except the right to receive the shares of Common Stock upon
such redemption and any cash payable upon such redemption, without interest from
the date of such redemption. Such cancelled shares shall be restored to the
status of authorized but unissued shares of Preferred Stock, without designation
as to series, and may thereafter be issued but not as shares of Series D
Preferred Stock. At the close of business on the redemption date upon surrender
in accordance with such notice of the certificates representing any such shares
(properly endorsed or assigned for transfer, if the Board of Directors of the
Company shall so require and the notice shall so state), each holder of Series D
Preferred Stock (unless the Company defaults in the delivery of the shares of
Common Stock or cash) will be, without any further action, deemed a holder of
the number of shares of Common Stock for which such Series D Preferred Stock is
redeemable.
(e) Fractional shares of Common Stock are not to be issued upon
redemption of the Series D Preferred Stock, but, in lieu thereof, the Company
will pay a cash adjustment based on the current market price of the Common Stock
on the day prior to the redemption date. If fewer than all the shares
represented by any such certificate are redeemed, a new certificate shall be
issued representing the unredeemed shares of Series D Preferred Stock without
cost to the holder thereof.
(f) Any shares or cash set aside by the Company pursuant to
subparagraph (e) and unclaimed at the end of three years from the date fixed for
redemption shall revert to the Company.
(g) Subject to applicable law and the limitation on purchases when
dividends on the Series D Preferred Stock are in arrears, the Company may, at
any time and from time to time, purchase any shares of the Series D Preferred
Stock by tender or by private agreement.
(4) Liquidation Preference.
----------------------
(a) The holders of shares of Series D Preferred Stock will be
entitled to receive in the event of any liquidation, dissolution or winding up
of the Company, whether voluntary or involuntary, $5.00 per share of Series D
Preferred Stock (the "Liquidation Preference"), plus an amount per share of
Series D Preferred Stock equal to all dividends (whether or not earned or
declared) accumulated and unpaid thereon to the date of final distribution to
such holders, and no more. If, upon any liquidation, dissolution or winding up
of the Company, the assets of the Company, or proceeds thereof, distributable
among the holders of the Series D Preferred Stock are insufficient to pay in
full the liquidation preference with respect to the Series D Preferred Stock and
any other Parity Stock, then such assets, or the proceeds thereof, will be
distributed among the holders of Series D Preferred Stock and any such Parity
Stock ratably in accordance with the respective amounts which would be payable
on such Series D Preferred Stock and any such Parity Stock if all amounts
payable thereon were paid in full.
(b) Neither a consolidation or merger of the Company with or into
another corporation, nor a sale, lease or transfer of all or substantially all
of the Company's assets will be considered a liquidation, dissolution or winding
up, voluntary or involuntary, of the Company.
(5) Voting Rights. Except as may be required by applicable law from
-------------
time to time, the holders of shares of Series D Preferred Stock will have no
voting rights.
(6) Sinking Fund. The Series D Preferred Stock shall not be entitled to
any mandatory redemption or prepayment (except on liquidation, dissolution or
winding up of the affairs of the Company) or to the benefit of any sinking fund.
WITNESS THE SIGNATURE of the undersigned who is the Chairman of the Board
and Chief Executive Officer of ThermoView Industries, Inc. as of this ___ day of
April, 2000.
------------------------------
Stephen A. Hoffmann
<PAGE>
4.2
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF DESIGNATION
OF
CUMULATIVE PREFERRED STOCK, SERIES D
OF
THERMOVIEW INDUSTRIES, INC.
-----------------------------------------------
Pursuant to Section 151 of the
General Corporation Law of the State of Delaware
-----------------------------------------------
ThermoView Industries, Inc., a Delaware corporation (the "Company")
certifies that pursuant to the authority contained in Section 4.2 of Article IV
of its Restated Certificate of Incorporation, as amended, and in accordance with
the provisions of Section 151 of the General Corporation Law of the State of
Delaware, the Board of Directors of the Company, at a meeting held on September
26, 2000, duly approved and adopted the following amendment to the Certificate
of Designation of 12% Series D Cumulative Preferred Stock (the "Certificate of
Designation") and with the written consent of all existing holders of the 12%
Series D Cumulative Preferred Stock:
A. The preamble of the Certificate of Designation is
hereby replaced in its entirety with the following:
Pursuant to Section 141(f) of the General Corporation Law of the State of
Delaware (the "DGCL"), the Board of Directors of ThermoView Industries, Inc., a
Delaware corporation (the "Company"), hereby unanimously consents to, adopts and
ratifies the following resolution:
RESOLVED, that pursuant to the authority expressly granted to and vested
in the Board of Directors of the Company by the provisions of Section 4.2
of Article IV of the Restated Certificate of Incorporation of the Company
(the "Restated Certificate of Incorporation"), and Section 151(g) of the
DGCL, such Board of Directors hereby creates, from the 5,000,000
authorized shares of Preferred Stock, par value $.001 per share (the
"Preferred Stock"), of the Company authorized to be issued pursuant to the
Restated Certificate of Incorporation, a series of Preferred Stock, and
hereby fixes by this certificate of designation (this "Certificate of
Designation") the voting powers, designations, preferences and relative,
participating, optional or other special rights, and qualifications,
limitations or restrictions thereof, of the shares of such series as
follows:
The series of Preferred Stock hereby established shall consist of
2,000,000 shares designated as "12% Cumulative Series D Preferred
Stock" (hereinafter called the "Series D Preferred Stock"), which
shall have a stated value of $5.00 per share. The relative rights,
preferences and limitations of such series shall be as follows:
B. Section 2 of the Certificate of Designation is hereby
replaced in its entirety with the following:
(2) Dividends.
---------
(a) Holders of shares of Series D Preferred Stock will be entitled to
receive, when, as and if declared by the Board of Directors of the Company, out
of funds of the Company legally available for payment, subject to the prior and
superior rights of Senior Stock, but pari passu with Parity Stock, and in
preference to Junior Stock, cumulative cash dividends at the rate per annum of
$0.60 per share of Series D Preferred Stock. Dividends on the Series D Preferred
Stock will begin to accrue commencing October 1, 2001 and will be payable
quarterly in arrears on the last calendar day of April, July, October and
January of each year, commencing October 31, 2001 (and in the case of any
accumulated and unpaid dividends not paid on the corresponding dividend payment
date, at such additional times and for such interim periods, if any, as
determined by the Board of Directors). Dividends will be cumulative from such
date, whether or not in any dividend period or periods there shall be funds of
the Company legally available for the payment of such dividends. Each such
dividend will be payable to holders of record as they appear on the stock
records of the Company at the close of business on such record dates, not more
than 60 days nor less than 10 days preceding the payment dates thereof, as shall
be fixed by the Board of Directors of the Company. Accumulations of dividends on
shares of Series D Preferred Stock will not bear interest. Dividends payable on
the Series D Preferred Stock for any period greater or less than a full dividend
period will be computed on the basis of actual days. Dividends payable on the
Series D Preferred Stock for each full dividend period will be computed by
dividing the annual dividend rate by four.
(b) Except as provided in the next sentence, no dividend will be
declared or paid on any Parity Stock unless full cumulative dividends have been
declared and paid or are contemporaneously declared and funds sufficient for
payment set aside on the Series D Preferred Stock for all prior dividend
periods. If accrued dividends on the Series D Preferred Stock for all prior
periods have not been paid in full, then any dividends declared on the Series D
Preferred Stock for any dividend period and on any Parity Stock will be declared
ratably in proportion to accumulated and unpaid dividends on the Series D
Preferred Stock and such Parity Stock.
(c) So long as the shares of the Series D Preferred Stock shall be
outstanding, unless (i) full cumulative dividends shall have been paid or
declared and set apart for payment on all outstanding shares of the Series D
Preferred Stock and any Parity Stock, (ii) sufficient funds have been paid or
set apart for the payment of the dividend for the current dividend period with
respect to the Series D Preferred Stock and any Parity Stock and (iii) the
Company is not in default or in arrears with respect to the mandatory or
optional redemption or mandatory repurchase or other mandatory retirement of, or
with respect to any sinking or other analogous fund for, the Series D Preferred
Stock or any Parity Stock, the Company may not declare any dividends on any
Junior Stock, or make any payment on account of, or set apart money for, the
purchase, redemption or other retirement of, or for a sinking or other analogous
fund for, any shares of Junior Stock or make any distribution in respect
thereof, whether in cash or property or in obligations or stock of the Company,
other than (x) Junior Stock which is neither convertible into, nor exchangeable
or exercisable for, any securities of the Company other than Junior Stock, or
(y) Common Stock acquired in connection with the cashless exercise of options
under employee incentive or benefit plans of the Company or any subsidiary or
any other redemption or purchase or other acquisition of Common Stock made in
the ordinary course of business, which has been approved by the Board of
Directors of the Company, for the purpose of any employee incentive or benefit
plan of the Company. The limitations in this paragraph do not restrict the
Company's ability to take the actions in this paragraph with respect to any
Parity Stock. As used in this subparagraph (c), the term "dividend" with respect
to Junior Stock does not include dividends payable solely in shares of Junior
Stock on Junior Stock, or in options, warrants or rights to holders of Junior
Stock to subscribe for or purchase any Junior Stock.
C. Section 3 of the Certificate of Designation is hereby
replaced in its entirety with the following:
(3) Optional Redemption.
-------------------
(a) The shares of Series D Preferred Stock will be redeemable at the
option of the Company in whole or in part, for cash or for such number of shares
of Common Stock as equals the Liquidation Preference (defined hereinafter in
paragraph (4)) of the Series D Preferred Stock to be redeemed (without regard to
accumulated and unpaid dividends) as of the opening of business on the date set
for such redemption. In order to exercise its redemption option, the Company
must notify the holders of record of its Series D Preferred Stock in writing
(the "Conditions Satisfaction Notice") prior to the opening of business on the
second trading day after the conditions of redemption have, from time to time,
been satisfied.
(b) Notice of redemption (the "Redemption Notice") will be given by
mail to the holders of the Series D Preferred Stock not less than 30 nor more
than 60 days prior to the date selected by the Company to redeem the Series D
Preferred Stock. The Redemption Notice shall be deemed to have been given when
deposited in the United States mail, first-class mail, postage prepaid, whether
or not such notice is actually received. Any failure to mail the notice provided
or any defect in notice or in the mailing of notice will not affect the validity
of the proceedings for the redemption of any shares to be so redeemed. The
Company's right to exercise its redemption option will not be affected by
changes in the closing price of the Common Stock following such 30-day period.
If fewer than all of the shares of Series D Preferred Stock are to be redeemed,
the shares to be redeemed shall be selected by lot or pro rata or in some other
equitable manner determined by the Board of Directors of the Company; provided,
however, that the Company shall not be required to effect the redemption in any
manner that results in additional fractional shares being outstanding.
(c) On the redemption date, the Company must pay, in cash, on each
share of Series D Preferred Stock to be redeemed any accumulated and unpaid
dividends through the redemption date. In the case of a redemption date falling
after a dividend payment record date and prior to the related payment date, the
holders of the Series D Preferred Stock at the close of business on such record
date will be entitled to receive the dividend payable on such shares on the
corresponding dividend payment date, notwithstanding the redemption of such
shares following such dividend payment record date. Except as provided for in
the preceding sentence, no payment or allowance will be made for accumulated and
unpaid dividends on any shares of Series D Preferred Stock called for redemption
or on the shares of Common Stock issuable upon such redemption.
(d) On and after the date fixed for redemption, provided that the
Company has made available at the office of its registrar and transfer agent a
sufficient number of shares of Common Stock and an amount of cash to effect the
redemption, dividends will cease to accrue on the Series D Preferred Stock
called for redemption (except that, in the case of a redemption date after a
dividend payment record date and prior to the related dividend payment date,
holders of Series D Preferred Stock on the dividend payment record date will be
entitled on such dividend payment date to receive the dividend payable on such
shares), such shares shall be cancelled and shall no longer be deemed to be
outstanding and all rights of the holders of such shares of Series D Preferred
Stock shall cease except the right to receive the shares of Common Stock upon
such redemption and any cash payable upon such redemption, without interest from
the date of such redemption. Such cancelled shares shall be restored to the
status of authorized but unissued shares of Preferred Stock, without designation
as to series, and may thereafter be issued but not as shares of Series D
Preferred Stock. At the close of business on the redemption date upon surrender
in accordance with such notice of the certificates representing any such shares
(properly endorsed or assigned for transfer, if the Board of Directors of the
Company shall so require and the notice shall so state), each holder of Series D
Preferred Stock (unless the Company defaults in the delivery of the shares of
Common Stock or cash) will be, without any further action, deemed a holder of
the number of shares of Common Stock for which such Series D Preferred Stock is
redeemable.
(e) Fractional shares of Common Stock are not to be issued upon
redemption of the Series D Preferred Stock, but, in lieu thereof, the Company
will pay a cash adjustment based on the current market price of the Common Stock
on the day prior to the redemption date. If fewer than all the shares
represented by any such certificate are redeemed, a new certificate shall be
issued representing the unredeemed shares of Series D Preferred Stock without
cost to the holder thereof.
(f) Any shares or cash set aside by the Company pursuant to
subparagraph (e) and unclaimed at the end of three years from the date fixed for
redemption shall revert to the Company.
(g) Subject to applicable law and the limitation on purchases when
dividends on the Series D Preferred Stock are in arrears, the Company may, at
any time and from time to time, purchase any shares of the Series D Preferred
Stock by tender or by private agreement.
(3A.)Mandatory Redemption
(a) The Company will, at the redemption price equal to the sum of
$5.00 per share, redeem from any source of funds legally available therefor,
twenty percent (20%) of all shares of Series D Preferred Stock and Parity Stock,
on an annual basis commencing October 1, 2001, and continuing on an annual basis
until such time that all shares have been redeemed pursuant to the Certificate
of Designation or by agreement of the Holders of such shares.
(b) In the event of a redemption on only a portion of the then
outstanding shares of Series D Preferred Stock, the Company will effect the
redemption pro rata according to the number of shares held by each holder of
Parity Stock,
(c ) At least ten (10) days and not more than thirty (30) days prior
to the date fixed for any redemption under this subsection of the Series D
Preferred Stock or Parity Stock, written notice (the "Redemption Notice") will
be mailed, postage prepaid, to each holder of record of the Series D Preferred
Stock and Parity Stock at his or her post office address last shown on the
records of the Company. The Redemption Notice will state:
(1) whether all or less than all the outstanding shares of Series D
Preferred Stock and Parity Stock are to be redeemed and the total
number of shares of Series D Preferred Stock and Parity Stock being
redeemed;
(2) the number of shares of Series D Preferred Stock and Parity Stock
held by the holder that the Company intends to redeem;
(3) the Redemption Date and the Redemption Price; and
(4) that the holder is to surrender to the Company, in the manner and at
the place designated, his or her certificate or certificates
representing the shares of Series D Preferred Stock and Parity Stock
to be redeemed.
The Redemption Notice shall be deemed to have been given when deposited in the
United States mail, first-class mail, postage prepaid, whether or not such
notice is actually received. Any failure to mail the notice provided or any
defect in notice or in the mailing of notice will not affect the validity of the
proceedings for the redemption of any shares to be so redeemed.
(d) On or before the date fixed for redemption, each holder of Series
D Preferred Stock and Parity Stock will surrender the certificate or
certificates representing the shares of Series D Preferred Stock and Parity
Stock to the Company, in the manner and at the place designated in the
Redemption Notice, and the Redemption Price for the shares will be payable in
cash on the Redemption Date to the person whose name appears on the certificate
or certificates as the owner, and each surrendered certificate will be cancelled
and retired. In the event that less than all of the shares represented by any
certificate are redeemed, a new certificate will be issued representing the
unredeemed shares.
(e) Unless the Company fails to pay in full the Redemption Price, dividends on
the Series D Preferred Stock called for redemption will cease to accumulate on
the Redemption Date, and all rights of the holders of the shares redeemed will
cease to have any further rights with respect to the shares on the Redemption
Date, other than to receive the Redemption Price. Upon the failure to pay, as
described in the immediately preceding sentence, the dividend rate for such
portion of unredeemed Series D Preferred Stock shall increase by two percent
(2%) on an annual basis until such time that the portion of the Series D
Preferred Stock and Parity Stock for which a failure to pay has occurred is
redeemed. In no event shall the applicable dividend rate pursuant to this
provision increase the rate of dividend payable on the outstanding Series D
Preferred Stock and Parity Stock above sixteen percent (16%) per annum.
(f) Subject to applicable law and the limitation on purchases when
dividends on the Series D Preferred Stock are in arrears, the Company may, at
any time and from time to time, purchase any shares of the Series D Preferred
Stock by tender or by private agreement.
IN WITNESS WHEREOF ThermoView Industries, Inc. has caused this Certificate
to be signed by its President on this __ day of September 2000.
------------------------------------
Name: Charles L. Smith
Title: President
<PAGE>
4.3
CERTIFICATE OF DESIGNATION
CERTIFICATE OF THE VOTING POWERS, DESIGNATIONS, PREFERENCES
AND RELATIVE, PARTICIPATING, OPTIONAL OR OTHER
SPECIAL RIGHTS, AND QUALIFICATIONS, LIMITATIONS OR
RESTRICTIONS THEREOF, OF 12% SERIES E CUMULATIVE
PREFERRED STOCK
OF
THERMOVIEW INDUSTRIES, INC.
Pursuant to Section 151 of the General Corporation Law
of the State of Delaware
Pursuant to Section 141(f) of the General Corporation Law of the State of
Delaware (the "DGCL"), the Board of Directors of ThermoView Industries, Inc., a
Delaware corporation (the "Company"), hereby unanimously consents to, adopts and
ratifies the following resolution:
RESOLVED, that pursuant to the authority expressly granted to and vested
in the Board of Directors of the Company by the provisions of Section 4.2
of Article IV of the Restated Certificate of Incorporation of the Company
(the "Restated Certificate of Incorporation"), and Section 151(g) of the
DGCL, such Board of Directors hereby creates, from the 5,000,000
authorized shares of Preferred Stock, par value $.001 per share (the
"Preferred Stock"), of the Company authorized to be issued pursuant to the
Restated Certificate of Incorporation, a series of Preferred Stock, and
hereby fixes by this certificate of designation (this "Certificate of
Designation") the voting powers, designations, preferences and relative,
participating, optional or other special rights, and qualifications,
limitations or restrictions thereof, of the shares of such series as
follows:
The series of Preferred Stock hereby established shall consist of
500,000 shares designated as "12% Cumulative Series E Preferred
Stock" (hereinafter called the "Series E Preferred Stock"), which
shall have a stated value of $5.00 per share. The relative rights,
preferences and limitations of such series shall be as follows:
12% CUMULATIVE SERIES E PREFERRED STOCK
(1) Ranking. The Series E Preferred Stock will, with respect to payment of
dividends and amounts upon liquidation, dissolution or winding up, rank (i)
senior to the Common Stock of the Company, $.001 par value (the "Common Stock")
and to shares of all other series of Preferred Stock issued by the Company the
terms of which specifically provide that the capital stock of such series rank
junior to such Series E Preferred Stock with respect to dividend rights or
distributions upon dissolution of the Company ("Junior Stock"); (ii) on a parity
with (a) all shares of the Company's 9.6% Cumulative Convertible Series C
Preferred Stock, (b) all of the shares of the Company's 12% Cumulative Series D
Preferred Stock, and (c) the shares of all capital stock issued by the Company
whether or not the dividend rates, dividend payment dates, or redemption or
liquidation prices per share thereof shall be different from those of the Series
E Preferred Stock, if the holders of stock of such class or series shall be
entitled by the terms thereof to the receipt of dividends or of amounts
distributable upon liquidation, dissolution or winding up, as the case may be,
in proportion to their respective dividend rates or liquidation prices, without
preference or priority of one over the other as between the holders of such
stock and the holders of shares of Series E Preferred Stock (collectively (a)
and (b) being "Parity Stock"); and (iii) junior to all capital stock issued by
the Company the terms of which specifically provide that the shares rank senior
to the Series E Preferred Stock with respect to dividends and distributions upon
dissolution of the Company ("Senior Stock").
(2) Dividends.
---------
(a) Holders of shares of Series E Preferred Stock will be entitled to
receive, when, as and if declared by the Board of Directors of the Company, out
of funds of the Company legally available for payment, subject to the prior and
superior rights of Senior Stock, but pari passu with Parity Stock, and in
preference to Junior Stock, cumulative cash dividends at the rate per annum of
$0.60 per share of Series E Preferred Stock. Dividends on the Series E Preferred
Stock will be payable quarterly in arrears on the last calendar day of April,
July, October and January of each year, commencing October 1, 2001 (and in the
case of any accumulated and unpaid dividends not paid on the corresponding
dividend payment date, at such additional times and for such interim periods, if
any, as determined by the Board of Directors). Each such dividend will be
payable to holders of record as they appear on the stock records of the Company
at the close of business on such record dates, not more than 60 days nor less
than 10 days preceding the payment dates thereof, as shall be fixed by the Board
of Directors of the Company. Dividends will accrue from the date of the original
issuance of the Series E Preferred Stock. Dividends will be cumulative from such
date, whether or not in any dividend period or periods there shall be funds of
the Company legally available for the payment of such dividends.
Each such dividend will be payable to holders of record as they appear on the
stock records of the Company at the close of business on such record dates, not
more than 60 days nor less than 10 days preceding the payment dates thereof, as
shall be fixed by the Board of Directors of the Company. Accumulations of
dividends on shares of Series E Preferred Stock will not bear interest.
Dividends payable on the Series E Preferred Stock for any period greater or less
than a full dividend period will be computed on the basis of actual days.
Dividends payable on the Series E Preferred Stock for each full dividend period
will be computed by dividing the annual dividend rate by four.
(b) Except as provided in the next sentence, no dividend will be
declared or paid on any Parity Stock unless full cumulative dividends have been
declared and paid or are contemporaneously declared and funds sufficient for
payment set aside on the Series E Preferred Stock for all prior dividend
periods. If accrued dividends on the Series E Preferred Stock for all prior
periods have not been paid in full, then any dividends declared on the Series E
Preferred Stock for any dividend period and on any Parity Stock will be declared
ratably in proportion to accumulated and unpaid dividends on the Series E
Preferred Stock and such Parity Stock.
(c) So long as the shares of the Series E Preferred Stock shall be
outstanding, unless (i) full cumulative dividends shall have been paid or
declared and set apart for payment on all outstanding shares of the Series E
Preferred Stock and any Parity Stock, (ii) sufficient funds have been paid or
set apart for the payment of the dividend for the current dividend period with
respect to the Series E Preferred Stock and any Parity Stock and (iii) the
Company is not in default or in arrears with respect to the mandatory or
optional redemption or mandatory repurchase or other mandatory retirement of, or
with respect to any sinking or other analogous fund for, the Series E Preferred
Stock or any Parity Stock, the Company may not declare any dividends on any
Junior Stock, or make any payment on account of, or set apart money for, the
purchase, redemption or other retirement of, or for a sinking or other analogous
fund for, any shares of Junior Stock or make any distribution in respect
thereof, whether in cash or property or in obligations or stock of the Company,
other than (x) Junior Stock which is neither convertible into, nor exchangeable
or exercisable for, any securities of the Company other than Junior Stock, or
(y) Common Stock acquired in connection with the cashless exercise of options
under employee incentive or benefit plans of the Company or any subsidiary or
any other redemption or purchase or other acquisition of Common Stock made in
the ordinary course of business, which has been approved by the Board of
Directors of the Company, for the purpose of any employee incentive or benefit
plan of the Company. The limitations in this paragraph do not restrict the
Company's ability to take the actions in this paragraph with respect to any
Parity Stock. As used in this subparagraph (c), the term "dividend" with respect
to Junior Stock does not include dividends payable solely in shares of Junior
Stock on Junior Stock, or in options, warrants or rights to holders of Junior
Stock to subscribe for or purchase any Junior Stock.
(3) Optional Redemption.
-------------------
(a) The shares of Series E Preferred Stock will be redeemable at the
option of the Company in whole or in part, for cash or for such number of shares
of Common Stock as equals the Liquidation Preference (defined hereinafter in
paragraph (4)) of the Series E Preferred Stock to be redeemed (without regard to
accumulated and unpaid dividends) as of the opening of business on the date set
for such redemption. In order to exercise its redemption option, the Company
must notify the holders of record of its Series E Preferred Stock in writing
(the "Conditions Satisfaction Notice") prior to the opening of business on the
second trading day after the conditions of redemption have, from time to time,
been satisfied.
(b) Notice of redemption (the "Redemption Notice") will be given by
mail to the holders of the Series E Preferred Stock not less than 30 nor more
than 60 days prior to the date selected by the Company to redeem the Series E
Preferred Stock. The Redemption Notice shall be deemed to have been given when
deposited in the United States mail, first-class mail, postage prepaid, whether
or not such notice is actually received. Any failure to mail the notice provided
or any defect in notice or in the mailing of notice will not affect the validity
of the proceedings for the redemption of any shares to be so redeemed. The
Company's right to exercise its redemption option will not be affected by
changes in the closing price of the Common Stock following such 30-day period.
If fewer than all of the shares of Series E Preferred Stock are to be redeemed,
the shares to be redeemed shall be selected by lot or pro rata or in some other
equitable manner determined by the Board of Directors of the Company; provided,
however, that the Company shall not be required to effect the redemption in any
manner that results in additional fractional shares being outstanding.
(c) On the redemption date, the Company must pay, in cash, on each
share of Series E Preferred Stock to be redeemed any accumulated and unpaid
dividends through the redemption date. In the case of a redemption date falling
after a dividend payment record date and prior to the related payment date, the
holders of the Series E Preferred Stock at the close of business on such record
date will be entitled to receive the dividend payable on such shares on the
corresponding dividend payment date, notwithstanding the redemption of such
shares following such dividend payment record date. Except as provided for in
the preceding sentence, no payment or allowance will be made for accumulated and
unpaid dividends on any shares of Series E Preferred Stock called for redemption
or on the shares of Common Stock issuable upon such redemption.
(d) On and after the date fixed for redemption, provided that the
Company has made available at the office of its registrar and transfer agent a
sufficient number of shares of Common Stock and an amount of cash to effect the
redemption, dividends will cease to accrue on the Series E Preferred Stock
called for redemption (except that, in the case of a redemption date after a
dividend payment record date and prior to the related dividend payment date,
holders of Series E Preferred Stock on the dividend payment record date will be
entitled on such dividend payment date to receive the dividend payable on such
shares), such shares shall be cancelled and shall no longer be deemed to be
outstanding and all rights of the holders of such shares of Series E Preferred
Stock shall cease except the right to receive the shares of Common Stock upon
such redemption and any cash payable upon such redemption, without interest from
the date of such redemption. Such cancelled shares shall be restored to the
status of authorized but unissued shares of Preferred Stock, without designation
as to series, and may thereafter be issued but not as shares of Series E
Preferred Stock. At the close of business on the redemption date upon surrender
in accordance with such notice of the certificates representing any such shares
(properly endorsed or assigned for transfer, if the Board of Directors of the
Company shall so require and the notice shall so state), each holder of Series E
Preferred Stock (unless the Company defaults in the delivery of the shares of
Common Stock or cash) will be, without any further action, deemed a holder of
the number of shares of Common Stock for which such Series E Preferred Stock is
redeemable.
(e) Fractional shares of Common Stock are not to be issued upon
redemption of the Series E Preferred Stock, but, in lieu thereof, the Company
will pay a cash adjustment based on the current market price of the Common Stock
on the day prior to the redemption date. If fewer than all the shares
represented by any such certificate are redeemed, a new certificate shall be
issued representing the unredeemed shares of Series E Preferred Stock without
cost to the holder thereof.
(f) Any shares or cash set aside by the Company pursuant to
subparagraph (e) and unclaimed at the end of three years from the date fixed for
redemption shall revert to the Company.
(g) Subject to applicable law and the limitation on purchases when
dividends on the Series E Preferred Stock are in arrears, the Company may, at
any time and from time to time, purchase any shares of the Series E Preferred
Stock by tender or by private agreement.
(3A.)Mandatory Redemption
(a) The Company will, at the redemption price equal to the sum of
$5.00 per share, redeem from any source of funds legally available therefor,
twenty percent (20%) of all shares of Series E Preferred Stock and Parity Stock,
on an annual basis commencing October 1, 2001, and continuing on an annual basis
until such time that all shares have been redeemed pursuant to the Certificate
of Designation or by agreement of the Holders of such shares.
(b) In the event of a redemption on only a portion of the then
outstanding shares of Series E Preferred Stock, the Company will effect the
redemption pro rata according to the number of shares held by each holder of
Parity Stock,
(c ) At least ten (10) days and not more than thirty (30) days prior
to the date fixed for any redemption under this subsection of the Series E
Preferred Stock or Parity Stock, written notice (the "Redemption Notice") will
be mailed, postage prepaid, to each holder of record of the Series E Preferred
Stock and Parity Stock at his or her post office address last shown on the
records of the Company. The Redemption Notice will state:
(1) whether all or less than all the outstanding shares of Series E
Preferred Stock and Parity Stock are to be redeemed and the total
number of shares of Series E Preferred Stock and Parity Stock being
redeemed;
(2) the number of shares of Series E Preferred Stock and Parity Stock
held by the holder that the Company intends to redeem;
(3) the Redemption Date and the Redemption Price; and
(4) that the holder is to surrender to the Company, in the manner and at
the place designated, his or her certificate or certificates
representing the shares of Series E Preferred Stock and Parity Stock
to be redeemed.
The Redemption Notice shall be deemed to have been given when deposited in the
United States mail, first-class mail, postage prepaid, whether or not such
notice is actually received. Any failure to mail the notice provided or any
defect in notice or in the mailing of notice will not affect the validity of the
proceedings for the redemption of any shares to be so redeemed.
(d) On or before the date fixed for redemption, each holder of Series
E Preferred Stock and Parity Stock will surrender the certificate or
certificates representing the shares of Series E Preferred Stock and Parity
Stock to the Company, in the manner and at the place designated in the
Redemption Notice, and the Redemption Price for the shares will be payable in
cash on the Redemption Date to the person whose name appears on the certificate
or certificates as the owner, and each surrendered certificate will be cancelled
and retired. In the event that less than all of the shares represented by any
certificate are redeemed, a new certificate will be issued representing the
unredeemed shares.
(e) Unless the Company fails to pay in full the Redemption Price, dividends on
the Series E Preferred Stock called for redemption will cease to accumulate on
the Redemption Date, and all rights of the holders of the shares redeemed will
cease to have any further rights with respect to the shares on the Redemption
Date, other than to receive the Redemption Price. Upon the failure to pay, as
described in the immediately preceding sentence, the dividend rate for such
portion of unredeemed Series E Preferred Stock shall increase by two percent
(2%) on an annual basis until such time that the portion of the Series E
Preferred Stock and Parity Stock for which a failure to pay has occurred is
redeemed. In no event shall the applicable dividend rate pursuant to this
provision increase the rate of dividend payable on the outstanding Series E
Preferred Stock and Parity Stock above sixteen percent (16%) per annum.
(f) Subject to applicable law and the limitation on purchases when
dividends on the Series E Preferred Stock are in arrears, the Company may, at
any time and from time to time, purchase any shares of the Series E Preferred
Stock by tender or by private agreement.
(4) Liquidation Preference.
----------------------
(a) The holders of shares of Series E Preferred Stock will be
entitled to receive in the event of any liquidation, dissolution or winding up
of the Company, whether voluntary or involuntary, $5.00 per share of Series E
Preferred Stock (the "Liquidation Preference"), plus an amount per share of
Series E Preferred Stock equal to all dividends (whether or not earned or
declared) accumulated and unpaid thereon to the date of final distribution to
such holders, and no more. If, upon any liquidation, dissolution or winding up
of the Company, the assets of the Company, or proceeds thereof, distributable
among the holders of the Series E Preferred Stock are insufficient to pay in
full the liquidation preference with respect to the Series E Preferred Stock and
any other Parity Stock, then such assets, or the proceeds thereof, will be
distributed among the holders of Series E Preferred Stock and any such Parity
Stock ratably in accordance with the respective amounts which would be payable
on such Series E Preferred Stock and any such Parity Stock if all amounts
payable thereon were paid in full.
(b) Neither a consolidation or merger of the Company with or into
another corporation, nor a sale, lease or transfer of all or substantially all
of the Company's assets will be considered a liquidation, dissolution or winding
up, voluntary or involuntary, of the Company.
(5) Voting Rights. Except as may be required by applicable
-------------
law from time to time, the holders of shares of Series E
Preferred Stock will have no voting rights.
(6) Sinking Fund. The Series E Preferred Stock shall not
------------
be entitled to any sinking fund.
WITNESS THE SIGNATURE of the undersigned who is the President and Chief
Operating Officer of ThermoView Industries, Inc. as of this ___ day of
September, 2000.
------------------------------
Charles L. Smith
<PAGE>
4.4
THERMOVIEW INDUSTRIES, INC.
2000 STOCK OPTION PLAN
<PAGE>
TABLE OF CONENTS
ss.1. BACKGROUND AND PURPOSE.....................................1
ss.2. DEFINITIONS................................................1
2.1. Board..................................................1
2.2. Change in Control......................................1
2.3. Code...................................................2
2.4. Committee..............................................2
2.5. Director...............................................2
2.6. Exchange Act...........................................2
2.7. Fair Market Value......................................2
2.8. Insider................................................3
2.9. ISO....................................................3
2.10.Key Employee...........................................3
2.11.NQO....................................................3
2.12.Option.................................................3
2.13.Option Certificate.....................................3
2.14.Option Price...........................................3
2.15.Parent Corporation.....................................3
2.16.Plan...................................................4
2.17.Rule 16b-3.............................................4
2.18.Stock..................................................4
2.19.Subsidiary.............................................4
2.20.Surrendered Shares.....................................4
2.21.Ten Percent Shareholder................................4
2.22.ThermoView.............................................4
ss.3. SHARES RESERVED UNDER PLAN.................................5
ss.4. EFFECTIVE DATE.............................................5
ss.5. COMMITTEE..................................................6
ss.6. ELIGIBILITY................................................6
ss.7. OPTIONS....................................................6
7.1. Committee Action.......................................6
7.2. $100,000 Limit.........................................7
ss.8. OPTION PRICE...............................................7
ss.9. EXERCISE PERIOD............................................8
ss.10. NONTRANSFERABILITY.........................................9
ss.11. SURRENDER OF OPTIONS.......................................9
11.1.General Rule...........................................9
11.2.Procedure.............................................10
11.3.Payment...............................................10
11.4.Restrictions..........................................10
ss.12. SECURITIES REGISTRATION...................................11
ss.13. LIFE OF PLAN..............................................12
ss.14. ADJUSTMENT................................................12
ss.15. SALE OR MERGER OF THERMOVIEW; CHANGE IN CONTROL...........13
15.1.Sale or Merger........................................13
15.2.Change in Control.....................................14
ss.16. AMENDMENT OR TERMINATION..................................15
ss.17. MISCELLANEOUS.............................................15
17.1.Shareholder Rights....................................15
17.2.No Contract of Employment or Right to Service.........15
17.3.Withholding...........................................16
17.4.Construction..........................................16
17.5.Other Conditions......................................16
<PAGE>
THERMOVIEW INDUSTRIES, INC.
2000 STOCK OPTION PLAN
ss. 1.
BACKGROUND AND PURPOSE
The purpose of this Plan is to promote the interest of ThermoView
through grants to Key Employees and Directors of Options to purchase Stock in
order (1) to attract Key Employees and Directors, (2) to provide an additional
incentive to each Key Employee and Director to work to increase the value of
Stock, and (3) to provide each Key Employee and Director with a stake in the
future of ThermoView which corresponds to the stake of each of ThermoView's
stockholders.
ss. 2.
DEFINITIONS
Each term set forth in this ss.2 shall have the meaning set forth opposite
such term for purposes of this Plan and, for purposes of such definitions, the
singular shall include the plural and the plural shall include the singular.
2.1. Board -- means the board of directors of ThermoView. 2.2. Change in Control
-- means (1) the individuals who, as of the date this Plan is effective,
constitute the Board cease for any reason to constitute at least a majority of
the Board; provided, however, that any individual becoming a director subsequent
to the date this Plan is effective whose election or nomination for election by
ThermoView's shareholders, was approved by a vote of at least a majority of the
directors then comprising the Board shall be considered as though such
individual were a member of the Board as of the date this Plan is effective, or
(2) the acquisition, directly or indirectly, of legal or beneficial ownership of
or the power to vote more than 25% of the outstanding Stock by any person or by
two or more persons acting together, except an acquisition from ThermoView or by
ThermoView, ThermoView's management or an ThermoView sponsored employee benefit
plan, where (3) the term "person" means a natural person, corporation,
partnership, joint venture, trust, government or instrumentality of a
government, and (4) customary agreements with or between underwriters and
selling group members with respect to a bona fide public offering of Stock shall
be disregarded for purposes of this definition.
2.3. Code -- means the Internal Revenue Code of 1986, as amended. 2.4. Committee
-- means the committee appointed by the Board to administer this Plan which at
all times shall consist of two or more members of the Board. At such time as
ThermoView becomes subject to the reporting requirements under Section 16(b) of
the Exchange Act, each member of the Committee shall be a "Non-employee
Director," as defined under Rule 16b-3. 2.5. Director -- means any member of the
Board who is not an employee of ThermoView or a Subsidiary or any affiliate of
ThermoView and who is designated in writing by the Board as eligible to receive
an Option under this Plan.
2.6. Exchange Act -- means the Securities Exchange Act of 1934, as amended. 2.7.
Fair Market Value -- means (1) the closing price on any date for a share of
Stock as reported by The Wall Street Journal under the New York Stock Exchange
Composite Transactions quotation system (or under any successor quotation
system) or, if Stock is not traded on the New York Stock Exchange, under the
quotation system under which such closing price is reported or, if The Wall
Street Journal no longer reports such closing price, such closing price as
reported by a newspaper or trade journal selected by the Committee or, if no
such closing price is available on such date, (2) such closing price as so
reported or so quoted in accordance with ss.2.5(l) for the immediately preceding
business day, or, if no newspaper or trade journal reports such closing price or
if no such price quotation is available, (3) the price which the Committee,
acting in good faith determines through any reasonable valuation method that a
share of Stock might change hands between a willing buyer and a willing seller,
neither being under any compulsion to buy or to sell and both having reasonable
knowledge of the relevant facts.
2.8. Insider -- means any individual who is subject to Section
-------
16(a) of the Exchange Act.
2.9. ISO -- means an option granted under this Plan to purchase
---
Stock which is intended to satisfy the requirements ofss.422 of
the Code.
2.10. Key Employee -- means a full time employee of ThermoView or any Subsidiary
or any affiliate of ThermoView designated by the Committee who, in the judgment
of the Committee, acting in its absolute discretion, is key, directly or
indirectly, to the success of ThermoView.
2.11. NQO-- means an option granted under this Plan to purchase Stock which is
intended to fail to satisfy the requirements of ss.422 of the Code.
2.12. Option -- means an ISO or a NQO.
------
2.13. Option Certificate -- means the written certificate which sets forth the
terms of an Option granted to a Key Employee or Director under ss. 7 of this
Plan.
2.14. Option Price -- means the price which shall be paid to purchase one share
of Stock upon the exercise of an option granted under this Plan.
2.15. Parent Corporation -- means any corporation which is a
------------------
parent of ThermoView within the meaning ofss.424(e) of the Code.
2.16. Plan -- means this ThermoView Industries, Inc. 2000 Stock
----
Option Plan, as amended from time to time.
2.17. Rule 16b-3 -- means Rule 16b-3 as promulgated pursuant to
----------
Section 16(b) of the Exchange Act or any successor to such rule.
2.18. Stock -- means $.001 par value common stock of ThermoView.
-----
2.19. Subsidiary -- means a corporation which is a subsidiary
----------
corporation (within the meaning ofss.424(f) of the Code) of
ThermoView.
2.20. Surrendered Shares -- means the shares of Stock described in ss.11 which
(in lieu of being purchased) are surrendered for cash or Stock, or for a
combination of cash and Stock, in accordance with ss.11.
2.21. Ten Percent Shareholder -- means a person who owns (after taking into
account the attribution rules of ss.424(d) of the Code) more than ten percent of
the total combined voting power of all classes of stock of either ThermoView, a
Subsidiary or a Parent Corporation.
2.22. ThermoView -- means ThermoView Industries, Inc., a Delaware
----------
corporation, and any successor to such corporation.
ss.3.
SHARES RESERVED UNDER PLAN
There shall be 1,400,000 shares of Stock reserved for use under this Plan;
provided, however, that any shares of Stock reserved for issuance but not
granted under the ThermoView Industries, Inc. 1999 Employee Stock Option Plan as
of the close of business on September 30, 2000 shall be available for use under
this Plan and shall be counted toward the total 1,400,000 shares of Stock
reserved for use under this Plan. All such shares of Stock shall be reserved to
the extent that ThermoView deems appropriate from authorized but unissued shares
of Stock and from shares of Stock which have been reacquired by ThermoView.
Furthermore, any shares of Stock subject to an Option which remain unissued
after the cancellation, expiration or exchange of such Option thereafter shall
again become available for use under this Plan, but any Surrendered Shares which
remain unissued after the surrender of an Option under ss.11 and any shares of
Stock used to satisfy the Option Price or a withholding obligation under ss.17.3
shall not again become available for use under this Plan.
ss. 4.
EFFECTIVE DATE
The effective date of this Plan shall be October 1, 2000, provided the
Board has adopted the Plan as of such date and provided the shareholders of
ThermoView (acting at a duly called meeting of such shareholders) approve such
adoption within twelve (12) months of such effective date and such approval
satisfies the requirements for shareholder approval under Rule 16b-3. If any
Options are granted under this Plan before the date of such shareholder
approval, such Options automatically shall be granted subject to such approval.
ss. 5.
COMMITTEE
This Plan shall be administered by the Committee. The Board may from time
to time remove members from, or add members to, the Committee. Vacancies on the
Committee shall be filled by the Board. The Committee shall select one of its
members as Chairman and shall hold meetings at such times and places as it shall
determine. The Committee acting in its absolute discretion shall exercise such
powers and take such action as expressly called for under this Plan and,
further, the Committee shall have the power to interpret this Plan and (subject
to ss.14, ss.15 and ss.16 of this Plan and, if applicable, Rule 16b-3) to take
such other action in the administration and operation of this Plan as the
Committee deems equitable under the circumstances, which action shall be binding
on ThermoView, on each affected Key Employee, on each affected Director and on
each other person directly or indirectly affected by such action.
ss. 6.
ELIGIBILITY
Eligibility for the grant of NQOs shall be limited to Key Employees and
Directors. Eligibility for the grant of ISOs shall be limited to Key Employees
who are employed by ThermoView or a Parent Corporation or a Subsidiary.
ss. 7.
OPTIONS
7.1. Committee Action. The Committee acting in its absolute discretion shall
have the right to grant Options to Key Employees and Directors under this Plan
from time to time to purchase shares of Stock and, further, shall have the right
to grant new Options in exchange for outstanding Options which have a higher or
lower Option Price; provided, however, that no grants of ISOs shall be made to
Key Employees who are not employed by ThermoView or a Parent Corporation or a
Subsidiary. Each grant of an Option to a Key Employee or Director shall be
evidenced by an Option Certificate, and each Option Certificate shall set forth
whether the Option is an ISO or a NQO and shall set forth such other terms and
conditions of such grant as the Committee acting in its absolute discretion
deems consistent with the terms of this Plan; however, if the Committee grants
an ISO and a NQO to a Key Employee on the same date, the right of the Key
Employee to exercise or surrender one such Option shall not be conditioned on
his or her failure to exercise or surrender the other such Option.
7.2. $100,000 Limit. To the extent that the aggregate Fair Market Value of Stock
(determined as of the date the ISO is granted) with respect to which ISOs first
become exercisable in any calendar year exceeds $100,000, such Options shall be
treated as NQOs. The Fair Market Value of Stock subject to any other option
(determined as the date such option was granted) which (1) satisfies the
requirements of ss.422 of the Code and (2) is granted to a Key Employee under a
plan maintained by ThermoView, a Subsidiary or a Parent Corporation shall be
treated (for purposes of this $100,000 limitation) as if granted under this
Plan. The Committee shall interpret and administer the limitation set forth in
this ss.7.2 in accordance with ss.422(d) of the Code. ss. 8.
OPTION PRICE
The Option Price for each share of Stock subject to an ISO which is
granted to a Key Employee shall be no less than the Fair Market Value of a share
of Stock on the date the ISO is granted; provided, however, if the Option is an
ISO granted to a Key Employee who is a Ten Percent Shareholder, the Option Price
for each share of Stock subject to such ISO shall be no less than 110% of the
Fair Market Value of a share of Stock on the date such ISO is granted. The
Option Price for each share of Stock subject to an NQO which is granted to a Key
Employee or Director may (in the absolute discretion of the Committee) be more
or less than or equal to the Fair Market Value of a share of Stock on the date
the NQO is granted; however, that in no event shall the Option Price be less
than adequate consideration as determined by the Committee. The Option Price
shall be payable in full upon the exercise of any Option, and at the discretion
of the Committee, an Option Certificate can provide for the payment of the
Option Price either in cash, by check or in Stock acceptable to the Committee,
or in any combination of cash, check and Stock acceptable to the Committee. Any
payment made in Stock shall be treated as equal to the Fair Market Value of such
Stock on the date the properly endorsed certificate for such Stock is delivered
to the Committee or its delegate. Any payment made in Stock shall be made either
by tendering shares of Stock held by the Key Employee or Director or, to the
extent allowed by the Committee, in its sole discretion, by having ThermoView
withhold Stock (that otherwise would be transferred to the Key Employee or
Director upon the exercise of such Option).
ss. 9.
EXERCISE PERIOD
Each Option granted under this Plan to a Key Employee or Director shall be
exercisable in whole or in part at such time or times as set forth in the
related Option Certificate, but no Option Certificate shall make an Option
granted to a Key Employee or Director exercisable after the earlier of (1) the
date such Option is exercised in full; (2) the date which is the fifth
anniversary of the date the Option is granted, if the Option is an ISO and the
Key Employee is a Ten Percent Shareholder on the date the Option is granted, or
(3) the date which is the tenth anniversary of the date the Option is granted,
if the Option is (a) an NQO or (b) an ISO which is granted to a Key Employee who
is not a Ten Percent Shareholder on the date the Option is granted. An Option
Certificate may provide for the exercise of an Option after the employment of a
Key Employee has terminated for any reason whatsoever, including death or
disability. Also, an Option Certificate may provide for the exercise of an
Option after a Director has ceased to serve as such (or has ceased to serve in
the same capacity on the Board as when the Option was granted) for any reason
whatsoever, including death or disability. ss. 10.
NONTRANSFERABILITY
Neither an Option granted under this Plan nor any related surrender rights
under ss.11 shall be transferable by a Key Employee or Director other than by
will or by the laws of descent and distribution, and any such Option and any
such surrender rights shall be exercisable during the lifetime of a Key Employee
or Director only by such Key Employee or Director. The person or persons to whom
an Option or any related surrender rights is transferred by will or by the laws
of descent and distribution thereafter shall be treated as the Key Employee or
Director under this Plan.
ss. 11.
SURRENDER OF OPTIONS
11.1. General Rule. The Committee acting in its absolute discretion may
incorporate a provision in an Option Certificate to allow a Key Employee or
Director to surrender his or her Option in whole or in part in lieu of the
exercise in whole or in part of that Option on any date that (1) the Fair Market
Value of the Stock subject to such Option exceeds the Option Price for such
Stock, and (2) the Option to purchase such Stock is otherwise exercisable. 11.2.
Procedure. The surrender of an Option in whole or in part shall be effected by
the delivery of the Option Certificate to the Committee (or to its delegate)
together with a statement signed by the Key Employee or Director which specifies
the number of shares of Stock as to which the Key Employee or Director
surrenders his or her Option and (at the Key Employee's or Director's option)
how he or she desires payment be made for such Surrendered Shares.
11.3. Payment. A Key Employee or Director in exchange for his or her Surrendered
Shares shall (to the extent consistent with the exemption under Rule 16b-3, if
applicable) receive a payment in cash or in Stock, or in a combination of cash
and Stock, equal in amount on the date such surrender is effected to the excess
of the Fair Market Value of the Surrendered Shares on such date over the Option
Price for the Surrendered Shares. The Committee acting in its absolute
discretion shall determine the form and timing of such payment, and the
Committee shall have the right (1) to take into account whatever factors the
Committee deems appropriate under the circumstances, including any written
request made by the Key Employee or Director and delivered to the Committee (or
to its delegate) and (2) to forfeit a Key Employee's or Director's right to
payment of cash in lieu of a fractional share of stock if the Committee deems
such forfeiture necessary in order for the surrender of his or her Option under
this ss.11 to come within the exemption under Rule 16b-3. 11.4. Restrictions. At
such time as ThermoView becomes subject to the reporting requirements under
Section 16(b) of the Exchange Act, any Option Certificate which incorporates a
provision to allow a Key Employee or Director to surrender his or her Option in
whole or in part also shall incorporate such additional restrictions, if any, as
the Committee deems necessary to satisfy the conditions to the exemption under
Rule 16b-3. ss. 12.
SECURITIES REGISTRATION
Each Option Certificate shall provide that, upon the receipt of shares of
Stock as a result of the surrender or exercise of an Option, the Key Employee or
Director shall, if so requested by ThermoView, hold such shares of Stock for
investment and not with a view of resale or distribution to the public and, if
so requested by ThermoView, shall deliver to ThermoView a written statement
satisfactory to ThermoView to that effect. ThermoView shall not have any
obligation to take any action to register the Plan or the issuance of Stock
pursuant to this Plan under the Securities Act of 1933, as amended, or under any
other applicable securities laws or to qualify such Stock for an exemption under
any such laws. Each Option Certificate also shall provide that, if so requested
by ThermoView, the Key Employee or Director shall make a written representation
to ThermoView that he or she will not sell or offer to sell any of such Stock
unless a registration statement shall be in effect with respect to such Stock
under the Securities Act of 1933, as amended, and the applicable state
securities laws, or unless he or she shall furnish to ThermoView an opinion, in
form and substance satisfactory to ThermoView, of legal counsel acceptable to
ThermoView, that such registration is not required. Certificates representing
the Stock transferred upon the exercise of an Option under this Plan may at the
discretion of ThermoView bear a legend to the effect that such Stock has not
been registered under the Securities Act of 1933, as amended, or any applicable
state securities law, and that such Stock may not be sold or offered for sale in
the absence of an effective registration statement as to such Stock under such
act and any applicable state securities law or an opinion, in form and substance
satisfactory to ThermoView, of legal counsel acceptable to ThermoView, that such
registration is not required. ss. 13.
LIFE OF PLAN
No Option shall be granted under this Plan on or after the earlier of (1)
the tenth anniversary of the effective date of this Plan (as determined under
ss.4 of this Plan), in which event this Plan shall continue in effect until all
outstanding Options have been surrendered or exercised in full or no longer are
exercisable, or (2) the date on which all of the Stock reserved under ss.3 of
this Plan has (as a result of the surrender or exercise of Options granted under
this Plan) been issued or no longer is available for use under this Plan, in
which event this Plan also shall terminate on such date.
ss. 14.
ADJUSTMENT
The number, kind or class (or any combination thereof) of shares of Stock
reserved under ss.3 of this Plan, and the number, kind or class (or any
combination thereof) of shares of Stock subject to Options granted under this
Plan and the Option Price of such options shall be adjusted by the Board in an
equitable manner to reflect any change in the capitalization of ThermoView,
including, but not limited to, such changes as stock dividends or stock splits.
Furthermore, the Board shall have the right to adjust (in a manner which
satisfies the requirements of ss.424(a) of the Code) the number, kind or class
(or any combination thereof) of shares of Stock reserved under ss.3 of this
Plan, and the number, kind or class (or any combination thereof) of shares
subject to Options granted under this Plan and the Option Price of such Options
in the event of any corporate transaction described in ss.424(a) of the Code
which provides for the substitution or assumption of such Option grants in order
to take into account on an equitable basis the effect of such transaction. If
any adjustment under this ss.14 would create a fractional share of Stock or a
right to acquire a fractional share of Stock, such fractional share shall be
disregarded and the number of shares of Stock reserved under this Plan and the
number subject to any Options granted under this Plan shall be the next lower
number of shares of Stock, rounding all fractions downward. An adjustment made
under this ss.14 by the Board shall be conclusive and binding on all affected
persons and, further, shall not constitute an increase in "the number of shares
reserved under ss.3" within the meaning of ss.16(1)(a) of this Plan. ss. 15.
SALE OR MERGER OF THERMOVIEW; CHANGE IN CONTROL
15.1. Sale or Merger. If ThermoView agrees to sell all or substantially all of
its assets for cash or property or for a combination of cash and property or
agrees to any merger, consolidation, reorganization, division or other corporate
transaction in which Stock is converted into another security or into the right
to receive securities or property and such agreement does not provide for the
assumption or substitution of the Options granted under this Plan in accordance
with ss.14 on a basis that is fair and equitable to holders of such Options as
determined by the Board, each Option granted to a Key Employee or Director at
the direction and discretion of the Board (a) may (subject to such conditions,
if any, as the Board deems appropriate under the circumstances) be cancelled
unilaterally by ThermoView (i) in exchange for (A) a transfer to such Key
Employee or Director of the number of whole shares of Stock, if any, which he or
she would have received if he or she had the right to surrender his or her
outstanding Option in full under ss.11 of this Plan and he or she exercised that
right on the date set by the Board exclusively for Stock or (B) the right to
exercise his or her outstanding Option in full on any date before the date as of
which the Board unilaterally cancels such Option in full or, if the exchange
described in this ss.15.1(i) would result in a violation of Section 16 of the
Exchange Act for a Key Employee or Director, (ii) may be cancelled unilaterally
by ThermoView after advance written notice to such Key Employee or Director or
(b) may be cancelled unilaterally by ThermoView if the Option Price equals or
exceeds the Fair Market Value of a share of Stock on a date set by the Board.
The Board may exercise its discretion to vest an Option in full upon a
transaction described in this ss.15.1 either at the time the Option is granted
(by including such vesting provision in the Option Certificate given to the
affected Key Employee or Director) or at the time such transaction occurs.
15.2. Change in Control. If there is a Change in Control of ThermoView or a
tender or exchange offer is made for Stock other than by ThermoView, the Board
thereafter shall have the right to take such action with respect to any
unexercised Options granted to Key Employees or Directors, or all such Options,
as the Board deems appropriate under the circumstances to protect the interest
of ThermoView in maintaining the integrity of such grants under this Plan,
including following the procedure set forth in ss.15.1 for a sale or merger of
ThermoView with respect to such Options. At the time an Option is granted, the
Board may, in its discretion, provide for full vesting of such Option upon a
transaction described in this ss.15.2 by including such a provision in the
Option Certificate given to the affected Key Employee or Director. The Board
shall have the right to take different action under this ss.15.2 with respect to
different Key Employees, different Directors or different groups of Key
Employees, as the Board deems appropriate under the circumstances. The Board
shall have the right to take different action under this ss. 15.2 with respect
to Key Employees on the one hand and Directors on the other hand and/or with
respect to different Directors or different groups of Directors, as the Board
deems appropriate under the circumstances.
ss. 16.
AMENDMENT OR TERMINATION
This Plan may be amended by the Board from time to time to the extent that
the Board deems necessary or appropriate; provided, however, no such amendment
shall be made absent the approval of the shareholders of ThermoView required
under ss.422 of the Code (a) to increase the number of shares of stock reserved
under ss.3, or (b) to change the class of employees eligible for Options grants
under ss.6. Any amendment which specifically applies to NQOs shall not require
shareholder approval unless such approval is necessary to comply with Section 16
of the Exchange Act. The Board also may suspend the granting of Options under
this Plan at any time and may terminate this Plan at any time; provided,
however, the Board shall not have the right unilaterally to modify, amend or
cancel any Option granted before such suspension or termination unless (1) the
Key Employee or Director consents in writing to such modification, amendment or
cancellation or (2) there is a dissolution or liquidation of ThermoView or a
transaction described in ss.14 or ss.15 of this Plan. ss. 17.
MISCELLANEOUS
17.1. Shareholder Rights. No Key Employee or Director shall have any rights as a
shareholder of ThermoView as a result of the grant of an Option under this Plan
or his or her exercise or surrender of such Option pending the actual delivery
of the Stock subject to such Option to such Key Employee or Director. 17.2. No
Contract of Employment or Right to Service. The grant of an Option to a Key
Employee or Director under this Plan shall not constitute a contract of
employment or a right to continue to serve on the Board and shall not confer on
a Key Employee or Director any rights upon his or her termination of employment
or service in addition to those rights, if any, expressly set forth in the
Option Certificate, which evidences his or her Option. 17.3. Withholding. The
exercise or surrender of any Option granted under this Plan shall constitute a
Key Employee's or Director's full and complete consent to whatever action the
Board or the Committee, as applicable, deems necessary to satisfy the federal
and state tax withholding requirements, if any, which the Board or the
Committee, as applicable, in its discretion deems applicable to such exercise or
surrender. The Board or the Committee, as applicable, also shall have the right
to provide in an Option Certificate that a Key Employee or Director may elect to
satisfy federal and state tax withholding requirements through a reduction in
the number of shares of Stock actually transferred to him or to her under this
Plan, and if the Key Employee or Director is subject to the reporting
requirements under Section 16 of the Exchange Act, any such election shall be
effected so as to satisfy the conditions to the exemption under Rule 16b-3.
17.4. Construction. This Plan shall be construed under the laws of the State of
Delaware.
17.5. Other Conditions. Each Option Certificate may require that a Key Employee
or Director (as a condition to the exercise of an Option) enter into any
agreement or make such representations prepared by ThermoView, including any
agreement which restricts the transfer of Stock acquired pursuant to the
exercise of an Option or provides for the repurchase of such Stock by ThermoView
under certain circumstances.
<PAGE>
IN WITNESS WHEREOF, ThermoView, Inc. has caused its duly
authorized officer to execute this Plan this ____ day of
________, 2000 to evidence its adoption of this Plan.
THERMOVIEW INDUSTRIES, INC.
By:
----------------------------------
Title:
----------------------------------
<PAGE>
4.5
THERMOVIEW INDUSTRIES, INC.
2000 STOCK OPTION PLAN
INCENTIVE STOCK OPTION
(NON-TRANSFERABLE)
OPTION CERTIFICATE
ThermoView Industries, Inc., a Delaware corporation ("Company"), pursuant to
action of the Board and in accordance with the ThermoView Industries, Inc. 2000
Stock Option Plan ("Plan"), hereby grants an Incentive Stock Option ("Option")
to ________________("Employee") to purchase from the Company ______ shares of
Stock, at an Option Price of $____ per share, which Option is subject to all of
the terms and conditions set forth in this Option Certificate and in the Plan.
This Option is granted effective as of_______, 2000 ("Option Grant Date").
THERMOVIEW INDUSTRIES, INC.
By:
Title:
TERMS AND CONDITIONS
ss.1. Plan. This Option is subject to all the terms and conditions set
forth in the Plan and this Option Certificate, and all of the terms defined in
the Plan shall have the same meaning herein when such terms start with a capital
letter. This Option is intended to satisfy the requirements of ss. 422 of the
Code. However, to the extent that this Option, when aggregated with all other
"incentive stock options" (within the meaning of ss. 422 of the Code) granted to
Employee under stock option plans maintained by ThermoView, a Subsidiary or
Parent Corporation exceeds the $100,000 limit in ss. 7.2 of the Plan, this
Option shall be treated as an NQO to the extent required by law. A copy of the
Plan will be made available to Employee upon written request to the Chief
Financial Officer of the Company.
ss. 2. Order of Exercise. The exercise of this Option shall not be
affected by the exercise or non-exercise of any other option (without regard to
whether such option constitutes an "incentive stock option" within the meaning
of ss. 422 of the Code).
ss. 3. Date Exercisable. This Option shall become exercisable in
accordance with the following schedule on any normal business day of the Company
occurring on or after the first date set forth below and before the date this
Option expires under ss. 4.
Number of Shares for which
On or After Option First Becomes
Exercisable
--------- -----
The maximum number of shares of Stock which may be purchased by exercise
of this Option on any such day shall equal the excess, if any, of (a) the total
number of shares of Stock subject to this Option on the Option Grant Date, as
adjusted in accordance with ss. 14 of the Plan, and with respect to which this
Option is vested, over (b) the number of shares of Stock which have previously
been purchased by exercise of this Option, as adjusted in a manner consistent
with ss. 14 of the Plan.
If at the time Employee intends to exercise any rights under this Option,
Employee is an officer or is filing ownership reports with the Securities and
Exchange Commission under Section 16(a) of the Exchange Act then Employee should
consult with the Company before Employee exercises such rights because there may
be additional restrictions upon the exercise of such rights.
ss. 4. Life of Option. The Option shall expire when exercised in full;
provided, however, the Option (to the extent not exercised in full) also shall
expire immediately and automatically on the earlier of (a) the date which is the
tenth anniversary of the Option Grant Date, (b) the date which is the fifth
anniversary of the Option Grant Date, if Employee is a Ten Percent Shareholder
on the Option Grant Date and the Option is an "incentive stock option" (within
the meaning of ss. 422 of the Code), (c) except in the case of death or
Disability of Employee, the date (i) which is the second anniversary after
Employee is terminated at the initiative of the Company for any reason except
"good cause," as such term is defined in ss. 4.1 below or (ii) the date which is
the first anniversary after Employee resigns at Employee's own initiative for
any reason or (iii) the date which is the 90th day after Employee is terminated
at the initiative of the Company for "good cause" (d) the one year anniversary
of the date Employee's employment terminates due to death or Disability.
Employee shall be Disabled for purposes of the Plan if Employee meets the
definition of disability set forth under the Company's long term disability
plan, as amended from time to time. The Company shall determine whether
Employee's employment terminates due to Disability.
ss. 4.1For purposes of this Option, "good cause" for termination of
Employee's employment shall exist only if (a) Employee is convicted of, pleads
guilty to, or confesses to any act of fraud, misappropriation or embezzlement or
to any felony, (b) Employee has engaged in a dishonest or disloyal act resulting
in material damage or prejudice to the Company or (c) Employee has engaged in
conduct or activities materially damaging or prejudicial to the property,
business or reputation of the Company.
ss. 5. Method of Exercise of Option. Employee may (subject to ss. 3, ss.
4, ss. 11, ss. 12, ss. 13 and ss. 16) exercise this Option in whole or in part
(before the date this Option expires) on any normal business day of the Company
by (1) delivering the Option Certificate to the Company at its principal place
of business together with written notice of the exercise of this Option and (2)
simultaneously paying to the Company the Option Price. The payment of such
Option Price shall be made either in cash, by check acceptable to the Company,
or by delivery to the Company of certificates (properly endorsed) for shares of
Stock registered in Employee's name, or in any combination of such cash, check,
and Stock which results in payment in full of the Option Price. Stock which is
so tendered as payment (in whole or in part) of the Option Price shall be valued
at its Fair Market Value on the date this Option is exercised.
ss. 6. Delivery. The Company's delivery of Stock pursuant to
--------
the exercise of this Option (as described inss.5) shall discharge
the Company of all of its duties and responsibilities with
respect to this Option.
ss. 7 Adjustment. The Board shall have the right to make such adjustments
to this Option as described under ss. 14 of the Plan.
ss. 8. Nontransferable. This Option shall not be transferable by Employee
except by his will or by the laws of descent and distribution, and rights
granted under this Option shall be exercisable during Employee's lifetime only
by Employee. If this Option is exercisable after the death of Employee, the
person or persons to whom this Option is transferred by will or by the laws of
descent and distribution shall be treated as the Employee under this Option
Certificate.
ss. 9. Termination of Employment. Neither the Plan, this Option nor any
related material shall give Employee the right to continue in employment with
the Company or any affiliate of the Company or shall adversely affect the right
of the Company or affiliate terminate Employee's employment with or without
cause at any time.
ss. 10. Shareholder Status. Employee shall have no rights as a shareholder
with respect to any shares of Stock under this Option until such shares have
been duly issued and delivered to Employee, and no adjustment shall be made for
dividends of any kind or description whatsoever or for distributions of other
rights of any kind or description whatsoever respecting such Stock except as
expressly set forth in the Plan.
ss. 11. Other Laws. The Company shall have the right to refuse to issue or
transfer any Stock under this Option if the Company acting in its absolute
discretion determines that the issuance or transfer of such Stock might violate
any applicable law or regulation, and any payment tendered in such event to
exercise this Option shall be promptly refunded to Employee.
ss. 12. Securities Registration. Employee may be requested by the Company
to hold any shares of Stock received upon the exercise of this Option for
personal investment and not for purposes of resale or distribution to the public
and Employee shall, if so requested by the Company, deliver a certified
statement to that effect to the Company as a condition to the transfer of such
Stock to Employee. Employee may be requested by the Company to deliver a
certified statement to the Company that he or she will not sell or offer to sell
any shares of Stock received upon the exercise of this Option unless a
registration statement shall be in effect with respect to such Stock under the
Securities Act of 1933, as amended, and the applicable state securities laws, or
unless he or she shall furnish to the Company an opinion, in form and substance
satisfactory to the Company, of legal counsel acceptable to the Company, that
such registration is not required. Certificates representing shares of Stock
received upon the exercise of this Option may bear an appropriate restrictive
legend reflecting the foregoing.
ss. 13. Other Conditions. Employee shall (as a condition to the exercise
of this Option) enter into any agreement or make any representations required by
the Company related to the Stock to be acquired pursuant to the exercise of this
Option, including any agreement which restricts the transfer of Stock acquired
pursuant to the exercise of this Option and provides for the repurchase of such
Stock by the Company under certain circumstances.
ss. 14. Tax Withholding. The Company shall have the right to withhold or
retain from any payment to Employee (whether or not such payment is made
pursuant to this Option) or take such other action as is permissible under the
Plan which the Company deems necessary or appropriate to satisfy any income or
other tax withholding requirements as a result of the exercise of this Option.
ss. 15. Governing Law. The Plan and this Option shall be
-------------
governed by the laws of the State of Delaware.
ss. 16. Modification, Amendment, and Cancellation. The Company shall have
the right unilaterally to modify, amend, or cancel this Option in accordance
with the terms of the Plan, and, in particular, shall have the right under ss.
15 of the Plan to cancel this Option as of any date before the effective date of
a sale or other corporate transaction described in ss. 15 of the Plan.
ss. 17. Binding Effect. This Option shall be binding upon the
--------------
Company and Employee and their respective heirs, executors,
administrators and successors.
<PAGE>
OPTION EXERCISE FORM
(To be executed by Employee to
exercise the rights to purchase Stock
evidenced by the foregoing Option)
TO: THERMOVIEW INDUSTRIES, INC.
The undersigned hereby exercises the right to purchase __________ shares
of Stock covered by the attached Option in accordance with the terms and
conditions thereof, and herewith makes payment of the Option Price for such
shares in full.
Signature
Address
- -
------ ----
Social Security Number
Dated: _________________
<PAGE>
4.5
THERMOVIEW INDUSTRIES, INC.
2000 STOCK OPTION PLAN
NON-INCENTIVE STOCK OPTION
(NON-TRANSFERABLE)
OPTION CERTIFICATE
ThermoView Industries, Inc., a Delaware corporation ("Company"), pursuant to
action of the Board and in accordance with the ThermoView Industries, Inc. 2000
Stock Option Plan ("Plan"), hereby grants a Non-Incentive Stock Option
("Option") to __________________ ("Employee") to purchase from the Company
________ shares of Stock, at an Option Price of $____ per share, which Option is
subject to all of the terms and conditions set forth in this Option Certificate
and in the Plan. This Option is granted effective as of ______________ __, 2000
("Option Grant Date").
THERMOVIEW INDUSTRIES, INC.
By:
Title:
TERMS AND CONDITIONS
ss.1. Plan. This Option is subject to all the terms and conditions set
forth in the Plan and this Option Certificate, and all of the terms defined in
the Plan shall have the same meaning herein when such terms start with a capital
letter. This Option is intended not to satisfy the requirements of ss. 422 of
the Code. A copy of the Plan will be made available to Employee upon written
request to the Chief Financial Officer of the Company.
ss. 2. Order of Exercise. The exercise of this Option shall not be
affected by the exercise or non-exercise of any other option (without regard to
whether such option constitutes an "incentive stock option" within the meaning
of ss. 422 of the Code).
ss. 3. Date Exercisable. This Option shall become exercisable in
accordance with the following schedule on any normal business day of the Company
occurring on or after the first date set forth below and before the date this
Option expires under ss. 4.
Number of Shares for which
On or After Option First Becomes
Exercisable
=========== ==========
=========== ==========
----------- ----------
The maximum number of shares of Stock which may be purchased by exercise
of this Option on any such day shall equal the excess, if any, of (a) the total
number of shares of Stock subject to this Option on the Option Grant Date, as
adjusted in accordance with ss. 14 of the Plan, and with respect to which this
Option is vested, over (b) the number of shares of Stock which have previously
been purchased by exercise of this Option, as adjusted in a manner consistent
with ss. 14 of the Plan.
If at the time Employee intends to exercise any rights under this Option,
Employee is an officer or is filing ownership reports with the Securities and
Exchange Commission under Section 16(a) of the Exchange Act then Employee should
consult with the Company before Employee exercises such rights because there may
be additional restrictions upon the exercise of such rights.
ss. 4. Life of Option. The Option shall expire when exercised in full;
provided, however, the Option (to the extent not exercised in full) also shall
expire immediately and automatically on the earlier of (a) the date which is the
tenth anniversary of the Option Grant Date, (b) except in the case of death or
Disability of Employee, the date (i) which is the 90th day after Employee is
terminated at the initiative of the Company for any reason except "good cause,"
as such term is defined in ss. 4.1 below or (ii) upon which Employee is
terminated at the initiative of the Company for "good cause" or resigns at
Employee's own initiative for any reason or (c) the one year anniversary of the
date Employee's employment terminates due to death or Disability. Employee shall
be Disabled for purposes of the Plan if Employee meets the definition of
disability set forth under the Company's long term disability plan, as amended
from time to time. The Company shall determine whether Employee's employment
terminates due to Disability.
ss. 4.1For purposes of this Option, "good cause" for termination of
Employee's employment shall exist only if (a) Employee is convicted of, pleads
guilty to, or confesses to any act of fraud, misappropriation or embezzlement or
to any felony, (b) Employee has engaged in a dishonest or disloyal act resulting
in material damage or prejudice to the Company or (c) Employee has engaged in
conduct or activities materially damaging or prejudicial to the property,
business or reputation of the Company.
ss. 5. Method of Exercise of Option. Employee may (subject to ss. 3, ss.
4, ss. 11, ss. 12, ss. 13 and ss. 16) exercise this Option in whole or in part
(before the date this Option expires) on any normal business day of the Company
by (1) delivering the Option Certificate to the Company at its principal place
of business together with written notice of the exercise of this Option and (2)
simultaneously paying to the Company the Option Price. The payment of such
Option Price shall be made either in cash, by check acceptable to the Company,
or by delivery to the Company of certificates (properly endorsed) for shares of
Stock registered in Employee's name, or in any combination of such cash, check,
and Stock which results in payment in full of the Option Price. Stock which is
so tendered as payment (in whole or in part) of the Option Price shall be valued
at its Fair Market Value on the date this Option is exercised.
ss. 6. Delivery. The Company's delivery of Stock pursuant to
--------
the exercise of this Option (as described inss.5) shall discharge the Company of
all of its duties and responsibilities with respect to this Option.
ss. 7 Adjustment. The Board shall have the right to make such adjustments
to this Option as described under ss. 14 of the Plan.
ss. 8. Nontransferable. This Option shall not be transferable by Employee
except by his will or by the laws of descent and distribution, and rights
granted under this Option shall be exercisable during Employee's lifetime only
by Employee. If this Option is exercisable after the death of Employee, the
person or persons to whom this Option is transferred by will or by the laws of
descent and distribution shall be treated as the Employee under this Option
Certificate.
ss. 9. Termination of Employment. Neither the Plan, this Option nor any
related material shall give Employee the right to continue in employment with
the Company or any affiliate of the Company or shall adversely affect the right
of the Company or affiliate terminate Employee's employment with or without
cause at any time.
ss. 10. Shareholder Status. Employee shall have no rights as a shareholder
with respect to any shares of Stock under this Option until such shares have
been duly issued and delivered to Employee, and no adjustment shall be made for
dividends of any kind or description whatsoever or for distributions of other
rights of any kind or description whatsoever respecting such Stock except as
expressly set forth in the Plan.
ss. 11. Other Laws. The Company shall have the right to refuse to issue or
transfer any Stock under this Option if the Company acting in its absolute
discretion determines that the issuance or transfer of such Stock might violate
any applicable law or regulation, and any payment tendered in such event to
exercise this Option shall be promptly refunded to Employee.
ss. 12. Securities Registration. Employee may be requested by the Company
to hold any shares of Stock received upon the exercise of this Option for
personal investment and not for purposes of resale or distribution to the public
and Employee shall, if so requested by the Company, deliver a certified
statement to that effect to the Company as a condition to the transfer of such
Stock to Employee. Employee may be requested by the Company to deliver a
certified statement to the Company that he or she will not sell or offer to sell
any shares of Stock received upon the exercise of this Option unless a
registration statement shall be in effect with respect to such Stock under the
Securities Act of 1933, as amended, and the applicable state securities laws, or
unless he or she shall furnish to the Company an opinion, in form and substance
satisfactory to the Company, of legal counsel acceptable to the Company, that
such registration is not required. Certificates representing shares of Stock
received upon the exercise of this Option may bear an appropriate restrictive
legend reflecting the foregoing.
ss. 13. Other Conditions. Employee shall (as a condition to the exercise
of this Option) enter into any agreement or make any representations required by
the Company related to the Stock to be acquired pursuant to the exercise of this
Option, including any agreement which restricts the transfer of Stock acquired
pursuant to the exercise of this Option and provides for the repurchase of such
Stock by the Company under certain circumstances.
ss. 14. Tax Withholding. The Company shall have the right to withhold or
retain from any payment to Employee (whether or not such payment is made
pursuant to this Option) or take such other action as is permissible under the
Plan which the Company deems necessary or appropriate to satisfy any income or
other tax withholding requirements as a result of the exercise of this Option.
ss. 15. Governing Law. The Plan and this Option shall be governed by
the laws of the State of Delaware.
ss. 16. Modification, Amendment, and Cancellation. The Company shall have
the right unilaterally to modify, amend, or cancel this Option in accordance
with the terms of the Plan, and, in particular, shall have the right under ss.
15 of the Plan to cancel this Option as of any date before the effective date of
a sale or other corporate transaction described in ss. 15 of the Plan.
ss. 17. Binding Effect. This Option shall be binding upon the
--------------
Company and Employee and their respective heirs, executors,
administrators and successors.
<PAGE>
OPTION EXERCISE FORM
(To be executed by Employee to
exercise the rights to purchase Stock
evidenced by the foregoing Option)
TO: THERMOVIEW INDUSTRIES, INC.
The undersigned hereby exercises the right to purchase __________ shares
of Stock covered by the attached Option in accordance with the terms and
conditions thereof, and herewith makes payment of the Option Price for such
shares in full.
Signature
Address
- -
------ ----
Social Security Number
Dated: _________________
<PAGE>
10.1
SIXTH AMENDMENT TO LOAN AGREEMENT
AND AMENDMENT TO NOTE
THIS SIXTH AMENDMENT TO LOAN AGREEMENT AND AMENDMENT TO NOTE (the
"Agreement"), is made and entered into as of the 15th day of August, 2000, by
and among [i] THERMOVIEW INDUSTRIES, INC., a Delaware corporation
("ThermoView"), [ii] AMERICAN HOME DEVELOPERS CO., INC., a California
corporation ("American Home"), [iii] THERMOVIEW INDUSTRIES, INC. OF CALIFORNIA,
a California corporation formerly known as Five Star Builders, Inc., successor
in interest to American Home Remodeling, ("ThermoView California"), [iv] KEY
HOME CREDIT, INC., a Delaware corporation ("Key Home"), [v] KEY HOME MORTGAGE,
INC., a Delaware corporation ("Key Home Mortgage"), [vi] LEINGANG SIDING AND
WINDOW, INC., a North Dakota business corporation ("Leingang Siding"), [vii]
PRIMAX WINDOW CO., a Kentucky corporation ("Primax") [viii] PRECISION WINDOW
MFG., INC., a Missouri corporation ("Precision") [ix] ROLOX, INC., a Kansas
corporation ("Rolox"), [x] TD WINDOWS, INC., a Kentucky corporation ("TD
Windows"), [xi] THERMAL LINE WINDOWS, INC., a North Dakota corporation, formerly
known as Ice Inc., successor in interest to Thermal Line Windows, LLP and
Blizzard Enterprises, Inc. ("Thermal Line"), [xii] THERMOVIEW OF MISSOURI, INC.,
a Missouri corporation ("ThermoView-Missouri"), and [xiii] THERMO-TILT WINDOW
COMPANY, a Delaware corporation ("Thermo-Tilt"), [xiv] THOMAS CONSTRUCTION,
INC., a Missouri corporation ("Thomas"), [xv] THERMO-SHIELD OF AMERICA
(ARIZONA), INC., an Arizona corporation ("TSAAI"), [xvi] THERMO-SHIELD OF
AMERICA (MICHIGAN), INC., a Michigan corporation ("TSAMI"), [xvii] THERMO-SHIELD
COMPANY, LLC, an Illinois limited liability company ("TSC") [xviii]
THERMO-SHIELD OF AMERICA (WISCONSIN), LLC., a Wisconsin limited liability
company ("TSAW"), [xix] THERMOVIEW ADVERTISING GROUP, INC., a Delaware
corporation ("TAG"), (ThermoView, American Home, ThermoView California, Key
Home, Key Home Mortgage, Leingang Siding, Primax, Precision, Rolox, TD Windows,
Thermal Line, ThermoView-Missouri, Thermo-Tilt, Thomas, TSAAI, TSAMI, TSC, TSAW
and TAG individually are referred to herein as a "Borrower" and collectively are
referred to in this Agreement as the "Borrowers"), and PNC BANK, NATIONAL
ASSOCIATION, a national banking association (the "Bank")].
PRELIMINARY STATEMENT:
A. Pursuant to that certain Loan Agreement dated as of August 31, 1998, by
and among certain of the Borrowers and the Bank, as amended pursuant to (a) that
certain Joinder to Loan Documents and Amendment to Loan Documents (Thomas
Construction, Inc.) dated as of January 1, 1999, by and among certain of the
Borrowers and the Bank, (b) that certain Joinder to Loan Documents and Amendment
to Loan Documents (Precision Window Mfg., Inc.) dated as of January 5, 1999, by
and among certain of the Borrowers and the Bank, (c) that certain Joinder to
Loan Documents and Amendment to Loan Documents (Thermo-Shield) dated as of July
8, 1999, by and among certain of the Borrowers and the Bank, (d) that certain
Amendment to Loan Agreement dated as of July 30, 1999, by and among certain of
the Borrowers and the Bank, (e) that certain Second Amendment to Loan Agreement
dated as of October 14, 1999, by and among certain of the Borrowers and the
Bank, (f) that certain Third Amendment to Loan Agreement dated as of November
__, 1999, by and among certain of the Borrowers and the Bank, (g) that certain
Fourth Amendment to Loan Agreement and Amendment to Note and Term Note dated as
of November 10, 1999, by and among certain of the Borrowers and the Bank, and
(h) that certain Fifth Amendment to Loan Agreement and Amendment to Note dated
as of April 14, 2000, by and among the Borrowers and the Bank (collectively, the
"Loan Agreement"), the Bank has established a committed line of credit in the
principal amount of Fifteen Million Dollars ($15,000,000.00) (the "Loan") in
favor of the Borrowers for the purposes set forth in the Loan Agreement.
B. The Borrowers are in default under the Loan Agreement in certain
respects as of June 30, 2000, and the Borrowers have requested the Bank to waive
all defaults and Events of Default, as such term is defined in the Loan
Agreement, existing as of June 30, 2000 as well as to amend the Loan Agreement
and the Note as more particularly described in this Agreement.
C. The Bank is willing to waive all defaults and Events of Default
existing under the Loan Agreement as of June 30, 2000 and to amend the Loan
Agreement and the Note as more particularly described in this Agreement upon the
condition, among others, that the Borrowers execute and deliver this Agreement
in favor of the Bank.
NOW, THEREFORE, in consideration of the foregoing premises and the mutual
covenants and agreements set forth herein, and for other good and valuable
consideration, the Borrowers and the Bank hereby agree as follows:
1. Defined Terms. Each capitalized term used herein, unless otherwise
expressly defined herein, shall have the meanings set forth in the Loan
Agreement.
2. Extension of the Stated Maturity Date of the Loan. The Borrowers and
the Bank hereby extend the stated maturity date of the Loan from May 1, 2001
to July 1, 2001. In furtherance of the provisions of this Section 2, the
Borrowers and the Bank hereby delete Section 1.D. of the Loan Agreement and
substitute a new Section 1.D. reading in its entirety as follows:
"D. Termination of Commitment. Bank's obligation to make Advances under
the Loan (the "Commitment") shall continue until the earlier of July 1,
2001, or any later date or dates, if applicable, as to which Borrowers and
the Bank (each in their sole and absolute discretion, which may be
exercised arbitrarily) may agree in writing (July 1, 2001, or such later
date is referred to herein as the "Loan Expiration Date"), and the amount
of all Advances not earlier repaid, together with interest thereon, shall
be due and payable in full as of the Loan Expiration Date."
The Borrowers and the Bank further agree to delete the first sentence of
Section I.F. of the Loan Agreement and substitute a new first sentence to
Section 1.F. of the Loan Agreement reading in its entirety as follows:
"Subject to the provisions of this Agreement, Bank agrees to issue
irrevocable standby Letters of Credit from time to time after January 1,
1999, until the earlier of July 1, 2001, or any later date or dates, if
applicable, as to which Borrowers and Bank may agree (each in their sole
and absolute discretion, which may be exercised arbitrarily) in writing
(July 1, 2001, or such later date is referred to herein as the "Letter of
Credit Expiration Date") upon the request of, for the account of, and with
recourse to Borrowers (the "Letter of Credit Facility").
3. Permanent Reduction in the Principal Amount of the Loan. The Borrowers and
the Bank hereby agree to permanently reduce the maximum principal amount of the
Loan from Fifteen Million Dollars ($15,000,000.00) to Ten Million Dollars
($10,000,000.00) on or before December 27, 2000. The Borrowers further covenant
and agree that, without the Bank's prior written consent, the Borrowers will not
incur additional Funded Debt to obtain the funds necessary to reduce the maximum
principal amount of the Loan from Fifteen Million Dollars ($15,000,000.00) to
Ten Million Dollars ($10,000,000.00) on or before December 27, 2000. The
Borrowers jointly and severally covenant and agree to pay to the Bank, on or
before December 27, 2000, an amount sufficient to reduce the unpaid principal
balance of the Loan to Ten Million Dollars ($10,000,000.00) on December 27,
2000. All references to the maximum principal amount of the Loan shall mean (a)
Fifteen Million Dollars ($15,000,000.00) through December 26, 2000, and (b) Ten
Million Dollars ($10,000,000.00) on and after December 27, 2000.
4. Restatement of Financial Covenants. The Borrowers and the Bank hereby
delete Section 4.I. of the Loan Agreement in its entirety and substitute a
new Section 4.I. reading in its entirety as follows:
"[I] [1] Cash Flow to Required Debt Service Payments. The Borrowers
will maintain a ratio of Cash Flow to Required Debt Service Payments: (a)
equal to or greater than 1.75 to 1.0 for the fiscal quarter ending on
September 30, 2000, (b) equal to or greater than 1.25 to 1.0 for the
fiscal quarter ending on December 31, 2000, and (c) equal to or greater
than 1.0 to 1.0 for the fiscal quarters ending on March 31, 2000 and June
30, 2001. Effective for the fiscal quarter commencing on July 1, 2000, the
foregoing ratio shall be determined on a cumulative basis beginning with
the fiscal quarter ending on September 30, 2000 and as of each fiscal
quarter thereafter through and including the fiscal quarter ending on
March 31, 2001, and thereafter the ratio shall be determined on a
cumulative basis for the immediately preceding four fiscal quarters."
[2] Funded Debt to EBITDA Ratio. The Borrowers will maintain a ratio,
calculated as of the end of each fiscal quarter of the Borrowers beginning
December 31, 2000 (each a "Calculation Date"), of the consolidated (and
combined, if applicable) Funded Debt of the Borrowers as of each
Calculation Date divided by the consolidated (and combined, if applicable)
EBITDA of the Borrowers for the four (4) fiscal quarters of the Borrowers
ending on the applicable Calculation Date, that shall not be greater than
the applicable ratio set forth opposite each Calculation Date.
----------------------------------------------
Funded Debt to
EBITDA Ratio if
Thermal Line Sale
Calculation Date has not Occurred
Prior to the
Calculation Date
----------------------------------------------
December 31, 2000 21.63
----------------------------------------------
March 31, 2001 7.50
----------------------------------------------
January 30, 2001 5.36
----------------------------------------------
For purposes of each of the above financial covenants, the following terms
shall have the following meanings:
[a] "Capital Expenditures" means, for any period, all payments
for any fixed assets, or improvements or for replacements, substitutions
or additions thereto, that have a useful life of more than one year and
which are required to be capitalized under GAAP and which payments have
been made from funds of the Borrowers other than funds borrowed by the
Borrowers.
[b] "Cash Flow" means, for any period, EBITDA for such period
less provision for income taxes and Capital Expenditures for the same
period.
[c] "EBITDA" means, for any period, (a) net income (or the
deficit if expenses and charges exceed revenues and proper income items),
increased by (b) all amounts deducted therefrom (without duplication) in
the calculation of net income on account of the sum of (i) interest
expense, (ii) provision for income taxes, (iii) depreciation and
amortization expense, and (iv) unusual charges charged to net income for
the quarter ended June 30, 2000, not to exceed $10,745,000, but excluding
therefrom (c) all amounts included therein on account of extraordinary
items of income and gains from the sale of assets outside the ordinary
course of business.
[d] "Funded Debt" is defined as the consolidated (and combined,
if applicable) sum of all line borrowings, plus current (i.e. less than or
equal to one (1) year) and non-current maturities of all long term debt of
each of the Borrowers (including but not limited to any obligations of any
Borrower that are determined based on the future performance of any
Acquired Entity ("Earn-Outs") and which Earn-Outs are not paid in full
within thirty (30) days of the date when due and payable (including after
any applicable requirement for notice and an opportunity to cure expressly
provided in the applicable instrument or document governing such
obligation) ("Matured Earn-Outs")) to the Bank and all other persons or
entities. For purposes of this calculation, Funded Debt shall be deemed to
include, at all times, the actual principal amount of the GE Subordinated
Debt due and owing with regard to any carrying value thereof shown on the
books and records of the Borrowers.
[e] "Required Debt Service Payments" means, for the period in
question, all regularly scheduled payments of principal (other than
balloon payments of principal due at stated maturity) and accrued interest
due on all Funded Debt during such period.
5. Key-Man Insurance. The Borrowers and the Bank add a new Section 4.T. to
the Loan Agreement reading in its entirety as follows:
T. Key-Man Insurance. The Borrowers shall provide to the Bank, on or
before September 30, 2000, copies of key-man life insurance policies on the
lives of Rodney Thomas and Larry Smith each in the amount of One Million Dollars
($1,000,000.00) and duly issued by a life insurance company satisfactory to the
Bank in its reasonable judgment, both of which life insurance polices shall be
assigned to the Bank pursuant to assignments in form and substance satisfactory
to the Bank.
6. Consultants. The Borrowers and the Bank add a new Section 4.U. to the
Loan Agreement reading in its entirety as follows:
U. Consultants. The Borrowers shall continue to retain the services
of either Continental & Equity Corporation ("CCEC") and/or West Park, Inc.
("West Park") through December 31, 2000 to assist the Borrowers in identifying
additional sources of capital and/or debt in order to repay the Loan in full to
the Bank. The Borrowers shall provide to the Bank, on or before August 31, 2000,
copies of the executed contracts between ThermoView and CCEC and West Park, as
applicable, confirming the Borrowers' compliance with the provisions of this
Section 4.U. During the term of the foregoing contract(s), the Borrowers shall
provide to the Bank, within ten (10) days after the end of each month, a status
report as of the last day of the immediately preceding month describing in
reasonable detail the work performed during such month by CCEC and/or West Park
and including therein copies of all offering memoranda, booklets and other
offering materials prepared by CCEC and/or West Park and/or the Borrowers during
such month.
7. Waiver and Extension Fee. The Borrowers and the Bank add a new Section
4.V. to the Loan Agreement reading in its entirety as follows:
V. Waiver and Extension Fee. The Borrowers jointly and severally
covenant and agree to pay to the Bank, in consideration of the covenants and
agreements of the Bank set forth in this Agreement, a waiver and extension fee
in the amount of One Hundred Thousand Dollars $100,000.00), of which Twenty-Five
Thousand Dollars ($25,000.00) shall be paid to the Bank on or before September
30, 2000, Twenty-Five Thousand Dollars ($25,000.00) shall be paid to the Bank on
or before October 31, 2000, Twenty-Five Thousand Dollars ($25,000.00) shall be
paid to the Bank on or before November 30, 2000, and Twenty-Five Thousand
Dollars ($25,000.00) shall be paid to the Bank on or before December 28, 2000.
8. Costs Reduction Initiatives. The Borrowers and the Bank add a new
Section 4.W. to the Loan Agreement reading in its entirety as follows:
W. Costs Reduction Initiatives. The Borrowers shall deliver to the
Bank on a monthly basis a report setting forth a listing and description of all
initiatives adopted by the Borrowers (including without limitation, those with
respect to the reduction of costs detailing and quantifying the initiatives set
forth both by entity and by the Borrowers as a whole) and the actual results of
such initiatives set forth both by entity and by the Borrowers as a whole.
9. Cash Dividends. The Borrowers and the Bank add a new Section 5.N. to
the Loan Agreement reading in its entirety as follows:
N. Cash Dividends. The Borrowers shall not declare, make or
permit any cash dividends, other than inter-company dividends from a
wholly-owned subsidiary corporation to its parent corporation, at any time
prior to the earlier of September 30, 2001 or the payment of the Loan in full
to the Bank.
10. Earn-Outs. The Borrowers and the Bank add a new Section 5.O. to the
Loan Agreement reading in its entirety as follows:
O. Earn-Outs. The Borrowers shall not make or permit any cash
payments with respect to any Earn-Outs at any time prior to the earlier of
September 30, 2001 or the payment of the Loan in full to the Bank.
11. Consent to Management Changes. The Bank consents to the election of
Rodney Thomas and Larry Smith as executive officers of each Borrower. The
Borrowers expressly ratify and reaffirm the provisions of Section 5.F. of the
Loan Agreement.
12. Amendment to Note. The Note is hereby amended by deleting the last
sentence of paragraph 1 of the Note and substituting a new last sentence to
paragraph 1 of the Note reading in its entirety as follows:
"The "Expiration Date" shall mean the earliest to occur of [a] July
1, 2001, or [b] the date on which the Bank receives written notice from
the Borrowers (which notice shall be irrevocable) in which the Borrowers
shall state that they do not intend to request further Advances hereunder,
and shall acknowledge that the Bank shall have no obligation to make
further Advances hereunder."
13. Waiver of Covenant Default. Subject to delivery to the Bank of each of the
"Agreement Documents" more particularly described in Section 13 of this
Agreement, the Bank hereby grants a waiver of Borrowers' non-compliance with [i]
the financial covenants contained in Section 4.I. and Section 4.J. of the Loan
Agreement and of the Events of Default that would otherwise result from a
violation of those Sections, solely for the period of April 1, 2000 to June 30,
2000, and [ii] the covenants contained in Sections 4.S. and 5.F. of the Loan
Agreement and of the Events of Default that would otherwise result from a
violation of those Sections, solely for the period of April 1, 2000 to June 30,
2000. The Borrowers agree that they will hereafter comply fully with these
provisions, as amended, and all other provisions of the Loan Agreement and the
Loan Documents, which remain in full force and effect.
14. Conditions Precedent. The modifications to the Loan Agreement described in
Sections 2, 3, 4, 5, 6, 7, 8, 9, 10 and 11 of this Agreement, the modification
to the Note described in Section 11 of this Agreement, and the waivers described
in Section 13 of this Agreement shall all become effective on that date (the
"Effective Date") on which each of the following documents (collectively, the
"Agreement Documents") has been executed by each of the parties to them and
delivered to the Bank and when the Bank determined to its satisfaction that each
other condition set forth below has been fulfilled, except that with respect to
the waivers described in Section 13 once effective on the Effective Date, such
waivers shall be deemed to be effective as of August 15, 2000:
A. This Agreement, duly executed by each of the Borrowers and the Bank;
B. Copies of each of the fully-executed documents and instruments
between the Borrowers, as applicable, and G.E. Capital Equity Investments,
Inc., pursuant to which G.E. Capital Equity Investments, Inc, shall have
waived all current Events of Default under and as defined in the GE Loan
Documents as of June 30, 2000, and the Borrowers and G.E. Capital Equity
Investments, Inc. shall have modified the financial covenants contained in
the GE Loan Documents so that such financial covenants are identical to the
financial covenants contained in the Loan Documents after giving effect to
the modifications to the Loan Documents described in this Agreement;
C. Evidence satisfactory to the Bank in its sole discretion that Rodney H.
Thomas, Thomas Construction, Inc., 13397 Lakefront Drive, LLC and Investors
Property Holding, LLC have agreed to suspend until September 30, 2001 the
effectiveness and enforceability of certain amendments and modifications to the
Non-Competition Agreement, Triple Net Lease Agreement and Furniture and Fixture
Lease Agreements to which such entities are parties, as applicable, and which
were implemented on April 14, 2000;
D. Evidence satisfactory to the Bank in its sole discretion that each of
Brown Simpson Strategic Growth Fund, Ltd. and Brown Simpson Strategic Growth
Fund, L.P. have agreed to suspend the cash dividend payment structure of the
Series C Preferred Stock and their right to certain redemption rights with
respect to the Series C Preferred Stock until the earlier of September 30, 2001
of the payment of the Loan in full to the Bank;
E. Each of Stephen A. Hoffmann, Nelson E. Clemens, Richard E. Bowlds,
and Douglas I. Maxwell, III shall have consented to the amendments to the
Loan Agreement and the Note effected pursuant to this Agreement and shall
have ratified and reaffirmed all of their covenants and agreements set forth
in that certain Limited Guaranty Agreement dated April 14, 2000, executed by
them in favor of the Bank, in each case pursuant to that certain Ratification
and Reaffirmation Agreement in the form of Exhibit A attached hereto and made
a part hereof;
F. Assignments of the key-man life insurance policies referred to in
Section 5 of this Agreement, duly executed and delivered by all required
parties and in form and substance satisfactory to the Bank;
G. Evidence satisfactory to the Bank in its sole discretion that each of
the Borrowers and all of the Subsidiaries of the Borrowers have consented in
writing to the amendments to the Loan Agreement and the Note effected pursuant
to this Agreement and have ratified and reaffirmed in writing all of their
covenants, agreements, obligations, representations and warranties set forth in
the Security Documents and the other Loan Documents to which they are parties;
and
H. Current resolutions of the Board of Directors of each Borrower and
current Certificates of Incumbency from each Borrower, in each case identifying
the current executive officers of each Borrower and, in the case of such
resolutions, expressly authorizing all of the transactions described in this
Agreement.
15. Other Stipulations. Upon the Effective Date, the provisions of this
Agreement shall become effective and shall modify or supersede and replace the
applicable provisions of, as applicable, the Loan Agreement and the Note recited
as being modified by them. From and after the Effective Date each reference to
the "Loan Agreement" and the "Note" shall mean and be deemed a reference to, as
applicable, the Loan Agreement and the Note as modified by this Agreement but,
except as modified by this Agreement, the Loan Agreement and the Note shall each
remain in full force and effect in the same form as existed immediately before
the Effective Date.
16. Miscellaneous. This Agreement contains the final, complete and exclusive
agreement of the Borrowers and the Bank with regard to its subject matter, may
not be amended except in writing signed by each of the Borrowers and the Bank,
shall be binding upon and inure to the benefit of the respective successors and
assigns of each of the Borrowers and the Bank (subject to applicable provisions
of the Loan Agreement), and shall be construed in accordance with and otherwise
governed in all respects by the laws of the Commonwealth of Kentucky. This
Agreement may be executed in counterparts, and all counterparts collectively
shall constitute but one original document. Each of the Borrowers hereby agrees
to reimburse the Bank for all costs and expenses incurred by the Bank in
connection with the preparation, negotiation, documentation, execution and
delivery of this Agreement, including but not limited to the reasonable fees of
legal counsel to the Bank.
17. Joinder. Each of the Borrowers join in this Agreement for the purpose of
consenting to the provisions of the foregoing Agreement, and each of the
Borrowers confirms and agrees that its and their respective obligations under,
as applicable, the Note and the other Loan Documents shall be unimpaired by this
Agreement and that no Borrower has any defenses or set offs against the Bank, or
its respective officers, directors, employees, agents or attorneys with respect
to, as applicable, the Note or other Loan Documents and that all of the terms,
conditions and covenants in the Loan Documents remain unaltered and in full
force and effect and are hereby ratified and confirmed.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Sixth Amendment to
Loan Agreement and Amendment to Note to be duly executed as of the day and year
first above written.
"Borrowers"
THERMOVIEW INDUSTRIES, INC.,
a Delaware corporation
By: ____________________________________
Charles L. Smith, President
AMERICAN HOME DEVELOPERS CO., INC.,
a California corporation
By: ____________________________________
Charles L. Smith, President
THERMOVIEW INDUSTRIES, INC. OF CALIFORNIA, a
California corporation, formerly known as Five
Star Builders, Inc., successor in interest to
American Home Remodeling
By: ____________________________________
Charles L. Smith, President
KEY HOME CREDIT, INC.,
a Delaware corporation
By: ____________________________________
Charles L. Smith, President
KEY HOME MORTGAGE, INC.,
a Delaware corporation
By: ____________________________________
Charles L. Smith, President
LEINGANG SIDING AND WINDOW, INC.,
a North Dakota business corporation
By: ____________________________________
Charles L. Smith, President
PRIMAX WINDOW CO.,
a Kentucky corporation
By: ____________________________________
Charles L. Smith, President
PRECISION WINDOW MFG., INC.,
a Missouri corporation
By: ____________________________________
Charles L. Smith, President
ROLOX, INC.,
a Kansas corporation
By: ____________________________________
Charles L. Smith, President
TD WINDOWS, INC.,
a Kentucky corporation
By: ____________________________________
Charles L. Smith, President
<PAGE>
THERMAL LINE WINDOWS, INC.,
a North Dakota corporation, formerly known as
Ice Inc., successor in interest to Thermal Line
Windows, LLP and Blizzard Enterprises, Inc.
By: ____________________________________
Charles L. Smith, President
THERMOVIEW OF MISSOURI, INC.,
a Missouri corporation
By: ____________________________________
Charles L. Smith, President
THERMO-TILT WINDOW COMPANY,
a Delaware corporation
By: ____________________________________
Charles L. Smith, President
THOMAS CONSTRUCTION, INC.,
a Missouri corporation
By: ____________________________________
Charles L. Smith, President
THERMO-SHIELD OF AMERICA (ARIZONA), INC., an
Arizona corporation
By: ____________________________________
Charles L. Smith, President
<PAGE>
THERMO-SHIELD OF AMERICA (MICHIGAN), INC., a
Michigan corporation
By: ____________________________________
Charles L. Smith, President
THERMO-SHIELD COMPANY, LLC,
an Illinois limited liability company
By: ____________________________________
Charles L. Smith, President
THERMO-SHIELD OF AMERICA (WISCONSIN), LLC., a
Wisconsin limited liability company
By: ____________________________________
Charles L. Smith, President
THERMOVIEW ADVERTISING GROUP, INC.,
a Delaware corporation
By: ____________________________________
Charles L. Smith, President
"Bank"
_________________________________________ PNC
BANK, NATIONAL ASSOCIATION,
a national banking association
By: ____________________________________
Lawrence E. Reynolds, Vice President
<PAGE>
10.2
AMENDMENT NO. 3 AND WAIVER
AMENDMENT NO. 3 AND WAIVER (this "Amendment"), dated as of September 6,
2000, between ThermoView Industries Inc. ("Company") and GE Capital Equity
Investments, Inc. ("GE Capital").
W I T N E S S E T H:
WHEREAS, Company and GE Capital are parties to that certain
Securities Purchase Agreement, dated as of July 8, 1999 (as from time to time
amended, restated, supplemented or otherwise modified, the "Purchase Agreement",
and unless the context otherwise requires or unless otherwise defined herein,
capitalized terms used herein shall have the meanings assigned to them in the
Purchase Agreement); and
WHEREAS, Company has requested an amendment and/or waiver of, and GE
Capital has agreed to amend and/or waive, certain provisions of the Purchase
Agreement, on the terms and subject to the conditions as hereinafter set forth;
NOW, THEREFORE, in consideration of the premises and mutual covenants
contained herein, the parties hereto agree as follows:
Section 1. AMENDMENTS TO THE PURCHASE AGREEMENT. Effective
------------------------------------
as of the Effective Date (as defined herein), the Purchase
Agreement is amended as follows:
1.1 By adding the following new clause (viii) to Section 5.1(b) of the Purchase
Agreement:
"(viii) Company shall deliver to Purchaser on a monthly basis a
report setting forth a listing and description of all initiatives adopted
by Company and its Subsidiaries (including, without limitation, those with
respect to the reduction of costs detailing and quantifying the
initiatives set forth both by entity and by Company and its Subsidiaries
as a whole) and the actual results of such initiatives set forth both by
entity and by Company and its Subsidiaries as a whole."
1.2 By adding the following sentences to Section 5.1(e) of the
Purchase Agreement:
"Company shall provide to the Purchaser on or before September 30,
2000, copies of key-man life insurance policies on the lives of Rodney
Thomas and Larry Smith each in the amount of One Million Dollars
($1,000,000.00) and duly issued by a life insurance company satisfactory
to the Purchaser in its reasonable judgment, both of which life insurance
policies shall be assigned to PNC Bank pursuant to assignments in form and
substance satisfactory to PNC Bank. Company shall thereafter maintain such
policies in full force and effect."
1.3 By amending and restating Section 5.1(h) of the Purchase Agreement in its
entirety as follows:
"(h) Financial Covenants. (i) Company and its Subsidiaries will
maintain a ratio of Cash Flow to Required Debt Service Payments: (a) equal
to or greater than 1.75 to 1.0 for the fiscal quarter ending on September
30, 2000; (b) equal to or greater than 1.25 to 1.0 for the fiscal quarter
ending on December 31, 2000; and (c) equal to or greater than 1.0 to 1.0
for the fiscal quarters ending on March 31, 2000 and June 30, 2001 and for
each fiscal quarter thereafter. Effective for the fiscal quarter
commencing on July 1, 2000, the foregoing ratio shall be determined on a
cumulative basis beginning with the fiscal quarter ending on September 30,
2000 and as of each fiscal quarter thereafter through and including the
fiscal quarter ending on March 31, 2001, and thereafter the ratio shall be
determined on a cumulative basis for the immediately preceding four fiscal
quarters.
(ii) The ratio, calculated as of the end of each fiscal quarter
of Company and its Subsidiaries beginning December 31, 2000 (each a
"Calculation Date"), of the consolidated (and combined, if applicable)
Funded Debt of Company and its Subsidiaries as of each Calculation Date
divided by the consolidated (and combined, if applicable) EBITDA for
Company and its Subsidiaries for the four (4) fiscal quarters of Company
and its Subsidiaries ending on the applicable Calculation Date shall not
be greater than as set forth opposite each Calculation Date below:
Calculation Date Debt to EBITDA Rate
---------------- -------------------
December 31, 2000 21.63 to 1.00
March 31, 2001 7.50 to 1.00
June 31, 2001 5.40 to 1.00
September 30, 2001 3.75 to 1.00
December 31, 2001 and 3.10 to 1.00
thereafter
For purposes of each of the above financial covenants, the following
terms shall have the following meanings:
(A) "Capital Expenditures" means, for any period, all payments
for any fixed assets, or improvements or for replacements, substitutions
or additions thereto, that have a useful life of more than one year and
which are required to be capitalized under GAAP and which payments have
been made from funds of Company and its Subsidiaries other than funds
borrowed by Company and its Subsidiaries.
(B) "Cash Flow" means, for any period, EBITDA for such period
less provision for income taxes and Capital Expenditures for the same
period.
(C) "EBITDA" means, for any period (a) net income (or the
deficit if expenses and charges exceed revenues and proper income items)
increased by (b) all amounts deducted therefrom (without duplication) in
the calculation of net income on account of the sum of (i) interest
expense, (ii) provision for income taxes, (iii) depreciation and
amortization expense and (iv) unusual charges charged to net income for
the quarter ended June 30, 2000, not to exceed $10,745,000, but excluding
therefrom (c) all amounts included therein on account of extraordinary
items of income and gains from the sale of assets outside the ordinary
course of business.
(D) "Funded Debt" is defined as the consolidated (and combined,
if applicable) sum of all line borrowings, plus current (i.e. less than or
equal to one (1) year) and non-current maturities of all long term debt of
Company and its Subsidiaries (including but not limited to any obligations
of Company or any of its Subsidiaries that are determined based on the
future performance of any Acquired Entity ("Earn-Outs") and which
Earn-Outs are not paid in full within thirty (30) days of the date when
due and payable (including after any applicable requirement for notice and
an opportunity to cure expressly provided in the applicable instrument or
document governing such obligation) ("Matured Earn-Outs")) to PNC Bank,
any Purchaser and all other persons or entities. For purposes of this
calculation, Funded Debt shall be deemed to include, at all times, the
aggregate amount of any line(s) of credit available to Company and its
Subsidiaries from PNC Bank and other financial institutions, and (without
duplication) the actual principal amount of the PNC Senior Debt, other
Senior Debt and Obligations due and owing with regard to any carrying
value thereof shown on the books and records of the Company and it
Subsidiaries.
(E) "Required Debt Service Payments" means, for the period in
question, all regularly scheduled payments of principal (other than
balloon payments of principal due at stated maturity) and accrued interest
due on all Funded Debt during such period."
1.4 By adding the following new Section 5.1(n) to the Purchase
Agreement:
"(n) Consultants. Company shall, and shall cause its Subsidiaries to,
continue to retain the services of either Continental & Equity Corporation
("CCEC") and/or West Park, Inc. ("West Park") through December 31, 2000 to
assist Company and its Subsidiaries in identifying additional sources of
capital and/or debt in order to repay the PNC Senior Debt. Company and its
Subsidiaries shall provide to the Purchaser, on or before August 31, 2000,
copies of the executed contracts between Company and CCEC and West Park,
as applicable, confirming Company's and its Subsidiaries' compliance with
the provisions of this Section 5.1(n). During the term of the foregoing
contract(s), Company shall, and shall cause its Subsidiaries to, provide
to Purchaser, within ten (10) days after the end of each month, a status
report as of the last day of the immediately preceding month describing in
reasonable detail the work performed during such month by CCEC and/or West
Park and including therein copies of all offering memoranda, booklets and
other offering materials prepared by CCEC and/or West Park and/or Company
and its Subsidiaries during such month."
1.5 By amending and restating Section 5.2(e) of the Purchase
Agreement as follows:
"(e) Indebtedness. Company shall not and shall not permit any
Subsidiary of Company to incur or suffer to exist any Indebtedness except:
(i) Indebtedness existing on the date hereof and listed on Schedule 4.9
and refinancings thereof which do not result in the occurrence of a
Default or Event of Default; provided that on or before December 27, 2000,
Company shall repay (and permanently reduce the existing line of credit
from PNC Bank by) an amount of the PNC Senior Debt equal to $5,000,000
(the "PNC Paydown"); (ii) Permitted Indebtedness; (iii) at any time after
the PNC Paydown, other Indebtedness, provided that the incurrence of such
Indebtedness, together with the Indebtedness referred to in clause (i)
above, shall not result in the occurrence of a breach of Section 5.1(h),
or any other Default or Event of Default and at the time of borrowing
thereunder no Default or Event of Default shall have occurred and be
continuing, provided further that the sum of (x) the PNC Senior Debt and
(y) other Indebtedness incurred pursuant to this clause (iii) shall not
exceed in the aggregate $15,000,000 outstanding at any time; or (iv)
Indebtedness owing by Company to any of its wholly-owned Subsidiaries or
by any of Company's wholly-owned Subsidiaries to any other wholly-owned
Subsidiaries or Company. For the purposes of measuring compliance of
Company and its Subsidiaries with Section 5.1(h) for the purposes of this
Section 5.2(e), (a) such calculation shall be performed on a pro forma
basis, assuming that any additional Indebtedness was incurred on the first
day of the four fiscal quarter period ending on the most recent
Calculation Date and (b) if such calculation is being performed in
connection with the incurrence of Indebtedness other than pursuant to the
PNC Loan Agreement, Indebtedness will be deemed to include at least the
amount of the line of credit available to Company from PNC Bank at such
time."
1.6 By amending and restating Section 5.2(g) of the Purchase
Agreement as follows:
"(g) Restricted Payments. Company shall not and shall not permit any
Subsidiary of Company to make any Restricted Payments nor shall Company
permit any Subsidiaries to make such payments with respect to Company's
Stock, provided that following the earlier to occur of September 1, 2001
and repayment in full of the PNC Senior Debt, Company may make regularly
scheduled dividend payments on its presently outstanding preferred stock
(the cash amount of such dividend payments in respect of Series C
Convertible Preferred Stock not to exceed in the aggregate 7% per annum of
the stated liquidation value of such Stock ), provided further that
Company shall not make any such Restricted Payment if at the time of such
payment a Default or Event of Default shall have occurred and be
continuing or such payment would result in the occurrence of a Default or
Event of Default."
By adding the following language to the end of clause (i) of Section
5.2(j) of the Purchase Agreement: "or the Series D Preferred Stock, $.001
par value, of Company".
Section 2. WAIVER OF CERTAIN PROVISIONS.
----------------------------
(a) Effective as of the Effective Date, GE Capital hereby grants a waiver of
Company's and its Subsidiaries' non-compliance with:
(i) the payment covenant contained in Section 2.6(a) of the Purchase Agreement
solely as it relates to the late payment of interest payable on or before June
30, 2000; and
(ii) the financial covenants contained in Section 5.1(h) of the Purchase
Agreement and of the Events of Default that would otherwise result from a
violation of those sections, solely for the period from April 1, 2000 to June
30, 2000.
(b) Company agrees that it will, and will cause its Subsidiaries to, hereafter
comply fully with the provisions waived pursuant to this Section 2, as amended,
and all other provisions of the Purchase Agreement and the other Loan Documents,
which remain in full force and effect.
Section 3. CONDITIONS PRECEDENT TO THE EFFECTIVENESS OF THIS AMENDMENT. Except
as otherwise expressly provided herein, this Amendment shall be effective as of
June 30, 2000 (such date is referred to herein as the "Effective Date")so long
as each of the following conditions shall have been satisfied or provided for in
a manner satisfactory to GE Capital or waived by GE Capital on or prior to
August 31, 2000:
(a) This Amendment shall have been fully executed and delivered by each of the
parties hereto.
(b) Each of the Subsidiaries of Company party to the Guaranty shall have
executed and delivered the consent included in the signature pages hereto.
(c) The Sixth Amendment to Loan Agreement and Amendment to Note among Company,
each of its Subsidiaries listed therein and PNC Bank, National Association ("PNC
Bank"), shall have been executed and delivered by each of the parties thereto
(the "Sixth Amendment") in form and substance satisfactory to GE Capital.
(d) GE Capital shall have received evidence satisfactory to GE Capital in its
sole discretion that Rodney H. Thomas, Thomas Construction, Inc., 13397
Lakefront Drive, LLC and Investors Property Holdings, LLC have agreed to suspend
until September 30, 2001 the effectiveness and enforceability of certain
amendments and modifications to the Non-Competition Agreement, Triple Net Lease
Agreement and Furniture and Fixture Lease Agreements to which such entities are
parties, as applicable, and which were implemented on April 14, 2000.
(e) Each of Brown Simpson Strategic Growth Fund, Ltd. and Brown
Simpson Strategic Growth Fund, L.P. shall have executed and
delivered a Waiver, Consent and Covenant in form and substance
satisfactory to GE Capital.
(f) Company shall have obtained, and delivered to GE Capital a copy of, each
consent required in connection with this Amendment and the Sixth Amendment.
Section 4. EFFECT ON PURCHASE AGREEMENT.
----------------------------
(a) On and after the Effective Date, each reference in the Purchase Agreement to
"this Agreement", "herein", "hereof", "hereunder" or words of similar import,
shall mean and be a reference to the Purchase Agreement as amended hereby.
(b) Except as specifically amended above in connection herewith, the Purchase
Agreement shall remain in full force and effect and is hereby ratified and
confirmed.
(c) The execution, delivery and effectiveness of this Amendment shall not,
except as expressly provided herein, operate as a waiver of any right, power or
remedy of GE Capital under any of the Loan Documents or constitute a waiver of
any provision of any of the Loan Documents.
Section 5. GOVERNING LAW. THIS AMENDMENT AND THE OBLIGATIONS
-------------
ARISING HEREUNDER SHALL BE GOVERNED BY, AND CONSTRUED AND
ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
Section 6. SECTION TITLES. Section titles contained in this
--------------
Amendment are and shall be without substantive meaning or content
of any kind whatsoever and are not a part of the agreement
between the parties hereto.
Section 7. COUNTERPARTS. This Amendment may be executed in
------------
any number of separate counterparts, each of which shall
collectively and separately constitute one agreement.
Section 8. FURTHER ASSURANCES. Company shall obtain, on or
-----------
prior to September 30, 2000, from each of Stephen A. Hoffmann,
Nelson E. Clemmens, Richard E. Bowlds and Douglas I. Maxwell,
III, a consent in the form included in signature pages hereto.
Company shall obtain as soon as practicable and deliver to
Purchaser a fully executed amendment to the registration rights
agreement of Brown Simpson Strategic Growth Fund, Ltd. and Brown
Simpson Strategic Growth Fund, L.P. pursuant to which such
entities shall waive for the period from August 7, 2000 to and
including May 31, 2001 the requirement that Company maintain an
effective registration statement on Form S-1 for such entities.
<PAGE>
IN WITNESS WHEREOF, this Amendment has been duly executed as of
the date first written above.
THERMOVIEW INDUSTRIES, INC.
By:
Charles L. Smith, President
GE CAPITAL EQUITY INVESTMENTS, INC.
By:
Duly Authorized signatory
<PAGE>
CONSENT OF THE GUARANTORS
The Subsidiaries of Company hereby (i) acknowledge receipt of a
copy of this Amendment and (ii) agree that the terms and provisions
thereof shall not affect in any way the obligations and liabilities of
such Subsidiaries under the Guaranty or any of the other Loan Documents,
all of which obligations and liabilities shall remain in full force and
effect and each of which are hereby reaffirmed.
AMERICAN HOME DEVELOPERS CO., INC., a
California corporation
By: _________________________________
Charles L. Smith, President
FIVE STAR BUILDERS, INC., a California
corporation, successor in interest to
American Home Remodeling
By: _________________________________
Charles L. Smith, President
KEY HOME CREDIT, INC., a Delaware corporation
By: _________________________________
Charles L. Smith, President
KEY HOME MORTGAGE, INC., a Delaware
corporation
By: _________________________________
Charles L. Smith, President
LEINGANG SIDING AND WINDOW, INC., a North
Dakota business corporation
By: _________________________________
Charles L. Smith, President
PRIMAX WINDOW CO., a Kentucky corporation
By: _________________________________
Charles L. Smith, President
PRECISION WINDOW MFG., INC., a Missouri
corporation
By: _________________________________
Charles L. Smith, President
ROLOX, INC. a Kansas corporation
By: _________________________________
Charles L. Smith, President
TD WINDOWS, INC. a Kentucky corporation
By: _________________________________
Charles L. Smith, President
THERMAL LINE WINDOWS, INC. a North Dakota
corporation, formerly known as Ice Inc.,
successor in interest to Blizzard
Enterprises, Inc. and Thermal Line Windows,
LLP
By: _________________________________
Charles L. Smith, President
THERMOVIEW OF MISSOURI, INC., a Missouri
corporation
By: _________________________________
Charles L. Smith, President
THERMO-TILT WINDOW COMPANY, a Delaware
corporation
By: _________________________________
Charles L. Smith, President
THOMAS CONSTRUCTION, INC., a Missouri
corporation
By: _________________________________
Charles L. Smith, President
<PAGE>
THERMO-SHIELD OF AMERICA (ARIZONA), INC., an
Arizona corporation
By: _________________________________
Charles L. Smith, President
THERMO-SHIELD OF AMERICA (MICHIGAN), INC., a
Michigan corporation
By: _________________________________
Charles L. Smith, President
THERMO-SHIELD COMPANY, LLC, an Illinois
limited liability company
By: _________________________________
Charles L. Smith, Manager and President
THERMO-SHIELD OF AMERICA(WISCONSIN), LLC, a
Wisconsin limited liability company
By: _________________________________
Charles L. Smith, Manager and President
THERMOVIEW ADVERTISING GROUP, INC., a
Delaware corporation
By: _________________________________
Charles L. Smith, President
PNC BANK, NATIONAL ASSOCIATION, a national
banking association
By: _________________________________
Gregory M. Carroll, Vice President
<PAGE>
CONSENT OF INDIVIDUAL GUARANTORS
The individual guarantors named below (the "Individual Guarantors") hereby
(i) acknowledge receipt of a copy of the Amendment and (ii) agree that the terms
and provisions thereof shall not affect in any way the agreements of the
Individual Guarantors contained in that certain Consent of Individual Guarantors
to Amendment No. 2 and Waiver, dated as of April 14, 2000, between GE Capital
and Company, all of which agreements shall remain in full force and effect and
each of which are hereby reaffirmed.
---------------------------------
Stephen A. Hoffmann
---------------------------------
Nelson E. Clemmens
---------------------------------
Richard E. Bowlds
---------------------------------
Douglas I. Maxwell, III
<PAGE>
10.3
November 9, 2000
Mr. Jim Simpson
Mr. Peter Greene
Brown Simpson Strategic Growth Fund. Ltd.
Brown Simpson Strategic Growth Fund, L.P.
152 West 57th Street, 40th Floor
New York, New York 10019
Re: Consent to Amendment of Series C Certificate of
Designation, et al. of ThermoView Industries, Inc.
Dear Messrs. Simpson and Greene:
As you are aware, ThermoView Industries, Inc. (the "Company") is currently
negotiating an extension and waiver of default of its revolving line of credit
(the "Line of Credit Extension and Waiver") with PNC Bank, National Association,
a national banking association, ("PNC"). As a condition of that Line of Credit
Extension and Waiver, PNC is requiring the Company to obtain your agreement to
accept dividends in the form of 100% common stock and suspend your right to
certain redemption rights until the earlier of September 30, 2001 or payment in
full of PNC Bank's indebtedness, at which time the terms and conditions will
revert to the terms which exist immediately prior to this agreement.
PNC has placed an additional requirement for ThermoView to provide
executed agreements from our respective creditors no later than August 31, 2000.
In this regard, the following attachments represent the amendments to the
respective documents until formal documentation has been obtained:
A. Amendment of Section 2(a) of the Certificate of Designation
of Convertible Preferred Stock series C of ThermoView
Industries, Inc.; and
B. Amendment of Section 2(a) and (d) of the Registration Rights
Agreement.
By your signature below, you hereby expressly agree as set forth above.
Sincerely,
THERMOVIEW INDUSTRIES, INC.
Charlton C. Hundley
General Counsel
ACKNOWLEDGED AND AGREED TO:
Brown Simpson Strategic Brown Simpson Strategic
Growth Fund, LTD. Growth Fund, L.P.
By: By:
---------------------------
Name: Name:
-------------------------
Title: Title:
-----------------------------
<PAGE>
ATTACHMENT "A"
Amendment of Section 2(a) of the Certificate of Designation of
Convertible Preferred Stock Series C of ThermoView Industries, Inc.
2. Dividends
(a) Holders of Preferred Stock shall be entitled to receive, out of funds
legally available therefor, and the Company shall pay, cumulative dividends at
the rate per share (as a percentage of the Liquidation Value per share) equal to
0.8% per month, payable quarterly, commencing on May 1, 1999. Each dividend
payable after April 1, 2000 through and including September 30, 2001 will be
comprised of 100% Common Stock (as defined in Section 8), the number of shares
of which shall be equal to the quotient obtained by dividing (a) 100% of the
cash amount of the total dividend payable to such Holder on such dividend
payment date by (b) the Average Per Share Market Value. As used herein, the
"Average Per Share Market Value" means the average of the Per Share Market Value
for the five Trading Days prior to such dividend payment date. Dividends on the
Series C Preferred Stock shall be calculated on the basis of a 360-day year,
shall accrue daily commencing on the Issuance Date, and shall be deemed to
accrue from such date and be cumulative whether or not earned or declared and
whether or not there are profits, surplus or other funds of the Company legally
available for the payment of dividends. Accrued and unpaid dividends of the
Preferred Stock for any shares which are being converted shall be paid on the
date on which such Preferred Stock is converted. Except as otherwise provided
herein, if at any time the Company pays less than the total amount of dividends
then accrued on account of the Preferred Stock, such payment shall be
distributed ratably among the Holders based upon the number of shares held by
each Holder.
<PAGE>
ATTACHMENT "B"
Amendment of Section 2 of the Registration Rights Agreement.*
Registration Requirements
(a) On or prior to the Filing Date, the Company shall prepare and file with
the Commission a Registration Statement (the "Initial Registration
Statement") which shall cover all Registrable Securities. The Initial
Registration Statement shall be on Form S-1 or any successor form. The
Company shall (i) not permit any securities other than the Registrable
Securities to be included in the Initial Registration Statement and (ii) use
its best efforts to cause the Initial Registration Statement to be declared
effective under the Securities Act as promptly as possible after the filing
thereof, but in any event on or prior to the Effectiveness Date, and to keep
such Initial Registration Statement continuously effective under the
Securities Act until the date which is four years after the date that such
Initial Registration Statement is declared effective by the Commission, with
the exception of the period of August 7, 2000 through and including May 31,
2001, or such earlier date when all Registrable Securities covered by such
Initial Registration Statement have been sold or may be sold without volume
restrictions pursuant to Rule 144 as determined by counsel to the Company
pursuant to a written opinion letter, addressed to the Holders and the
Company's transfer agent to such effect (the "Effectiveness Period"). The
number of shares of Common Stock initially included in the Initial
Registration Statement shall be no less than 150% of the sum of the number of
Securities and Warrants that are then issuable upon conversion of the
Securities (based on the Conversion Price (as defined in the Securities) as
would then be in effect at such time) and the exercise of the Warrants,
without regard to any limitation on the Investor's ability to convert the
Securities or exercise the Warrants.
(d) If (i) the Initial Registration Statement covering all the applicable
Registrable Securities and required to be filed by the Company pursuant to
this Agreement is not (A) filed with the Commission on or before the Filing
Date or (B) declared effective by the Commission on or before the applicable
Effectiveness Date, (ii) on any day after the Registration Statement has been
declared effective by the Commission (A) sales of all the Registrable
Securities required to be included in a Registration Statement cannot be made
pursuant to the Registration Statement (including, without limitation,
because of a failure to keep the Registration Statement effective, to
disclose such information as is necessary for sales to be made pursuant to
the Registration Statement, or to register sufficient shares of Common Stock,
but excluding any periods during which the Registrable Securities cannot be
sold due to any update or amendment of the Registration Statement pursuant to
Section 3(b) hereof, provided that such period shall not exceed ten (10)
Business Days) or (B) the Common Stock is not listed or included for
quotation on the OTCBB, the National Market System of the Nasdaq Stock Market
("Nasdaq"), the New York Stock Exchange ("NYSE") or the American Stock
Exchange (the "AMEX") after being so listed or included for quotation or
(iii) the Company shall otherwise fail to file a Registration Statement
required by Section 2(a) hereof, (each such event specified in (i), (ii) and
(iii) above, an "Event"), then, as partial relief for the damages to any
Holder by reason of any such delay in or reduction of its ability to sell the
Registrable Securities (which remedy shall not be exclusive of any other
remedies available at law or in equity), the Company shall pay to each Holder
an amount in cash (a "Registration Delay Payment") equal to two percent (2%)
of the product of (y) the number of Securities held by such Holder and (z)
$1,000, multiplied by the sum of: (i) the number of months (prorated for
partial months) after the end of the Effectiveness Date and prior to the date
the Registration Statement is declared effective by the Commission, provided,
however, that there shall be excluded from such period any delays which are
solely attributable to changes required by the Purchasers in the Registration
Statement with respect to information relating to the Purchasers, or to the
failure of the Purchasers to conduct their review of the Registration
Statement pursuant to Section 3(a), or any black-out period relating to an
update or amendment of the Registration Statement; provided, further, that
with respect to Section 2(d)(i)(B) hereof, there shall be excluded from such
period any delays which are solely attributable to the Commission during the
150-day period following the Filing Date, so long as the Company responds as
promptly as practicable, but in no event later than fifteen (15) Business
Days, to any comments received from the Commission; (ii) the number of months
(prorated for partial months) that sales cannot be made pursuant to the
Registration Statement after the Registration Statement has been declared
effective (including, without limitation, when sales cannot be made by reason
of the Company's failure to properly supplement or amend the Prospectus in
accordance with the terms of this Agreement, or otherwise, but excluding, (a)
when such sales cannot be made solely by reason of any act or omission solely
attributable to the Purchasers, and (b) delays which occur during the period
beginning August 7, 2000 and ending May 31, 2001 ); and (iii) the number of
months (prorated for partial months) that the Common Stock is not listed or
included for quotation on the OTCBB, Nasdaq, NYSE or AMEX or that trading
thereon is halted after the Registration Statement has been declared
effective. The Company shall pay any required Registration Delay Payments to
each Holder in cash on the last Business Day of each month during which an
Event has occurred and is continuing. In the event the Company fails to make
a Registration Delay Payment within fifteen (15) Business Days of the date
such Registration Delay Payment is due, such Registration Delay Payment shall
bear interest at the rate of 2.0% per month (prorated for partial months)
until paid in full. Notwithstanding the foregoing, the required Registration
Delay Payments resulting from delays during the period beginning July 21,
2000 and ending August 7, 2000, as reduced by the ten (10) business day
exclusion set forth in (b)(ii)(A) above, shall be payable in Common Stock,
the number of shares of which shall be equal to the quotient obtained by
dividing (a) 100% of the cash amount of the total Registration Delay Payments
payable to such Holder on such payment date by (b) the Average Per Share
Market Value. As used herein, the "Average Per Share Market Value" means the
average of the Per Share Market Value for the five Trading Days prior to such
payment date.
* Amended language italicized.
<PAGE>
10.4
CLIENT SERVICE AGREEMENT
THIS AGREEMENT is made and entered into this 4th day of March, 2000, between
CONTINENTAL CAPITAL & EQUITY CORPORATION, located at 195 Wekiva Springs Road,
Suite 200, Longwood, FL 32779, (hereinafter referred to as CCEC") and THERMOVIEW
INDUSTRIES, INC., located at 1101 Herr Lane, Louisville, Kentucky 40222
(hereinafter referred to as the "Company").
WITNESSETH:
WHEREAS, CCEC is a financial relations and direct marketing advertising firm
specializing in the dissemination of information about publicly traded
companies, and
WHEREAS, the Company is publicly held with its common stock trading on the
AMEX Exchange, and
WHEREAS, the Company desires to publicize itself with the intention of making
its name and business better known to shareholders, investors, brokerage houses,
institutional investors, analysts and other industry professionals, and
WHEREAS, CCEC is willing to accept the Company as a client.
NOW THEREFORE, inconsideration of the mutual covenants herein contained, it is
agreed:
1. ENGAGEMENT: The Company hereby engages CCEC to publicize the Company to
brokers, prospective investors, institutional investors, analysts, other
industry professionals and shareholders described in Section 2 of this
Agreement, and subject to the further provisions of this Agreement. CCEC hereby
accepts the Company as a client and agrees to publicize it as described in
Section 2 of this Agreement, but subject to the further provisions of this
Agreement.
2. MARKETING PROGRAM: Consists of the following components:
(A) CCEC will review and analyze various aspects of the Company's goals and
make recommendations on feasibility and achievement of desired goals.
(B) CCEC will review all of the general information and recent filings from
the Company and produce up to a 100,000 piece direct mail package to include an
11" x 17" self-mailer and an ample number of corporate profiles so as to allow
for one profile for each respondent to the original mailing, both items to be
approved by the Company prior to circulation.
(C) CCEC will provide exposure to its network of firms and brokers that may
be interested in participating with the Company and schedule and conduct the
necessary due diligence and obtain the required approvals necessary for those
firms to participate. CCEC will also interview and make determinations on any
firms or brokers referred by the Company with regard to their participation.
(D) At the Company's request, CCEC will be available to the Company to
field any calls from firms and brokers inquiring about the company.
(E) CCEC will use its best efforts to obtain the Company exposure on radio
programming, in independent financial newsletters, and through on-line fax and
Internet broadcast services
(F) CCEC will promote the Company on the Worldwide Internet via CCEC's home
web site (www.insidewallstreet.com). Further, CCEC shall create banner ads for
placement on financial web sites with hyperlinks back to the Company's feature
page on CCEC's home web site. The banner ads shall run for two (2) months.
(G) At the Company's request, CCEC shall write, produce and assist the
Company in releasing all press announcements. The Company shall be solely
responsible for paying all fees associated with the actual release(s) through
BusinessWire, P.R. Newswire, or any other comparable news dissemination source.
(H) CCEC will create, build and continually enhance a fax database of all
brokers, investors, analysts and media contacts who have expressed an interest
in receiving on-going information on the Company. CCEC will assist the Company
in setting up an account with a fax broadcasting agency to manage the actual
broadcasting in the event Company does not have this capability in-house.
Further, CCEC will, at its election, mass-fax broadcast select releases to its
network of U.S. stockbrokers, analysts and institutional investors.
(I) CCEC will obtain express written approval from the Company on all
material produced by CCEC prior to disseminating the information to the public.
3. TIME OF PERFORMANCE: Services to be performed under this Agreement shall
commence upon execution of this Agreement and shall continue for a period of
twelve (12) months.
4. COMPENSATION AND EXPENSES: In consideration of the services to be performed
by CCEC, the Company agrees to pay compensation to CCEC as follows:
(A) One hundred fifty thousand dollars ($150,000.00), payable in cash plus
forty-five thousand restricted common shares which shall be delivered to CCEC
within five working days of the date of execution of this Agreement and shall be
subject to the registration rights as defined in Section 4(B) herein; plus
(B) An option to purchase 200,000 shares of the Company's common stock as
follows: fifty thousand (50,000) shares at a per share price of four dollars
($4.00), fifty thousand (50,000) shares at a per share price of five dollars
($5.00), fifty thousand (50,000) shares at a per share price of six ($6.00); and
fifty thousand (50,000) shares at a per share price of seven dollars ($7.00).
The option shall expire 24 months from the day the Registration Statement
registering the underlying shares of the option is deemed effective. If the
Company at any time proposes to register any of its voting equity securities
under the Securities Act of 1933, as amended (the "Securities Act") (other than
a registration (i) on Form S-8 or S-4 or any successor or similar forms, (ii)
relating to equity securities issuable upon exercise of employee stock options
or in connection with any employee benefit or similar plan of the Company, (iii)
in connection with a direct or indirect acquisition by the Company or other
company or business or any other transaction described in Rule 145(a) under the
Securities Act, or (iv) a registration on any registration form which does not
permit secondary sales or does not include substantially the same information as
would be required to be included in a registration statement covering the sale
of the Company's common stock subject to the restricted shares and option
granted to CCEC (the "Registrable Securities"), whether for sale for its own
account or for the account of other security holders, in a manner which would
permit registration of Registrable Securities for sale to the public under the
Securities Act, it will each such time give prompt written notice to CCEC of the
Registrable Securities of its intention to so do. Any such notice shall offer
CCEC the opportunity to request to include in such registration statement such
number of Registrable Securities as CCEC may request.
5. REPRESENTATIONS AND WARRANTIES OF THE COMPANY: The Company represents and
warrants to CCEC, each such representation and warranty being deemed to be
material that:
(A) The Company will cooperate fully and timely with CCEC to enable CCEC to
perform its obligations under this Agreement.
(B) The execution and performance of this Agreement by the Company has been
duly authorized by the Board of Directors of the Company in accordance with
applicable law, and, to the extent required by the requisite number of
shareholders of the Company;
(C) The performance by the Company of this Agreement will not violate any
applicable court decree, law or regulation, nor will it violate any provisions
of the organizational documents of the Company or any contractual obligation by
which the Company may be bound.
(D) The Company will prom0ptly deliver to CCEC a complete due diligence
package to include latest 10K, 10Q, last six (6) months of press releases and
all other relevant materials, including but not limited to corporate reports,
brochures, etc.
(E) The Company will promptly deliver to CCEC a list of names and addresses
of all shareholders of the Company of which it is aware.
(F) The Company will promptly deliver to CCEC a list of brokers and market
makers of the Company's securities which have been following the Company.
(G) Because CCEC will rely on such information to be supplied it by the
Company, all such information shall not contain any misstatement of material
facts.
(H) The Company will act diligently and promptly in reviewing materials
submitted to it by CCEC to enhance timely distribution of the materials and will
inform CCEC of any inaccuracies contained therein prior to the projected
publication date.
6. DISCLAIMER BY CCEC: CCEC WILL BE THE PREPARER OF CERTAIN PROMOTIONAL
MATERILS. CCEC MAKES NO REPRESENTATION THAT (A) ITS SERVICE WILL RESULT IN
ANY ENHANCEMETN TO THE COMPANY (B) THE PRICE OF THE COMPANY'S PUBLICLY TRADED
SECURITIES WILL INCREASE, (C) ANY PERSON WILL PURCHASE SECURITIES IN THE
COMPANY, OR (D) ANY INVESTOR WILL LEND MONEY TO OR INVEST IN OR WITH THE
COMPANY.
7. EARLY TERMINATION: If the Company fails to cooperate with CCEC, or fails to
made timely payment of the compensation set forth in Section 4 of this
Agreement, CCEC shall have the right to terminate any further performance
under this Agreement. In such event all compensation shall become immediately
due and payable and/or deliverable, and CCEC shall be entitled to receive and
retain the same as liquidated damages, and not as a penalty, in lieu of all
other remedies, the parties acknowledging and agreeing that it would be too
difficult currently to determine the exact extent of CCEC's damage, but that
the receipt and retention of such compensation is reasonable present estimate
of such damage.
8. LIMITATION OF CCEC LIABILITY: CCEC WILL NOT BE LIABLE FOR ANY INDIRECT
SPECIAL OR CONSEQUENTIAL DAMAGES OR FOR ANY CLAIM AGAINST THE COMPANY BY ANY
PERSON OR ENTITY ARISING FROM OR IN ANY WAY RELATED TO THIS AGREEMETN, UNLESS
SUCH DAMAGES RESULT FROM THE USE BY CCEC OF INFORMATION NOT AUTHORIZED BY THE
COMPANY OR THE FAILURE BY CCEC TO DISCLOSE MATERIAL INFORMATION PROVIDED BY
THE COMPANY.
9. OWNERSHIP OF MATERIALS: All right, title and interest in and to materials to
be produced by CCEC in connection with the contract and other services to be
rendered under this Agreement shall be and remain the sole and exclusive
property of CCEC, except that if the Company performs fully and timely its
obligation hereunder, it shall be entitled to receive upon written request,
one hundred (100) copies of all such materials.
10.CONFIDENTIALITY: Until such time as the same may become publicly known, CCEC
agrees that any information of a confidential nature will not be revealed or
disclosed to any person or entity, except in the performance of this
Agreement, and upon completion of its services and upon written request of
the Company all materials and original documentation provided by the Company
will be returned to it. CCEC will, however, require Confidentiality
Agreements from its own employees and from contracto5s CCEC reasonably
believes will come in contact with confidential material.
11.NOTICES: All notices hereunder shall be in writing and addressed to the
party at the address herein set forth and shall be given by personal
delivery, by certified mail, express mail or by national overnight courier
services. Notices will be deemed given upon the earlier of the actual receipt
or three (3) business days after being mailed or delivered to such courier
service. Any notices to be given hereunder will be effective if executed by
and sent by the attorneys for the parties giving such notice, and in
connection herewith the parties and their respective counsel agree taht in
giving such notice such counsel may communicate directly in writing with such
parties to the extent necessary to give such notice.
12.SEPARABILITY: If one or more of the provision of this Agreement shall be
held invalid, illegal, or unenforceable in any respect, such provision, to
the extent invalid, illegal, or unenforceable, and provided that such
provision is not essential to the transaction provided for by this Agreement,
shall not affect any other provision hereof, and the Agreement shall be
construed as if such provision had never been contained herein.
13.ARBITRATION: Any controversy or claim arising out of or relating to the
Client Service Agreement, or the breach thereof, shall be settled by
arbitration in accordance with the commercial arbitration rules of the
American Arbitration Association and convened in the Louisville, Kentucky
area, and judgement upon the award rendered by the arbitrator(s) may be
entered in any court having jurisdiction thereof.
14. MISCELLANEOUS:
(A) GOVERNING LAW: This Agreement shall be governed by and interpreted
under the laws of the Commonwealth of Kentucky.
(B) CURRENCY: In all instances, references to dollars shall be deemed to be
United States Dollars.
(C) MULTIPLE/FAXED COUNTERPARTS: This Agreement may be executed in multiple
counterparts, and by fax transmission, each of which shall be deemed an
original.
Executed as a sealed instrument as of the last day and year shown hereunder.
CONFIRMED AND AGREED ON THE ______ DAY OF ________________, 2000
CONTINENTAL CAPITAL & EQUITY CORPORATION
By: ___________________________________ __________________________________
CCEC Representative CCEC Officer
--------------------------------------- -----------------------------------
Witness Witness
CONFIRMED AND AGREED ON THE _______ DAY OF _____________________, 2000
THERMOVIEW INDUSTRIES, INC.
By: ___________________________________ __________________________________
Duly Authorized Witness
<PAGE>
10.5
AGENT AGREEMENT
This Agent Agreement is made and entered into this 24th day of August, 1999 by
and between CONTINENTAL CAPITAL & EQUITY CORPORATION, located at 195 Wekiva
Springs Road, Suite 200, Longwood, FL 32779, hereinafter referred to as CCEC and
THERMOVIEW INDUSTRIES, INC., located at 1103 Herr Lane, Louisville, Kentucky
40222, hereinafter referred to as THV.
RECITALS
Whereas, THV is a publicly held corporation and desires to engage CCEC as agent
for the purpose of introducing merger/acquisition candidates, identifying
sources of capital and/or providing other financial services, and
Whereas, CCEC possesses certain skills, knowledge, abilities and considerable
contacts throughout the financial industry, and
Whereas, CCEC desires to assist THV with introduction to sources, as outlined
above.
Now, therefore, in consideration of the covenants and conditions contained
herein, and other good and valuable consideration, the receipt and sufficiency
of which is hereby acknowledged, the parties do hereby agree as follows:
ARTICLE I
EFFECTIVE TERM OF AGREEMENT
1.1 This Agent Agreement shall begin on the date shown and shall continue
without expiration unless terminated pursuant to the provisions of this
Agreement.
ARTICLE II
EXCLUSIVITY AND NON-CIRCUMVENTION
2.1 Exclusivity. During the effective term of the Agent
Agreement, CCEC shall be engaged by THV on a non-exclusive basis.
2.2 Non-Circumvention. Each party to this Agreement shall keep the existence and
the terms of this Agreement strictly confidential. Furthermore, THV shall not
attempt to contact any third party initially introduced by CCEC with the express
purpose of circumventing CCEC's participation in any transaction pursuant to
this Agreement.
ARTICLE III
CCEC PERFORMANCE OBLIGATIONS
Upon execution of the Agent Agreement by both parties, CCEC agrees to employ its
best efforts to perform the following:
3.1 To introduce sources, as outlined above, to THV, and assist in the closing
of such transactions.
3.2 THV must approve in advance, in writing, any and all matters relating to, or
otherwise affecting THV and/or its business, and for any such matter to be
effective against, or otherwise bind THV. CCEC shall use every effort to make
such parties aware, that no agreement, promise, understanding, representation or
inducement shall be effective against, or otherwise bind THV unless or until
such is approved in advance in a written agreement signed by THV.
ARTICLE IV
THV PERFORMANCE OBLIGATIONS
THV agrees to pay CCEC upon closing of any transaction associated with this
agreement as follows:
4.1 Funding: CCEC shall be entitled to receive on the closing of any funding
transaction, a cash finder's fee of 3% of total gross proceeds received by THV.
4.2 Merger/Acquisition Consulting: CCEC shall be entitled to receive on the
closing of any merger/acquisition transaction related to introductions made by
CCEC a finder's fee of 3% of the total gross value of the transaction payable in
either cash and/or free trading shares of the surviving company.
NO POWER OF AGENCY
5.1 No power of Agency. Neither party shall have the power to bind the other,
nor shall any act by either party be immutable for any purpose to the other.
ARTICLE VI
ENTIRE AGREEMENT
6.1 Entire Agreement. Other than any current and/or future agreement(s) by and
between the parties (which any said agreement(s) shall continue in full force
and effect independent of this Agreement), this Agent Agreement sets forth the
agreement and understanding of the parties hereto. No other representation,
promise or inducement has been made by any party that is not embodied in this
Agreement, and no party shall be bound by or liable for any alleged
representation, promise of inducement no so set forth.
ARTICLE VII
MODIFICATION
7.1 Modification. This Agent Agreement may be modified or added to from time to
time, at the will of the parties, provided that all subsequent modifications or
additions must be in writing and executed by the parties, nothing the date
thereof. No modifications or additions bearing a date earlier than the last of
the dates of execution below shall be valid. All future modifications, to the
extent that they conflict with the provisions contained herein, shall be deemed
as superceding the conflicting provisions set out herein.
ARTICLE VIII
ASSIGNMENT AND SUCCESSION
8.1 Assign ability. CCEC may assign any part of its rights under this Agent
Agreement with prior approval of THV and CCEC shall have the right to delegate
its duties under this Agent Agreement with the prior consent of THV.
8.2 Successors. This Agent Agreement shall be binding upon and shall inure to
the benefit of the parties hereto and their respective successors and their
assigns.
ARTICLE IX
INVALID PROVISION
9.1 Invalid Provision. In the event that any one or more provisions of the Agent
Agreement shall for any reason be duly held to be invalid, illegal or
unenforceable, such invalidity, illegality or unenforceability shall not effect
any other provision of the Agent Agreement.
ARTICLE X
COUNTERPARTS
10.1 Counterparts. This Agent Agreement may be executed in counterparts, and any
number of counterparts signed in the agreement by the parties hereto shall
constitute a single original instrument.
ARTICLE XI
HEADINGS
11.1 Headings. The headings herein are for reference only and
shall not affect the construction of t6his Agent Agreement.
ARTICLE XII
ARBITRATION
12.1 Arbitration. Any controversy or claim arising out of or relating to the
Agent Agreement, or the breach thereof, shall be settled by arbitration in
accordance with the commercial arbitration rules of the American Arbitration
Association, and judgment upon the award rendered by the arbitrator(s) may be
entered in any court having jurisdiction thereof, Seminole County, Florida shall
be the site for any arbitration proceedings.
ARTICLE XIII
COLLECTIONS
13.1 Collections. Should either party incur any expenses in enforcing provisions
of the agreement, or in collecting any debt which may arise from this agreement,
the other party shall be obligated to reimburse said party for all reasonable
costs and expenses incorrect.
ARTICLE VIX
GOVERNING LAW
14.1 Governing Law. The existence, validity, construction, operation and effect
of this Agent Agreement shall be determined in accordance with and governed by
the laws of the State of Florida, United States of America. Venue for all
litigation shall be Seminole County, Florida.
In witness thereof, the parties, have carefully considered each provision of the
Agent Agreement, note their approval and acceptance hereof by executing this
Agent Agreement shall become effective, and the term of the Agent Agreement
shall begin on the last day of execution hereunder.
CONFIRMED AND AGREED ON THE ____ DAY OF ____________, 2000
CONTINENTAL CAPITAL & EQUITY CORPORATION
By: ____________________________ _______________________________
CCEC Representative CCEC OFFICER
------------------------------- ------------------------------
Witness Witness
CONFIRMED AND AGREED ON THE ______ DAY OF _____________, 2000
THERMOVIEW INDUSTRIES, INC.
By: ____________________________ ------------------------------
Witness Witness
<PAGE>
10.6
RELEASE AND SETTLEMENT AGREEMENT
This Release and Settlement Agreement ("Agreement") is entered into this
15th day of September, 2000 between Joseph Charles & Assoc., Inc. ("Releasor"),
and ThermoView Industries, Inc., a Delaware corporation ("ThermoView"), and
Rodney H. Thomas and Alvin W. Leingang (collectively the "Individuals").
Premises
1. Joseph Charles & Assoc., Inc., ThermoView and Individuals are parties to
a "Underwriting Agreement", dated on or about December 1, 1999, and a "Lock-Up
Agreement" of various dates in which a dispute has arisen regarding the breach
of performance by ThermoView and the Individuals ("Dispute").
2. The parties desire to settle, fully and finally, the claims and causes
of action asserted or which could have been asserted by the Releasor resulting
from the Dispute.
Now, therefore, in consideration of these premises and the agreements set
forth herein, the parties agree as follows:
1. Release. Joseph Charles & Assoc., Inc., effective upon the receipt of a
validly authorized and executed stock purchase warrant providing Joseph Charles
& Assoc., Inc. the right to purchase 200,000 shares of ThermoView common stock
at a price of $12.00 for a period of twenty four months following the issuance
thereof, do hereby for its successors and assigns, release, acquit and forever
discharge the Individuals and ThermoView and its agents, employees, servants,
successors, assigns and all other persons, firms, corporations, associations,
limited liability companies or partnerships of and from any and all claims,
actions, causes of action, judgments, debts, contracts, demands, rights,
damages, costs and expenses of whatsoever nature, kind or description which any
of the undersigned now have or which they may hereinafter accrue as a result of
the Dispute.
2. No Admission. The parties understand and agree that this Agreement is
executed in compromise of disputed claims and that neither this Agreement nor
the fact of compromise constitutes an admission of any liability, violation of
law or wrongdoing of any kind or nature whatsoever on the part of any of the
parties hereto.
3. Confidentiality. The parties, including their agents, attorneys, successors
and assigns, shall not disclose, in any way, the terms of this Agreement, any
amounts offered during negotiations for the settlement of this matter or any of
the terms of this settlement to any other persons or entities except as required
by law.
4. Entire Agreement. This Agreement contains the entire agreement of the parties
with respect to the subject matter hereof. The parties represent and certify
that they have carefully read and fully understand all provisions and effects of
this Agreement, that they have consulted with counsel or have had a reasonable
opportunity to do so regarding this Agreement, that they are voluntarily
entering into this Agreement and that neither of the parties or their agents,
representatives or attorneys have made any promise or representation other than
as expressly set forth in this Agreement. This Agreement may be modified only by
a written instrument signed by each of the parties hereto.
5. Severability. Should any part, term or provision of this Agreement be
declared or determined by any court to be illegal or invalid, the validity of
the remaining parts, terms or provisions shall not be affected thereby and said
illegal or invalid part, term or provision shall be deemed not to be a part of
this Agreement.
IN WITNESS WHEREOF, the parties, intending to be legally bound, have
executed and delivered the foregoing Release and Settlement Agreement as of the
date written above.
Joseph Charles & Assoc., Inc.
By: __________________________
Its: _________________________
Thermoview Industries, Inc.
By: __________________________
Its: __________________________
<PAGE>
10.7
RELEASE AND SETTLEMENT AGREEMENT
This Release and Settlement Agreement ("Agreement") is entered into this __
day of September, 2000 between WestPark Capital, Inc., a Colorado corporation,
as a separate entity and as the successor in interest to EBI Capital Markets
(collectively referred as "WestPark" and/or "Releasor"), ThermoView Industries,
Inc., a Delaware corporation ("ThermoView"), and Rodney H. Thomas and Alvin W.
Leingang ("Individuals").
Premises
1. WestPark and ThermoView are parties to a Private Placement Engagement
Agreement dated April 19, 2000, in which a dispute has arisen regarding the
breach of performance by ThermoView ("PPM Dispute").
2. EBI Capital Markets, ThermoView and Individuals are parties to an
"Underwriting Agreement", dated on or about December 1, 1999, and a "Lock-Up
Agreement" of various dates, in which a dispute has arisen regarding the breach
of performance by ThermoView and the Individuals, and of which WestPark may
assert damages as a consequence of their purchase of ThermoView common stock
prior to the dispute ("Lock Up Dispute").
3. The parties desire to settle, fully and finally, the claims and causes
of action asserted or which could have been asserted by the Releasor resulting
from the PPM Dispute and the Lock Up Dispute.
Now, therefore, in consideration of these premises and the agreements set
forth herein, the parties agree as follows:
1. Release. WestPark Capital, Inc., on its behalf and as successor in interest
to EBI Capital Markets, effective upon the receipt of the validly authorized
financial advisor agreement providing, among other items of compensation on a
performance basis, for the non-refundable payment of $60,000 at the rate of
$5,000 per month for twelve consecutive months, and other valuable
consideration, a copy of which is attached, do hereby for its successors and
assigns, release, acquit and forever discharge the Individuals and ThermoView
and its agents, employees, directors, servants, successors, assigns and all
other persons, firms, corporations, associations, limited liability companies or
partnerships of and from any and all claims, actions, causes of action,
judgments, debts, contracts, demands, rights, damages, costs and expenses of
whatsoever nature, kind or description which any of the undersigned now have or
which they may hereinafter accrue as a result of the PPM Dispute and the Lock Up
Dispute.
2. No Admission. The parties understand and agree that this Agreement is
executed in compromise of disputed claims and that neither this Agreement nor
the fact of compromise constitutes an admission of any liability, violation of
law or wrongdoing of any kind or nature whatsoever on the part of any of the
parties hereto.
3. Confidentiality. The parties, including their agents, attorneys, successors
and assigns, shall not disclose, in any way, the terms of this Agreement, any
amounts offered during negotiations for the settlement of this matter or any of
the terms of this settlement to any other persons or entities except as required
by law.
4. Entire Agreement. This Agreement contains the entire agreement of the parties
with respect to the subject matter hereof. The parties represent and certify
that they have carefully read and fully understand all provisions and effects of
this Agreement, that they have consulted with counsel or have had a reasonable
opportunity to do so regarding this Agreement, that they are voluntarily
entering into this Agreement and that neither of the parties or their agents,
representatives or attorneys have made any promise or representation other than
as expressly set forth in this Agreement. This Agreement may be modified only by
a written instrument signed by each of the parties hereto.
5. Severability. Should any part, term or provision of this Agreement be
declared or determined by any court to be illegal or invalid, the validity of
the remaining parts, terms or provisions shall not be affected thereby and said
illegal or invalid part, term or provision shall be deemed not to be a part of
this Agreement.
IN WITNESS WHEREOF, the parties, being duly authorized and intending to be
legally bound, have executed and delivered the foregoing Release and Settlement
Agreement as of the date written above.
"Releasor"
WestPark Capital, Inc.
By: __________________________
Its: _________________________
EBI Capital Markets
By: __________________________
Its: _________________________
ThermoView Industries, Inc.
By: __________________________
Its: __________________________
<PAGE>
10.8
October 1, 2000
Mr. Larry Smith
Chief Operating Officer & President
THERMOVIEW INDUSTRIES, INC.
1011 Herr Lane
Louisville, KY 40222
Dear Mr. Smith:
This letter (the "Agreement") confirms that Thermoview Industries, Inc. (the
Company") has engaged WestPark Capital, Inc. ("WPC" or the "Advisor") as its
non-exclusive financial advisor with respect to certain business and financial
matters as set forth below. This agreement supercedes the Private Placement
Engagement Agreement dated April 19, 2000.
1. Scope of Engagement - WPC will advise the Company on an non-exclusive basis
on financial matters relating to the refinancing of the company or the possible
sale of the Company by way of a sale of stock, sale of assets, merger or
otherwise (the "Transaction"). WPC's services under this Agreement will include:
a) contacting potential acquirers and/or investors as agreed upon; c) advising
with respect to the structuring of the Transaction; and d) assisting the Company
in the negotiation of the financial aspects of the Transaction.
2. Term - The term (the "Term") of this Agreement shall be twenty-four months
from the date of the Company's acceptance of this Agreement.
3. Company Responsibilities - The Company represents and warrants to WPC that,
to the best of its knowledge, all such information provided to any party
introduced by WPC by the Company will not contain any untrue statement of a
material fact or omit to state a material fact. The Company agrees and
acknowledges that WPC expects that any party introduced by WPC will conduct its
own due diligence and will not rely on the Advisor for such information.
4. Compensation - In connection with the engagement, WPC will be paid the
following fees and expenses by the Company in the manner described below.
a) The Company will pay to WPC a non-refundable retainer fee in the amount
of $5,000 per month for the first twelve months. The first monthly
retainer is due upon acceptance of this Agreement along with 340,000
warrants with an exercise price of $12. If any portion of the retainer
is not paid within the 12 month period of the signing of this letter,
then the exercise price will be reduced to $3.
b) Equity: In consideration for the services to be provided by WPC, the
Company agrees to pay WPC a cash fee (the "Transaction Fee") based on
the following formula:
6.0% of the first $10 million of consideration/funding;
5.0% of the second $10 million of consideration/funding;
4.0% of the third $10 million of consideration/funding; and
3.0% of any additional consideration/funding.
c) Debt (excluding Senior Debt):In consideration for the services to be
provided by WPC, the Company agrees to pay WPC a cash fee (the
"Transaction Fee") based on the following formula:
4.0% of the first $10 million of consideration; 3.0% of the
second $10 million of consideration; 2.0% of the third $10
million of consideration; and 1.0% of any additional
consideration.
d) Senior Debt: In consideration for the services to be
provided by WPC, the Company agrees to pay WPC a 3.0% cash
fee (the "Transaction Fee").
e) Merger & Acquisition: In consideration for the services to
be provided by WPC, the Company agrees to pay WPC a cash
fee (the "Transaction Fee") based on the following formula:
6.0% of the first $1 million of consideration/funding;
5.0% of the second $2 million of consideration/funding;
4.0% of the third $3 million of consideration/funding; and
3.0% of the third $4 million of consideration/funding; and
2.0% of the third $5 million of consideration/funding; and
1.0% of the third $6 million of consideration/funding
For purposes of this Agreement, Consideration shall include any amounts paid to
the Company or its shareholders, including any amounts of debt, convertible
preferred stock or preferred stock assumed or refinanced or common stock or any
other type of financing.
This Transaction Fee shall be payable with respect to any Transaction closed
during a period of 24 months following the effective date of this Agreement with
any party introduced by WPC. The Transaction Fee shall only be payable with
respect to any Transaction closed during a period of 24 months following the
effective date of this Agreement with any third party introduced by WPC during
the Term of this Agreement. Upon the termination of this Agreement WPC shall
provide written notice of each third party introduced to the Company by WPC
pursuant to this Agreement. In the event of a syndicated transaction involving
more than one principal investor, the Transaction Fee shall be payable on a
ratable basis based upon the constituency of any third parties introduced by WPC
to the whole of the investors participating in the Transaction.
5. Expenses - WPC will pre-approve all expenses with The Company. The Company
will reimburse WPC on invoicing for their reasonable out-of-pocket expenses,
including the expenses of any legal counsel utilized by WPC in furtherance of a
Transaction.
6. Indemnification - In consideration of the Advisor's agreement to perform
services under this Agreement, the Company shall to the extent that a claim of
indemnification shall not be covered by any applicable coverage of insurance
issued to either WPC or the Company", the Company shall Indemnify and hold
harmless the Advisor and any of its directors, officers, employees, consultants
or agents (each, individually an "Indemnified Person") from and against any
losses, claims, damages or liabilities to which such Indemnified Person may
become subject arising out of or in connection with the rendering of services by
the Advisor hereunder, except to the extent that such losses, claims, damages or
liabilities are determined in judicial rulings to have primarily resulted from
the gross negligence or willful misconduct of such Indemnified Person; and
Reimburse such Indemnified Person for reasonable legal or other expenses as they
are incurred, that arise in connection with investigating, preparing to defend
or defending any lawsuit, claim or proceeding and any appeals therefrom arising
in any manner out of in connection with the rendering of services by the
Advisor, provided, however, that in the event a final judicial determination is
made to the effect specified in subparagraph (a) above, such Indemnified Person
promptly would remit to the Company any amounts reimbursed under the
subparagraph (b).
Following the judicial determination of any issue which has resulted in a claim
of indemnification pursuant to this Agreement reimburse such Indemnified Person
for reasonable legal or other expenses that arise in connection with the Company
and its Advisor agree that (i) the indemnification and reimbursement commitments
set forth above shall apply whether or not such Indemnified Person is named
party to any such lawsuit, claim or other proceeding; and (ii) promptly after
receipt by the Advisors of notice of its involvement in any action, proceeding
or investigation, it shall, if a claim in respect thereof is to be made under
the preceding paragraph, notify the Company in writing of such involvement. This
indemnification shall survive any termination of this Agreement.
7. Successors and Assigns - The benefits of this Agreement shall inure to the
respective successors and assigns of the parties hereto, and the obligations and
liabilities assumed in this Agreement by the parties hereto shall be binding
upon their receptive successors and assigns.
8. Governing Law - This Agreement shall be governed and construed in accordance
with the laws of the State of California.
Please confirm that the foregoing correctly sets forth our agreement by signing
the enclosed duplicate of this letter and returning it to me at the address
shown on the first page.
Very truly yours, Accepted and Agreed to:
WESTPARK CAPITAL, INC. THERMOVIEW INDUSTRIES,INC.
By: ___________________________ By:__________________________
Mr. Richard Rappaport Mr. Larry Smith
Chief Executive Officer Chief Operating Officer &
President
Date:_______________________________
<PAGE>
10.9
AGREEMENT
THIS AGREEMENT is made and entered into as of the ___ day of September,
2000, by and between THERMOVIEW INDUSTRIES, INC., a Delaware corporation
("ThermoView") and ________________________.
PRELIMINARY STATEMENTS
As of August 14, 1998, ThermoView acquired all of the outstanding shares
of capital stock of ________________________, a ________________________
corporation, pursuant to a certain Stock Purchase Agreement (the "Stock
Agreement") among ThermoView, and ________________.
Under the terms of the Stock Agreement, ____________ is entitled to
receive post-closing earn-out payments (the "Earn-out Payments"), if earned, on
December 31, and 2000.
ThermoView desires to make the remainder of the Earn-out Payments in
ThermoView 12% Cumulative Series D Preferred Stock with a stated value of $5.00
(the "Preferred Stock") in lieu of cash and ____________ desires to accept the
Preferred Stock in consideration of the remainder of the Earn-out Payments. The
terms and conditions of the Preferred Stock are further described in the
Certificate of Designation, attached hereto as Exhibit A and incorporated herein
by reference (the "Certificate").
NOW, THEREFORE, in consideration of these preliminary statements and the
mutual promises contained herein, and for other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the parties hereby
agree as follows:
1. Preferred Stock. In lieu of and in exchange for any and all cash amounts due
to ____________ by ThermoView pursuant to the Earn-out Payments under the Stock
Agreement, ____________ hereby consents to the acceptance of Preferred Stock.
Upon a determination that an Earn-Out Payment is due ____________ from
ThermoView, ThermoView shall deliver the equivalent number of shares of
Preferred Stock to ____________ within fifteen (15) business days of the
original due date of the earn-out payment.
2. No Amendment or Termination. Nothing contained in this Agreement shall
amend or terminate any obligations of ThermoView to make any and all other
Earn-out Payments, if earned, under the terms of the Stock Agreement.
3. Miscellaneous.
(a) Entire Agreement. This Agreement embodies the entire agreement and
understanding between the parties hereto with respect to the Earn-out
Payment and supersedes all prior oral or written agreements and
understandings relating to the Earn-out Payment. No statement,
representation, warranty, covenant or agreement of any kind not expressly
set forth in this Agreement shall affect, or be used to interpret, change
or restrict, the express terms and provisions of this Agreement.
(b) Modifications and Amendments. The terms and provisions of this Agreement
may be modified or amended only by written agreement executed by all
parties hereto.
(c) Benefit. This Agreement shall be binding on the parties hereto and shall
inure to the benefit of the parties hereto and the respective successors
and permitted assigns of each party hereto. Nothing in this Agreement
shall be construed to create any rights or obligations except among the
parties hereto, and no person or entity shall be regarded as a third-party
beneficiary of this Agreement.
(d) Governing Law. This Agreement and the rights and obligations of the
parties hereunder shall be construed in accordance with and governed by
the law of the Commonwealth of Kentucky, without giving effect to the
conflict of law principles thereof.
(e) Severability. In the event that any court of competent jurisdiction shall
determine that any provision, or any portion thereof, contained in this
Agreement shall be unreasonable or unenforceable in any respect, then such
provision shall be deemed limited to the extent that such court deems it
reasonable and enforceable, and as so limited shall remain in full force
and effect. In the event that such court shall deem any such provision, or
portion thereof, wholly unenforceable, the remaining provisions of this
Agreement shall nevertheless remain in full force and effect.
(f) Headings and Captions. The headings and captions of the various
subdivisions of this Agreement are for convenience of reference only and
shall in no way modify, or affect the meaning or construction of any of
the terms or provisions hereof.
(g) Counterparts. This Agreement may be executed in one or more counterparts,
and by different parties hereto on separate counterparts, each of which
shall be deemed an original, but all of which together shall constitute
one and the same instrument.
IN WITNESS WHEREOF, ThermoView has caused this Agreement to be executed by
its duly authorized officer and ____________ has executed this Agreement all as
of the date first above written.
THERMOVIEW INDUSTRIES, INC.
By:
Title:
<PAGE>
10.10
SERIES D PREFERRED
WAIVER OF DIVIDEND AGREEMENT
THIS DIVIDEND AGREEMENT is made and entered into as of the 26th day of
September, 2000, by and between THERMOVIEW INDUSTRIES, INC., a Delaware
corporation ("ThermoView") and ____________________ ("Holder").
PRELIMINARY STATEMENTS
ThermoView has previously issued, or will cause to be issued, to
Holder shares of ThermoView 12% Cumulative Series D Preferred Stock with a
stated value of $5.00 (the "Preferred Stock") in lieu of cash Earn-out Payments.
The Holder has previously provided to ThermoView an oral agreement to a) waive
payment of dividends from the Preferred Stock until September 30, 2001, b)
consent to the redemption of 300,000 shares of Preferred Stock held Rodney H.
Thomas with consideration consisting entirely of newly issued shares of Series E
12% Cumulative Preferred Stock ("Series E Preferred") and c) provide a written
consent to ThermoView to cause the filing with the Delaware Secretary of State
of an amendment to the Certificate of Designation of the Preferred Stock, which
provides for the mandatory redemption of the Series D Preferred Stock, and such
other series of preferred stock issued with rights that are pari passu with the
Series D Preferred Stock, commencing October 2001, attached hereto as Exhibit A
and incorporated herein by reference (the "Certificate").
NOW, THEREFORE, in consideration of these preliminary statements and the
mutual promises contained herein, and for other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the parties hereby
agree as follows:
1. Waiver of Dividends. By execution of this Dividend Agreement, Holder consents
to waive the payment and accrual of dividends, which would otherwise accrue from
ownership of the Preferred Stock, until September 30, 2001.
2. Consent to Redemption. Holder consents to the redemption of shares of
Preferred Stock, held by the referenced holders and in the amounts specified
below, with shares of a Series E 12% Cumulative Preferred Stock to be issued by
ThermoView:
a. Rodney H. Thomas 300,000 shares;
Holder grants this consent of redemption with the acknowledgement and
understanding that the Series E Preferred provides rights and privileges that
are not identical with the rights and prvileges of the Series D Preferred Stock,
but on a pari passu basis in the event of redemption and liquidation, to the
Preferred Stock of the Holder. The Certificate of Designation of the Series E
Preferred ("Series E Certificate") is attached hereto as Exhibit B and
incorporated herein by reference.
3. Consent to Amendment. Holder consents to the amendment to the
Certificate of Designation of the Preferred Stock, attached hereto as Exhibit A
and incorporated herein by reference (the "Certificate").
4. Miscellaneous.
(a) Entire Agreement. This Dividend Agreement embodies the entire agreement and
understanding between the parties hereto with respect to the payment of
Preferred Stock dividends and supersedes all prior oral or written
agreements and understandings relating to same. No statement,
representation, warranty, covenant or agreement of any kind not expressly
set forth in this Dividend Agreement shall affect, or be used to interpret,
change or restrict, the express terms and provisions of this Dividend
Agreement.
(b) Modifications and Amendments. The terms and provisions of this Dividend
Agreement may be modified or amended only by written agreement executed by
all parties hereto.
(c) Benefit. This Dividend Agreement shall be binding on the parties hereto and
shall inure to the benefit of the parties hereto and the respective
successors and permitted assigns of each party hereto. Nothing in this
Dividend Agreement shall be construed to create any rights or obligations
except among the parties hereto, and no person or entity shall be regarded
as a third-party beneficiary of this Dividend Agreement.
(d) Governing Law. This Dividend Agreement and the rights and obligations of
the parties hereunder shall be construed in accordance with and governed
by the law of the Commonwealth of Kentucky, without giving effect to the
conflict of law principles thereof.
(e) Severability. In the event that any court of competent jurisdiction shall
determine that any provision, or any portion thereof, contained in this
Dividend Agreement shall be unreasonable or unenforceable in any respect,
then such provision shall be deemed limited to the extent that such court
deems it reasonable and enforceable, and as so limited shall remain in full
force and effect. In the event that such court shall deem any such
provision, or portion thereof, wholly unenforceable, the remaining
provisions of this Dividend Agreement shall nevertheless remain in full
force and effect.
(f) Headings and Captions. The headings and captions of the various
subdivisions of this Dividend Agreement are for convenience of reference
only and shall in no way modify, or affect the meaning or construction of
any of the terms or provisions hereof.
(g) Counterparts. This Dividend Agreement may be executed in one or more
counterparts, and by different parties hereto on separate counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument.
IN WITNESS WHEREOF, ThermoView has caused this Dividend Agreement to be
executed by its duly authorized officer and Holder has executed this Dividend
Agreement all as of the date first above written.
THERMOVIEW INDUSTRIES, INC.
By:
Title:
Holder
<PAGE>
EXHIBIT A
AMENDMENT TO SERIES D PREFERRED STOCK
CERTIFICATE OF DESIGNATION
<PAGE>
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF DESIGNATION
OF
CUMULATIVE PREFERRED STOCK, SERIES D
OF
THERMOVIEW INDUSTRIES, INC.
-----------------------------------------------
Pursuant to Section 151 of the
General Corporation Law of the State of Delaware
-----------------------------------------------
ThermoView Industries, Inc., a Delaware corporation (the "Company")
certifies that pursuant to the authority contained in Section 4.2 of Article IV
of its Restated Certificate of Incorporation, as amended, and in accordance with
the provisions of Section 151 of the General Corporation Law of the State of
Delaware, the Board of Directors of the Company, at a meeting held on September
26, 2000, duly approved and adopted the following amendment to the Certificate
of Designation of 12% Series D Cumulative Preferred Stock (the "Certificate of
Designation") and with the written consent of all existing holders of the 12%
Series D Cumulative Preferred Stock:
A. The preamble of the Certificate of Designation is hereby replaced in its
entirety with the following:
Pursuant to Section 141(f) of the General Corporation Law of the State of
Delaware (the "DGCL"), the Board of Directors of ThermoView Industries, Inc., a
Delaware corporation (the "Company"), hereby unanimously consents to, adopts and
ratifies the following resolution:
RESOLVED, that pursuant to the authority expressly granted to and vested
in the Board of Directors of the Company by the provisions of Section 4.2
of Article IV of the Restated Certificate of Incorporation of the Company
(the "Restated Certificate of Incorporation"), and Section 151(g) of the
DGCL, such Board of Directors hereby creates, from the 5,000,000
authorized shares of Preferred Stock, par value $.001 per share (the
"Preferred Stock"), of the Company authorized to be issued pursuant to the
Restated Certificate of Incorporation, a series of Preferred Stock, and
hereby fixes by this certificate of designation (this "Certificate of
Designation") the voting powers, designations, preferences and relative,
participating, optional or other special rights, and qualifications,
limitations or restrictions thereof, of the shares of such series as
follows:
The series of Preferred Stock hereby established shall consist of
2,000,000 shares designated as "12% Cumulative Series D Preferred
Stock" (hereinafter called the "Series D Preferred Stock"), which
shall have a stated value of $5.00 per share. The relative rights,
preferences and limitations of such series shall be as follows:
B. Section 2 of the Certificate of Designation is hereby
replaced in its entirety with the following:
(2) Dividends.
(a) Holders of shares of Series D Preferred Stock will be entitled to
receive, when, as and if declared by the Board of Directors of the Company, out
of funds of the Company legally available for payment, subject to the prior and
superior rights of Senior Stock, but pari passu with Parity Stock, and in
preference to Junior Stock, cumulative cash dividends at the rate per annum of
$0.60 per share of Series D Preferred Stock. Dividends on the Series D Preferred
Stock will begin to accrue commencing October 1, 2001 and will be payable
quarterly in arrears on the last calendar day of April, July, October and
January of each year, commencing October 31, 2001 (and in the case of any
accumulated and unpaid dividends not paid on the corresponding dividend payment
date, at such additional times and for such interim periods, if any, as
determined by the Board of Directors). Dividends will be cumulative from such
date, whether or not in any dividend period or periods there shall be funds of
the Company legally available for the payment of such dividends. Each such
dividend will be payable to holders of record as they appear on the stock
records of the Company at the close of business on such record dates, not more
than 60 days nor less than 10 days preceding the payment dates thereof, as shall
be fixed by the Board of Directors of the Company. Accumulations of dividends on
shares of Series D Preferred Stock will not bear interest. Dividends payable on
the Series D Preferred Stock for any period greater or less than a full dividend
period will be computed on the basis of actual days. Dividends payable on the
Series D Preferred Stock for each full dividend period will be computed by
dividing the annual dividend rate by four.
(b) Except as provided in the next sentence, no dividend will be
declared or paid on any Parity Stock unless full cumulative dividends have been
declared and paid or are contemporaneously declared and funds sufficient for
payment set aside on the Series D Preferred Stock for all prior dividend
periods. If accrued dividends on the Series D Preferred Stock for all prior
periods have not been paid in full, then any dividends declared on the Series D
Preferred Stock for any dividend period and on any Parity Stock will be declared
ratably in proportion to accumulated and unpaid dividends on the Series D
Preferred Stock and such Parity Stock.
(c) So long as the shares of the Series D Preferred Stock shall be
outstanding, unless (i) full cumulative dividends shall have been paid or
declared and set apart for payment on all outstanding shares of the Series D
Preferred Stock and any Parity Stock, (ii) sufficient funds have been paid or
set apart for the payment of the dividend for the current dividend period with
respect to the Series D Preferred Stock and any Parity Stock and (iii) the
Company is not in default or in arrears with respect to the mandatory or
optional redemption or mandatory repurchase or other mandatory retirement of, or
with respect to any sinking or other analogous fund for, the Series D Preferred
Stock or any Parity Stock, the Company may not declare any dividends on any
Junior Stock, or make any payment on account of, or set apart money for, the
purchase, redemption or other retirement of, or for a sinking or other analogous
fund for, any shares of Junior Stock or make any distribution in respect
thereof, whether in cash or property or in obligations or stock of the Company,
other than (x) Junior Stock which is neither convertible into, nor exchangeable
or exercisable for, any securities of the Company other than Junior Stock, or
(y) Common Stock acquired in connection with the cashless exercise of options
under employee incentive or benefit plans of the Company or any subsidiary or
any other redemption or purchase or other acquisition of Common Stock made in
the ordinary course of business, which has been approved by the Board of
Directors of the Company, for the purpose of any employee incentive or benefit
plan of the Company. The limitations in this paragraph do not restrict the
Company's ability to take the actions in this paragraph with respect to any
Parity Stock. As used in this subparagraph (c), the term "dividend" with respect
to Junior Stock does not include dividends payable solely in shares of Junior
Stock on Junior Stock, or in options, warrants or rights to holders of Junior
Stock to subscribe for or purchase any Junior Stock.
C. Section 3 of the Certificate of Designation is hereby
replaced in its entirety with the following:
(3) Optional Redemption.
(a) The shares of Series D Preferred Stock will be redeemable at the
option of the Company in whole or in part, for cash or for such number of shares
of Common Stock as equals the Liquidation Preference (defined hereinafter in
paragraph (4)) of the Series D Preferred Stock to be redeemed (without regard to
accumulated and unpaid dividends) as of the opening of business on the date set
for such redemption. In order to exercise its redemption option, the Company
must notify the holders of record of its Series D Preferred Stock in writing
(the "Conditions Satisfaction Notice") prior to the opening of business on the
second trading day after the conditions of redemption have, from time to time,
been satisfied.
(b) Notice of redemption (the "Redemption Notice") will be given by
mail to the holders of the Series D Preferred Stock not less than 30 nor more
than 60 days prior to the date selected by the Company to redeem the Series D
Preferred Stock. The Redemption Notice shall be deemed to have been given when
deposited in the United States mail, first-class mail, postage prepaid, whether
or not such notice is actually received. Any failure to mail the notice provided
or any defect in notice or in the mailing of notice will not affect the validity
of the proceedings for the redemption of any shares to be so redeemed. The
Company's right to exercise its redemption option will not be affected by
changes in the closing price of the Common Stock following such 30-day period.
If fewer than all of the shares of Series D Preferred Stock are to be redeemed,
the shares to be redeemed shall be selected by lot or pro rata or in some other
equitable manner determined by the Board of Directors of the Company; provided,
however, that the Company shall not be required to effect the redemption in any
manner that results in additional fractional shares being outstanding.
(c) On the redemption date, the Company must pay, in cash, on each
share of Series D Preferred Stock to be redeemed any accumulated and unpaid
dividends through the redemption date. In the case of a redemption date falling
after a dividend payment record date and prior to the related payment date, the
holders of the Series D Preferred Stock at the close of business on such record
date will be entitled to receive the dividend payable on such shares on the
corresponding dividend payment date, notwithstanding the redemption of such
shares following such dividend payment record date. Except as provided for in
the preceding sentence, no payment or allowance will be made for accumulated and
unpaid dividends on any shares of Series D Preferred Stock called for redemption
or on the shares of Common Stock issuable upon such redemption.
(d) On and after the date fixed for redemption, provided that the
Company has made available at the office of its registrar and transfer agent a
sufficient number of shares of Common Stock and an amount of cash to effect the
redemption, dividends will cease to accrue on the Series D Preferred Stock
called for redemption (except that, in the case of a redemption date after a
dividend payment record date and prior to the related dividend payment date,
holders of Series D Preferred Stock on the dividend payment record date will be
entitled on such dividend payment date to receive the dividend payable on such
shares), such shares shall be cancelled and shall no longer be deemed to be
outstanding and all rights of the holders of such shares of Series D Preferred
Stock shall cease except the right to receive the shares of Common Stock upon
such redemption and any cash payable upon such redemption, without interest from
the date of such redemption. Such cancelled shares shall be restored to the
status of authorized but unissued shares of Preferred Stock, without designation
as to series, and may thereafter be issued but not as shares of Series D
Preferred Stock. At the close of business on the redemption date upon surrender
in accordance with such notice of the certificates representing any such shares
(properly endorsed or assigned for transfer, if the Board of Directors of the
Company shall so require and the notice shall so state), each holder of Series D
Preferred Stock (unless the Company defaults in the delivery of the shares of
Common Stock or cash) will be, without any further action, deemed a holder of
the number of shares of Common Stock for which such Series D Preferred Stock is
redeemable.
(e) Fractional shares of Common Stock are not to be issued upon
redemption of the Series D Preferred Stock, but, in lieu thereof, the Company
will pay a cash adjustment based on the current market price of the Common Stock
on the day prior to the redemption date. If fewer than all the shares
represented by any such certificate are redeemed, a new certificate shall be
issued representing the unredeemed shares of Series D Preferred Stock without
cost to the holder thereof.
(f) Any shares or cash set aside by the Company pursuant to
subparagraph (e) and unclaimed at the end of three years from the date fixed for
redemption shall revert to the Company.
(g) Subject to applicable law and the limitation on purchases when
dividends on the Series D Preferred Stock are in arrears, the Company may, at
any time and from time to time, purchase any shares of the Series D Preferred
Stock by tender or by private agreement.
(3A.)Mandatory Redemption
(a) The Company will, at the redemption price equal to the sum of
$5.00 per share, redeem from any source of funds legally available therefor,
twenty percent (20%) of all shares of Series D Preferred Stock and Parity Stock,
on an annual basis commencing October 1, 2001, and continuing on an annual basis
until such time that all shares have been redeemed pursuant to the Certificate
of Designation or by agreement of the Holders of such shares.
(b) In the event of a redemption on only a portion of the then
outstanding shares of Series D Preferred Stock, the Company will effect the
redemption pro rata according to the number of shares held by each holder of
Parity Stock,
(c ) At least ten (10) days and not more than thirty (30) days prior
to the date fixed for any redemption under this subsection of the Series D
Preferred Stock or Parity Stock, written notice (the "Redemption Notice") will
be mailed, postage prepaid, to each holder of record of the Series D Preferred
Stock and Parity Stock at his or her post office address last shown on the
records of the Company. The Redemption Notice will state:
(1) whether all or less than all the outstanding shares of Series D
Preferred Stock and Parity Stock are to be redeemed and the total
number of shares of Series D Preferred Stock and Parity Stock being
redeemed;
(2) the number of shares of Series D Preferred Stock and Parity Stock
held by the holder that the Company intends to redeem;
(3) the Redemption Date and the Redemption Price; and
(4) that the holder is to surrender to the Company, in the manner and at
the place designated, his or her certificate or certificates
representing the shares of Series D Preferred Stock and Parity Stock
to be redeemed.
The Redemption Notice shall be deemed to have been given when deposited in the
United States mail, first-class mail, postage prepaid, whether or not such
notice is actually received. Any failure to mail the notice provided or any
defect in notice or in the mailing of notice will not affect the validity of the
proceedings for the redemption of any shares to be so redeemed.
(d) On or before the date fixed for redemption, each holder of Series
D Preferred Stock and Parity Stock will surrender the certificate or
certificates representing the shares of Series D Preferred Stock and Parity
Stock to the Company, in the manner and at the place designated in the
Redemption Notice, and the Redemption Price for the shares will be payable in
cash on the Redemption Date to the person whose name appears on the certificate
or certificates as the owner, and each surrendered certificate will be cancelled
and retired. In the event that less than all of the shares represented by any
certificate are redeemed, a new certificate will be issued representing the
unredeemed shares.
(e) Unless the Company fails to pay in full the Redemption Price, dividends on
the Series D Preferred Stock called for redemption will cease to accumulate on
the Redemption Date, and all rights of the holders of the shares redeemed will
cease to have any further rights with respect to the shares on the Redemption
Date, other than to receive the Redemption Price. Upon the failure to pay, as
described in the immediately preceding sentence, the dividend rate for such
portion of unredeemed Series D Preferred Stock shall increase by two percent
(2%) on an annual basis until such time that the portion of the Series D
Preferred Stock and Parity Stock for which a failure to pay has occurred is
redeemed. In no event shall the applicable dividend rate pursuant to this
provision increase the rate of dividend payable on the outstanding Series D
Preferred Stock and Parity Stock above sixteen percent (16%) per annum.
(f) Subject to applicable law and the limitation on purchases when
dividends on the Series D Preferred Stock are in arrears, the Company may, at
any time and from time to time, purchase any shares of the Series D Preferred
Stock by tender or by private agreement.
IN WITNESS WHEREOF ThermoView Industries, Inc. has caused this Certificate
to be signed by its President on this __ day of September 2000.
------------------------------------
Name: Charles L. Smith
Title: President
<PAGE>
EXHIBIT B
SERIES E PREFERRED STOCK
CERTIFICATE OF DESIGNATION
<PAGE>
CERTIFICATE OF DESIGNATION
CERTIFICATE OF THE VOTING POWERS, DESIGNATIONS, PREFERENCES
AND RELATIVE, PARTICIPATING, OPTIONAL OR OTHER
SPECIAL RIGHTS, AND QUALIFICATIONS, LIMITATIONS OR
RESTRICTIONS THEREOF, OF 12% SERIES E CUMULATIVE
PREFERRED STOCK
OF
THERMOVIEW INDUSTRIES, INC.
Pursuant to Section 151 of the General Corporation Law
of the State of Delaware
Pursuant to Section 141(f) of the General Corporation Law of the State of
Delaware (the "DGCL"), the Board of Directors of ThermoView Industries, Inc., a
Delaware corporation (the "Company"), hereby unanimously consents to, adopts and
ratifies the following resolution:
RESOLVED, that pursuant to the authority expressly granted to and vested
in the Board of Directors of the Company by the provisions of Section 4.2
of Article IV of the Restated Certificate of Incorporation of the Company
(the "Restated Certificate of Incorporation"), and Section 151(g) of the
DGCL, such Board of Directors hereby creates, from the 5,000,000
authorized shares of Preferred Stock, par value $.001 per share (the
"Preferred Stock"), of the Company authorized to be issued pursuant to the
Restated Certificate of Incorporation, a series of Preferred Stock, and
hereby fixes by this certificate of designation (this "Certificate of
Designation") the voting powers, designations, preferences and relative,
participating, optional or other special rights, and qualifications,
limitations or restrictions thereof, of the shares of such series as
follows:
The series of Preferred Stock hereby established shall consist of
500,000 shares designated as "12% Cumulative Series E Preferred
Stock" (hereinafter called the "Series E Preferred Stock"), which
shall have a stated value of $5.00 per share. The relative rights,
preferences and limitations of such series shall be as follows:
12% CUMULATIVE SERIES E PREFERRED STOCK
(1) Ranking. The Series E Preferred Stock will, with respect to payment of
dividends and amounts upon liquidation, dissolution or winding up, rank (i)
senior to the Common Stock of the Company, $.001 par value (the "Common Stock")
and to shares of all other series of Preferred Stock issued by the Company the
terms of which specifically provide that the capital stock of such series rank
junior to such Series E Preferred Stock with respect to dividend rights or
distributions upon dissolution of the Company ("Junior Stock"); (ii) on a parity
with (a) all shares of the Company's 9.6% Cumulative Convertible Series C
Preferred Stock, (b) all of the shares of the Company's 12% Cumulative Series D
Preferred Stock, and (c) the shares of all capital stock issued by the Company
whether or not the dividend rates, dividend payment dates, or redemption or
liquidation prices per share thereof shall be different from those of the Series
E Preferred Stock, if the holders of stock of such class or series shall be
entitled by the terms thereof to the receipt of dividends or of amounts
distributable upon liquidation, dissolution or winding up, as the case may be,
in proportion to their respective dividend rates or liquidation prices, without
preference or priority of one over the other as between the holders of such
stock and the holders of shares of Series E Preferred Stock (collectively (a)
and (b) being "Parity Stock"); and (iii) junior to all capital stock issued by
the Company the terms of which specifically provide that the shares rank senior
to the Series E Preferred Stock with respect to dividends and distributions upon
dissolution of the Company ("Senior Stock").
(2) Dividends.
(a) Holders of shares of Series E Preferred Stock will be entitled to
receive, when, as and if declared by the Board of Directors of the Company, out
of funds of the Company legally available for payment, subject to the prior and
superior rights of Senior Stock, but pari passu with Parity Stock, and in
preference to Junior Stock, cumulative cash dividends at the rate per annum of
$0.60 per share of Series E Preferred Stock. Dividends on the Series E Preferred
Stock will be payable quarterly in arrears on the last calendar day of April,
July, October and January of each year, commencing October 1, 2001 (and in the
case of any accumulated and unpaid dividends not paid on the corresponding
dividend payment date, at such additional times and for such interim periods, if
any, as determined by the Board of Directors). Each such dividend will be
payable to holders of record as they appear on the stock records of the Company
at the close of business on such record dates, not more than 60 days nor less
than 10 days preceding the payment dates thereof, as shall be fixed by the Board
of Directors of the Company. Dividends will accrue from the date of the original
issuance of the Series E Preferred Stock. Dividends will be cumulative from such
date, whether or not in any dividend period or periods there shall be funds of
the Company legally available for the payment of such dividends.
Each such dividend will be payable to holders of record as they appear on the
stock records of the Company at the close of business on such record dates, not
more than 60 days nor less than 10 days preceding the payment dates thereof, as
shall be fixed by the Board of Directors of the Company. Accumulations of
dividends on shares of Series E Preferred Stock will not bear interest.
Dividends payable on the Series E Preferred Stock for any period greater or less
than a full dividend period will be computed on the basis of actual days.
Dividends payable on the Series E Preferred Stock for each full dividend period
will be computed by dividing the annual dividend rate by four.
(b) Except as provided in the next sentence, no dividend will be
declared or paid on any Parity Stock unless full cumulative dividends have been
declared and paid or are contemporaneously declared and funds sufficient for
payment set aside on the Series E Preferred Stock for all prior dividend
periods. If accrued dividends on the Series E Preferred Stock for all prior
periods have not been paid in full, then any dividends declared on the Series E
Preferred Stock for any dividend period and on any Parity Stock will be declared
ratably in proportion to accumulated and unpaid dividends on the Series E
Preferred Stock and such Parity Stock.
(c) So long as the shares of the Series E Preferred Stock shall be
outstanding, unless (i) full cumulative dividends shall have been paid or
declared and set apart for payment on all outstanding shares of the Series E
Preferred Stock and any Parity Stock, (ii) sufficient funds have been paid or
set apart for the payment of the dividend for the current dividend period with
respect to the Series E Preferred Stock and any Parity Stock and (iii) the
Company is not in default or in arrears with respect to the mandatory or
optional redemption or mandatory repurchase or other mandatory retirement of, or
with respect to any sinking or other analogous fund for, the Series E Preferred
Stock or any Parity Stock, the Company may not declare any dividends on any
Junior Stock, or make any payment on account of, or set apart money for, the
purchase, redemption or other retirement of, or for a sinking or other analogous
fund for, any shares of Junior Stock or make any distribution in respect
thereof, whether in cash or property or in obligations or stock of the Company,
other than (x) Junior Stock which is neither convertible into, nor exchangeable
or exercisable for, any securities of the Company other than Junior Stock, or
(y) Common Stock acquired in connection with the cashless exercise of options
under employee incentive or benefit plans of the Company or any subsidiary or
any other redemption or purchase or other acquisition of Common Stock made in
the ordinary course of business, which has been approved by the Board of
Directors of the Company, for the purpose of any employee incentive or benefit
plan of the Company. The limitations in this paragraph do not restrict the
Company's ability to take the actions in this paragraph with respect to any
Parity Stock. As used in this subparagraph (c), the term "dividend" with respect
to Junior Stock does not include dividends payable solely in shares of Junior
Stock on Junior Stock, or in options, warrants or rights to holders of Junior
Stock to subscribe for or purchase any Junior Stock.
(3) Optional Redemption.
(a) The shares of Series E Preferred Stock will be redeemable at the
option of the Company in whole or in part, for cash or for such number of shares
of Common Stock as equals the Liquidation Preference (defined hereinafter in
paragraph (4)) of the Series E Preferred Stock to be redeemed (without regard to
accumulated and unpaid dividends) as of the opening of business on the date set
for such redemption. In order to exercise its redemption option, the Company
must notify the holders of record of its Series E Preferred Stock in writing
(the "Conditions Satisfaction Notice") prior to the opening of business on the
second trading day after the conditions of redemption have, from time to time,
been satisfied.
(b) Notice of redemption (the "Redemption Notice") will be given by
mail to the holders of the Series E Preferred Stock not less than 30 nor more
than 60 days prior to the date selected by the Company to redeem the Series E
Preferred Stock. The Redemption Notice shall be deemed to have been given when
deposited in the United States mail, first-class mail, postage prepaid, whether
or not such notice is actually received. Any failure to mail the notice provided
or any defect in notice or in the mailing of notice will not affect the validity
of the proceedings for the redemption of any shares to be so redeemed. The
Company's right to exercise its redemption option will not be affected by
changes in the closing price of the Common Stock following such 30-day period.
If fewer than all of the shares of Series E Preferred Stock are to be redeemed,
the shares to be redeemed shall be selected by lot or pro rata or in some other
equitable manner determined by the Board of Directors of the Company; provided,
however, that the Company shall not be required to effect the redemption in any
manner that results in additional fractional shares being outstanding.
(c) On the redemption date, the Company must pay, in cash, on each
share of Series E Preferred Stock to be redeemed any accumulated and unpaid
dividends through the redemption date. In the case of a redemption date falling
after a dividend payment record date and prior to the related payment date, the
holders of the Series E Preferred Stock at the close of business on such record
date will be entitled to receive the dividend payable on such shares on the
corresponding dividend payment date, notwithstanding the redemption of such
shares following such dividend payment record date. Except as provided for in
the preceding sentence, no payment or allowance will be made for accumulated and
unpaid dividends on any shares of Series E Preferred Stock called for redemption
or on the shares of Common Stock issuable upon such redemption.
(d) On and after the date fixed for redemption, provided that the
Company has made available at the office of its registrar and transfer agent a
sufficient number of shares of Common Stock and an amount of cash to effect the
redemption, dividends will cease to accrue on the Series E Preferred Stock
called for redemption (except that, in the case of a redemption date after a
dividend payment record date and prior to the related dividend payment date,
holders of Series E Preferred Stock on the dividend payment record date will be
entitled on such dividend payment date to receive the dividend payable on such
shares), such shares shall be cancelled and shall no longer be deemed to be
outstanding and all rights of the holders of such shares of Series E Preferred
Stock shall cease except the right to receive the shares of Common Stock upon
such redemption and any cash payable upon such redemption, without interest from
the date of such redemption. Such cancelled shares shall be restored to the
status of authorized but unissued shares of Preferred Stock, without designation
as to series, and may thereafter be issued but not as shares of Series E
Preferred Stock. At the close of business on the redemption date upon surrender
in accordance with such notice of the certificates representing any such shares
(properly endorsed or assigned for transfer, if the Board of Directors of the
Company shall so require and the notice shall so state), each holder of Series E
Preferred Stock (unless the Company defaults in the delivery of the shares of
Common Stock or cash) will be, without any further action, deemed a holder of
the number of shares of Common Stock for which such Series E Preferred Stock is
redeemable.
(e) Fractional shares of Common Stock are not to be issued upon
redemption of the Series E Preferred Stock, but, in lieu thereof, the Company
will pay a cash adjustment based on the current market price of the Common Stock
on the day prior to the redemption date. If fewer than all the shares
represented by any such certificate are redeemed, a new certificate shall be
issued representing the unredeemed shares of Series E Preferred Stock without
cost to the holder thereof.
(f) Any shares or cash set aside by the Company pursuant to
subparagraph (e) and unclaimed at the end of three years from the date fixed for
redemption shall revert to the Company.
(g) Subject to applicable law and the limitation on purchases when
dividends on the Series E Preferred Stock are in arrears, the Company may, at
any time and from time to time, purchase any shares of the Series E Preferred
Stock by tender or by private agreement.
(3A.)Mandatory Redemption
(a) The Company will, at the redemption price equal to the sum of
$5.00 per share, redeem from any source of funds legally available therefor,
twenty percent (20%) of all shares of Series E Preferred Stock and Parity Stock,
on an annual basis commencing October 1, 2001, and continuing on an annual basis
until such time that all shares have been redeemed pursuant to the Certificate
of Designation or by agreement of the Holders of such shares.
(b) In the event of a redemption on only a portion of the then
outstanding shares of Series E Preferred Stock, the Company will effect the
redemption pro rata according to the number of shares held by each holder of
Parity Stock,
(c ) At least ten (10) days and not more than thirty (30) days prior
to the date fixed for any redemption under this subsection of the Series E
Preferred Stock or Parity Stock, written notice (the "Redemption Notice") will
be mailed, postage prepaid, to each holder of record of the Series E Preferred
Stock and Parity Stock at his or her post office address last shown on the
records of the Company. The Redemption Notice will state:
(1) whether all or less than all the outstanding shares of Series E
Preferred Stock and Parity Stock are to be redeemed and the total
number of shares of Series E Preferred Stock and Parity Stock being
redeemed;
(2) the number of shares of Series E Preferred Stock and Parity Stock
held by the holder that the Company intends to redeem;
(3) the Redemption Date and the Redemption Price; and
(4) that the holder is to surrender to the Company, in the manner and at
the place designated, his or her certificate or certificates
representing the shares of Series E Preferred Stock and Parity Stock
to be redeemed.
The Redemption Notice shall be deemed to have been given when deposited in the
United States mail, first-class mail, postage prepaid, whether or not such
notice is actually received. Any failure to mail the notice provided or any
defect in notice or in the mailing of notice will not affect the validity of the
proceedings for the redemption of any shares to be so redeemed.
(d) On or before the date fixed for redemption, each holder of Series
E Preferred Stock and Parity Stock will surrender the certificate or
certificates representing the shares of Series E Preferred Stock and Parity
Stock to the Company, in the manner and at the place designated in the
Redemption Notice, and the Redemption Price for the shares will be payable in
cash on the Redemption Date to the person whose name appears on the certificate
or certificates as the owner, and each surrendered certificate will be cancelled
and retired. In the event that less than all of the shares represented by any
certificate are redeemed, a new certificate will be issued representing the
unredeemed shares.
(f) Unless the Company fails to pay in full the Redemption Price, dividends on
the Series E Preferred Stock called for redemption will cease to accumulate on
the Redemption Date, and all rights of the holders of the shares redeemed will
cease to have any further rights with respect to the shares on the Redemption
Date, other than to receive the Redemption Price. Upon the failure to pay, as
described in the immediately preceding sentence, the dividend rate for such
portion of unredeemed Series E Preferred Stock shall increase by two percent
(2%) on an annual basis until such time that the portion of the Series E
Preferred Stock and Parity Stock for which a failure to pay has occurred is
redeemed. In no event shall the applicable dividend rate pursuant to this
provision increase the rate of dividend payable on the outstanding Series E
Preferred Stock and Parity Stock above sixteen percent (16%) per annum.
(f) Subject to applicable law and the limitation on purchases when
dividends on the Series E Preferred Stock are in arrears, the Company may, at
any time and from time to time, purchase any shares of the Series E Preferred
Stock by tender or by private agreement.
(4) Liquidation Preference.
(a) The holders of shares of Series E Preferred Stock will be
entitled to receive in the event of any liquidation, dissolution or winding up
of the Company, whether voluntary or involuntary, $5.00 per share of Series E
Preferred Stock (the "Liquidation Preference"), plus an amount per share of
Series E Preferred Stock equal to all dividends (whether or not earned or
declared) accumulated and unpaid thereon to the date of final distribution to
such holders, and no more. If, upon any liquidation, dissolution or winding up
of the Company, the assets of the Company, or proceeds thereof, distributable
among the holders of the Series E Preferred Stock are insufficient to pay in
full the liquidation preference with respect to the Series E Preferred Stock and
any other Parity Stock, then such assets, or the proceeds thereof, will be
distributed among the holders of Series E Preferred Stock and any such Parity
Stock ratably in accordance with the respective amounts which would be payable
on such Series E Preferred Stock and any such Parity Stock if all amounts
payable thereon were paid in full.
(b) Neither a consolidation or merger of the Company with or into
another corporation, nor a sale, lease or transfer of all or substantially all
of the Company's assets will be considered a liquidation, dissolution or winding
up, voluntary or involuntary, of the Company.
(5) Voting Rights. Except as may be required by applicable law from time to
time, the holders of shares of Series E Preferred Stock will have no voting
rights.
(6) Sinking Fund. The Series E Preferred Stock shall not be entitled to any
sinking fund.
WITNESS THE SIGNATURE of the undersigned who is the President and Chief
Operating Officer of ThermoView Industries, Inc. as of this ___ day of
September, 2000.
------------------------------
Charles L. Smith
<PAGE>
10.11
Warrant to Purchase 200,000
Shares of Common Stock
COMMON STOCK PURCHASE WARRANT
Dated: October 1, 2000
THIS CERTIFIES THAT JOSEPH CHARLES & ASSOCIATES (herein sometimes called
the "Holder") is entitled to purchase from THERMOVIEW INDUSTRIES, INC., a
Delaware corporation (the "Company"), at the price and during the period as
hereinafter specified, up to two hundred thousand (200,000) shares (the
"Shares") of common stock, $0.001 par value per share (the "Common Stock"), at a
purchase price of $12.00 per share subject to adjustment as described below, at
any time during the two year period from the date hereof.
This Common Stock Purchase Warrant (the "Warrant") is issued pursuant to
an agreement between the Company and Joseph Charles & Associates dated September
__, 2000.
1. The rights represented by the Common Stock Purchase Warrant shall be
exercised at the price, subject to adjustment in accordance with Section 8
hereof (the "Exercise Price"), and during the periods as follows:
(a) Between the date hereof and October 1, 2002, (twenty four (24)
months from the date hereof, i.e. the "Expiration Date")
inclusive, the Holder shall have the option to purchase Shares
hereunder at a price of $12.00 per Share.
(b) After the Expiration Date, the Holder shall have no right to
purchase any Shares hereunder.
2. (a) The rights represented by the Common Stock Purchase Warrant may be
exercised at any time within the periods above specified, in whole or in part,
by (i) the surrender of the Common Stock Purchase Warrant (with the purchase
form at the end hereof properly executed) at the principal executive office of
the Company (or such other office or agency of the Company as it may designate
by notice in writing to the Holder at the address of the Holder appearing on the
books of the Company); (ii) payment to the Company of the exercise price then in
effect for the number of Shares specified in the above-mentioned purchase form
together with applicable stock transfer taxes, if any; and (iii) delivery to the
Company of a duly executed agreement signed by the person(s) designated in the
purchase form to the effect that such person(s) agree(s) to be bound by the
provisions of paragraph 6 and subparagraphs (b), (c) and (d) of paragraph 7
hereof. The Common Stock Purchase Warrant shall be deemed to have been
exercised, in whole or in part to the extent specified, immediately prior to the
close of business on the date the Common Stock Purchase Warrant is surrendered
and payment is made in accordance with the foregoing provisions of this
paragraph 2, and the person or persons in whose name or names the certificates
for the Shares shall be issuable upon such exercise shall become the holder or
holders of record of such Shares at that time and date. The Shares and the
certificates for the Shares so purchased shall be delivered to the Holder within
a reasonable time, not exceeding ten (10) business days, after the rights
represented by this Common Stock Purchase Warrant shall have been so exercised.
3. This Common Stock Purchase Warrant must be executed immediately upon
its transfer and if not so executed, shall lapse. Any such assignment shall be
effected by the Holder by (i) executing the form of assignment at the end hereof
and (ii) surrendering the Common Stock Purchase Warrant for cancellation at the
office or agency of the Company referred to in paragraph 2 hereof, accompanied
by a certificate (signed by an officer of the Holder if the Holder is a
corporation) stating that each transferee is a permitted transferee under this
paragraph 3; whereupon the Company shall issue, in the name or names specified
by the Holder (including the Holder), a new Common Stock Purchase Warrant or
Warrants of like tenor and representing in the aggregate rights to purchase the
same number of Shares as are purchasable hereunder at such time.
4. The Company covenants and agrees that all Shares which may be purchased
hereunder will, upon issuance and delivery against payment therefor of the
requisite purchase price, be duly and validly issued, fully paid and
nonassessable. The Company further covenants and agrees that, during the periods
within which the Common Stock Purchase Warrant may be exercised, the Company
will at all times have authorized and reserved a sufficient number of shares of
its Common Stock to provide for the exercise of the Common Stock Purchase
Warrant.
5. The Common Stock Purchase Warrant shall not entitle the Holder to any
voting rights or other rights, including without limitation notice of meetings
of other actions or receipt of dividends, as a stockholder of the Company.
6. (a) The Company shall advise the Holder or its permitted transferee,
whether the Holder holds the Common Stock Purchase Warrant or has exercised the
Common Stock Purchase Warrant and holds Shares, by written notice at least four
weeks prior to the filing of any new registration statement thereto under the
Act, or the filing of a notification on Form 1-A under the Act for a public
offering of securities, covering any securities of the Company, for its own
account or for the account of others, except for any registration statement
filed on Form S-4 or S-8 (or other comparable form), and will, during the
eighteen (18) month period from the date hereof, upon the request of the Holder,
include in any such new registration statement (or notification as the case may
be) such information as may be required to permit a public offering of, all or
any of the Shares underlying the Common Stock Purchase Warrant (the "Registrable
Securities").
(b) At such time that the Company is eligible to register securities
by the use of Form S-3 (or other comparable form) during the twenty four (24)
month period beginning on the date hereof, a 50% Holder (as defined below) may
request, on one occasion, that the Company register under the Act any and all of
the Registrable Securities held by such 50% Holder. Upon the receipt of any such
notice, the Company will promptly, but no later than four weeks after receipt of
such notice, file a post-effective amendment to the current Registration
Statement or a new registration statement pursuant to the Act, so that such
designated Registrable Securities may be publicly sold under the Act as promptly
as practicable thereafter and the Company will use reasonable efforts to cause
such registration to become and remain effective (including the taking of such
reasonable steps as are necessary to obtain the removal of any stop order)
within 120 days after the receipt of such notice, provided, that such Holder
shall furnish the Company with appropriate information in connection therewith
as the Company may reasonably request in writing. The 50% Holder may, at its
option, request the registration of any of the Shares underlying the Common
Stock Purchase Warrant in a registration statement made by the Company as
contemplated by Section 6(a) or in connection with a request made pursuant to
this Section 6(b) prior to acquisition of the Shares issuable upon exercise of
the Common Stock Purchase Warrant. The 50% Holder may, at its option, request
such post-effective amendment or new registration statement during the described
period with respect to the Common Stock Purchase Warrant, and such registration
rights may be exercised by the 50% Holder prior to or subsequent to the exercise
of the Common Stock Purchase Warrant. Within ten days after receiving any such
notice pursuant to this subsection (b) of paragraph 6, the Company shall give
notice to any other Holders of the Common Stock Purchase Warrant, advising that
the Company is proceeding with such post-effective amendment or registration
statement and offering to include therein the Shares underlying that part of the
Common Stock Purchase Warrant held by the other Holders, provided that they
shall furnish the Company with such appropriate information (relating to the
intentions of such Holders) in connection therewith as the Company shall
reasonably request in writing. The Holder shall be responsible for the costs and
expenses of such registration and shall bear the fees of their own counsel and
any other advisors retained by them and any underwriting discounts or
commissions applicable to any of the securities sold by them. The Company will
use its best efforts to maintain such registration statement or post-effective
amendment current under the Act for a period of at least 180 days from the
effective date thereof. The Company shall supply prospectuses, and such other
documents as the Holder(s) may reasonably request in order to facilitate the
public sale or other disposition of the Registrable Securities, use its best
efforts to register and qualify any of the Registrable Securities for sale in
such states (i) as such Holder(s) designate and (ii) with respect to which the
Company obtained a qualification in connection with its initial public offering
and furnish indemnification in the manner provided in paragraph 7 hereof.
Notwithstanding the foregoing set forth in this paragraph 6(b), the Company
shall not be required to include in any registration statement any Registrable
Securities which in the opinion of counsel to the Company (which opinion is
reasonably acceptable to counsel to the Representative) would be saleable
immediately without restriction under Rule 144 (or its successor) if the Common
Stock Purchase Warrant was exercised pursuant to paragraph 2(b) herein.
(c) The term "50% Holder" as used in this paragraph 6 shall mean the
Holder(s) of at least 50% of the Common Stock Purchase Warrant and/or the Shares
underlying the Common Stock Purchase Warrant (considered in the aggregate).
7. (a) Whenever pursuant to paragraph 6 a registration statement relating
to any Shares issued upon exercise of the Common Stock Purchase Warrant is filed
under the Act, amended or supplemented, the Company will indemnify and hold
harmless each Holder of the securities covered by such registration statement,
amendment or supplement (such Holder being hereinafter called the "Distributing
Holder"), and each person, if any, who controls (within the meaning of the Act)
the Distributing Holder, and each underwriter (within the meaning of the Act) of
such securities and each person, if any, who controls (within the meaning of the
Act) any such underwriter, against any losses, claims, damages or liabilities,
joint or several, to which the Distributing Holder, any such controlling person
or any such underwriter may become subject, under the Act or otherwise, insofar
as such losses, claims, damages or liabilities, or actions in respect thereof,
arise out of or are based upon any untrue statement or alleged untrue statement
of any material fact contained in any such registration statement as declared
effective or any final prospectus constituting a part thereof or any amendment
or supplement thereto, or arise out of or are based upon the omission or the
alleged omission to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading and will reimburse
the Distributing Holder or such controlling person or underwriter for any legal
or other expense reasonably incurred by them in connection with investigating or
defending any such loss, claim, damage, liability or action; provided, however,
that the Company will not be liable in any such case to the extent that any such
loss, claim, damage or liability arises out of or is based upon an untrue
statement or alleged untrue statement or omission or alleged omission made in
said registration statement, said preliminary prospectus, said final prospectus
or said amendment or supplement in reliance upon and in conformity with written
information furnished by such Distributing Holder or any other Distributing
Holder for use in the preparation thereof and provided further, that the
indemnity agreement provided in this Section 7(a) with respect to any
preliminary prospectus shall not inure to the benefit of any Distributing
Holder, controlling person of such Distributing Holder, underwriter or
controlling person of such underwriter from whom the person asserting any
losses, claims, charges, liabilities or litigation based upon any untrue
statement or alleged untrue statement of a material fact or omission or alleged
omission to state therein a material fact, received such preliminary prospectus,
if a copy of the prospectus in which such untrue statement or alleged untrue
statement or omission or alleged omission was corrected has not been sent or
given to such person within the time required by the Act and the Rules and
Regulations thereunder.
(b) The Distributing Holder will indemnify and hold harmless the
Company, each of its directors, each of its officers who have signed said
registration statement and such amendments and supplements thereto, and each
person, if any, who controls the Company (within the meaning of the Act) against
any losses, claims, damages or liabilities, joint or several, to which the
Company or any such director, officer or controlling person may become subject,
under the Act or otherwise, insofar as such losses, claims, damages or
liabilities, or actions in respect thereof, arise out of or are based upon any
untrue or alleged untrue statement of any material fact contained in said
registration statement, said preliminary prospectus, said final prospectus, or
said amendment or supplement, or arise out of or are based upon the omission or
the alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, in each case
to the extent, but only to the extent, that such loss, claim, damage or
liability arises out of or is based upon an untrue statement or alleged untrue
statement or omission or alleged omission made in said registration statement,
said preliminary prospectus, said final prospectus or said amendment or
supplement in reliance upon and in conformity with written information furnished
by such Distributing Holder for use in the preparation thereof; and will
reimburse the Company or any such director, officer or controlling person for
any legal or other expenses reasonably incurred by them in connection with
investigating or defending any such loss, claim, damage, liability or action.
(c) Promptly after receipt by an indemnified party under this
paragraph 7 of notice of the commencement of any action, such indemnified party
will, if a claim in respect thereof is to be made against any indemnifying
party, give the indemnifying party notice of the commencement thereof, but the
omission so to notify the indemnifying party will not relieve it from any
liability which it may have to any indemnified party otherwise than under this
paragraph 7.
(d) In case any such action is brought against any indemnified party,
and it notifies an indemnifying party of the commencement hereof, the
indemnifying party will be entitled to participate in and, to the extent that it
may wish, jointly with any other indemnifying party similarly notified, to
assume the defense thereof, with counsel reasonably satisfactory to such
indemnified party, and after notice from the indemnifying party to such
indemnified party of its election so to assume the defense thereof, the
indemnifying party will not be liable to such indemnified party under this
paragraph 7 for any legal or other expenses subsequently incurred by such
indemnified party in connection with the defense thereof other than reasonable
costs of investigation.
8. The Exercise Price in effect at the time and the number and kind of
securities purchasable upon the exercise of the Warrant shall be subject to
adjustment from time to time upon the happening of certain events as follows:
<PAGE>
(a) In case the Company shall (i) declare a dividend or make a
distribution on its outstanding shares of Common Stock in shares of Common Stock
(other than issuance of Common Stock pursuant to antidilution provisions set
forth in the Registration Statement), (ii) subdivide or reclassify its
outstanding shares of Common Stock into a greater number of shares, (iii)
combine or reclassify its outstanding shares of Common Stock into a smaller
number of shares, or (iv) enter into any transaction whereby the outstanding
shares of Common Stock of the Company are at any time changed into or exchanged
for a different number or kind of shares or other security of the Company or of
another corporation through reorganization, merger, consolidation, liquidation
or recapitalization, then appropriate adjustments in the number of Shares (or
other securities for which such Shares have previously been exchanged or
converted) subject to this Common Stock Purchase Warrant shall be made and the
Exercise Price in effect at the time of the record date for such dividend or
distribution or of the effective date of such subdivision, combination,
reclassification, reorganization, merger, consolidation, liquidation or
recapitalization shall be proportionately adjusted so that the Holder of this
Common Stock Purchase Warrant exercised after such date shall be entitled to
receive the aggregate number and kind of shares of Common Stock which, if this
Common Stock Purchase Warrant had been exercised by such Holder immediately
prior to such date, he would have been entitled to receive upon such dividend,
distribution, subdivision, combination, reclassification, reorganization,
merger, consolidation, liquidation or recapitalization. For example, if the
Company declares a 2 for 1 stock distribution and the Exercise Price hereof
immediately prior to such event was $12.00 per Share and the number of Shares
issuable upon exercise of this Common Stock Purchase Warrant was 200,000, the
adjusted Exercise Price immediately after such event would be $6.00 per Share
and the adjusted number of Shares issuable upon exercise of this Common Stock
Purchase Warrant would be 400,000. Such adjustment shall be made successively
whenever any event listed above shall occur.
(b) In case the Company shall fix a record date for the issuance of
rights or warrants to all holders of its Common Stock entitling them to
subscribe for or purchase shares of Common Stock (or securities convertible into
Common Stock) at a price (the "Subscription Price") (or having a conversion
price per share) less than the Exercise Price on a per share basis (the "Per
Share Exercise Price") on such record date, the Exercise Price shall be adjusted
so that the same shall equal the price determined by multiplying the number of
Shares by the Per Share Exercise Price in effect immediately prior to the date
of issuance by a fraction, the numerator of which shall be the sum of the number
of shares of Common Stock then outstanding on the record date mentioned below
and the number of additional shares of Common Stock which the aggregate offering
price of the total number of shares of Common Stock so offered (or the aggregate
conversion price of the convertible securities so offered) would purchase at the
Per Share Exercise Price in effect immediately prior to the date of such
issuance, and the denominator of which shall be the sum of the number of shares
of Common Stock outstanding on the record date mentioned below and the number of
additional shares of Common Stock offered for subscription or purchase (or into
which the convertible securities so offered are convertible). Such adjustment
shall be made successively whenever such rights or warrants are issued and shall
become effective immediately after the record date for the determination of
stockholders entitled to receive such rights or warrants; and to the extent that
shares of Common Stock are not delivered (or securities convertible into Common
Stock are not delivered) after the expiration of such rights or warrants the
Exercise Price shall be readjusted to the Exercise Price which would then be in
effect had the adjustments made upon the issuance of such rights or warrants
been made upon the basis of delivery of only the number of shares of Common
Stock (or securities convertible into Common Stock) actually delivered.
(c) In case the Company shall hereafter distribute to all holders of
its Common Stock evidences of its indebtedness or assets (excluding cash
dividends or distributions and dividends or distributions referred to in
Subsection (a) above) or subscription rights or warrants (excluding those
referred to in Subsection (b) above), then in each such case the Exercise Price
in effect thereafter shall be determined by multiplying the number of Shares by
the Per Share Exercise Price in effect immediately prior thereto, multiplied by
a fraction, the numerator of which shall be the total number of shares of Common
Stock then outstanding multiplied by the current market price per share of
Common Stock (as defined in Subsection (e) below), less the fair market value
(as determined by the Company's Board of Directors) of said assets, or evidences
of indebtedness so distributed or of such rights or warrants, and the
denominator of which shall be the total number of shares of Common Stock
outstanding multiplied by such current market price per share of Common Stock.
Such adjustment shall be made whenever any such distribution is made and shall
become effective immediately after the record date for the determination of
stockholders entitled to receive such distribution.
(d) Whenever the Exercise Price payable upon exercise of the Common
Stock Purchase Warrant is adjusted pursuant to Subsections (a), (b) or (c)
above, the number of Shares purchasable upon exercise of this Common Stock
Purchase Warrant shall simultaneously be adjusted by multiplying the number of
Shares issuable upon exercise of this Common Stock Purchase Warrant by the
Exercise Price in effect on the date hereof and dividing the product so obtained
by the Exercise Price, as adjusted.
(e) For the purpose of any computation under Subsection (c) above,
the current market price per share of Common Stock at any date shall be deemed
to be the average of the daily closing prices of the Common Stock for 30
consecutive business days before such date. The closing price for each day shall
be the last sale price regular way or, in case no such reported sale takes place
on such day, the average of the last reported bid and asked prices regular way,
in either case on the principal national securities exchange on which the Common
Stock is admitted to trading or listed, or, if not listed or admitted to trading
on such exchange, the average of the highest reported bid and lowest reported
asked prices as reported by NASDAQ, or other similar organization if NASDAQ is
no longer reporting such information, or if not so available, the fair market
price as determined by the Board of Directors as set forth in Section 2(b)
herein.
(f) No adjustment in the Exercise Price shall be required unless such
adjustment would require an increase or decrease of at least five cents ($0.05)
in such price; provided, however, that any adjustments which may by reason of
this Subsection (f) are not required to be made shall be carried forward and
taken into account in any subsequent adjustment required to be made hereunder.
All calculations under this Section 8 shall be made to the nearest cent or to
the nearest one-hundredth of a share, as the case may be. Anything in this
Section 8 to the contrary notwithstanding, the Company shall be entitled, but
shall not be required, to make such changes in the Exercise Price, in addition
to those required by this Section 8, as it shall determine, in its sole
discretion, to be advisable in order that any dividend or distribution in shares
of Common Stock, or any subdivision, reclassification or combination of Common
Stock, hereafter made by the Company shall not result in any Federal income tax
liability to the holders of the Common Stock or securities convertible into
Common Stock.
(g) Whenever the Exercise Price is adjusted, as herein provided, the
Company shall promptly cause a notice setting forth the adjusted Exercise Price
and adjusted number of Shares issuable upon exercise of the Common Stock
Purchase Warrant to be mailed to the Holder, at its address set forth herein,
and shall cause a certified copy thereof to be mailed to the Company's transfer
agent, if any. The Company may retain a firm of independent certified public
accountants selected by the Board of Directors (who may be the regular
accountants employed by the Company) to make any computation required by this
Section 8, and a certificate signed by such firm shall be conclusive evidence of
the correctness of such adjustment.
(h) In the event that at any time, as a result of an adjustment made
pursuant to the provisions of this Section 8, the Holder of the Common Stock
Purchase Warrant thereafter shall become entitled to receive any shares of the
Company other than Common Stock, thereafter the number of such other shares so
receivable upon exercise of the Common Stock Purchase Warrant shall be subject
to adjustment from time to time in a manner and on terms as nearly equivalent as
practicable to the provisions with respect to the Common Stock contained in
Subsections (a) to (f), inclusive, above.
9. This Agreement shall be governed by and in accordance with the laws of
the Commonwealth of Kentucky without regard to conflict of laws provision.
IN WITNESS WHEREOF, THERMOVIEW INDUSTRIES, INC. has caused this Common
Stock Purchase Warrant to be signed by its duly authorized officers under its
corporate seal, and this Common Stock Purchase Warrant to be dated October 1,
2000.
THERMOVIEW INDUSTRIES, INC.
By:________________________________
Rodney H. Thomas
Chief Executive Officer
Attest:
------------------------------
Charles L. Smith
its President
<PAGE>
PURCHASE FORM
(To be signed only upon exercise of Warrant)
The undersigned, the holder of the foregoing Common Stock Purchase
Warrant, hereby irrevocably elects to exercise the purchase rights represented
by such Warrant for, and to purchase thereunder, _______________ Shares of
Common Stock, $0.001 par value per share (the "Shares"), of THERMOVIEW
INDUSTRIES, INC., payment of $_______ therefor, and requests that the
certificates for the Shares issued in the name(s) of, and delivered to
________________________, whose address(es) is (are):
Dated: _______________, ____
By:________________________________
-----------------------------------
-----------------------------------
Address
<PAGE>
TRANSFER FORM
(To be signed only upon transfer of Warrant)
For value received, the undersigned hereby sells, assigns, and transfers
unto ________ _____________________________ the right to purchase Shares
represented by the foregoing Common Stock Purchase Warrant to the extent of
__________ Shares, and appoints ______________ _________ attorney to transfer
such rights on the books of _____________________________, with full power of
substitution in the premises.
Dated: _______________, ____
By:________________________________
-----------------------------------
-----------------------------------
Address
In the presence of:
<PAGE>
10.12
Warrant to Purchase 340,000
Shares of Common Stock
CONSULTANT'S WARRANT
Dated: October 1, 2000
THIS CERTIFIES THAT WESTPARK CAPITAL, INC. (herein sometimes called the
"Holder") is entitled to purchase from THERMOVIEW INDUSTRIES, INC., a Delaware
corporation (the "Company"), at the price and during the period as hereinafter
specified, up to three hundred forty thousand (340,000) shares (the "Shares") of
common stock, $0.001 par value per share (the "Common Stock"), at a purchase
price of $12.00 per share subject to adjustment as described below, at any time
during the two year period from the date hereof.
This Consulting Warrant (the "Consulting Warrant") is issued pursuant to a
financial advisory agreement between the Company and WestPark Capital, Inc.
dated October 1, 2000.
1. The rights represented by the Consulting Warrant shall be exercised at
the price, subject to adjustment in accordance with Section 8 hereof (the
"Exercise Price"), and during the periods as follows:
(a) Between the date hereof and October 1, 2002, (twenty four (24)
months from the date hereof, i.e. the "Expiration Date")
inclusive, the Holder shall have the option to purchase Shares
hereunder at a price of $12.00 per Share.
(b) After the Expiration Date, the Holder shall have no right to
purchase any Shares hereunder.
2. (a) The rights represented by the Consulting Warrant may be exercised
at any time within the periods above specified, in whole or in part, by (i) the
surrender of the Consulting Warrant (with the purchase form at the end hereof
properly executed) at the principal executive office of the Company (or such
other office or agency of the Company as it may designate by notice in writing
to the Holder at the address of the Holder appearing on the books of the
Company); (ii) payment to the Company of the exercise price then in effect for
the number of Shares specified in the above-mentioned purchase form together
with applicable stock transfer taxes, if any; and (iii) delivery to the Company
of a duly executed agreement signed by the person(s) designated in the purchase
form to the effect that such person(s) agree(s) to be bound by the provisions of
paragraph 6 and subparagraphs (b), (c) and (d) of paragraph 7 hereof. The
Consulting Warrant shall be deemed to have been exercised, in whole or in part
to the extent specified, immediately prior to the close of business on the date
the Consulting Warrant is surrendered and payment is made in accordance with the
foregoing provisions of this paragraph 2, and the person or persons in whose
name or names the certificates for the Shares shall be issuable upon such
exercise shall become the holder or holders of record of such Shares at that
time and date. The Shares and the certificates for the Shares so purchased shall
be delivered to the Holder within a reasonable time, not exceeding ten (10)
business days, after the rights represented by this Consulting Warrant shall
have been so exercised.
3. This Consulting Warrant must be executed immediately upon its transfer
and if not so executed, shall lapse. Any such assignment shall be effected by
the Holder by (i) executing the form of assignment at the end hereof and (ii)
surrendering the Consulting Warrant for cancellation at the office or agency of
the Company referred to in paragraph 2 hereof, accompanied by a certificate
(signed by an officer of the Holder if the Holder is a corporation) stating that
each transferee is a permitted transferee under this paragraph 3; whereupon the
Company shall issue, in the name or names specified by the Holder (including the
Holder), a new Consulting Warrant or Warrants of like tenor and representing in
the aggregate rights to purchase the same number of Shares as are purchasable
hereunder at such time.
4. The Company covenants and agrees that all Shares which may be purchased
hereunder will, upon issuance and delivery against payment therefor of the
requisite purchase price, be duly and validly issued, fully paid and
nonassessable. The Company further covenants and agrees that, during the periods
within which the Consulting Warrant may be exercised, the Company will at all
times have authorized and reserved a sufficient number of shares of its Common
Stock to provide for the exercise of the Consulting Warrant.
5. The Consulting Warrant shall not entitle the Holder to any voting
rights or other rights, including without limitation notice of meetings of other
actions or receipt of dividends, as a stockholder of the Company.
6. (a) The Company shall advise the Holder or its permitted transferee,
whether the Holder holds the Consulting Warrant or has exercised the Consulting
Warrant and holds Shares, by written notice at least four weeks prior to the
filing of any new registration statement thereto under the Act, or the filing of
a notification on Form 1-A under the Act for a public offering of securities,
covering any securities of the Company, for its own account or for the account
of others, except for any registration statement filed on Form S-4 or S-8 (or
other comparable form), and will, during the eighteen (18) month period from the
date hereof, upon the request of the Holder, include in any such new
registration statement (or notification as the case may be) such information as
may be required to permit a public offering of, all or any of the Shares
underlying the Consulting Warrant (the "Registrable Securities").
(b) At such time that the Company is eligible to register securities
by the use of Form S-3 ( or other comparable form) during the twenty four (24)
month period beginning on the date hereof, a 50% Holder (as defined below) may
request, on one occasion, that the Company register under the Act any and all of
the Registrable Securities held by such 50% Holder. Upon the receipt of any such
notice, the Company will promptly, but no later than four weeks after receipt of
such notice, file a post-effective amendment to the current Registration
Statement or a new registration statement pursuant to the Act, so that such
designated Registrable Securities may be publicly sold under the Act as promptly
as practicable thereafter and the Company will use reasonable efforts to cause
such registration to become and remain effective (including the taking of such
reasonable steps as are necessary to obtain the removal of any stop order)
within 120 days after the receipt of such notice, provided, that such Holder
shall furnish the Company with appropriate information in connection therewith
as the Company may reasonably request in writing. The 50% Holder may, at its
option, request the registration of any of the Shares underlying the Consulting
Warrant in a registration statement made by the Company as contemplated by
Section 6(a) or in connection with a request made pursuant to this Section 6(b)
prior to acquisition of the Shares issuable upon exercise of the Consulting
Warrant. The 50% Holder may, at its option, request such post-effective
amendment or new registration statement during the described period with respect
to the Consulting Warrant, and such registration rights may be exercised by the
50% Holder prior to or subsequent to the exercise of the Consulting Warrant.
Within ten days after receiving any such notice pursuant to this subsection (b)
of paragraph 6, the Company shall give notice to any other Holders of the
Consulting Warrant, advising that the Company is proceeding with such
post-effective amendment or registration statement and offering to include
therein the Shares underlying that part of the Consulting Warrant held by the
other Holders, provided that they shall furnish the Company with such
appropriate information (relating to the intentions of such Holders) in
connection therewith as the Company shall reasonably request in writing. The
Holder shall be responsible for the costs and expenses of such registration and
shall bear the fees of their own counsel and any other advisors retained by them
and any underwriting discounts or commissions applicable to any of the
securities sold by them. The Company will use its best efforts to maintain such
registration statement or post-effective amendment current under the Act for a
period of at least 180 days from the effective date thereof. The Company shall
supply prospectuses, and such other documents as the Holder(s) may reasonably
request in order to facilitate the public sale or other disposition of the
Registrable Securities, use its best efforts to register and qualify any of the
Registrable Securities for sale in such states (i) as such Holder(s) designate
and (ii) with respect to which the Company obtained a qualification in
connection with its initial public offering and furnish indemnification in the
manner provided in paragraph 7 hereof. Notwithstanding the foregoing set forth
in this paragraph 6(b), the Company shall not be required to include in any
registration statement any Registrable Securities which in the opinion of
counsel to the Company (which opinion is reasonably acceptable to counsel to the
Representative) would be saleable immediately without restriction under Rule 144
(or its successor) if the Consulting Warrant was exercised pursuant to paragraph
2(b) herein.
(c) The term "50% Holder" as used in this paragraph 6 shall mean the
Holder(s) of at least 50% of the Consulting Warrant and/or the Shares underlying
the Consulting Warrant (considered in the aggregate).
7. (a) Whenever pursuant to paragraph 6 a registration statement relating
to any Shares issued upon exercise of the Consulting Warrant is filed under the
Act, amended or supplemented, the Company will indemnify and hold harmless each
Holder of the securities covered by such registration statement, amendment or
supplement (such Holder being hereinafter called the "Distributing Holder"), and
each person, if any, who controls (within the meaning of the Act) the
Distributing Holder, and each underwriter (within the meaning of the Act) of
such securities and each person, if any, who controls (within the meaning of the
Act) any such underwriter, against any losses, claims, damages or liabilities,
joint or several, to which the Distributing Holder, any such controlling person
or any such underwriter may become subject, under the Act or otherwise, insofar
as such losses, claims, damages or liabilities, or actions in respect thereof,
arise out of or are based upon any untrue statement or alleged untrue statement
of any material fact contained in any such registration statement as declared
effective or any final prospectus constituting a part thereof or any amendment
or supplement thereto, or arise out of or are based upon the omission or the
alleged omission to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading and will reimburse
the Distributing Holder or such controlling person or underwriter for any legal
or other expense reasonably incurred by them in connection with investigating or
defending any such loss, claim, damage, liability or action; provided, however,
that the Company will not be liable in any such case to the extent that any such
loss, claim, damage or liability arises out of or is based upon an untrue
statement or alleged untrue statement or omission or alleged omission made in
said registration statement, said preliminary prospectus, said final prospectus
or said amendment or supplement in reliance upon and in conformity with written
information furnished by such Distributing Holder or any other Distributing
Holder for use in the preparation thereof and provided further, that the
indemnity agreement provided in this Section 7(a) with respect to any
preliminary prospectus shall not inure to the benefit of any Distributing
Holder, controlling person of such Distributing Holder, underwriter or
controlling person of such underwriter from whom the person asserting any
losses, claims, charges, liabilities or litigation based upon any untrue
statement or alleged untrue statement of a material fact or omission or alleged
omission to state therein a material fact, received such preliminary prospectus,
if a copy of the prospectus in which such untrue statement or alleged untrue
statement or omission or alleged omission was corrected has not been sent or
given to such person within the time required by the Act and the Rules and
Regulations thereunder.
(b) The Distributing Holder will indemnify and hold harmless the
Company, each of its directors, each of its officers who have signed said
registration statement and such amendments and supplements thereto, and each
person, if any, who controls the Company (within the meaning of the Act) against
any losses, claims, damages or liabilities, joint or several, to which the
Company or any such director, officer or controlling person may become subject,
under the Act or otherwise, insofar as such losses, claims, damages or
liabilities, or actions in respect thereof, arise out of or are based upon any
untrue or alleged untrue statement of any material fact contained in said
registration statement, said preliminary prospectus, said final prospectus, or
said amendment or supplement, or arise out of or are based upon the omission or
the alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, in each case
to the extent, but only to the extent, that such loss, claim, damage or
liability arises out of or is based upon an untrue statement or alleged untrue
statement or omission or alleged omission made in said registration statement,
said preliminary prospectus, said final prospectus or said amendment or
supplement in reliance upon and in conformity with written information furnished
by such Distributing Holder for use in the preparation thereof; and will
reimburse the Company or any such director, officer or controlling person for
any legal or other expenses reasonably incurred by them in connection with
investigating or defending any such loss, claim, damage, liability or action.
(c) Promptly after receipt by an indemnified party under this
paragraph 7 of notice of the commencement of any action, such indemnified party
will, if a claim in respect thereof is to be made against any indemnifying
party, give the indemnifying party notice of the commencement thereof, but the
omission so to notify the indemnifying party will not relieve it from any
liability which it may have to any indemnified party otherwise than under this
paragraph 7.
(d) In case any such action is brought against any indemnified party,
and it notifies an indemnifying party of the commencement hereof, the
indemnifying party will be entitled to participate in and, to the extent that it
may wish, jointly with any other indemnifying party similarly notified, to
assume the defense thereof, with counsel reasonably satisfactory to such
indemnified party, and after notice from the indemnifying party to such
indemnified party of its election so to assume the defense thereof, the
indemnifying party will not be liable to such indemnified party under this
paragraph 7 for any legal or other expenses subsequently incurred by such
indemnified party in connection with the defense thereof other than reasonable
costs of investigation.
8. The Exercise Price in effect at the time and the number and kind of
securities purchasable upon the exercise of the Warrant shall be subject to
adjustment from time to time upon the happening of certain events as follows:
<PAGE>
(a) In case the Company shall (i) declare a dividend or make a
distribution on its outstanding shares of Common Stock in shares of Common Stock
(other than issuance of Common Stock pursuant to antidilution provisions set
forth in the Registration Statement), (ii) subdivide or reclassify its
outstanding shares of Common Stock into a greater number of shares, (iii)
combine or reclassify its outstanding shares of Common Stock into a smaller
number of shares, or (iv) enter into any transaction whereby the outstanding
shares of Common Stock of the Company are at any time changed into or exchanged
for a different number or kind of shares or other security of the Company or of
another corporation through reorganization, merger, consolidation, liquidation
or recapitalization, then appropriate adjustments in the number of Shares (or
other securities for which such Shares have previously been exchanged or
converted) subject to this Consulting Warrant shall be made and the Exercise
Price in effect at the time of the record date for such dividend or distribution
or of the effective date of such subdivision, combination, reclassification,
reorganization, merger, consolidation, liquidation or recapitalization shall be
proportionately adjusted so that the Holder of this Consulting Warrant exercised
after such date shall be entitled to receive the aggregate number and kind of
shares of Common Stock which, if this Consulting Warrant had been exercised by
such Holder immediately prior to such date, he would have been entitled to
receive upon such dividend, distribution, subdivision, combination,
reclassification, reorganization, merger, consolidation, liquidation or
recapitalization. For example, if the Company declares a 2 for 1 stock
distribution and the Exercise Price hereof immediately prior to such event was
$12.00 per Share and the number of Shares issuable upon exercise of this
Consulting Warrant was 340,000, the adjusted Exercise Price immediately after
such event would be $6.00 per Share and the adjusted number of Shares issuable
upon exercise of this Consulting Warrant would be 680,000. Such adjustment shall
be made successively whenever any event listed above shall occur.
(b) In case the Company shall fix a record date for the issuance of
rights or warrants to all holders of its Common Stock entitling them to
subscribe for or purchase shares of Common Stock (or securities convertible into
Common Stock) at a price (the "Subscription Price") (or having a conversion
price per share) less than the Exercise Price on a per share basis (the "Per
Share Exercise Price") on such record date, the Exercise Price shall be adjusted
so that the same shall equal the price determined by multiplying the number of
Shares by the Per Share Exercise Price in effect immediately prior to the date
of issuance by a fraction, the numerator of which shall be the sum of the number
of shares of Common Stock then outstanding on the record date mentioned below
and the number of additional shares of Common Stock which the aggregate offering
price of the total number of shares of Common Stock so offered (or the aggregate
conversion price of the convertible securities so offered) would purchase at the
Per Share Exercise Price in effect immediately prior to the date of such
issuance, and the denominator of which shall be the sum of the number of shares
of Common Stock outstanding on the record date mentioned below and the number of
additional shares of Common Stock offered for subscription or purchase (or into
which the convertible securities so offered are convertible). Such adjustment
shall be made successively whenever such rights or warrants are issued and shall
become effective immediately after the record date for the determination of
stockholders entitled to receive such rights or warrants; and to the extent that
shares of Common Stock are not delivered (or securities convertible into Common
Stock are not delivered) after the expiration of such rights or warrants the
Exercise Price shall be readjusted to the Exercise Price which would then be in
effect had the adjustments made upon the issuance of such rights or warrants
been made upon the basis of delivery of only the number of shares of Common
Stock (or securities convertible into Common Stock) actually delivered.
(c) In case the Company shall hereafter distribute to all holders of
its Common Stock evidences of its indebtedness or assets (excluding cash
dividends or distributions and dividends or distributions referred to in
Subsection (a) above) or subscription rights or warrants (excluding those
referred to in Subsection (b) above), then in each such case the Exercise Price
in effect thereafter shall be determined by multiplying the number of Shares by
the Per Share Exercise Price in effect immediately prior thereto, multiplied by
a fraction, the numerator of which shall be the total number of shares of Common
Stock then outstanding multiplied by the current market price per share of
Common Stock (as defined in Subsection (e) below), less the fair market value
(as determined by the Company's Board of Directors) of said assets, or evidences
of indebtedness so distributed or of such rights or warrants, and the
denominator of which shall be the total number of shares of Common Stock
outstanding multiplied by such current market price per share of Common Stock.
Such adjustment shall be made whenever any such distribution is made and shall
become effective immediately after the record date for the determination of
stockholders entitled to receive such distribution.
(d) Whenever the Exercise Price payable upon exercise of the
Consulting Warrant is adjusted pursuant to Subsections (a), (b) or (c) above,
the number of Shares purchasable upon exercise of this Consulting Warrant shall
simultaneously be adjusted by multiplying the number of Shares issuable upon
exercise of this Consulting Warrant by the Exercise Price in effect on the date
hereof and dividing the product so obtained by the Exercise Price, as adjusted.
(e) For the purpose of any computation under Subsection (c) above,
the current market price per share of Common Stock at any date shall be deemed
to be the average of the daily closing prices of the Common Stock for 30
consecutive business days before such date. The closing price for each day shall
be the last sale price regular way or, in case no such reported sale takes place
on such day, the average of the last reported bid and asked prices regular way,
in either case on the principal national securities exchange on which the Common
Stock is admitted to trading or listed, or, if not listed or admitted to trading
on such exchange, the average of the highest reported bid and lowest reported
asked prices as reported by NASDAQ, or other similar organization if NASDAQ is
no longer reporting such information, or if not so available, the fair market
price as determined by the Board of Directors as set forth in Section 2(b)
herein.
(f) No adjustment in the Exercise Price shall be required unless such
adjustment would require an increase or decrease of at least five cents ($0.05)
in such price; provided, however, that any adjustments which may by reason of
this Subsection (f) are not required to be made shall be carried forward and
taken into account in any subsequent adjustment required to be made hereunder.
All calculations under this Section 8 shall be made to the nearest cent or to
the nearest one-hundredth of a share, as the case may be. Anything in this
Section 8 to the contrary notwithstanding, the Company shall be entitled, but
shall not be required, to make such changes in the Exercise Price, in addition
to those required by this Section 8, as it shall determine, in its sole
discretion, to be advisable in order that any dividend or distribution in shares
of Common Stock, or any subdivision, reclassification or combination of Common
Stock, hereafter made by the Company shall not result in any Federal income tax
liability to the holders of the Common Stock or securities convertible into
Common Stock.
(g) Whenever the Exercise Price is adjusted, as herein provided, the
Company shall promptly cause a notice setting forth the adjusted Exercise Price
and adjusted number of Shares issuable upon exercise of the Consulting Warrant
to be mailed to the Holder, at its address set forth herein, and shall cause a
certified copy thereof to be mailed to the Company's transfer agent, if any. The
Company may retain a firm of independent certified public accountants selected
by the Board of Directors (who may be the regular accountants employed by the
Company) to make any computation required by this Section 8, and a certificate
signed by such firm shall be conclusive evidence of the correctness of such
adjustment.
(h) In the event that at any time, as a result of an adjustment made
pursuant to the provisions of this Section 8, the Holder of the Consulting
Warrant thereafter shall become entitled to receive any shares of the Company
other than Common Stock, thereafter the number of such other shares so
receivable upon exercise of the Consulting Warrant shall be subject to
adjustment from time to time in a manner and on terms as nearly equivalent as
practicable to the provisions with respect to the Common Stock contained in
Subsections (a) to (f), inclusive, above.
9. This Agreement shall be governed by and in accordance with the laws of
the Commonwealth of Kentucky without regard to conflict of laws provision.
IN WITNESS WHEREOF, THERMOVIEW INDUSTRIES, INC. has caused this Consulting
Warrant to be signed by its duly authorized officers under its corporate seal,
and this Consulting Warrant to be dated October 1, 2000.
THERMOVIEW INDUSTRIES, INC.
By:________________________________
Rodney H. Thomas
Chief Executive Officer
Attest:
------------------------------
Charles L. Smith
its President
<PAGE>
PURCHASE FORM
(To be signed only upon exercise of Warrant)
The undersigned, the holder of the foregoing Consulting Warrant, hereby
irrevocably elects to exercise the purchase rights represented by such Warrant
for, and to purchase thereunder, _______________ Shares of Common Stock, $0.001
par value per share (the "Shares"), of THERMOVIEW INDUSTRIES, INC., payment of
$_______ therefor, and requests that the certificates for the Shares issued in
the name(s) of, and delivered to ________________________, whose address(es) is
(are):
Dated: _______________, ____
By:________________________________
-----------------------------------
-----------------------------------
Address
<PAGE>
TRANSFER FORM
(To be signed only upon transfer of Warrant)
For value received, the undersigned hereby sells, assigns, and transfers
unto ________ _____________________________ the right to purchase Shares
represented by the foregoing Consulting Warrant to the extent of __________
Shares, and appoints ______________ _________ attorney to transfer such rights
on the books of _____________________________, with full power of substitution
in the premises.
Dated: _______________, ____
By:________________________________
-----------------------------------
-----------------------------------
Address
In the presence of:
<PAGE>
10.13
SERIES E PREFERRED STOCK AGREEMENT
THIS SERIES E PREFERRED STOCK AGREEMENT is made and entered into as of
September 30, 2000, by and between THERMOVIEW INDUSTRIES, INC., a Delaware
corporation ("ThermoView") and RODNEY H. THOMAS ("Thomas").
PRELIMINARY STATEMENTS
As of January 1, 1999, ThermoView acquired all of the outstanding shares of
capital stock of Thomas Construction, Inc., a Missouri corporation, Castle
Associates, Inc., a Missouri corporation and Showplace Home Improvements, Inc.,
a Missouri corporation, pursuant to a certain Stock Purchase Agreement (the
"Stock Agreement"), dated December 22, 1998, between ThermoView and Thomas.
Under the terms of the Stock Agreement, Thomas is entitled to receive
post-closing earn-out payments (the "Earn-out Payments"), if earned, on December
31, 1999, December 31, 2000 and December 31, 2001. As of December 31, 1999,
ThermoView owed Thomas cash payments of approximately $6,500,000.00 (the "Year
One Earn-out Payment") under the terms of the Stock Agreement pursuant to the
earn-out provision.
ThermoView has paid $1,000,000.00 of the Year One Earn-out Payment in cash
to Thomas. ThermoView further delivered to Thomas pursuant to Agreement dated
April 14, 2000 1,113,500 shares of ThermoView 12% Cumulative Series D Preferred
Stock with a stated value of $5.00 (the "D Preferred Stock") in lieu of the
remainder of the Year One Earn-out Payment.
ThermoView desires to replace 300,000 shares of the D Preferred Stock with
300,000 shares of newly created ThermoView 12% Cumulative Series E Preferred
Stock (the "E Preferred Stock") Thomas desires to accept the E Preferred Stock
in consideration of the remainder of the Year One Earn-out Payment. The terms
and conditions of the E Preferred Stock are further described in the Certificate
of Designation, attached hereto as Exhibit A and incorporated herein by
reference (the "Certificate").
NOW, THEREFORE, in consideration of these preliminary statements and the
mutual promises contained herein, and for other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the parties hereby
agree as follows:
1. Stock Issuance. In exchange for the delivery and cancellation of certificates
representing 300,000 shares of D Preferred Stock issued for any and all amounts
due to Thomas by ThermoView pursuant to the Year One Earn-out Payment under the
Stock Agreement, ThermoView hereby transfers to Thomas and Thomas hereby agrees
to accept 300,000 shares of E Preferred Stock. The delivery of the Preferred
Stock to Thomas shall occur with fifteen (15) business days of the execution of
this Agreement.
2. Full Satisfaction. Thomas hereby acknowledges that his receipt of the
$1,000,000 cash payment 813,500 shares of D Preferred Stock and 300,000 shares
of E Preferred Stock is in full and complete satisfaction of the obligation owed
to Thomas by ThermoView for the Year One Earn-out Payment.
3. No Amendment or Termination. Nothing contained in this Agreement shall
amend or terminate any obligations of ThermoView to make any and all other
Earn-out Payments, if earned, under the terms of the Stock Agreement.
4. Thomas' Representations and Warranties. Thomas hereby represents and
warrants to ThermoView as follows:
(a) Investment Intent. Thomas is acquiring the E Preferred Stock for his own
account and not with a present view to or for distributing or reselling the
Preferred Stock in violation of the Securities Act of 1933, as amended (the
"Securities Act"). Thomas agrees that such shares of E Preferred Stock may
not be sold, transferred, offered for sale, pledged, hypothecated or
otherwise disposed of without registration under the Securities Act, except
pursuant to an exemption available under the Securities Act. Thomas will
not sell, offer to sell or solicit offers to buy any of the shares of E
Preferred Stock in violation of the Securities Act or any securities act of
any state. Thomas understands that the shares of E Preferred Stock have not
been registered under federal or any state securities laws.
(b) Thomas' Status. Thomas is (i) an "accredited investor" as defined in Rule
501 of the Securities Act and (ii) has such knowledge, sophistication and
experience in business and financial matters so as to be capable of
evaluating the merits and risks of the prospective investment in the E
Preferred Stock.
(c) Reliance. Thomas understands and acknowledges that (i) the E Preferred
Stock is being offered and sold to Thomas without registration under the
Securities Act in a private placement that is exempt from the registration
provisions of the Securities Act under Section 4(2) of the Securities Act
or Regulation D promulgated thereunder or other applicable federal and
state securities laws and (ii) the availability of such exemptions depends
in part on, and ThermoView will rely upon the accuracy and truthfulness of,
the representations set forth in this Section 4 and Thomas consents to such
reliance.
(d) Information. Thomas and his advisors, if any, have been furnished with all
materials relating to the business, finances and operations of ThermoView
and materials relating to the offer and sale of the E Preferred Stock,
including the Certificate, which have been requested by Thomas or his
advisors. Thomas and his advisors, if any, have been afforded the
opportunity to ask questions of ThermoView. Thomas acknowledges receipt of
the ThermoView prospectus dated December 2, 1999 (the "Prospectus") and
that ThermoView will deliver a copy of its most recent Form 10-K filing
with the Securities and Exchange Commission as soon as it becomes publicly
available. Thomas understands that his investment in the Preferred Stock
involves a significant degree of risk, some of which risks associated with
the investment in the Preferred Stock are set forth in Exhibit B, attached
hereto and incorporated herein by reference, and in the Prospectus.
5. Miscellaneous.
(a) Entire Agreement. This Agreement embodies the entire agreement and
understanding between the parties hereto with respect to the Year One
Earn-out Payment and supersedes all prior oral or written agreements and
understandings relating to the Year One Earn-out Payment. No statement,
representation, warranty, covenant or agreement of any kind not expressly
set forth in this Agreement shall affect, or be used to interpret, change
or restrict, the express terms and provisions of this Agreement.
(b) Modifications and Amendments. The terms and provisions of this Agreement
may be modified or amended only by written agreement executed by all
parties hereto.
(c) Benefit. This Agreement shall be binding on the parties hereto and shall
inure to the benefit of the parties hereto and the respective successors
and permitted assigns of each party hereto. Nothing in this Agreement
shall be construed to create any rights or obligations except among the
parties hereto, and no person or entity shall be regarded as a third-party
beneficiary of this Agreement.
(d) Governing Law. This Agreement and the rights and obligations of the
parties hereunder shall be construed in accordance with and governed by
the law of the Commonwealth of Kentucky, without giving effect to the
conflict of law principles thereof.
(e) Severability. In the event that any court of competent jurisdiction shall
determine that any provision, or any portion thereof, contained in this
Agreement shall be unreasonable or unenforceable in any respect, then such
provision shall be deemed limited to the extent that such court deems it
reasonable and enforceable, and as so limited shall remain in full force
and effect. In the event that such court shall deem any such provision, or
portion thereof, wholly unenforceable, the remaining provisions of this
Agreement shall nevertheless remain in full force and effect.
(f) Headings and Captions. The headings and captions of the various
subdivisions of this Agreement are for convenience of reference only and
shall in no way modify, or affect the meaning or construction of any of
the terms or provisions hereof.
(g) Counterparts. This Agreement may be executed in one or more counterparts,
and by different parties hereto on separate counterparts, each of which
shall be deemed an original, but all of which together shall constitute
one and the same instrument.
IN WITNESS WHEREOF, ThermoView has caused this Agreement to be executed by
its duly authorized officer and Thomas has executed this Agreement all as of the
date first above written.
THERMOVIEW INDUSTRIES, INC.
By:
Title:
RODNEY H. THOMAS
<PAGE>
EXHIBIT A
CERTIFICATE OF DESIGNATION
CERTIFICATE OF THE VOTING POWERS, DESIGNATIONS, PREFERENCES
AND RELATIVE, PARTICIPATING, OPTIONAL OR OTHER
SPECIAL RIGHTS, AND QUALIFICATIONS, LIMITATIONS OR
RESTRICTIONS THEREOF, OF 12% SERIES E CUMULATIVE
PREFERRED STOCK
OF
THERMOVIEW INDUSTRIES, INC.
Pursuant to Section 151 of the General Corporation Law
of the State of Delaware
Pursuant to Section 141(f) of the General Corporation Law of the State of
Delaware (the "DGCL"), the Board of Directors of ThermoView Industries, Inc., a
Delaware corporation (the "Company"), hereby unanimously consents to, adopts and
ratifies the following resolution:
RESOLVED, that pursuant to the authority expressly granted to and vested
in the Board of Directors of the Company by the provisions of Section 4.2
of Article IV of the Restated Certificate of Incorporation of the Company
(the "Restated Certificate of Incorporation"), and Section 151(g) of the
DGCL, such Board of Directors hereby creates, from the 5,000,000
authorized shares of Preferred Stock, par value $.001 per share (the
"Preferred Stock"), of the Company authorized to be issued pursuant to the
Restated Certificate of Incorporation, a series of Preferred Stock, and
hereby fixes by this certificate of designation (this "Certificate of
Designation") the voting powers, designations, preferences and relative,
participating, optional or other special rights, and qualifications,
limitations or restrictions thereof, of the shares of such series as
follows:
The series of Preferred Stock hereby established shall consist of
500,000 shares designated as "12% Cumulative Series E Preferred
Stock" (hereinafter called the "Series E Preferred Stock"), which
shall have a stated value of $5.00 per share. The relative rights,
preferences and limitations of such series shall be as follows:
12% CUMULATIVE SERIES E PREFERRED STOCK
(1) Ranking. The Series E Preferred Stock will, with respect to payment of
dividends and amounts upon liquidation, dissolution or winding up, rank (i)
senior to the Common Stock of the Company, $.001 par value (the "Common Stock")
and to shares of all other series of Preferred Stock issued by the Company the
terms of which specifically provide that the capital stock of such series rank
junior to such Series E Preferred Stock with respect to dividend rights or
distributions upon dissolution of the Company ("Junior Stock"); (ii) on a parity
with (a) all shares of the Company's 9.6% Cumulative Convertible Series C
Preferred Stock, (b) all of the shares of the Company's 12% Cumulative Series D
Preferred Stock, and (c) the shares of all capital stock issued by the Company
whether or not the dividend rates, dividend payment dates, or redemption or
liquidation prices per share thereof shall be different from those of the Series
E Preferred Stock, if the holders of stock of such class or series shall be
entitled by the terms thereof to the receipt of dividends or of amounts
distributable upon liquidation, dissolution or winding up, as the case may be,
in proportion to their respective dividend rates or liquidation prices, without
preference or priority of one over the other as between the holders of such
stock and the holders of shares of Series E Preferred Stock (collectively (a)
and (b) being "Parity Stock"); and (iii) junior to all capital stock issued by
the Company the terms of which specifically provide that the shares rank senior
to the Series E Preferred Stock with respect to dividends and distributions upon
dissolution of the Company ("Senior Stock").
(2) Dividends.
(a) Holders of shares of Series E Preferred Stock will be entitled to
receive, when, as and if declared by the Board of Directors of the Company, out
of funds of the Company legally available for payment, subject to the prior and
superior rights of Senior Stock, but pari passu with Parity Stock, and in
preference to Junior Stock, cumulative cash dividends at the rate per annum of
$0.60 per share of Series E Preferred Stock. Dividends on the Series E Preferred
Stock will be payable quarterly in arrears on the last calendar day of April,
July, October and January of each year, commencing October 1, 2001 (and in the
case of any accumulated and unpaid dividends not paid on the corresponding
dividend payment date, at such additional times and for such interim periods, if
any, as determined by the Board of Directors). Each such dividend will be
payable to holders of record as they appear on the stock records of the Company
at the close of business on such record dates, not more than 60 days nor less
than 10 days preceding the payment dates thereof, as shall be fixed by the Board
of Directors of the Company. Dividends will accrue from the effective date of
the earlier of: 1) the original issuance of the Series E Preferred Stock, or 2)
the original issuance of ThermoView 12% Cumulative Series D Preferred Stock that
is cancelled and replaced with Series E Preferred Stock. Dividends will be
cumulative from such date, whether or not in any dividend period or periods
there shall be funds of the Company legally available for the payment of such
dividends. Each such dividend will be payable to holders of record as they
appear on the stock records of the Company at the close of business on such
record dates, not more than 60 days nor less than 10 days preceding the payment
dates thereof, as shall be fixed by the Board of Directors of the Company.
Accumulations of dividends on shares of Series E Preferred Stock will not bear
interest. Dividends payable on the Series E Preferred Stock for any period
greater or less than a full dividend period will be computed on the basis of
actual days. Dividends payable on the Series E Preferred Stock for each full
dividend period will be computed by dividing the annual dividend rate by four.
(b) Except as provided in the next sentence, no dividend will be
declared or paid on any Parity Stock unless full cumulative dividends have been
declared and paid or are contemporaneously declared and funds sufficient for
payment set aside on the Series E Preferred Stock for all prior dividend
periods. If accrued dividends on the Series E Preferred Stock for all prior
periods have not been paid in full, then any dividends declared on the Series E
Preferred Stock for any dividend period and on any Parity Stock will be declared
ratably in proportion to accumulated and unpaid dividends on the Series E
Preferred Stock and such Parity Stock.
(c) So long as the shares of the Series E Preferred Stock shall be
outstanding, unless (i) full cumulative dividends shall have been paid or
declared and set apart for payment on all outstanding shares of the Series E
Preferred Stock and any Parity Stock, (ii) sufficient funds have been paid or
set apart for the payment of the dividend for the current dividend period with
respect to the Series E Preferred Stock and any Parity Stock and (iii) the
Company is not in default or in arrears with respect to the mandatory or
optional redemption or mandatory repurchase or other mandatory retirement of, or
with respect to any sinking or other analogous fund for, the Series E Preferred
Stock or any Parity Stock, the Company may not declare any dividends on any
Junior Stock, or make any payment on account of, or set apart money for, the
purchase, redemption or other retirement of, or for a sinking or other analogous
fund for, any shares of Junior Stock or make any distribution in respect
thereof, whether in cash or property or in obligations or stock of the Company,
other than (x) Junior Stock which is neither convertible into, nor exchangeable
or exercisable for, any securities of the Company other than Junior Stock, or
(y) Common Stock acquired in connection with the cashless exercise of options
under employee incentive or benefit plans of the Company or any subsidiary or
any other redemption or purchase or other acquisition of Common Stock made in
the ordinary course of business, which has been approved by the Board of
Directors of the Company, for the purpose of any employee incentive or benefit
plan of the Company. The limitations in this paragraph do not restrict the
Company's ability to take the actions in this paragraph with respect to any
Parity Stock. As used in this subparagraph (c), the term "dividend" with respect
to Junior Stock does not include dividends payable solely in shares of Junior
Stock on Junior Stock, or in options, warrants or rights to holders of Junior
Stock to subscribe for or purchase any Junior Stock.
(3) Optional Redemption.
(a) The shares of Series E Preferred Stock will be redeemable at the
option of the Company in whole or in part, for cash or for such number of shares
of Common Stock as equals the Liquidation Preference (defined hereinafter in
paragraph (4)) of the Series E Preferred Stock to be redeemed (without regard to
accumulated and unpaid dividends) as of the opening of business on the date set
for such redemption. In order to exercise its redemption option, the Company
must notify the holders of record of its Series E Preferred Stock in writing
(the "Conditions Satisfaction Notice") prior to the opening of business on the
second trading day after the conditions of redemption have, from time to time,
been satisfied.
(b) Notice of redemption (the "Redemption Notice") will be given by
mail to the holders of the Series E Preferred Stock not less than 30 nor more
than 60 days prior to the date selected by the Company to redeem the Series E
Preferred Stock. The Redemption Notice shall be deemed to have been given when
deposited in the United States mail, first-class mail, postage prepaid, whether
or not such notice is actually received. Any failure to mail the notice provided
or any defect in notice or in the mailing of notice will not affect the validity
of the proceedings for the redemption of any shares to be so redeemed. The
Company's right to exercise its redemption option will not be affected by
changes in the closing price of the Common Stock following such 30-day period.
If fewer than all of the shares of Series E Preferred Stock are to be redeemed,
the shares to be redeemed shall be selected by lot or pro rata or in some other
equitable manner determined by the Board of Directors of the Company; provided,
however, that the Company shall not be required to effect the redemption in any
manner that results in additional fractional shares being outstanding.
(c) On the redemption date, the Company must pay, in cash, on each
share of Series E Preferred Stock to be redeemed any accumulated and unpaid
dividends through the redemption date. In the case of a redemption date falling
after a dividend payment record date and prior to the related payment date, the
holders of the Series E Preferred Stock at the close of business on such record
date will be entitled to receive the dividend payable on such shares on the
corresponding dividend payment date, notwithstanding the redemption of such
shares following such dividend payment record date. Except as provided for in
the preceding sentence, no payment or allowance will be made for accumulated and
unpaid dividends on any shares of Series E Preferred Stock called for redemption
or on the shares of Common Stock issuable upon such redemption.
(d) On and after the date fixed for redemption, provided that the
Company has made available at the office of its registrar and transfer agent a
sufficient number of shares of Common Stock and an amount of cash to effect the
redemption, dividends will cease to accrue on the Series E Preferred Stock
called for redemption (except that, in the case of a redemption date after a
dividend payment record date and prior to the related dividend payment date,
holders of Series E Preferred Stock on the dividend payment record date will be
entitled on such dividend payment date to receive the dividend payable on such
shares), such shares shall be cancelled and shall no longer be deemed to be
outstanding and all rights of the holders of such shares of Series E Preferred
Stock shall cease except the right to receive the shares of Common Stock upon
such redemption and any cash payable upon such redemption, without interest from
the date of such redemption. Such cancelled shares shall be restored to the
status of authorized but unissued shares of Preferred Stock, without designation
as to series, and may thereafter be issued but not as shares of Series E
Preferred Stock. At the close of business on the redemption date upon surrender
in accordance with such notice of the certificates representing any such shares
(properly endorsed or assigned for transfer, if the Board of Directors of the
Company shall so require and the notice shall so state), each holder of Series E
Preferred Stock (unless the Company defaults in the delivery of the shares of
Common Stock or cash) will be, without any further action, deemed a holder of
the number of shares of Common Stock for which such Series E Preferred Stock is
redeemable.
(e) Fractional shares of Common Stock are not to be issued upon
redemption of the Series E Preferred Stock, but, in lieu thereof, the Company
will pay a cash adjustment based on the current market price of the Common Stock
on the day prior to the redemption date. If fewer than all the shares
represented by any such certificate are redeemed, a new certificate shall be
issued representing the unredeemed shares of Series E Preferred Stock without
cost to the holder thereof.
(f) Any shares or cash set aside by the Company pursuant to
subparagraph (e) and unclaimed at the end of three years from the date fixed for
redemption shall revert to the Company.
(g) Subject to applicable law and the limitation on purchases when
dividends on the Series E Preferred Stock are in arrears, the Company may, at
any time and from time to time, purchase any shares of the Series E Preferred
Stock by tender or by private agreement.
(3A.)Mandatory Redemption
(a) The Company will, at the redemption price equal to the sum of
$5.00 per share, redeem from any source of funds legally available therefor,
twenty percent (20%) of all shares of Series E Preferred Stock and Parity Stock,
on an annual basis commencing October 1, 2001, and continuing on an annual basis
until such time that all shares have been redeemed pursuant to the Certificate
of Designation or by agreement of the Holders of such shares.
(b) In the event of a redemption on only a portion of the then
outstanding shares of Series E Preferred Stock, the Company will effect the
redemption pro rata according to the number of shares held by each holder of
Parity Stock,
(c ) At least ten (10) days and not more than thirty (30) days prior
to the date fixed for any redemption under this subsection of the Series E
Preferred Stock or Parity Stock, written notice (the "Redemption Notice") will
be mailed, postage prepaid, to each holder of record of the Series E Preferred
Stock and Parity Stock at his or her post office address last shown on the
records of the Company. The Redemption Notice will state:
(1) whether all or less than all the outstanding shares of Series E
Preferred Stock and Parity Stock are to be redeemed and the total
number of shares of Series E Preferred Stock and Parity Stock being
redeemed;
(2) the number of shares of Series E Preferred Stock and Parity Stock
held by the holder that the Company intends to redeem;
(3) the Redemption Date and the Redemption Price; and
(4) that the holder is to surrender to the Company, in the manner and at
the place designated, his or her certificate or certificates
representing the shares of Series E Preferred Stock and Parity Stock
to be redeemed.
The Redemption Notice shall be deemed to have been given when deposited in the
United States mail, first-class mail, postage prepaid, whether or not such
notice is actually received. Any failure to mail the notice provided or any
defect in notice or in the mailing of notice will not affect the validity of the
proceedings for the redemption of any shares to be so redeemed.
(d) On or before the date fixed for redemption, each holder of Series
E Preferred Stock and Parity Stock will surrender the certificate or
certificates representing the shares of Series E Preferred Stock and Parity
Stock to the Company, in the manner and at the place designated in the
Redemption Notice, and the Redemption Price for the shares will be payable in
cash on the Redemption Date to the person whose name appears on the certificate
or certificates as the owner, and each surrendered certificate will be cancelled
and retired. In the event that less than all of the shares represented by any
certificate are redeemed, a new certificate will be issued representing the
unredeemed shares.
(e) Unless the Company fails to pay in full the Redemption Price, dividends on
the Series E Preferred Stock called for redemption will cease to accumulate on
the Redemption Date, and all rights of the holders of the shares redeemed will
cease to have any further rights with respect to the shares on the Redemption
Date, other than to receive the Redemption Price. Upon the failure to pay, as
described in the immediately preceding sentence, the dividend rate for such
portion of unredeemed Series E Preferred Stock shall increase by two percent
(2%) on an annual basis until such time that the portion of the Series E
Preferred Stock and Parity Stock for which a failure to pay has occurred is
redeemed. In no event shall the applicable dividend rate pursuant to this
provision increase the rate of dividend payable on the outstanding Series E
Preferred Stock and Parity Stock above sixteen percent (16%) per annum.
(f) Subject to applicable law and the limitation on purchases when
dividends on the Series E Preferred Stock are in arrears, the Company may, at
any time and from time to time, purchase any shares of the Series E Preferred
Stock by tender or by private agreement.
(4) Liquidation Preference.
(a) The holders of shares of Series E Preferred Stock will be
entitled to receive in the event of any liquidation, dissolution or winding up
of the Company, whether voluntary or involuntary, $5.00 per share of Series E
Preferred Stock (the "Liquidation Preference"), plus an amount per share of
Series E Preferred Stock equal to all dividends (whether or not earned or
declared) accumulated and unpaid thereon to the date of final distribution to
such holders, and no more. If, upon any liquidation, dissolution or winding up
of the Company, the assets of the Company, or proceeds thereof, distributable
among the holders of the Series E Preferred Stock are insufficient to pay in
full the liquidation preference with respect to the Series E Preferred Stock and
any other Parity Stock, then such assets, or the proceeds thereof, will be
distributed among the holders of Series E Preferred Stock and any such Parity
Stock ratably in accordance with the respective amounts which would be payable
on such Series E Preferred Stock and any such Parity Stock if all amounts
payable thereon were paid in full.
(b) Neither a consolidation or merger of the Company with or into
another corporation, nor a sale, lease or transfer of all or substantially all
of the Company's assets will be considered a liquidation, dissolution or winding
up, voluntary or involuntary, of the Company.
(5) Voting Rights. Except as may be required by applicable law from time to
time, the holders of shares of Series E Preferred Stock will have no voting
rights.
(6) Sinking Fund. The Series E Preferred Stock shall not be entitled to any
sinking fund.
WITNESS THE SIGNATURE of the undersigned who is the President and Chief
Operating Officer of ThermoView Industries, Inc. as of this ___ day of
September, 2000.
------------------------------
Charles L. Smith
<PAGE>
EXHIBIT B
RISK FACTORS
Prior to making an investment decision, a prospective purchaser of the 12%
Cumulative Series E Preferred Stock offered hereby should evaluate the following
risk factors including those in the ThermoView Prospectus, dated December 2,
1999.
Series E Preferred Stock
There can be no assurance that ThermoView's continuing losses or
consolidated earnings, if ever, in the future will be sufficient to cover its
combined fixed charges and dividends on (i) the 12% Series E Cumulative
Preferred Stock alone, or (ii) its 9.6% Series C Convertible Preferred Stock and
the Series D Preferred Stock.
Absence of Trading Market for Series E Preferred Stock
There is no public market for the Series C Preferred Stock, Series D
Preferred Stock and Series E Preferred Stock and ThermoView does not anticipate
that any public market will develop in the future. However, the Series C
Preferred Stock is convertible into Common Stock at a conversion price, subject
to adjustment in certain circumstances of $15.00 per share of Common Stock
(initially equivalent to a conversion rate of 66 2/3 shares of stock per share
of Series C Preferred Stock). The Series D and Series E Preferred Stock has no
such conversion feature. The ThermoView Common Stock trades on the American
Stock Exchange, so a public market does exist for the Common Stock. Without the
ability to convert the Series E Preferred Stock into Common Stock or have a
market available to sell the Series E Preferred Stock, the holders of the Series
E Preferred Stock may not be able to liquidate their investment at any time.
Restriction of Payment of Cash Dividends on Series D and Series E
Preferred Stock
Pursuant to ThermoView's current line of credit with its principal secured
lender and documentation related to financings with other parties, it may not
pay dividends on its Common Stock until all obligations thereunder have been
paid in full and on the Series D and Series E Preferred Stock until satisfaction
of all covenants under the line of credit and other financings. ThermoView
cannot provide any assurance that it will be able to satisfy these covenants so
as to pay quarterly the dividends due on the Series E Preferred Stock.
Considering that ThermoView has in the past received waivers from its lenders
for non-compliance with its covenants, a history exists that non-compliance with
its loan or other covenants may occur in the future. Accordingly, it is possible
that ThermoView may not be able to pay any dividends due on its Series E
Preferred Stock.
Litigation
On March 3, 2000, Pro Futures Bridge Capital Fund, L.P. and Pro Futures
Bridge Capital Fund, L.P. filed an action titled Pro Futures Bridge Capital
Fund, L.P. v. ThermoView Industries, Inc., et al., Civil Action No. 00CV0559
(Colo. Dist. Ct., March 3, 2000) alleging breach of contract, common law fraud,
fraudulent misstatements and omissions in connection with the sale of
securities, negligent misrepresentations and breach of fiduciary duty. These
claims are in connection with (i) the mandatory conversion of the ThermoView 10%
Series A Convertible Preferred Stock, held by the two funds, into ThermoView
Common Stock upon completion of the ThermoView public offering in December 1999,
and (ii) purchases by the two funds of ThermoView Common Stock from ThermoView
stockholders. The funds are seeking (a) rescission of their purchases of the
Series A Preferred Stock in the amount of $3,250,000 plus interest and (b)
unspecified damages in connection with their purchases of the ThermoView Common
Stock. Although ThermoView believes that the claims are without merit and
intends to vigorously defend the suit, an adverse outcome in this action could
have a material adverse effect on the financial position or results of
operations of ThermoView.
<PAGE>
