- --------------------------------------------------------------------------------
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 June 30, 2003
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)
(Registrant's telephone number, including area code, 502-968-2020)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes [X] No [ ]
Indicate by check mark whether the Registrant is an accelerated filer (as
defined by Rule 12b.2 of the Exchange Act). Yes [ ] No [X]
As of July 31, 2003, 8,628,716 shares of the Registrant's common stock,
$.001 par value, were issued and outstanding.
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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.......................2
Condensed Consolidated Statements of Cash Flows.......................3
Notes to Condensed Consolidated Financial Statements..................4
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations............................................11
Item 3. Quantitative and Qualitative Disclosures About Market Risk.......17
Item 4. Controls and Procedures..........................................17
Part II Other Information
Item 1. Legal Proceedings................................................19
Item 2. Changes in Securities and Use of Proceeds........................20
Item 3. Defaults Upon Senior Securities..................................20
Item 4. Submission of Matters to a Vote of Security Holders..............20
Item 5. Other Information................................................20
Item 6. Exhibits and Reports on Form 8-K.................................20
- -----
Item 1. Financial Statements
ThermoView Industries, Inc.
Condensed Consolidated Balance Sheets
December 31, June 30, 2003
--------------------- ---------------------
Assets 2002 (Unaudited)
--------------------- ---------------------
Current assets:
Cash and equivalents $ 2,179,887 $ 64,769
Receivables:
Trade 3,340,577 3,529,634
Other 346,272 354,761
Costs in excess of billings on
uncompleted contracts 589,458 577,186
Inventories 2,104,966 2,034,538
Prepaid expenses and other current
assets 485,316 743,645
--------------------- ---------------------
Total current assets 9,046,476 7,304,533
Property and equipment, net 2,679,852 2,840,661
Other assets:
Goodwill, net 28,358,742 28,358,742
Other assets 408,094 490,833
--------------------- ---------------------
28,766,836 28,849,575
--------------------- ---------------------
Total assets $ 40,493,164 $ 38,994,769
===================== =====================
Liabilities and stockholders' equity
Current liabilities:
Accounts payable $ 3,698,212 $ 3,971,916
Accrued expenses 2,663,889 2,691,898
Billings in excess of costs on
uncompleted contracts 654,338 610,451
Income taxes payable 93,950 71,700
Current portion of long-term debt 324,368 265,947
--------------------- ---------------------
Total current liabilities 7,434,757 7,611,912
Long-term debt 17,012,156 16,360,883
Other long-term liabilities 135,494 193,594
Mandatorily redeemable preferred stock:
Series C, $.001 par value, 25,000
shares authorized; none issued - -
Series D, $.001 par value (aggregate
redemption amount and liquidation
preference of $5,547,875 at December
31, 2002 and $4,882,921 at June 30,
2003); 1,500,000 shares authorized;
956,900 shares issued and outstanding
at December 31, 2002 and at June 30,
2003 5,547,875 4,882,921
Series E, $.001 par value (aggregate
redemption amount and liquidation
preference of $2,275,932 at December
31, 2002 and $2,413,380 at June 30,
2003); 500,000 shares authorized;
336,600 shares issued and outstanding
at December 31, 2002 and at June
30, 2003 2,275,932 2,413,380
Stockholders' equity:
Preferred stock, 2,975,000 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; 8,628,716 shares issued
and outstanding at December 31, 2002 and at
June 30, 2003 8,628 8,628
Paid-in capital 63,799,703 64,531,209
Accumulated deficit (55,721,381) (57,007,758)
--------------------- ---------------------
Total stockholders' equity 8,086,950 7,532,079
--------------------- ---------------------
Total liabilities and stockholders'
equity $ 40,493,164 $ 38,994,769
===================== =====================
See accompanying notes.
1
ThermoView Industries, Inc.
Condensed Consolidated Statements of Operations
(Unaudited)
For the three months ended For the six months ended
June 30, June 30,
------------------------ -------------------------
2002 2003 2002 2003
---- ---- ---- ----
Revenues $23,822,546 $18,112,855 $44,479,808 $34,305,868
Cost of revenues earned 11,658,576 9,244,077 21,981,255 17,700,298
----------- ----------- ----------- ------------
Gross profit 12,163,970 8,868,778 22,498,553 16,605,570
----------- ----------- ----------- ------------
Selling, general and
administrative expenses 10,479,852 8,487,674 20,626,896 16,883,855
Unusual credit-gain on
conversion of debt to
warrants - (796,000) (796,000)
Depreciation expense 253,747 199,642 527,129 413,743
Amortization expense 33,890 5,065 8,537 10,129
----------- ----------- ----------- ------------
Income from operations 1,396,481 972,397 1,275,991 93,843
Equity in earnings (loss)
of joint venture 19,096 (20,017) 32,280 (46,224)
Interest expense (657,146) (706,366) (1,320,446) (1,338,496)
Interest income 13,059 6,965 28,738 16,729
----------- ----------- ----------- ------------
Income (loss) before
income taxes 771,490 252,979 16,563 (1,274,148)
Income tax expense (benefit) (746) 12,653 (7,166) 12,229
----------- ----------- ----------- ------------
Income (loss) before
cumulative effect of an
accounting change 772,236 240,326 23,729 (1,286,377)
Cumulative effect of an
accounting change--charge
for impairment of goodwill - - (30,000,000) -
----------- ----------- ----------- ------------
Net income (loss) 772,236 240,326 (29,976,271) (1,286,377)
Less non-cash Series D and
E preferred stock
dividends (193,486) (240,997) (384,854) (472,494)
Plus benefit of Series D
preferred stock redemption - 796,000 - 796,000
----------- ----------- ----------- ------------
(193,486) 555,003 (384,854) 323,506
----------- ----------- ----------- ------------
Net income (loss)
attributable to common
stockholders $ 578,750 $ 795,329 $(30,361,125) $ (962,871)
=========== =========== =========== ============
Basic income (loss) per common share:
Income (loss) attributable
to common stockholders $ 0.06 $ 0.09 $ (0.04) $ (0.10)
Cumulative effect of an
accounting change - - (3.35) -
----------- ----------- ----------- ------------
Net income (loss)
attributable to common
stockholders $ 0.06 $ 0.09 $ (3.39) $ (0.10)
=========== =========== =========== ============
Diluted income (loss) per common share:
Income (loss) attributable
to common stockholders $ 0.06 $ 0.08 $ (0.04) $ (0.10)
Cumulative effect of an
accounting change - - (3.35) -
----------- ----------- ----------- ------------
Net income (loss)
attributable to common
stockholders $ 0.06 $ 0.08 $ (3.39) $ (0.10)
=========== =========== =========== ============
See accompanying notes.
2
ThermoView Industries, Inc.
Condensed Consolidated Statements of Cash Flows
(Unaudited)
For the six months ended
June 30,
--------------------------
2002 2003
------------ ------------
Operating activities
Net loss $(29,976,271) $(1,286,377)
Adjustments to reconcile net loss to net cash
provided by (used in) operations:
Cumulative effect of an accounting change-
charge related to impairment of goodwill 30,000,000 -
Depreciation and amortization 595,666 423,872
Accretion of debt discount 395,357 376,320
Unusual credit-gain on conversion of debt
to warrants - (796,000)
Equity in income (loss) of joint venture (32,280) 46,224
Other (190,000) 100,000
Changes in operating assets and liabilities 131,475 (179,499)
------------- ------------
Net cash provided by (used in) operating activities 923,947 (1,315,460)
Investing activities
Payments for purchase of property and equipment (367,911) (418,154)
Other (17,107) (137,650)
------------- ------------
Net cash used in investing activities (385,018) (555,804)
Financing activities
Increase in long-term debt 86,247 -
Payments of long-term debt (236,779) (243,854)
------------- ------------
Net cash used in financing activities (150,532) (243,854)
------------- ------------
Net increase (decrease) in cash and equivalents 388,397 (2,115,118)
Cash and equivalents at beginning of period 2,387,583 2,179,887
------------- ------------
Cash and equivalents at end of period $ 2,775,980 $ 64,769
============= ============
See accompanying notes.
3
THERMOVIEW INDUSTRIES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2003
(UNAUDITED)
1. Basis of Presentation
The accompanying unaudited condensed consolidated financial statements of
ThermoView Industries, Inc. ("ThermoView" or "the Company"), 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 six-month period ended June
30, 2003, are not necessarily indicative of the results that may be expected for
the year ended December 31, 2003.
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, 2002.
2. Operating Losses, Negative Cash Flow and Possible Impairment of Goodwill
Revenues for the first six months of 2003 were $34.3 million, compared to
revenues of $44.5 million for the first six months of 2002. During the first six
months of 2003, the Company incurred a net loss to common shareholders of
$2,555,000, excluding $1,592,000 of unusual gains from restructuring debt and
preferred stock. Also, net cash used by operating activities for the first six
months of 2003 was $1,315,000.
Following is the net income (loss) per quarter for the first six months of
2002 and 2003 (excluding the $30 million charge for impairment of goodwill in
2002 and excluding the $1,592,000 of unusual gains from restructuring debt and
preferred stock in 2003):
2002 2003
---- ----
First Quarter $(940,000) $(1,758,000)
Second Quarter 579,000 (797,000)
If the third quarter is not a "turn-around" quarter with operating income
and cash flow in the range of the third quarters of 2001 and 2002, the Company
could encounter the following:
a) An inability to meet the new EBITDA, fixed charge coverage ratios, and
current ratios required by restructured debt agreements (these covenants
are to be measured for the first time on September 30, 2003).
b) An escalating cash flow problem as the Company enters its slower season
towards the beginning of 2004.
4
THERMOVIEW INDUSTRIES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2003
(UNAUDITED)
2. Operating Losses, Negative Cash Flow and Possible Impairment of Goodwill
(Continued)
The Company has adopted September 30 as the annual valuation date for
goodwill. Management considered whether goodwill needed to be evaluated for
impairment as of June 30 this year, and decided to not perform a valuation
because management believes that the poor operating performance of the first six
months of 2003 does not constitute a change in business climate which would
require reconsideration prior to September 30, 2003. It is possible that the
annual valuation of goodwill at September 30, 2003 could indicate that goodwill
is impaired.
3. Income (Loss) per Common Share
Income (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 six-month periods ended June 30, 2002 and 2003,
includes shares related to a stock purchase warrant that can be exercised for
nominal cash consideration. Outstanding shares for purposes of determining
diluted earnings per common share includes the weighted average number of shares
outstanding for basic earnings per share, plus the diluted effect of any common
share equivalents such as options or warrants in the calculation. As the Company
recorded losses before preferred stock dividends and cumulative effect of an
accounting change for the six-month periods ended June 30, 2002 and 2003, common
share equivalents outstanding would be anti-dilutive. Accordingly, basic and
diluted earnings per share amounts are the same.
Weighted average shares outstanding for the periods in which there were
losses attributable to common stockholders were as follows:
Weighted Average
Period Shares Outstanding
-------------------------------------- ------------------
For the six months ended June 30, 2002 8,946,634
For the six months ended June 30, 2003 9,190,059
A reconciliation of basic to diluted share amounts used in computing the
per share amounts for the three months ended June 30, 2002 and 2003 is as
follows:
Three Months
Ended June 30,
2002 2003
---- ----
Basic - weighted average shares outstanding 9,130,375 9,190,059
Dilutive effect of stock options and warrants 1,006,625 528,613
---------- ----------
Diluted - weighted average shares outstanding and
assumed conversions 10,137,000 9,718,672
========== ==========
5
THERMOVIEW INDUSTRIES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2003
(UNAUDITED)
3. Income (Loss) per Common Share (Continued)
A reconciliation of income (loss) before cumulative effect of an accounting
change attributable to common stockholders used in computing the per share
amounts for the three and six months ended June 30, are as follows:
Three Months Six Months
Ended June 30, Ended June 30,
------------- ----------------
2002 2003 2002 2003
---- ---- ---- ----
Income (loss) before
cumulative effect of an
accounting change $ 772,236 $240,326 $ 23,729 $(1,286,377)
Preferred stock dividends,
net of benefit of redemption (193,486) 555,003 (384,854) 323,506
---------- -------- ---------- -----------
Income (loss) before cumulative
effect of an accounting change
attributable to common stockholders $ 578,750 $795,329 $(361,125) $ (962,871)
========== ======== ========== ===========
4. Stock Option Information
Pursuant to SFAS No. 123, "Accounting for Stock-Based Compensation," the
Company has elected to account for its employee stock options under APB No. 25,
"Accounting for Stock Issued to Employees." Accordingly, no compensation cost
has been recognized for employee options except as noted above. Had compensation
cost for employee options been determined based on the fair value at the grant
date consistent with SFAS No. 123, the Company's net income (loss) and income
(loss) per share for the three months and six months ended June 30 would have
been as follows:
Three Months Six Months
Ended June 30, Ended June 30,
-------------- --------------
2002 2003 2002 2003
---- ---- ---- ----
Net income (loss):
As reported $ 772,238 $240,326 $(29,976,270) $(1,286,377)
Pro forma 695,293 219,567 (30,142,935) (1,327,941)
Net income (loss) attributable
to common stockholders:
As reported 578,750 795,329 (30,361,125) (962,871)
Pro forma 501,807 774,570 (30,527,789) (1,004,435)
Basic and diluted income
(loss) per common share:
Basic, As reported $ .06 $ .09 $ (3.39) $ (.10)
Diluted, As reported .06 .08 (3.39) (.10)
Basic, Pro forma .06 .09 (3.41) (.11)
Diluted, Pro forma .05 .08 (3.41) (.11)
6
THERMOVIEW INDUSTRIES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2003
(UNAUDITED)
4. Stock Option Information (Continued)
The fair value of each option grant to employees was estimated on the date
of grant using the Black Scholes option-pricing model with the following
weighted average assumptions:
2002 2003
------- -------
Interest rate 3.59 2.79
Dividends -- --
Expected volatility 1.62 1.20
Expected life in years 5 5
5. Long-term Debt and Mandatorily Redeemable Preferred Stock
On June 30, 2003, the Company restructured its long-term debt and preferred
stock. GE Equity holds Series A debt, Series C debt and other subordinated debt.
Under the restructuring agreements, GE Equity reduced the interest rate on both
series of debt from 10% to 8% and from 12% to 8% on the subordinated debt.
Additionally, GE Equity converted $1 million of the subordinated debt to 680,000
common stock warrants at 28 cents per share. These warrants are exercisable
through March 22, 2013 and were determined to have a fair value of $204,000.
ThermoView's debt maturities were extended by two years to June 30, 2006, and to
July 31, 2006 for the subordinated debt.
ThermoView's preferred stock holders also converted $1 million worth of
Series D preferred stock to 680,000 common stock warrants at 28 cents per share.
These warrants are exercisable through June 30, 2013 and were determined to have
a fair value of $204,000. Also, the Series D and E preferred stock holders
agreed to reduce the dividend rate on the remainder of the preferred holdings
from 12% to 8%, to defer cash dividends until the Series A and B debt is
retired, and to extend the date for mandatory redemption to August 31, 2006.
The restructured debt agreements require ThermoView to pay $100,000 toward
principal each month commencing July 2004, as well as monthly interest. It also
calls for payments of excess cash toward principal two times per year. Excess
cash is defined as amounts over $1 million at the two measurement dates.
Under terms of the restructured debt agreements, ThermoView must achieve
certain quarterly and/or trailing twelve month EBITDA levels as well as fixed
charge coverage ratios and current asset to current liability ratios. The first
measurement date is September 30, 2003.
The holder of $1.2 million of notes in connection with obligations related
to guarantors of a bank revolving line of credit also agreed to extend the due
date of the notes from June 2004 to September 30, 2006.
6. Segment Information
For the three month periods ended June 30, 2002 and 2003, the Company's
business units had separate management teams and infrastructures that operate
primarily in the vinyl replacement windows, doors and related home improvement
7
THERMOVIEW INDUSTRIES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2003
(UNAUDITED)
6. Segment Information (Continued)
products industry in various states in the Midwest and in Southern California.
The business units have been aggregated into two reportable operating segments:
manufacturing and retail.
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.
Segment information for the three months and six months ended June 30 was
as follows:
For the three months Manu-
ended June 30, 2002 facturing Retail Corporate Consolidated
- -------------------------- ----------- ----------- ----------- ------------
Revenues from external
customers $1,783,383 $21,937,489 $ 101,674 $ 23,822,546
Intersegment revenues 315,628 - - 315,628
Income (loss) from
operations 342,240 1,567,761 (513,520) 1,396,481
Total assets 4,447,014 33,999,403 3,310,649 41,757,065
For the three months Manu-
ended June 30, 2003 facturing Retail Corporate Consolidated
- -------------------------- ----------- ----------- ----------- ------------
Revenues from external
customers $1,521,814 $16,279,342 $ 311,699 $ 18,112,855
Intersegment revenues 298,335 - - 298,335
Unusual credit-gain on
conversion of
debt to warrants - - 796,000 796,000
Income (loss) from
Operations 214,761 399,267 358,369 972,397
Total assets 4,130,163 34,205,205 659,401 38,994,769
For the six months Manu-
ended June 30, 2002 facturing Retail Corporate Consolidated
- -------------------------- ----------- ----------- ----------- ------------
Revenues from external
customers $ 2,815,282 $41,481,974 $ 182,552 $ 44,479,808
Intersegment revenues 474,014 - - 474,014
Income (loss) from
operations 189,628 2,111,402 (1,025,039) 1,275,991
8
THERMOVIEW INDUSTRIES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2003
(UNAUDITED)
6. Segment Information (Continued)
For the six months Manu-
ended June 30, 2003 facturing Retail Corporate Consolidated
- -------------------------- ----------- ----------- ----------- ------------
Revenues from external
customers $ 2,331,184 $31,586,105 $ 388,579 $ 34,305,868
Intersegment revenues 386,701 - - 386,701
Unusual credit-gain on
conversion of
debt to warrants - - 796,000 796,000
Income (loss) from
operations (4,085) 349,741 (251,813) 93,843
7. Contingencies and Commitments
On November 19, 2001, Nelson E. Clemmens, former director and president of
ThermoView, filed an action titled Nelson E. Clemmens v. ThermoView Industries,
Inc., Civil Action No. 01-CI-07901 (Jefferson Circuit Court, November 19, 2001)
against ThermoView alleging subrogation and indemnity rights associated with Mr.
Clemmens' loss of guaranty collateral to PNC Bank. These claims are in
connection with the April 2000 amendment to ThermoView's previous bank debt with
PNC Bank, in which Stephen A. Hoffmann, Richard E. Bowlds, Nelson E. Clemmens
and Douglas I. Maxwell, III guaranteed $3,000,000 of our PNC Bank debt. In
January 2001, PNC seized the collateral pledged as security by the guarantors
for the loan guaranty. In March 2001, ThermoView reached settlements with
Messrs. Bowlds and Hoffmann for any claims that they may hold against us
regarding their loss of assets in connection with the guaranty. We did not reach
a settlement with Messrs. Clemmens and Maxwell with regard to guarantees of
$1,000,000. Following the initial discovery phase, Clemmens sought a judicial
determination that ThermoView's March 2001 assignment of the underlying debt
relieved him of a contractual obligation to refrain from asserting a claim of
repayment until the debt was ultimately satisfied. On September 30, 2002, the
Jefferson Circuit Court issued an order of summary judgment stating that
Clemmens could not assert a claim for repayment until the debt was ultimately
satisfied. Clemmens filed a motion with the court to reconsider the September
30, 2002, ruling. On February 26, 2003, the Jefferson Circuit Court reversed the
previous judgment granted to ThermoView and awarded judgment to Clemmens against
ThermoView. ThermoView sought a reconsideration of the February 26, 2003 ruling.
On May 9, 2003, the Jefferson Circuit Court upheld the previous ruling in favor
of Clemmens, and entered a final appealable judgment which allowed Clemmens to
seek collection against ThermoView for the loss of collateral in the amount of
$500,000 plus interest at the rate of 10% annually beginning January 1, 2001
($125,000 through June 30, 2003). On May 19, 2003, ThermoView appealed the
judgment issued to Clemmens to the Kentucky Court of Appeals. On June 6, 2003,
ThermoView, with the guarantee of GE Capital Equity, posted a supercedeas bond
in the amount of $690,000 with the Jefferson Circuit Court to prevent Clemmens
from enforcing the judgment awarded to him during the pendency of the appeal of
this matter. In order to secure the supercedeas bond, ThermoView entered into an
agreement with GE Capital Equity to deposit funds monthly into a sinking fund to
serve as security for the amount of the supercedeas bond. Pursuant to this
agreement, ThermoView shall make payments of $50,000 monthly for the months of
July through December, 2003 and $30,000 monthly during the months January
through June, 2004 until the balance of the sinking fund is equal to the face
amount of the bond. In addition, under the agreement, ThermoView must make
additional payments to the sinking fund such that the balance of the sinking
9
THERMOVIEW INDUSTRIES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2003
(UNAUDITED)
7. Contingencies and Commitments (Continued)
fund will be no less than $600,000 by June 30, 2004. In consideration for the
agreement, ThermoView shall pay to GE Capital Equity Investments a fee of 2.5%
of the face amount of the bond upon issuance and shall grant GE Capital Equity a
first priority lien on its assets to secure any amounts drawn on the bond. In
the event that ThermoView prevails upon the appeal and no amounts are drawn upon
the bond, the balance of the sinking fund will be applied to the Series A and B
notes of ThermoView on a pro-rata basis. A prehearing conference of the appeal
is scheduled for August 28, 2003. Maxwell has not asserted a claim for the loss
of his collateral as of the date of filing of this report. Maxwell could assert
claims for the same amount as Clemmens. Management has evaluated the potential
loss associated with Clemmens' litigation and Maxwell's unasserted claim and
believes that the Company has recorded adequate liabilities on its balance sheet
as of June 30, 2003. While ThermoView believes that the ultimate resolution of
this Clemmens' matter on appeal will be favorable to ThermoView, an adverse
final determination of our position regarding this matter could have a material
adverse effect on our cash flow.
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.
In March 2000, the Company entered into a license agreement with Research
Frontiers Incorporated (Research Frontiers), a Delaware corporation with
headquarters located in Woodbury, New York, for the non-exclusive rights to
market windows which utilize variable light transmission technology developed by
Research Frontiers. The agreement provides for the payment of a royalty of 5% of
the net selling price of the licensed products as defined in the agreement to
Research Frontiers for products sold by the Company that incorporate such
technology. Additionally, the Company has agreed to pay to Research Frontiers an
annual minimum royalty of $100,000 for 2003. The royalty is payable in cash or
shares of the Company's common stock at the Company's option.
8. Recently Enacted Accounting Standards
Financial Accounting Standard Board (FASB) recently issued two new
accounting standards, Statement 149, Amendment of Statement 133 on Derivative
Instruments and Hedging Activities, and Statement 150, Accounting for Certain
Financial Instruments with Characteristics of both Liabilities and Equities,
both of which generally become effective in the quarter beginning July 1, 2003.
Under the new standard for certain liabilities and equity instruments,
mandatorily redeemable instruments such as preferred securities are considered
liabilities.
10
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, adverse judgments to ThermoView, and restrictions imposed by our
senior and subordinated debt.
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 our audited consolidated financial statements
contained in our Annual Report on Form 10-K for the year ended December 31,
2002. 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 exterior coatings, vinyl siding, patio decks,
patio enclosures, cabinet refacings and kitchen and bathroom remodeling
products, as well as residential roofing.
Business Segments
Our subsidiaries have separate management teams and infrastructures and
operate in two reportable operating segments: retail and manufacturing.
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.
Manufacturing. Our manufacturing segment consists of our subsidiary that
manufactures and sells vinyl replacement windows to one of our retail companies
and to unaffiliated customers. Our manufacturing segment recognizes revenues
11
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.
Historical Results Of Operations
For the three months For the six months
ended June 30, ended June 30,
------------------- --------------------
2002 2003 2002 2003
-------- -------- -------- ---------
(In thousands)
Revenues........................... $ 23,823 $ 18,113 $ 44,480 $ 34,306
Cost of revenues earned............ 11,659 9,244 21,981 17,700
-------- -------- -------- ---------
Gross profit....................... 12,164 8,869 22,499 16,606
Selling, general and administrative
expenses......................... 10,480 8,488 20,627 16,884
Unusual credit-gain on conversion
of debt to warrants.............. - (796) - (796)
Depreciation expense............... 254 200 527 414
Amortization expense............... 34 5 69 10
-------- -------- -------- ---------
Income from operations............. 1,396 972 1,276 94
Equity in earnings (loss) of joint
venture.......................... 19 (20) 32 (46)
Interest expense................... (657) (706) (1,320) (1,338)
Interest income.................... 13 7 29 16
-------- -------- -------- ---------
Income (loss) before income taxes.. 771 253 17 (1,274)
Income tax expense (benefit)....... (1) 13 (7) 12
-------- -------- -------- ---------
Income (loss) before cumulative
effect of an accounting change... 772 240 24 (1,286)
Cumulative effect of an accounting
change--charge for impairment of
goodwill......................... - - (30,000) -
-------- -------- -------- ---------
Net income (loss).................. 772 240 (29,976) (1,286)
Less non-cash Series D and E
preferred stock dividends........ (193) (241) (385) (473)
Plus benefit of Series D preferred
stock redemption................. - 796 - 796
-------- -------- -------- ---------
(193) 555 (385) 323
-------- -------- -------- ---------
Net income (loss) attributable to
common stockholders.............. $ 579 $ 795 $(30,361) $ (963)
======== ======== ======== =========
12
Three Months Ended June 30, 2003 Compared to June 30, 2002
Revenues. Revenues decreased from $23.8 million for the second quarter of
2002 to $18.1 million for the second quarter of 2003. Revenues during the second
quarter of 2003 continued to be negatively impacted by rain in our Southern
California market, the sluggish economy, the events in Iraq and new
telemarketing laws. All of our retail operations and our manufacturing operation
reported less revenues in the second quarter of 2003 compared to 2002.
Gross Profit. Gross profit, which represents revenues less cost of revenues
earned, decreased from $12.2 million in the second quarter of 2002 to $8.9
million in the second quarter of 2003. The reduction in the amount of gross
profit is consistent with the reduced revenue discussed above. As a percentage
of revenues, gross profit decreased from 51.1% in the second quarter of 2002 to
49.0% in the second quarter of 2003. 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 second quarter of 2003 compared
to the second quarter of 2002.
Selling, General and Administrative Expenses. Selling, general and
administrative expenses decreased from $10.5 million in the second quarter of
2002 to $8.5 million in the second quarter of 2003. Selling, general and
administrative expenses as a percentage of revenue increased from 44.0% in the
second quarter of 2002 to 46.9% in the second quarter of 2003. The increase in
selling, general and administrative expenses as a percentage of revenues in the
second quarter of 2003 results primarily from the fixed nature of certain
expenses relative to the lower volumes.
Unusual Credit. The unusual credit in 2003 represents a gain from
converting $1 million of debt to warrants to purchase 680,000 shares of our
common stock exercised at 28 cents per share.
Depreciation Expense. Depreciation expense decreased from $254,000 in the
second quarter of 2002 to $200,000 in the second quarter of 2003, reflecting a
fairly constant amount of property and equipment.
Interest Expense. Interest expense increased from $657,000 in 2002 to
$706,000 in 2003. This increase represents interest recognized in 2003 on
obligations related to guarantors of a bank revolving line of credit offset by
some decrease in interest expense because of debt retirements during 2002.
Income Tax Benefit. Due to operating losses, management concluded that it
is more likely than not that our deferred tax assets will not be realized.
Accordingly, we established a valuation allowance against all deferred tax
assets, and no deferred income taxes have been recorded in 2002 or 2003. Income
tax expense in the second quarter of 2003 relates to state taxes.
Non-Cash Dividends. Non-cash dividends in the second quarter of 2002 and
2003 represent accrued dividends on the Series D and E preferred stock.
Benefit of Series D Preferred Stock Redemption. The benefit in 2003
represents a gain on redemption of $1 million of Series D stock for warrants to
purchase 680,000 shares of our common stock exercised at 28 cents per share.
13
Six Months Ended June 30, 2003 Compared to June 30, 2002
Revenues. Revenues decreased from $44.5 million for the first six months of
2002 to $34.3 million for the first six months of 2003. Revenues during the
first six months of 2003 were negatively impacted by severe winter weather in
our Midwest markets in the first quarter, rain in our Southern California
market, the sluggish economy, the events in Iraq, and new telemarketing laws.
All of our retail operations and our manufacturing operation reported less
revenues in the first six months of 2003 compared to 2002.
Gross Profit. Gross profit, which represents revenues less cost of revenues
earned, decreased from $22.5 million in the first six months of 2002 to $16.6
million in the first six months of 2003. The reduction in the amount of gross
profit is consistent with the reduced revenue discussed above. As a percentage
of revenues, gross profit decreased from 50.6% in the first six months of 2002
to 48.4% in the first six months of 2003. 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 six months of 2003
compared to the first six months of 2002.
Selling, General and Administrative Expenses. Selling, general and
administrative expenses decreased from $20.6 million in the first six months of
2002 to $16.9 million in the first six months of 2003. Selling, general and
administrative expenses as a percentage of revenue increased from 46.4% in the
first six months of 2002 to 49.2% in the first six months of 2003. The increase
in selling, general and administrative expenses as a percentage of revenues in
the first six months of 2003 results primarily from the fixed nature of certain
expenses relative to the lower volumes.
Unusual Credit. The unusual credit in 2003 represents a gain from
converting $1 million of debt to 680,000 common stock warrants issued at 28
cents per share.
Depreciation Expense. Depreciation expense decreased from $527,000 in the
first six months of 2002 to $414,000 in the first six months of 2003, reflecting
a fairly constant amount of property and equipment.
Interest Expense. Interest expense was relatively constant for the six
month periods.
Income Tax Benefit. Due to operating losses, management concluded that it
is more likely than not that our deferred tax assets will not be realized.
Accordingly, we established a valuation allowance against all deferred tax
assets, and no deferred income taxes have been recorded in 2002 or 2003. Income
tax expense in the second quarter of 2003 relates to state taxes.
Non-Cash Dividends. Non-cash dividends in the first six months of 2002 and
2003 represent accrued dividends on the Series D and E preferred stock.
Benefit of Series D Preferred Stock Redemption. The benefit in 2003
represents a gain on redemption of $1 million of Series D stock for 680,000
common stock warrants issued at 28 cents per share.
14
Liquidity And Capital Resources
As of June 30, 2003, we had cash and equivalents of $65,000, a working
capital deficit of $307,000, $16.4 million of long-term debt, net of current
maturities, and $7.3 million of mandatorily redeemable preferred stock.
Our operating activities for the six months ended June 30, 2002, provided
$924,000 of cash. Our operating activities for the six months ended June 30,
2003, used $1,315,000 of cash.
The use of $385,000 of cash for investing activities for the six months
ended June 30, 2002 related primarily to the acquisition of property and
equipment. The use of $556,000 of cash for investing activities for the six
months ended June 30, 2003, related primarily to the acquisition of property and
equipment.
We used $151,000 in cash for financing activities in the six months ended
June 30, 2002, primarily for repayment of debt. We used $244,000 of cash for
financing activities in the six months ended June 30, 2003 for repayment of
debt.
Revenues for the first six months of 2003 were $34.3 million, compared to
revenues of $44.5 million of the first six months of 2002. During the first six
months of 2003, the Company incurred a net loss to common shareholders of
$2,555,000, excluding $1,592,000 of unusual gains from restructuring debt and
preferred stock. Also, net cash used by operating activities for the first six
months of 2003 was $1,315,000.
Following is the net income (loss) per quarter for the first six months of
2002 and 2003 (excluding the $30 million charge for impairment of goodwill in
2002 and excluding the $1,592,000 of unusual gains from restructuring debt and
preferred stock in 2003):
2002 2003
---- ----
First Quarter $(940,000) $(1,758,000)
Second Quarter 579,000 (797,000)
Management believes that the decrease in sales of 2003, which was largely
responsible for the operating loss and reduction in cash flow, was primarily due
to severe winter weather in the Midwest markets, severe rain in the southern
California market, a sluggish economy, the events in Iraq, and regulatory
restrictions on telemarketing.
Management is aware of the above external factors. In addition, various
internal factors such as debt/preferred stock restructuring, price increases and
further cost cutting have been accomplished in the first six months of 2003.
Management believes these actions will improve operating performance in the
second six months of 2003.
If the third quarter is not a "turn-around" quarter with more normal
operating income and cash flow in the range of the third quarters of 2001 and
2002, the Company could encounter the following:
a) An inability to meet the new EBITDA, fixed charge coverage ratios, and
current ratios required by restructured debt agreements (these covenants
are to be measured for the first time on September 30, 2003).
15
b) An escalating cash flow problem as the Company enters its slower season
towards the beginning of 2004.
The Company has adopted September 30 as the annual valuation date for
goodwill. Management considered whether goodwill needed to be valued as of June
30 this year, and decided to not perform a valuation because management believes
that the poor operating performance of the first six months of 2003 does not
constitute a change in business climate which would require reconsideration
prior to September 30, 2003. It is possible that the annual valuation of
goodwill at September 30, 2003 could indicate that goodwill is impaired.
Our cash flow could be negatively impacted by an adverse final
determination in the Nelson E. Clemmens' litigation. The adverse judgment could
result in our requirement to pay $500,000 plus 10% interest accrued from January
1, 2001 until paid. We have recorded $500,000 as long-term debt on our balance
sheet, and have accrued interest amounting to $100,000 through June 30, 2003.
Management intends to appeal the latest decision and expects that it will take
over twelve months to complete the appeal process.
On June 30, 2003, the Company restructured its long-term debt and preferred
stock. GE Equity holds Series A debt, Series C debt and other subordinated debt.
Under the restructuring agreements, GE Equity reduced the interest rate on both
series of debt from 10% to 8% and from 12% to 8% on the subordinated debt.
Additionally, GE Equity converted $1 million of the subordinated debt to 680,000
common stock warrants at 28 cents per share. These warrants are exercisable
through March 22, 2013 and were determined to have a fair value of $204,000.
ThermoView's debt maturities were extended by two years to June 30, 2006, and to
July 31, 2006 for the subordinated debt.
ThermoView's preferred stock holders also converted $1 million worth of
Series D preferred stock to 680,000 common stock warrants at 28 cents per share.
These warrants are exercisable through June 30, 2013 and were determined to have
a fair value of $204,000. Also, the Series D and E preferred stock holders
agreed to reduce the dividend rate on the remainder of the preferred holdings
from 12% to 8%, to defer cash dividends until the Series A and B debt is
retired, and to extend the date for mandatory redemption to August 31, 2006.
The restructured debt agreements require ThermoView to pay $100,000 toward
principal each month commencing July 2004, as well as monthly interest. It also
calls for payments of excess cash toward principal two times per year. Excess
cash is defined as amounts over $1 million at the two measurement dates.
Under terms of the restructured debt agreements, ThermoView must achieve
certain quarterly and/or trailing twelve month EBITDA levels as well as fixed
charge coverage ratios and current asset to current liability ratios. The first
measurement date is September 30, 2003.
The holder of $1.2 million of notes in connection with obligations related
to guarantors of a bank revolving line of credit also agreed to extend the due
date of the notes from June 2004 to September 30, 2006.
If we default in the future under our debt arrangements, the lenders can,
among other items, accelerate all amounts owed and increase interest rates on
our debt. An event of default could result in the loss of our subsidiaries
16
because of the pledge of our ownership in all of our subsidiaries to the
lenders. As of December 31, 2002 and June 30, 2003, we are not in default under
any of our debt arrangements.
Subject to more normal revenue production during the third quarter of 2003
in the range of the third quarters of 2001 and 2002, 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 debt service requirements;
o working capital requirements;
o planned property and equipment capital expenditures;
o expanding our retail segment;
o offering new technologically improved products to our customers; and
o integrating more thoroughly the advertising and marketing programs of our
regional subsidiaries into a national home-remodeling business.
We also believe in the longer term that cash will be sufficient to meet our
needs. However, we do not expect to continue our acquisition program soon. In
October 2002, we opened a new retail sales office in Phoenix, Arizona, and are
considering two new retail offices in the upper midwest and in a southeastern
state in 2003. Also, we have and are investing in the development of Alter-Lite
light-control windows and a new line of climate resistant, highly durable
Compozit(TM) windows. In addition, we intend to more thoroughly integrate the
advertising and marketing programs of our regional subsidiaries into a national
home-remodeling business over the next two years. These various initiatives we
expect will require cash from $300,000 to $400,000 in the next twelve months.
We do not expect annual capital expenditures for the next three years to
significantly vary from amounts reported for the last three years, which have
been in the range of $500,000 to $900,000 annually.
Pending Litigation
ThermoView does not anticipate any significant adverse effect on our
results of operations through December 2003 because of the Clemmens litigation
described in Part II, Item 1, Legal Proceedings. Although ThermoView believes
that we will prevail upon appeal of the claim, an adverse outcome in this action
could have a material adverse effect on our cash flow.
Item 3. Quantitative And Qualitative Disclosures About Market Risk
In June 2003, we restructured our debt and all of our debt continues to be
fixed rate debt. 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 currently outstanding, a 10% change in interest rates (for
example, from 10% to 11%) would not have resulted in a significant change in the
fair value of our fixed-rate debt.
17
Item 4. Controls and Procedures
As of June 30, 2003, an evaluation was carried out under the supervision
and with the participation of ThermoView's management, including our Chief
Executive Officer and Chief Financial Officer, of the effectiveness of our
disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e)
and 15d-15(e) under the Securities Exchange Act of 1934). Based on their
evaluation, our Chief Executive Officer and Chief Financial Officer have
concluded that ThermoView's disclosure controls and procedures are, to the best
of their knowledge, effective to ensure that information required to be
disclosed by ThermoView in reports that it files or submits under the Exchange
Act is recorded, processed, summarized and reported within the time periods
specified in Securities and Exchange Commission rules and forms. Subsequent to
June 30, 2003, our Chief Executive Officer and Chief Financial Officer have
concluded that there were no significant changes in ThermoView's internal
controls or in other factors that could significantly affect our internal
controls.
18
Part II - OTHER INFORMATION
Item 1. Legal Proceedings
On November 19, 2001, Nelson E. Clemmens, former director and president of
ThermoView, filed an action titled Nelson E. Clemmens v. ThermoView Industries,
Inc., Civil Action No. 01-CI-07901 (Jefferson Circuit Court, November 19, 2001)
against ThermoView alleging subrogation and indemnity rights associated with Mr.
Clemmens' loss of guaranty collateral to PNC Bank. These claims are in
connection with the April 2000 amendment to ThermoView's previous bank debt with
PNC Bank, in which Stephen A. Hoffmann, Richard E. Bowlds, Nelson E. Clemmens
and Douglas I. Maxwell, III guaranteed $3,000,000 of our PNC Bank debt. In
January 2001, PNC seized the collateral pledged as security by the guarantors
for the loan guaranty. In March 2001, ThermoView reached settlements with
Messrs. Bowlds and Hoffmann for any claims that they may hold against us
regarding their loss of assets in connection with the guaranty. We did not reach
a settlement with Messrs. Clemmens and Maxwell with regard to guarantees of
$1,000,000. Following the initial discovery phase, Clemmens sought a judicial
determination that ThermoView's March 2001 assignment of the underlying debt
relieved him of a contractual obligation to refrain from asserting a claim of
repayment until the debt was ultimately satisfied. On September 30, 2002, the
Jefferson Circuit Court issued an order of summary judgment stating that
Clemmens could not assert a claim for repayment until the debt was ultimately
satisfied. Clemmens filed a motion with the court to reconsider the September
30, 2002, ruling. On February 26, 2003, the Jefferson Circuit Court reversed the
previous judgment granted to ThermoView and awarded judgment to Clemmens against
ThermoView. ThermoView sought a reconsideration of the February 26, 2003 ruling.
On May 9, 2003, the Jefferson Circuit Court upheld the previous ruling in favor
of Clemmens, and entered a final appealable judgment which allowed Clemmens to
seek collection against ThermoView for the loss of collateral in the amount of
$500,000 plus interest at the rate of 10% annually beginning January 1, 2001
($125,000 through June 30, 2003). On May 19, 2003, ThermoView appealed the
judgment issued to Clemmens to the Kentucky Court of Appeals. On June 6, 2003,
ThermoView, with the guarantee of GE Capital Equity, posted a supercedeas bond
in the amount of $690,000 with the Jefferson Circuit Court to prevent Clemmens
from enforcing the judgment awarded to him during the pendency of the appeal of
this matter. In order to secure the supercedeas bond, ThermoView entered into an
agreement with GE Capital Equity to deposit funds monthly into a sinking fund to
serve as security for the amount of the supercedeas bond. Pursuant to this
agreement, ThermoView shall make payments of $50,000 monthly for the months of
July through December, 2003 and $30,000 monthly during the months January
through June, 2004 until the balance of the sinking fund is equal to the face
amount of the bond. In addition, under the agreement, ThermoView must make
additional payments to the sinking fund such that the balance of the sinking
fund will be no less than $600,000 by June 30, 2004. In consideration for the
agreement, ThermoView paid to GE Capital Equity Investments a fee of 2.5% of the
face amount of the bond upon issuance and granted GE Capital Equity a first
priority lien on its assets to secure any amounts drawn on the bond. In the
event that ThermoView prevails upon the appeal and no amounts are drawn upon the
bond, the balance of the sinking fund will be applied to the Series A and B
notes of ThermoView on a pro-rata basis. A prehearing conference of the appeal
is scheduled for August 28, 2003. Maxwell has not asserted a claim for the loss
19
of his collateral as of the date of filing of this report. Maxwell could assert
claims for the same amount as Clemmens. Management has evaluated the potential
loss associated with Clemmens' litigation and Maxwell's unasserted claim and
believes that ThermoView has recorded adequate liabilities on its balance sheet
as of June 30, 2003. While ThermoView believes that the ultimate resolution of
this Clemmens' matter on appeal will be favorable to ThermoView, an adverse
final determination of our position regarding this matter could have a material
adverse effect on our cash flow.
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
a. ThermoView held its annual meeting of stockholders on May 1, 2003, at 10:00
A.M., eastern daylight time, at the Republic Bank Conference Center, 9600
Brownsboro Road, Louisville, Kentucky.
b. At the annual meeting, stockholders elected three individuals as Class I
members of our Board of Directors.
Broker Non
Name For Against Withheld Abstentions Votes
---- --- ------- -------- ----------- -----
Ronald L. Carmicle 5,735,615 0 0 46,815 0
Raymond C. Dauenhauer, Jr. 5,735,615 0 0 46,815 0
Bruce C. Merrick 5,729,817 0 5,798 46,815 0
The following directors remained on the Board of Directors as Class II and
Class III directors immediately after the annual meeting:
Class II Directors Class III Directors
Name Name
- ---- ----
J. Sherman Henderson, III Robert L. Cox
Rodney H. Thomas* Stephen A. Hoffmann
George T. Underhill, III Charles L. Smith
* Mr. Thomas subsequently resigned as a director effective May 26, 2003.
c. Not applicable.
d. Not applicable.
Item 5. Other Information
On August 13, 2003, ThermoView issued a press release reporting financial
results for the second quarter. The press release is filed herewith as Exhibit
99.1.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits.
See Index to Exhibits.
20
(b) Reports on Form 8-K.
(1) On April 10, 2003, ThermoView filed a Form 8-K under Item 5. Other Events
and Regulation FD Disclosure reporting implementation of an online
financing alternative.
(2) On May 1, 2003, ThermoView filed a Form 8-K under Item 5. Other Events and
Regulation FD Disclosure reporting financial results for the first quarter
and the renewal of directors at our Annual Meeting of Shareholders.
(3) On May 29, 2003, ThermoView filed a Form 8-K under Item 6. Resignations of
Registrant's Directors reporting the resignation of Rodney H. Thomas from
the Board of Directors.
(4) On June 30, 2003, ThermoView filed a Form 8-K under Item 5. Other Events
and Regulation FD Disclosure reporting agreements to restructure with
lenders ThermoView's long-term debt and preferred stock.
21
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: August 14, 2003 By: /s/ Charles L. Smith
--------------------------------------
Charles L. Smith,
Chief Executive Officer
(principal executive officer)
Date: August 14, 2003 By: /s/ James J. TerBeest
--------------------------------------
James J. TerBeest,
Chief Financial Officer
(principal financial and accounting
officer)
22
INDEX TO EXHIBITS
Exhibit
Number Description of Exhibits
4.4 -- Third Amended Certificate of Designation of Series D Preferred Stock
dated March 28, 2003.
4.5 -- Second Amended Certificate of Designation of Series E Preferred Stock
dated March 28, 2003.
4.6 -- Fourth Amended Certificate of Designation of Series D Preferred Stock
dated May 2, 2003.
4.7 -- Third Amended Certificate of Designation of Series E Preferred Stock
dated May 2, 2003.
4.8 -- Fifth Amended Certificate of Designation of Series E Preferred Stock
dated June 30, 2003.
4.9 -- Fourth Amended Certificate of Designation of Series E Preferred Stock
dated June 30, 2003.
10.114 -- Consent to Amendment of Series D preferred stock dated May 2, 2003 by
and among registrant and preferred shareholders.
10.115 -- Consent to Amendment of Series E preferred stock dated May 2, 2003 by
and among registrant and preferred shareholders.
10.116 -- Amendment to Notes dated May 14, 2003 by and between Stephen A.
Hoffmann and registrant, et al.
10.117 -- Tenth Amendment to Loan Agreement dated as of May 15, 2003 by and
among GE Capital Equity Investment, Inc. and registrant, et al.
10.118 -- Sixth Amendment to Securities Purchase Agreement dated as of May 15,
2003 by and among GE Capital Equity Investment, Inc. and registrant,
et al.
10.119 -- Reimbursement Agreement dated as of May 30, 2003 by and among GE
Capital Equity Investment, Inc. and registrant, et al.
10.120 -- Eleventh Amendment to Loan Agreement dated as of June 30, 2003 by and
among GE Capital Equity Investment, Inc. and registrant, et al.
10.121 -- Seventh Amendment to Securities Purchase Agreement dated as of June
30, 2003 by and among GE Capital Equity Investment Inc. and registrant
et al.
10.122 -- Reimbursement Agreement dated as of June 30, 2003 by and among GE
Capital Equity Investment, Inc. and registrant, et al.
10.123 -- Amendment to Pledge Agreement dated as of June 30, 2003 by and among
GE Capital Equity Investment, Inc. and registrant, et al.
10.124 -- Amendment to Security Agreement dated as of June 30, 2003 by and among
GE Capital Equity Investment, Inc. and registrant, et al.
10.125 -- Consent to Amendment of Series D preferred stock dated June 27, 2003
by and among registrant and preferred shareholders.
10.126 -- Consent to Amendment of Series E preferred stock dated June 27, 2003
by and among registrant and preferred shareholders.
10.127 -- Amended and Restated Series A Promissory Note dated as of June 30,
2003 by and between registrant and its subsidiaries and GE Capital
Equity Investments, Inc.
10.128 -- Amended and Restated Series C Promissory Note dated as of June 30,
2003 by and between registrant and its subsidiaries and GE Capital
Equity Investments, Inc.
10.129 -- Amended and Restated Series B Promissory Note dated as of June 30,
2003 by and between registrant and its subsidiaries and the
individuals identified on Schedule A of the Index to Exhibits.
10.130 -- Common Stock Purchase warrant dated as of March 22, 2001 by and among
registrant and the individuals identified on Schedule A of the Index
to Exhibits.
10.131 -- Second Amendment to Notes dated June 30, 2003 by and between Stephen
A. Hoffmann and registrant, et al.
10.132 -- Amendment dated June 27, 2003 to Lease Agreement dated January 1, 1999
between Thomas Construction, Inc. and 13397 Lakefront Drive, LLC.
31.1 -- Rule 13a-14(a) Certification of Charles L. Smith for the Form 10-Q for
the quarter ended June 30, 2003.
31.2 -- Rule 13a-14(a) Certification of James J.TerBeest for the Form 10-Q for
the quarter ended June 30, 2003.
32.1 -- 18 U.S.C. Section 1350 Certifications of Charles L. Smith and James J.
TerBeest for the Form 10-Q for the quarter ended June 30, 2003.
99.1 -- News Release of ThermoView Industries, Inc. announcing second quarter
financial results dated August 13, 2003.
SCHEDULE A
TO INDEX TO EXHIBITS
Exhibit Number 10.129 Amended and Restated Series B Promissory Note dated as of
June 30, 2003, was executed by the registrant and issued to the individuals in
the amounts specified:
Name Amount
Daniel F. Dooley 17,738.10
Robert L. Cox 177,380.95
DART Investors, LLC 603,095.24
Charles L. Smith 333,476.19
Robert L. Cox, II 106,428.57
Stephen A. Hoffmann 92,238.10
Mitch M. Wexler 70,952.38
Stephen Townzen 35,476.19
Emerging Business Solutions, LLC 35,476.19
Ronald L. Carmicle 24,833.33
Raymond C. Dauenhauer 24,833.33
J. Sherman Henderson, III 24,833.33
Bruce C. Merrick 24,833.33
George T. Underhill, III 24,833.33
SCHEDULE B
TO INDEX TO EXHIBITS
Exhibit Number 10.130 Common Stock Purchase Warrant dated as of June 30, 2003,
was executed by the registrant and issued to the individuals in the amounts
specified:
Name Warrant Shares
Mitchell M. Wexler W-21 70,000
DART Investors, L.P. No.2 W-22 305,000
Charles L. Smith W-23 305,000
GE Capital Equity Investments, Inc. W-24 680,000
24
Exhibit No. 4.4
THIRD AMENDED 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, by regularly scheduled meeting
held on April 24, 2003, 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. 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, with the exception of those
dividends which accrue from the period commencing October 1, 2001 and ending
March 31, 2004, which dividends shall be paid by the issuance of an equivalent
amount of Series D Preferred Stock. Provided, however, that in the event that
funds are legally available for payment, and the Company, following distribution
of such cash dividends, shall remain in compliance with sections 4.I.[1] and
4.I.[2] of that certain Eighth Amendment to Loan Agreement dated March 22, 2001,
by and between GE Capital Equity Investments, Inc., et al. and the Company, the
Company shall pay cash dividends from the period commencing January 1, 2003 and
ending March 31, 2004. 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 July 31, 2004, representing dividends due for the quarter ending June
30, 2004 (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
25
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.
Accrued dividends earn interest to the fullest extent allowed by applicable law.
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 and for payment of dividends on
Series E Preferred Stock, 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.
B. Other than as amended hereby, the Certificate of Designation for the Series
D Preferred Stock remains in full force and effect.
IN WITNESS WHEREOF ThermoView Industries, Inc. has caused this Certificate
to be signed by its President on this 24th day of April 2003.
------------------------------------
Name: Charles L. Smith
Title: President
26
Exhibit 4.5
SECOND AMENDED CERTIFICATE OF DESIGNATION
OF
CUMULATIVE PREFERRED STOCK, SERIES E
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, by regularly scheduled meeting
held on April 24, 2003, duly approved and adopted the following amendment to the
Certificate of Designation of 12% Series E Cumulative Preferred Stock (the
"Certificate of Designation") and with the written consent of all existing
holders of the 12% Series E Cumulative Preferred Stock:
A. Section 2 of the Certificate of Designation is hereby replaced in its
entirety with the following:
(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 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 July 31, 2004, representing
dividends due for the quarter ending June 30, 2004 (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 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 which accrue from the period beginning from the earlier of either the
date of original issuance of Series E Preferred Stock, or the original issuance
date of ThermoView 12% Cumulative Series D preferred stock that is cancelled and
replaced with Series E preferred Stock, of the Series E Preferred Stock and
ending March 31, 2004 shall be paid by the issuance of an equivalent amount of
Series E Preferred Stock. Provided, however, that in the event that funds are
legally available for payment, and the Company, following distribution of such
cash dividends, shall remain in compliance with sections 4.I.[1] and 4.I.[2] of
that certain Eighth Amendment to Loan Agreement dated March 22, 2001, by and
between GE Capital Equity Investments, Inc., et al. and the Company, the Company
shall pay cash dividends from the period commencing January 1, 2003 and ending
March 31, 2004. 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 be cumulative from such date, whether or not in any dividend
27
period or periods there shall be funds of the Company legally available for the
payment of such dividends. Accrued dividends earn interest to the fullest extent
allowed by applicable law. 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 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.
28
B. Other than as amended hereby, the Certificate of Designation for the Series
E Preferred Stock remains in full force and effect.
IN WITNESS WHEREOF ThermoView Industries, Inc. has caused this Certificate
to be signed by its President on this 24th day of April 2003.
------------------------------------
Name: Charles L. Smith
Title: President
29
Exhibit 4.6
FOURTH AMENDED 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, by regularly scheduled meeting
held on April 24, 2003, 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. 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, with the exception of those
dividends which accrue from the period commencing October 1, 2001 and ending
September 30, 2004, which dividends shall be paid by the issuance of an
equivalent amount of Series D Preferred Stock. Provided, however, that in the
event that funds are legally available for payment, and the Company, following
distribution of such cash dividends, shall remain in compliance with sections
4.I.[1] and 4.I.[2] of that certain Eighth Amendment to Loan Agreement dated
March 22, 2001, by and between GE Capital Equity Investments, Inc., et al. and
the Company, the Company shall pay cash dividends from the period commencing
January 1, 2003 and ending September 30, 2004. 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 January 31, 2005, representing dividends
due for the quarter ending December 31, 2004 (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
30
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. Accrued dividends earn interest to the fullest extent
allowed by applicable law. 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 and for payment of dividends on
Series E Preferred Stock, 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.
B. Section 3A of the Certificate of Designation is hereby replaced in its
entirety with the following:
(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, twenty percent (20%)
of all shares of Series D Preferred Stock and Parity Stock, on an annual basis
commencing January 1, 2005, and continuing on an annual basis until such time
31
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.
32
(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.
C. Other than as amended hereby, the Certificate of Designation for the Series
D Preferred Stock remains in full force and effect.
IN WITNESS WHEREOF ThermoView Industries, Inc. has caused this Certificate
to be signed by its President on this 2nd day of May 2003.
------------------------------------
Name: Charles L. Smith
Title: President
33
Exhibit 4.7
THIRD AMENDED CERTIFICATE OF DESIGNATION
OF
CUMULATIVE PREFERRED STOCK, SERIES E
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 regularly scheduled
meeting held on April 24, 2003, duly approved and adopted the following
amendment to the Certificate of Designation of 12% Series E Cumulative Preferred
Stock (the "Certificate of Designation") and with the written consent of all
existing holders of the 12% Series E Cumulative Preferred Stock:
A. Section 2 of the Certificate of Designation is hereby replaced in its
entirety with the following:
(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 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 January 31, 2005, representing
dividends due for the quarter ending December 31, 2004 (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 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 which accrue from the period beginning from the earlier of either the
date of original issuance of Series E Preferred Stock, or the original issuance
date of ThermoView 12% Cumulative Series D preferred stock that is cancelled and
replaced with Series E preferred Stock, of the Series E Preferred Stock and
ending September 30, 2004 shall be paid by the issuance of an equivalent amount
of Series E Preferred Stock. Provided, however, that in the event that funds are
legally available for payment, and the Company, following distribution of such
cash dividends, shall remain in compliance with sections 4.I.[1] and 4.I.[2] of
that certain Eighth Amendment to Loan Agreement dated March 22, 2001, by and
between GE Capital Equity Investments, Inc., et al. and the Company, the Company
shall pay cash dividends from the period commencing January 1, 2003 and ending
September 30, 2004. 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
34
dates thereof, as shall be fixed by the Board of Directors of the Company.
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. Accrued dividends earn interest to the fullest extent
allowed by applicable law. 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 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.
35
B. Section 3A of the Certificate of Designation is hereby replaced in its
entirety with the following:
(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, twenty percent (20%)
of all shares of Series E Preferred Stock and Parity Stock, on an annual basis
commencing January 1, 2005, 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
36
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. Other than as amended hereby, the
Certificate of Designation for the Series E Preferred Stock remains in full
force and effect.
C. Other than as amended hereby, the Certificate of Designation for the Series
E Preferred Stock remains in full force and effect.
IN WITNESS WHEREOF ThermoView Industries, Inc. has caused this Certificate to
be signed by its President on this 2nd day of May 2003.
------------------------------------
Name: Charles L. Smith
Title: President
37
Exhibit 4.8
FIFTH AMENDED 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, by special meeting held on June
2, 2003, duly approved and adopted the following amendment and restatement 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 Certificate of Designation of Cumulative Preferred Stock, Series D
of ThermoView Industries, Inc. is hereby restated 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 "8% Cumulative Series D Preferred
Stock" (hereinafter called the "Series D Preferred Stock"), which
38
shall have a stated value of $5.00 per share. The relative rights,
preferences and limitations of such series shall be as follows:
8% 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 of
the shares of the Company's 8% Cumulative Series E 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, 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
$0.40 per share of Series D Preferred Stock, with the exception of those
dividends which accrue from the period commencing October 1, 2001 and ending on
the earlier date of (i) the date on which the Company has fully satisfied that
certain Amended and Restated Series A Promissory Note dated June 30, 2003 in the
principal amount of $2,128,571.43, including any extensions, amendments or
replacements thereof, and, collectively, those certain Amended and Restated
Series B Promissory Notes dated June 30, 2003 issued by the Company to Series B
lenders in the collective amount of $1,596,428.57, including any extensions,
amendments or replacements thereof; or, (ii) March 31, 2006, which dividends
shall be paid by the issuance of an equivalent amount of Series D Preferred
Stock. Provided, however, that in the event that funds are legally available for
payment, and the Company, following distribution of such cash dividends, shall
remain in compliance with sections 4.I.[1] and 4.I.[2] of that certain Eighth
Amendment to Loan Agreement dated March 22, 2001, by and between GE Capital
Equity Investments, Inc., et al. and the Company, the Company shall pay cash
dividends from the period commencing January 1, 2003 and ending March 31, 2006.
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 July 31, 2006,
representing dividends due for the quarter ending June 30, 2006 (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
39
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. Accrued dividends earn
interest to the fullest extent allowed by applicable law. 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 and for payment of dividends on
Series E Preferred Stock, 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.
40
(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
41
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, twenty percent (20%)
of all shares of Series D Preferred Stock and Parity Stock, on an annual basis
commencing August 31, 2006, 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;
42
(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.
(g) 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 twelve percent (12%) 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.
(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
43
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.
IN WITNESS WHEREOF ThermoView Industries, Inc. has caused this Certificate
to be signed by its President on this 30th day of June 2003.
------------------------------------
Name: Charles L. Smith
Title: President
44
Exhibit 4.9
FOURTH AMENDED CERTIFICATE OF DESIGNATION
OF
CUMULATIVE PREFERRED STOCK, SERIES E
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 special meeting held on
June 2, 2003, duly approved and adopted the following amendment and restatement
to the Certificate of Designation of 12% Series E Cumulative Preferred Stock
(the "Certificate of Designation") and with the written consent of all existing
holders of the 12% Series E Cumulative Preferred Stock:
A. The Certificate of Designation of Cumulative Preferred Stock,
Series E of ThermoView Industries, Inc., is hereby restated 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
500,000 shares designated as "8% 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:
45
8% CUMULATIVE SERIES E PREFERRED STOCK
(2) 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 of
the shares of the Company's 8% Cumulative Series D 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 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 dividends at the rate per annum of $.40
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 on the earlier of (i) the date on
which the Company has fully satisfied that certain Amended and Restated Series A
Promissory Note dated June 30, 2003 in the principal amount of $2,128,571.43,
including any extensions, amendments or replacements thereof, and, collectively,
those certain Amended and Restated Series B Promissory Notes dated June 30, 2003
issued by the Company to Series B lenders in the collective amount of
$1,596,428.57, including any extensions, amendments or replacements thereof; or,
July 31, 2006, representing dividends due for the quarter ending June 30, 2006
(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 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
Cumulative Series D Preferred Stock that is cancelled and replaced with Series E
Preferred Stock. Dividends which accrue from the period beginning from the
earlier of either the date of original issuance of Series E Preferred Stock, or
the original issuance date of ThermoView Cumulative Series D preferred stock
that is cancelled and replaced with Series E preferred Stock, of the Series E
46
Preferred Stock and ending on the earlier of (i) the date on which the Company
has fully satisfied that certain Amended and Restated Series A Promissory Note
dated June 30, 2003 in the principal amount of $2,128,571.43, including any
extensions, amendments or replacements thereof, and, collectively, those certain
Amended and Restated Series B Promissory Notes dated June 30, 2003 issued by the
Company to Series B lenders in the collective amount of $1,596,428.57, including
any extensions, amendments or replacements thereof; or, (ii)March 31, 2006 shall
be paid by the issuance of an equivalent amount of Series E Preferred Stock.
Provided, however, that in the event that funds are legally available for
payment, and the Company, following distribution of such cash dividends, shall
remain in compliance with sections 4.I.[1] and 4.I.[2] of that certain Eighth
Amendment to Loan Agreement dated March 22, 2001, by and between GE Capital
Equity Investments, Inc., et al. and the Company, the Company shall pay cash
dividends from the period commencing January 1, 2003 and ending March 31, 2006.
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 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. Accrued dividends earn interest to the fullest extent allowed by
applicable law. 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 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
47
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.
48
(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, twenty percent (20%)
of all shares of Series E Preferred Stock and Parity Stock, on an annual basis
commencing August 31, 2006, 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,
49
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 twelve percent (12%) 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.
50
(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.
IN WITNESS WHEREOF ThermoView Industries, Inc. has caused this Certificate
to be signed by its President on this 30th day of June 2003.
------------------------------------
Name: Charles L. Smith
Title: President
51
Exhibit 10.114
CONSENT TO AMENDMENT
THIS CONSENT TO AMENDMENT is made and entered into as of the 2nd day of
May, 2003, with an effective date of March 31, 2003, 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"). The Holder has previously provided to
ThermoView an oral agreement to 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, 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:
2. 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").
3. Miscellaneous.
(a) Entire Agreement. This Consent to Amendment 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
Consent to Amendment shall affect, or be used to interpret, change or restrict,
the express terms and provisions of this Consent to Amendment.
(b) Modifications and Amendments. The terms and provisions of this Consent
to Amendment may be modified or amended only by written agreement executed by
all parties hereto.
(c) Benefit. This Consent to Amendment 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 Consent
to Amendment 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 Consent to Amendment.
(d) Governing Law. This Consent to Amendment 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.
52
(e) Severability. In the event that any court of competent jurisdiction
shall determine that any provision, or any portion thereof, contained in this
Consent to Amendment 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 Consent to
Amendment shall nevertheless remain in full force and effect.
(f) Headings and Captions. The headings and captions of the various
subdivisions of this Consent to Amendment 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 Consent to Amendment 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 Consent to Amendment to be
executed by its duly authorized officer and Holder has executed this Consent to
Amendment all as of the date first above written.
THERMOVIEW INDUSTRIES, INC.
By:
------------------------------------------------
Title:
------------------------------------------------
------------------------------------------------
Holder
53
EXHIBIT A
FOURTH AMENDED 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, by regularly scheduled meeting
held on April 24, 2003, 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. 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, with the exception of those
dividends which accrue from the period commencing October 1, 2001 and ending
September 30, 2004, which dividends shall be paid by the issuance of an
equivalent amount of Series D Preferred Stock. Provided, however, that in the
event that funds are legally available for payment, and the Company, following
distribution of such cash dividends, shall remain in compliance with sections
4.I.[1] and 4.I.[2] of that certain Eighth Amendment to Loan Agreement dated
March 22, 2001, by and between GE Capital Equity Investments, Inc., et al. and
the Company, the Company shall pay cash dividends from the period commencing
January 1, 2003 and ending September 30, 2004. 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 January 31, 2005, representing dividends
due for the quarter ending December 31, 2004 (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
54
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. Accrued dividends earn interest to the fullest extent
allowed by applicable law. 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 and for payment of dividends on
Series E Preferred Stock, 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.
B. Section 3A of the Certificate of Designation is hereby replaced in its
entirety with the following:
(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, twenty percent (20%)
of all shares of Series D Preferred Stock and Parity Stock, on an annual basis
55
commencing January 1, 2005, 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.
(h) 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
56
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.
D. Other than as amended hereby, the Certificate of Designation for the Series
D Preferred Stock remains in full force and effect.
IN WITNESS WHEREOF ThermoView Industries, Inc. has caused this Certificate
to be signed by its President on this ____ day of May 2003.
------------------------------------
Name: Charles L. Smith
Title: President
57
Exhibit 10.115
CONSENT TO AMENDMENT
THIS CONSENT TO AMENDMENT is made and entered into as of the 2nd day of
May, 2003, with an effective date of March 31, 2003, 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 E Preferred Stock with a stated value
of $5.00 (the "Preferred Stock"). The Holder has previously provided to
ThermoView an oral agreement to 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, 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:
4. 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").
5. Miscellaneous.
(a) Entire Agreement. This Consent to Amendment 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
Consent to Amendment shall affect, or be used to interpret, change or restrict,
the express terms and provisions of this Consent to Amendment.
(b) Modifications and Amendments. The terms and provisions of this Consent
to Amendment may be modified or amended only by written agreement executed by
all parties hereto.
(c) Benefit. This Consent to Amendment 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 Consent
to Amendment 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 Consent to Amendment.
(d) Governing Law. This Consent to Amendment 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.
58
(e) Severability. In the event that any court of competent jurisdiction
shall determine that any provision, or any portion thereof, contained in this
Consent to Amendment 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 Consent to
Amendment shall nevertheless remain in full force and effect.
(f) Headings and Captions. The headings and captions of the various
subdivisions of this Consent to Amendment 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 Consent to Amendment 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 Consent to Amendment to be
executed by its duly authorized officer and Holder has executed this Consent to
Amendment all as of the date first above written.
THERMOVIEW INDUSTRIES, INC.
By:
------------------------------------------------
Title:
------------------------------------------------
------------------------------------------------
Holder
59
EXHIBIT A
THIRD AMENDED CERTIFICATE OF DESIGNATION
OF
CUMULATIVE PREFERRED STOCK, SERIES E
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 regularly scheduled
meeting held on April 24, 2003, duly approved and adopted the following
amendment to the Certificate of Designation of 12% Series E Cumulative Preferred
Stock (the "Certificate of Designation") and with the written consent of all
existing holders of the 12% Series E Cumulative Preferred Stock:
A. Section 2 of the Certificate of Designation is hereby replaced in its
entirety with the following:
(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 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 January 31, 2005, representing
dividends due for the quarter ending December 31, 2004 (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 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 which accrue from the period beginning from the earlier of either the
date of original issuance of Series E Preferred Stock, or the original issuance
date of ThermoView 12% Cumulative Series D preferred stock that is cancelled and
replaced with Series E preferred Stock, of the Series E Preferred Stock and
ending September 30, 2004 shall be paid by the issuance of an equivalent amount
of Series E Preferred Stock. Provided, however, that in the event that funds are
legally available for payment, and the Company, following distribution of such
cash dividends, shall remain in compliance with sections 4.I.[1] and 4.I.[2] of
that certain Eighth Amendment to Loan Agreement dated March 22, 2001, by and
between GE Capital Equity Investments, Inc., et al. and the Company, the Company
60
shall pay cash dividends from the period commencing January 1, 2003 and ending
September 30, 2004. 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 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. Accrued dividends earn interest to the fullest extent
allowed by applicable law. 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 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.
61
B. Section 3A of the Certificate of Designation is hereby replaced in its
entirety with the following:
(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, twenty percent (20%)
of all shares of Series E Preferred Stock and Parity Stock, on an annual basis
commencing January 1, 2005, 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.
(h) 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
62
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.
C. Other than as amended hereby, the Certificate of Designation for the
Series E Preferred Stock remains in full force and effect.
IN WITNESS WHEREOF ThermoView Industries, Inc. has caused this Certificate
to be signed by its President on this ____ day of May 2003.
------------------------------------
Name: Charles L. Smith
Title: President
63
Exhibit 10.116
AMENDMENT TO NOTES
THIS AMENDMENT TO NOTES (the "Amendment") is made and entered into as of
the 14th day of May, 2003, by and between [I] THERMOVIEW INDUSTRIES, INC., a
Delaware corporation ("ThermoView") , [ii] AMERICAN HOME DEVELOPERS CO., INC., a
California corporation ("American Home"), [iii] FIVE STAR BUILDERS, INC., a
California corporation ("Five Star"), [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] PRECISION WINDOW MFG., INC., a
Missouri corporation ("Precision"), [viii] PRIMAX WINDOW CO., a Kentucky
corporation ("Primax"), [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 ("Thermal Line"), [xii] THERMOVIEW OF MISSOURI,
INC., a Missouri corporation ("ThermoView-Missouri"), [xiii] THERMO-TILT WINDOW
COMPANY, a Delaware corporation ("Thermo-Tilt"), [xiv]THERMO-SHIELD OF AMERICA
(ARIZONA), INC., an Arizona corporation ("Thermo-Shield Arizona"), [xv]
THERMO-SHIELD OF AMERICA (MICHIGAN), INC., a Michigan corporation
("Thermo-Shield Michigan"), [xvi] THERMO-SHIELD COMPANY, LLC, an Illinois
limited liability company ("Thermo-Shield Company"), [xvii] THERMO-SHIELD OF
AMERICA (WISCONSIN), LLC, a Wisconsin limited liability company ("Thermo-Shield
Wisconsin"), [xviii] THERMOVIEW ADVERTISING GROUP, INC., a Delaware corporation
("ThermoView Advertising") and [xix] THOMAS CONSTRUCTION, INC., a Missouri
corporation ("Thomas Construction"), (ThermoView, American Home, Five Star, Key
Home, Key Home Mortgage, Leingang Siding, Precision, Primax, Rolox, TD Windows,
Thermal Line, ThermoView-Missouri, Thermo-Tilt, Thermo-Shield Arizona,
Thermo-Shield Michigan, Thermo-Shield Company, Thermo-Shield Wisconsin,
ThermoView Advertising and Thomas Construction individually are referred to in
this Agreement as a "Maker" and collectively as the "Makers") having an address
in care of ThermoView Industries, Inc., 5611 Fern Valley Road, Louisville,
Kentucky 40228, and Stephen A. Hoffmann (hereinafter referred to as "Lender"),
having an address at 1383 Waxwing Place, Louisville, Kentucky 40222.
PRELIMINARY STATEMENTS
ThermoView and Makers have previously issued to Lender two promissory notes
dated March 22, 2001 in the principal amounts of $900,000.00 and $300,000.00
(the "Notes"), both of which are due and payable on June 30, 2003 (the "Maturity
Date"). The Lender has previously provided to ThermoView and Makers an oral
agreement to amend the Maturity Date of the Notes from June 30, 2004 to December
31, 2004.
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:
6. Amendment to Maturity Date
(a) Lender hereby consents to amend the Maturity Date of the Notes from
June 30, 2004 to December 31, 2004.
64
(b) Except as specifically amended above in connection herewith, each Note
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 the Lenders under any of the Notes or constitute a waiver of any
provision of any of the Notes.
7. Miscellaneous.
(a) Entire Agreement. This Amendment embodies the entire agreement and
understanding between the parties hereto with respect to the Maturity Date of
the Notes 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 Amendment shall affect, or be used
to interpret, change or restrict, the express terms and provisions of this
Amendment.
(b) Modifications and Amendments. The terms and provisions of this
Amendment may be modified or amended only by written agreement executed by all
parties hereto.
(c) Benefit. This Amendment 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 Amendment 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
Amendment.
(d) Governing Law. This Amendment 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
Amendment 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 Amendment shall
nevertheless remain in full force and effect.
(f) Headings and Captions. The headings and captions of the various
subdivisions of this Amendment 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 Amendment 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 and the Makers have caused this Amendment to
be executed by its duly authorized officer and Lender has executed this
Amendment all as of the date first above written.
65
MAKERS:
THERMOVIEW INDUSTRIES, INC.
AMERICAN HOME DEVELOPERS CO., INC.
FIVE STAR BUILDERS, INC.
KEY HOME CREDIT, INC.
KEY HOME MORTGAGE, INC.
LEINGANG SIDING AND WINDOW, INC.
PRIMAX WINDOW CO.
PRECISION WINDOW MFG., INC.
ROLOX, INC.
TD WINDOWS, INC.
THERMAL LINE WINDOWS, INC.
THERMOVIEW OF MISSOURI, INC.
THERMO-TILT WINDOW COMPANY
THOMAS CONSTRUCTION, INC.
THERMO-SHIELD OF AMERICA (ARIZONA), INC.
THERMO-SHIELD OF AMERICA (MICHIGAN), INC.
THERMO-SHIELD COMPANY, LLC
THERMO-SHIELD OF AMERICA(WISCONSIN), LLC
THERMOVIEW ADVERTISING GROUP, INC.
By: ___________________________
Charles L. Smith, President
LENDER:
________________________________
Stephen A. Hoffmann
66
Exhibit 10.117
TENTH AMENDMENT TO LOAN AGREEMENT
TENTH AMENDMENT TO LOAN AGREEMENT (this "Amendment"), dated as of May 15,
2003, by and among [i] THERMOVIEW INDUSTRIES, INC., a Delaware corporation
("ThermoView"), [ii] AMERICAN HOME DEVELOPERS CO., INC., a California
corporation ("American Home"), [iii] FIVE STAR BUILDERS, INC., a California
corporation ("Five Star"), [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] PRECISION WINDOW MFG., INC., a Missouri
corporation ("Precision"), [viii] PRIMAX WINDOW CO., a Kentucky corporation
("Primax"), [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 ("Thermal Line"), [xii] THERMOVIEW OF MISSOURI, INC., a
Missouri corporation ("ThermoView-Missouri"), [xiii] THERMO-TILT WINDOW COMPANY,
a Delaware corporation ("Thermo-Tilt"), [xiv]THERMO-SHIELD OF AMERICA (ARIZONA),
INC., an Arizona corporation ("Thermo-Shield Arizona"), [xv] THERMO-SHIELD OF
AMERICA (MICHIGAN), INC., a Michigan corporation ("Thermo-Shield Michigan"),
[xvi] THERMO-SHIELD COMPANY, LLC, an Illinois limited liability company
("Thermo-Shield Company"), [xvii] THERMO-SHIELD OF AMERICA (WISCONSIN), LLC, a
Wisconsin limited liability company ("Thermo-Shield Wisconsin"), [xviii]
THERMOVIEW ADVERTISING GROUP, INC., a Delaware corporation ("ThermoView
Advertising") and [xix] THOMAS CONSTRUCTION, INC., a Missouri corporation
("Thomas Construction"), (ThermoView, American Home, Five Star, Key Home, Key
Home Mortgage, Leingang Siding, Precision, Primax, Rolox, TD Windows, Thermal
Line, ThermoView-Missouri, Thermo-Tilt, Thermo-Shield Arizona, Thermo-Shield
Michigan, Thermo-Shield Company, Thermo-Shield Wisconsin, ThermoView Advertising
and Thomas Construction individually are referred to in this Agreement as a
"Borrower" and collectively, as the "Borrowers") having an address in care of
ThermoView Industries, Inc., 5611 Fern Valley Road, Louisville, Kentucky 40228
and [xx] GE CAPITAL EQUITY INVESTMENTS, INC., a Delaware corporation ("GE
Capital" or the "Series A Lender" or the "Series C Lender") and [xi] GE Capital
as collateral agent, as applicable (in such capacity, the "Collateral Agent")
and [xii] Rodney H. Thomas, Charles L. Smith, Robert L. Cox, Robert L. Cox, II,
Stephen A. Hoffmann, Mitch M. Wexler, Stephen Townzen, Emerging Business
Solutions, LLC, Ronald L. Carmicle, Raymond C. Dauenhauer, J. Sherman Henderson,
III, Bruce C. Merrick, George T. Underhill, II and Daniel F. Dooley (each, a
"Series B Lender" and collectively, the "Series B Lenders", and together with
the Series A Lender and the Series C Lender, the "Lenders").
W I T N E S S E T H:
A. Pursuant to that certain Assignment and Acceptance Agreement, dated as
of March 22, 2001, the Lenders purchased loans made to the Borrowers pursuant to
that certain Loan Agreement dated as of August 31, 1998, 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 PNC Bank ("PNC"), (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 PNC, (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 PNC, (d) that
certain Amendment to Loan Agreement dated as of July 30, 1999, by and among
certain of the Borrowers and PNC, (e) that certain Second Amendment to Loan
Agreement dated as of October 14, 1999, by and among certain of the Borrowers
and PNC, (f) that certain Third Amendment to Loan Agreement dated as of
67
November, 1999, by and among certain of the Borrowers and PNC, (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 PNC, (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 PNC, (i) that certain Sixth
Amendment to Loan Agreement dated as of August 15, 2000, by and among the
Borrowers and PNC, (j) that certain Seventh Amendment to Loan Agreement dated as
of March 22, 2001, among the Borrowers and PNC, (k) that certain Eighth
Amendment and Amendment and Restatement of Note dated as of March 22, 2001 and
(l) that certain Ninth Amendment to Loan Agreement and Amendment to Amended and
Restated Promissory Notes (collectively, the "Loan Agreement"; capitalized terms
used herein and not defined shall have the meanings assigned to such terms in
the Loan Agreement).
B. In connection with the Loan Agreement, the Borrowers executed and
delivered to (i) the Series A Lender, the Amended and Restated Series A
Promissory Note, (ii) each Series B Lender, an Amended and Restated Series B
Promissory Note and (iii) the Series C Lender, the Amended and Restated Series C
Promissory Note, each dated March 22, 2001 (as amended, modified or supplemented
from time to time the "Notes" and together with the Loan Agreement, the "Loan
Documents").
E. The Borrowers have requested an extension of the maturity date under the
Loan Documents.
F. The Lenders are willing to extend the maturity date under the Loan
Documents upon the condition, among others, that the Borrowers execute and
deliver this Amendment in favor of the Lenders.
NOW, THEREFORE, in consideration of the premises and mutual covenants contained
herein, the parties hereto agree as follows:
Section 1. AMENDMENT TO THE LOAN AGREEMENT. Effective as of the Effective
Date (as defined herein), the Loan Agreement is amended as follows:
1.1 By deleting the reference in Section 1.D of the Loan Agreement to
"March 31, 2004" and substituting therefor the following: "September 30, 2004".
Section 2. CONSENT. The Lenders consent to (i) the Fourth Amended
Certificate of Designation of Cumulative Preferred Stock, Series D, of
Thermoview Industries, Inc., and the Third Amended Certificate of Designation of
Cumulative Preferred Stock, Series E, of Thermoview Industries, Inc., attached
hereto as Annexes 1 and 2, respectively (the "Certificate Amendments"), and (ii)
the Amendment to Notes, dated as of May 14, 2003, between Stephen A. Hoffman and
the Lenders (the "Note Amendment").
Section 3. CONDITIONS PRECEDENT TO THE EFFECTIVENESS OF THIS AMENDMENT.
This Amendment shall be effective as of May 15, 2003 (such date is referred to
herein as the "Effective Date") upon (i) full execution and delivery of this
Amendment by the parties hereto, (ii) full execution and delivery of Amendment
68
No. 6 to the Securities Purchase Agreement, dated as of the date hereof, between
Thermoview and GE Capital, in form and substance satisfactory to GE Capital,
(iii) full execution and delivery of a certificate of a senior executive officer
of Thermoview, dated the date hereof, to the effect that, as of the date hereof,
no litigation not listed on Annex A hereto has been commenced against Thermoview
or any of its Subsidiaries and (iv) full execution and delivery of the Note
Amendment and the consents of the holders of the preferred stock of ThermoView
to the Certificate Amendments.
Section 4. EXPENSES. Within fifteen (15) days of the date hereof,
Thermoview shall pay to GE Capital, and shall reimburse GE Capital for, all
reasonable expenses of GE Capital in connection with the preparation of this
Amendment and each of the other documents prepared in connection herewith
(including the reasonable fees and expenses of counsel) and all other reasonable
out-of-pocket costs and expenses of every type and nature (including, without
limitation, the reasonable fees, expenses and disbursements of GE Capital's
counsel, Weil, Gotshal & Manges LLP) related thereto.
Section 5. EFFECT ON LOAN DOCUMENTS.
(a) On and after the Effective Date, each reference in the Loan Documents
to "this Agreement", "herein", "hereof", "hereunder" or words of similar import,
shall mean and be a reference to such Loan Document as amended hereby.
(b) Except as specifically amended above in connection herewith, each Loan
Document 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 the Lenders under any of the Loan Documents or constitute a waiver of
any provision of any of the Loan Documents.
Section 6. 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, EXCLUDING ITS CONFLICT OF LAWS RULES.
Section 7. 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 8. COUNTERPARTS. This Amendment may be executed in any number of
separate counterparts, each of which shall collectively and separately
constitute one agreement.
69
IN WITNESS WHEREOF, this Amendment has been duly executed as of the date first
written above.
GE CAPITAL EQUITY INVESTMENTS, INC.,
as Series A Lender, Series C Lender and as Collateral Agent
By: _____________________________
Name, Title
SERIES B LENDERS:
Rodney H. Thomas _________________________________
Charles L. Smith ________________________________
ROBERT l. Cox _________________________________
ROBERT l. Cox, II _________________________________
Stephen a. Hoffmann _________________________________
Mitch m. Wexler _________________________________
StePHEN TownzeN _________________________________
eMERGING BUSINESS SOLUTIONS, LLC
By: _________________________________
Name:
Title:
RonALD L. Carmicle _________________________________
RayMOND C. DaUenhauer _______________________________
J. Sherman Henderson, III ___________________________
Bruce c. Merrick _________________________________
GEORGE T. Underhill, II _____________________________
DANIEL F. DOOLEY _________________________________
THERMOVIEW INDUSTRIES, INC.
AMERICAN HOME DEVELOPERS CO., INC.
FIVE STAR BUILDERS, INC.
KEY HOME CREDIT, INC.
KEY HOME MORTGAGE, INC.
LEINGANG SIDING AND WINDOW, INC.
PRIMAX WINDOW CO.
PRECISION WINDOW MFG., INC.
ROLOX, INC.
70
TD WINDOWS, INC.
THERMAL LINE WINDOWS, INC.
THERMOVIEW OF MISSOURI, INC.
THERMO-TILT WINDOW COMPANY
THOMAS CONSTRUCTION, INC.
THERMO-SHIELD OF AMERICA (ARIZONA), INC.
THERMO-SHIELD OF AMERICA (MICHIGAN), INC.
THERMO-SHIELD COMPANY, LLC
THERMO-SHIELD OF AMERICA(WISCONSIN), LLC
THERMOVIEW ADVERTISING GROUP, INC.
By: _________________________________
Charles L. Smith, President
71
Exhibit 10.118
AMENDMENT NO. 6
AMENDMENT NO. 6 (this "Amendment"), dated as of May 15, 2003, 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 extension of the maturity date under the
Purchase Agreement, as well as amendments to the Purchase Agreement as more
particularly described in this Amendment; and
WHEREAS, GE Capital is the maturity date under the Purchase Agreement, and
to amend the Purchase Agreement as more particularly described in this Amendment
upon the condition, among others, that Company execute and deliver this
Amendment in favor of GE Capital;
NOW, THEREFORE, in consideration of the premises and mutual covenants
contained herein, and on the terms and subject to the conditions as hereinafter
set forth, the parties hereto agree as follows: Section 9. AMENDMENTS TO THE
PURCHASE AGREEMENT. Effective as of the Effective Date (as defined herein), the
Purchase Agreement is amended as follows:
9.1 By deleting the reference in the last sentence of Section 2.1(a) to
"April 30, 2004" and substituting therefor the following: "October 31, 2004".
Section 10. CONSENT. GE Capital consents to (i) the Fourth Amended
Certificate of Designation of Cumulative Preferred Stock, Series D, of
Thermoview Industries, Inc., and the Third Amended Certificate of Designation of
Cumulative Preferred Stock, Series E, of Thermoview Industries, Inc., attached
hereto as Annexes 1 and 2, respectively (the "Certificate Amendments"), and (ii)
the Amendment to Notes, dated as of May 14, 2003, between Stephen A. Hoffman and
the Company and its Subsidiaries (the "Note Amendment").
Section 11. CONDITIONS PRECEDENT TO THE EFFECTIVENESS OF THIS AMENDMENT.
Except as otherwise expressly provided herein, this Amendment shall be effective
as of May 15, 2003 (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 the Effective Date:
(a) This Amendment shall have been fully executed and delivered by each of
the parties hereto.
72
(b) Each of the Subsidiaries of Company party to the Guaranty and each of
the lenders party to the Tenth Amendment to Loan Agreement dated as of the date
hereof (the "Tenth Amendment") shall have executed and delivered the applicable
consent included in the signature pages hereto.
(c) The Tenth Amendment shall have been executed and delivered by each of
the parties thereto in form and substance satisfactory to GE Capital.
(d) Company shall have obtained, and delivered to GE Capital a copy of,
each consent required in connection with this Amendment and the Tenth Amendment.
(e) Company shall have obtained and delivered to GE Capital fully executed
copies of the Note Amendment and the consents of the holders of the preferred
stock of ThermoView to the Certificate Amendments.
(f) Company shall have delivered to GE Capital a certificate of the
President of Company dated the date hereof, to the effect that, as of the date
hereof, no litigation not listed on Annex A hereto shall have been commenced
against Company or any of its Subsidiaries.
Section 12. 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 13. 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, EXCLUDING ITS CONFLICT OF LAWS RULES.
Section 14. 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 15. COUNTERPARTS. This Amendment may be executed in any number of
separate counterparts, each of which shall collectively and separately
constitute one agreement.
73
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
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.
THERMOVIEW INDUSTRIES, INC.
AMERICAN HOME DEVELOPERS CO., INC.
FIVE STAR BUILDERS, INC.
KEY HOME CREDIT, INC.
KEY HOME MORTGAGE, INC.
LEINGANG SIDING AND WINDOW, INC.
PRIMAX WINDOW CO.
PRECISION WINDOW MFG., INC.
ROLOX, INC.
TD WINDOWS, INC.
THERMAL LINE WINDOWS, INC.
THERMOVIEW OF MISSOURI, INC.
THERMO-TILT WINDOW COMPANY
THOMAS CONSTRUCTION, INC.
THERMO-SHIELD OF AMERICA (ARIZONA), INC.
THERMO-SHIELD OF AMERICA (MICHIGAN), INC.
THERMO-SHIELD COMPANY, LLC
THERMO-SHIELD OF AMERICA (WISCONSIN), LLC
THERMOVIEW ADVERTISING GROUP, INC.
By: _________________________________
Charles L. Smith, President
74
CONSENT OF LENDERS
GE CAPITAL EQUITY INVESTMENTS INC.
By: _____________________________
Name, Title
Rodney H. Thomas _________________________________
Charles L. Smith _________________________________
Robert L. Cox _________________________________
Robert L. Cox, ii _________________________________
Stephen A. Hoffmann _________________________________
Mitch M. Wexler _________________________________
Stephen TownzeN _________________________________
emerging business solutions, llc
By: _________________________________
Name:
Title:
Ronald l. Carmicle _________________________________
Raymond c. DaUenhauer _______________________________
j. Sherman Henderson, iii ___________________________
Bruce c. Merrick _________________________________
george t. Underhill, ii _____________________________
DANIEL F. DOOLEY _________________________________
75
Exhibit 10.119
TERMS OF REIMBURSEMENT AGREEMENT
Dated as of May 30, 2003
GE Capital Equity Investments, Inc. ("GEE"), has agreed to guarantee an appeal
bond (the "Bond") on behalf of Thermoview Industries, Inc. ("THV" or the
"Company"). The following sets forth the terms under which GEE and THV and each
of its subsidiaries agree to enter into this arrangement.
Amount: Up to $700,000
Fee: Two-and-one-half percent (2 1/2%) of the face amount of the Bond
payable on issuance.
Term: One year.
Extensions: To the extent that the term of the Bond needs to be extended
beyond its initial Term, THV will be responsible to pay a renewal
fee in an amount equal to the Fee upon renewal.
Maturity: To the extent the bond is drawn upon, GEE may demand immediate
payment of the amount drawn.
Default Interest Rate: To the extent that the bond is drawn and the GEE
is not immediately reimbursed the amount drawn by THV, GEE will
charge an interest rate of twelve percent (12%) per annum on the
unreimbursed amount.
Sinking Fund: THV will establish a sinking fund into which deposits will
be made on monthly basis, on the first of every month, until the
amount in the sinking fund is equal to the face amount of the
Bond. The minimum monthly payments shall be:
|X| From July - December: $50,000 per month
|X| From January - June: $30,000 per month
At June 30, 2004 the balance of the sinking fund shall be no less
than $600,000.
The sinking fund will be setup as a separate joint bank account
in GEE's name. GEE will control this account and THV and its
subsidiaries will grant to GEE a first priority lien on the
account.
No payments of interest or principal may be made on junior
securities if the aforementioned minimum payments have not been
made to the Sinking Fund.
Draws on the
Bond: To the extent the bond is drawn upon, GEE will withdraw the cash
in the Sinking Fund. If the balance of the Sinking Fund is less
than the amount drawn, the difference will be due and payable
76
immediately to GEE and no payments of interest or principal may
be made to junior securities until said difference is paid in
full to GEE.
To the extent THV prevails in its appeal, and the bond is never
drawn upon, the cash in the Sinking Fund will be used to pay
principal on the Series A and Series B notes on a pro-rata basis,
as per the existing documents.
Seniority /
Security
Interest: The obligations of THV and its subsidiaries to reimburse GEE for
amounts drawn on the Bond, pay interest thereon and any related
fees under this Agreement (collectively, the "Reimbursement
Obligations") shall be senior to the obligations of THV and its
subsidiaries under its existing debt documents, including
obligations under (i) the Loan Agreement dated as of August 31,
1998 (as amended), among THV and its subsidiaries, and the Series
A, B and C lenders party thereto and (ii) the Securities Purchase
Agreement dated as of July 8, 1999 between THV and GEE
(collectively, the "Existing Obligations"). The reimbursement
Obligations will be secured by a first priority lien on all of
the assets of THV and its subsidiaries and the liens securing the
Existing Obligations shall be subordinate to the first priority
liens securing the Reimbursement Obligations.
Governing Law: New York.
Binding Effect: This Agreement shall be binding upon the parties and in
full force and effect as of the date hereof. Without derogating
from the above, the parties undertake to prepare a more detailed
agreement, which will replace this Agreement, and shall take best
efforts to complete such efforts and sign such agreement by June
6, 2003.
IN WITNESS HEREOF, the parties have signed this Agreement as of May 30, 2003:
GE CAPITAL EQUITY INVESTMENTS, INC.,
By: _____________________________
Name, Title
THERMOVIEW INDUSTRIES, INC.
AMERICAN HOME DEVELOPERS CO., INC.
FIVE STAR BUILDERS, INC.
KEY HOME CREDIT, INC.
KEY HOME MORTGAGE, INC.
LEINGANG SIDING AND WINDOW, INC.
PRIMAX WINDOW CO.
PRECISION WINDOW MFG., INC.
ROLOX, INC.
TD WINDOWS, INC.
THERMAL LINE WINDOWS, INC.
THERMOVIEW OF MISSOURI, INC.
THERMO-TILT WINDOW COMPANY
THOMAS CONSTRUCTION, INC.
THERMO-SHIELD OF AMERICA (ARIZONA), INC.
77
THERMO-SHIELD OF AMERICA (MICHIGAN), INC.
THERMO-SHIELD COMPANY, LLC
THERMO-SHIELD OF AMERICA (WISCONSIN), LLC
THERMOVIEW ADVERTISING GROUP, INC.
By: _________________________________
Charles L. Smith, President
CONSENT OF LENDERS:
The lenders party hereto hereby acknowledge receipt of a copy of this
Agreement and agree to execute the definitive agreements documenting this
Agreement and any further documents as may be required to give effect to the
terms of this Agreement.
GE CAPITAL EQUITY INVESTMENTS, INC.,
as Series A Lender, Series C Lender and as Collateral Agent
By: _____________________________
Name, Title
Rodney H. Thomas _________________________________
Charles L. Smith _________________________________
ROBERT l. Cox _________________________________
ROBERT l. Cox, II _________________________________
Stephen a. Hoffmann _________________________________
Mitch m. Wexler _________________________________
StePHEN TownzeN _________________________________
eMERGING BUSINESS SOLUTIONS, LLC
By: _________________________________
Name:
Title:
RonALD L. Carmicle _________________________________
RayMOND C. DaUenhauer _______________________________
J. Sherman Henderson, III ___________________________
Bruce c. Merrick _________________________________
GEORGE T. Underhill, II _____________________________
DANIEL F. DOOLEY _________________________________
78
Exhibit 10.120
ELEVENTH AMENDMENT TO LOAN AGREEMENT
ELEVENTH AMENDMENT TO LOAN AGREEMENT (this "Amendment"), dated as of June
30, 2003, by and among [i] THERMOVIEW INDUSTRIES, INC., a Delaware corporation
("ThermoView"), [ii] AMERICAN HOME DEVELOPERS CO., INC., a California
corporation ("American Home"), [iii] FIVE STAR BUILDERS, INC., a California
corporation ("Five Star"), [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] PRECISION WINDOW MFG., INC., a Missouri
corporation ("Precision"), [viii] PRIMAX WINDOW CO., a Kentucky corporation
("Primax"), [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 ("Thermal Line"), [xii] THERMOVIEW OF MISSOURI, INC., a
Missouri corporation ("ThermoView-Missouri"), [xiii] THERMO-TILT WINDOW COMPANY,
a Delaware corporation ("Thermo-Tilt"), [xiv]THERMO-SHIELD OF AMERICA (ARIZONA),
INC., an Arizona corporation ("Thermo-Shield Arizona"), [xv] THERMO-SHIELD OF
AMERICA (MICHIGAN), INC., a Michigan corporation ("Thermo-Shield Michigan"),
[xvi] THERMO-SHIELD COMPANY, LLC, an Illinois limited liability company
("Thermo-Shield Company"), [xvii] THERMO-SHIELD OF AMERICA (WISCONSIN), LLC, a
Wisconsin limited liability company ("Thermo-Shield Wisconsin"), [xviii]
THERMOVIEW ADVERTISING GROUP, INC., a Delaware corporation ("ThermoView
Advertising") and [xix] THOMAS CONSTRUCTION, INC., a Missouri corporation
("Thomas Construction"), (ThermoView, American Home, Five Star, Key Home, Key
Home Mortgage, Leingang Siding, Precision, Primax, Rolox, TD Windows, Thermal
Line, ThermoView-Missouri, Thermo-Tilt, Thermo-Shield Arizona, Thermo-Shield
Michigan, Thermo-Shield Company, Thermo-Shield Wisconsin, ThermoView Advertising
and Thomas Construction individually are referred to in this Agreement as a
"Borrower" and collectively, as the "Borrowers") having an address in care of
ThermoView Industries, Inc., 5611 Fern Valley Road, Louisville, Kentucky 40228
and [xx] GE CAPITAL EQUITY INVESTMENTS, INC., a Delaware corporation ("GE
Capital" or the "Series A Lender" or the "Series C Lender") and [xi] GE Capital
as collateral agent, as applicable (in such capacity, the "Collateral Agent")
and [xii] Rodney H. Thomas, Charles L. Smith, Robert L. Cox, Robert L. Cox, II,
Stephen A. Hoffmann, Mitch M. Wexler, Stephen Townzen, Emerging Business
Solutions, LLC, Ronald L. Carmicle, Raymond C. Dauenhauer, J. Sherman Henderson,
III, Bruce C. Merrick, George T. Underhill, II and Daniel F. Dooley (each, a
"Series B Lender" and collectively, the "Series B Lenders", and together with
the Series A Lender and the Series C Lender, the "Lenders").
W I T N E S S E T H:
A. Pursuant to that certain Assignment and Acceptance Agreement, dated as
of March 22, 2001, the Lenders purchased loans made to the Borrowers pursuant to
that certain Loan Agreement dated as of August 31, 1998, 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 PNC Bank ("PNC"), (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 PNC, (c) that certain
Joinder to Loan Documents and Amendment to Loan Documents (Thermo-Shield) dated
80
as of July 8, 1999, by and among certain of the Borrowers and PNC, (d) that
certain Amendment to Loan Agreement dated as of July 30, 1999, by and among
certain of the Borrowers and PNC, (e) that certain Second Amendment to Loan
Agreement dated as of October 14, 1999, by and among certain of the Borrowers
and PNC, (f) that certain Third Amendment to Loan Agreement dated as of
November, 1999, by and among certain of the Borrowers and PNC, (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 PNC, (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 PNC, (i) that certain Sixth
Amendment to Loan Agreement dated as of August 15, 2000, by and among the
Borrowers and PNC, (j) that certain Seventh Amendment to Loan Agreement dated as
of March 22, 2001, among the Borrowers and PNC, (k) that certain Eighth
Amendment and Amendment and Restatement of Note dated as of March 22, 2001,
among the Borrowers and the Lenders, (l) that certain Ninth Amendment to Loan
Agreement and Amendment to Amended and Restated Promissory Notes among the
Borrowers and the Lenders and (m) that certain Tenth Amendment to Loan Agreement
among the Borrowers and the Lenders (collectively, the "Loan Agreement";
capitalized terms used herein and not defined shall have the meanings assigned
to such terms in the Loan Agreement).
B. In connection with the Loan Agreement, the Borrowers executed and
delivered to (i) the Series A Lender, the Amended and Restated Series A
Promissory Note, (ii) each Series B Lender, an Amended and Restated Series B
Promissory Note and (iii) the Series C Lender, the Amended and Restated Series C
Promissory Note, each dated March 22, 2001 (as amended, modified or supplemented
from time to time the "Notes" and together with the Loan Agreement, the "Loan
Documents").
E. The Borrowers have requested amendments to the Loan Documents as more
particularly described in this Amendment.
F. The Lenders are willing to amend the Loan Documents as more particularly
described in this Amendment upon the condition, among others, that the Borrowers
execute and deliver this Amendment in favor of the Lenders.
NOW, THEREFORE, in consideration of the premises and mutual covenants contained
herein, the parties hereto agree as follows:
Section 16. AMENDMENT TO THE LOAN AGREEMENT. Effective as of the Effective
Date (as defined herein), the Loan Agreement is amended as follows:
16.1 By deleting the reference in Section 1.D of the Loan Agreement to
"September 30, 2004" and substituting therefor the following: "June 30, 2006".
16.2 By amending and restating Section 4.I of the Loan Agreement as
follows:
"[I] [1] Fixed Charge Coverage Ratio. (i) ThermoView will maintain, as of
the last day of each calendar quarter for the applicable period of measurement
set forth below, a Fixed Charge Coverage Ratio of not less than the following
for such period:
81
PERIOD/CALENDAR QUARTER FIXED CHARGE COVERAGE RATIO
- --------------------------------------------- --------------------------------
Quarter ending on September 30, 2003 1.20 to 1.00
Six months ending on December 31, 2003 1.20 to 1.00
Nine months ending on March 31, 2004 1.00 to 1.00
Twelve months ending on June 30, 2004 1.20 to 1.00
Twelve months ending on September 30, 2004 1.20 to 1.00
Twelve months ending on December 31, 2004 1.20 to 1.00
Twelve months ending on March 31, 2005 1.20 to 1.00
Twelve months ending on June 30, 2005 1.20 to 1.00
Twelve months ending on September 30, 2005 1.20 to 1.00
Twelve months ending on December 30, 2005 1.20 to 1.00
Twelve months ending as of the end of each 1.20 to 1.00
calendar quarter thereafter
[2] Minimum EBITDA. ThermoView shall have, as of the last day of each calendar
quarter for the applicable period of measurement set forth below, EBITDA of not
less than the following for such period:
PERIOD/CALENDAR QUARTER MINIMUM EBITDA
- --------------------------------------------- --------------------------
Quarter ending on September 30, 2003 $1,275,000
Six months ending on December 31, 2003 $2,500,000
Nine months ending on March 31, 2004 $2,500,000
Twelve months ending on June 30, 2004 $3,800,000
Twelve months ending on September 30, 2004 $4,200,000
Twelve months ending on December 31, 2004 $4,600,000
Twelve months ending on March 31, 2005 $4,600,000
Twelve months ending on June 30, 2005 $5,000,000
Twelve months ending on September 30, 2005 $5,300,000
Twelve months ending on December 30, 2005 $5,600,000
Twelve months ending as of the end of each $5,600,000
calendar quarter thereafter
82
[3] Current Ratio. Thermoview and its Subsidiaries on a consolidated basis
shall maintain a Current Ratio of not less than (i) 1.00 to 1.00 as of the end
of each calendar quarter ending March 31, commencing with the calendar quarter
ending on March 31, 2004 and (ii) 1.10 to 1.00 as of the end of each calendar
quarter other than calendar quarters ending March 31, commencing with the
calendar quarter ending September 30, 2003.
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
Thermoview other than funds borrowed by Thermoview and its Subsidiaries.
[B] "Current Assets" means, with respect to any Person, all current assets of
such Person as of any date of determination calculated in accordance with GAAP,
but excluding cash, cash equivalents and debts due from Affiliates.
[C] "Current Liabilities" means, with respect to any Person, all liabilities
that should, in accordance with GAAP, be classified as current liabilities, and
in any event shall include all Indebtedness payable on demand or within one year
from any date of determination without any option on the part of the obligor to
extend or renew beyond such year, all accruals for federal or other taxes based
on or measured by income and payable within such year, but excluding the current
portion of long-term debt required to be paid within one year.
[D] "Current Ratio" means, with respect to any Person as of any date of
determination, the ratio of (a) Current Assets to (b) Current Liabilities.
[E] "Fixed Charges" shall mean, with respect to Thermoview for any period, the
aggregate of all consolidated interest expenses paid or accrued, plus Capital
Expenditures, plus obligations with respect to capital leases, plus the
Reimbursement Obligations, plus cash income taxes payable, plus amounts paid to
preferred shareholders, plus fees and scheduled payments of principal with
respect to Indebtedness, in all cases during such period by Thermoview and its
Subsidiaries.
[F] "Fixed Charge Coverage Ratio" means, with respect to any Person for any
period, the ratio of (a) EBITDA of such Person for such period to (b) the Fixed
Charges of such Person for such period.
[G] "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 and (iii) depreciation and amortization expense (including but not limited
to legal fees and closing costs associated with this Amendment and with the
registration rights in respect of all outstanding warrants), but excluding
therefrom (c) all amounts included therein on account of extraordinary items of
income and expense, as well as gains from the sale of assets outside the
ordinary course of business."
16.3 By amending and restating Section 5.A. of the Loan Agreement as
follows:
"A. Indebtedness. Incur any indebtedness for borrowed money (including but
not limited to capitalized leases) other than: [i] the Loan and any subsequent
83
indebtedness to the Lenders; [ii] existing indebtedness disclosed on the
Historical Financial Statements referred to the in "Financial Statements"
Section of this Agreement; [iii] subordinated indebtedness (the "GE Subordinated
Debt") to GE Capital Equity Investments, Inc. ("GE") issued pursuant to that
certain Securities Purchase Agreement dated as of July 8, 1999 (the "GE
Agreement"), and the Loan Documents, as that term is defined in the GE
Agreement, executed and delivered in connection with the GE Agreement
(collectively, the "GE Loan Documents"); [iv] indebtedness that is subordinated
in form and substance acceptable to the Lenders; and [v] the "Reimbursement
Obligations" as defined in that certain Reimbursement Agreement, dated as of
June 30, 2003, by and among the Borrowers and GE."
16.4 By adding the following to the end of Section 5.G.:
"Notwithstanding the foregoing, following repayment and satisfaction in
full of the Series A Note and the Series B Notes (each as defined in the PNC
Loan Agreement), Thermoview may make regularly scheduled dividend payments in
respect of the Series D Preferred Stock and the Series E Preferred Stock;
provided that at the time of such payment no 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."
Section 17. CONSENT. The Lenders consent to the Fifth Amended Certificate
of Designation of Cumulative Preferred Stock, Series D, of Thermoview
Industries, Inc., and the Fourth Amended Certificate of Designation of
Cumulative Preferred Stock, Series E, of Thermoview Industries, Inc., attached
hereto as Annexes 1 and 2, respectively (the "Certificate Amendments"), it being
understood and agreed that any provisions of the Loan Agreement (including,
without limitation, Section 5.G. thereof) shall not be deemed to be modified or
amended or waived pursuant to this consent if the Certificate Amendments shall
conflict with such provisions.
Section 18. CONDITIONS PRECEDENT TO THE EFFECTIVENESS OF THIS AMENDMENT.
This Amendment shall be effective as of June 30, 2003 (such date is referred to
herein as the "Effective Date") upon full execution and delivery of the
following, in each case in form and substance satisfactory to the Lenders:
(a) this Amendment;
(b) Amendment No. 7 to the Securities Purchase Agreement, dated as of the
date hereof, between Thermoview and GE Capital;
(c) the Amended and Restated Series A Note, the Amended and Restated Series
B Notes, the Amended and Restated Series C Note, in each case issued by the
Borrowers to the Lenders;
(d) the Amendment to Security Agreement, dated as of the date hereof, among
the Borrowers and the Lenders party thereto;
(e) the Amendment to Pledge Agreement dated as of the date hereof among the
Borrowers and the Lenders party thereto;
(f) the Reimbursement Agreement, dated as of the date hereof, among the
Borrowers and GE Capital;
84
(g) Warrant No. W-6A dated as of the date hereof issued by Thermoview to GE
Capital; and
(h) the Certificate Amendments and the consents of the holders of the
preferred stock of Thermoview to the Certificate Amendments.
Section 19. EXPENSES. Within fifteen (15) days of the date hereof,
Thermoview shall pay to GE Capital, and shall reimburse GE Capital for, all
reasonable expenses of GE Capital in connection with the preparation of this
Amendment and each of the other documents prepared in connection herewith
(including the reasonable fees and expenses of counsel) and all other reasonable
out-of-pocket costs and expenses of every type and nature (including, without
limitation, the reasonable fees, expenses and disbursements of GE Capital's
counsel, Weil, Gotshal & Manges LLP) related thereto.
Section 20. EFFECT ON LOAN DOCUMENTS.
(a) On and after the Effective Date, each reference in the Loan Documents
to "this Agreement", "herein", "hereof", "hereunder" or words of similar import,
shall mean and be a reference to such Loan Document as amended hereby.
(b) Except as specifically amended above in connection herewith, each Loan
Document 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 the Lenders under any of the Loan Documents or constitute a waiver of
any provision of any of the Loan Documents.
Section 21. 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, EXCLUDING ITS CONFLICT OF LAWS RULES.
Section 22. 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 23. COUNTERPARTS. This Amendment may be executed in any number of
separate counterparts, each of which shall collectively and separately
constitute one agreement.
85
IN WITNESS WHEREOF, this Amendment has been duly executed as of the date first
written above.
GE CAPITAL EQUITY INVESTMENTS, INC.,
as Series A Lender, Series C Lender and as Collateral Agent
By: _____________________________
Name, Title
SERIES B LENDERS:
Rodney H. Thomas _________________________________
Charles L. Smith _________________________________
ROBERT l. Cox _________________________________
ROBERT l. Cox, II _________________________________
Stephen a. Hoffmann _________________________________
Mitch m. Wexler _________________________________
StePHEN TownzeN _________________________________
eMERGING BUSINESS SOLUTIONS, LLC
By: _________________________________
Name:
Title:
RonALD L. Carmicle _________________________________
RayMOND C. DaUenhauer _______________________________
J. Sherman Henderson, III ___________________________
Bruce c. Merrick _________________________________
GEORGE T. Underhill, II _____________________________
DANIEL F. DOOLEY _________________________________
THERMOVIEW INDUSTRIES, INC.
AMERICAN HOME DEVELOPERS CO., INC.
FIVE STAR BUILDERS, INC.
KEY HOME CREDIT, INC.
KEY HOME MORTGAGE, INC.
LEINGANG SIDING AND WINDOW, INC.
PRIMAX WINDOW CO.
PRECISION WINDOW MFG., INC.
ROLOX, INC.
86
TD WINDOWS, INC.
THERMAL LINE WINDOWS, INC.
THERMOVIEW OF MISSOURI, INC.
THERMO-TILT WINDOW COMPANY
THOMAS CONSTRUCTION, INC.
THERMO-SHIELD OF AMERICA (ARIZONA), INC.
THERMO-SHIELD OF AMERICA (MICHIGAN), INC.
THERMO-SHIELD COMPANY, LLC
THERMO-SHIELD OF AMERICA(WISCONSIN), LLC
THERMOVIEW ADVERTISING GROUP, INC.
By: _________________________________
Charles L. Smith, President
87
Exhibit 10.121
AMENDMENT NO. 7
AMENDMENT NO. 7 (this "Amendment"), dated as of June 30, 2003, 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 extension of the maturity date and
cancellation of $1,000,000 of the principal amount of the promissory note issued
under the Purchase Agreement, as well as amendments to the Purchase Agreement as
more particularly described in this Amendment; and
WHEREAS, GE Capital has agreed such extension of maturity date and
cancellation of indebtedness under the Purchase Agreement, and to amend the
Purchase Agreement as more particularly described in this Amendment upon the
condition, among others, that Company execute and deliver this Amendment in
favor of GE Capital;
NOW, THEREFORE, in consideration of the premises and mutual covenants contained
herein, and on the terms and subject to the conditions as hereinafter set forth,
the parties hereto agree as follows: Section 24. AMENDMENTS TO THE PURCHASE
AGREEMENT. Effective as of the Effective Date (as defined herein), the Purchase
Agreement is amended as follows:
24.1 By adding the following new definition to Section 1 of the Purchase
Agreement:
`"Reimbursement Agreement" shall mean that certain Reimbursement Agreement
dated as of June 30, 2003 among Purchaser and Company and its Subsidiaries.'
24.2 By amending and restating the following definition in Section 1:
`"Senior Debt" shall mean all Indebtedness of Company and its Subsidiaries
under the Reimbursement Agreement and the PNC Loan Agreement, as amended from
time to time, and all refinancings thereof.'
24.3 By deleting the reference in the last sentence of Section 2.1(a) to
"$4,350,000" and substituting therefor, "$3,745,875".
24.4 By deleting the reference in the last sentence of Section 2.1(a) to
"October 31, 2004" and substituting therefor, "July 31, 2006".
24.5 By adding a new paragraph (d) to the end of Section 2.4 as follows:
88
"(d) Following the repayment in full of all Senior Debt, on July 31 and
November 15 of each calendar year, Company shall prepay the Note in an amount
outstanding equal to 70% of the Company's and its Subsidiaries' cash, cash
equivalents and marketable securities balance on its balance sheet which,
collectively, is in excess of $1,000,000 as of June 30 or October 15, as
applicable, of that year."
24.6 By deleting the reference in Section 2.6(a) to "12%" and substituting
therefor, "8%".
24.7 By adding the following to the end of Section 5.2(g):
"Notwithstanding the foregoing, following repayment and satisfaction in
full of the Series A Note and the Series B Notes (each as defined in the PNC
Loan Agreement), Company may make regularly scheduled dividend payments in
respect of the Series D Preferred Stock and the Series E Preferred Stock;
provided that at the time of such payment no 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."
24.8 By amending and restating Section 5.1(h) of the Purchase Agreement as
follows:
"(h) (i) Fixed Charge Coverage Ratio. Company will maintain, as of the last
day of each calendar quarter for the applicable period of measurement set forth
below, a Fixed Charge Coverage Ratio of not less than the following for such
period:
PERIOD/CALENDAR QUARTER FIXED CHARGE COVERAGE RATIO
- --------------------------------------------- --------------------------------
Quarter ending on September 30, 2003 1.20 to 1.00
Six months ending on December 31, 2003 1.20 to 1.00
Nine months ending on March 31, 2004 1.00 to 1.00
Twelve months ending on June 30, 2004 1.20 to 1.00
Twelve months ending on September 30, 2004 1.20 to 1.00
Twelve months ending on December 31, 2004 1.20 to 1.00
Twelve months ending on March 31, 2005 1.20 to 1.00
Twelve months ending on June 30, 2005 1.20 to 1.00
Twelve months ending on September 30, 2005 1.20 to 1.00
Twelve months ending on December 30, 2005 1.20 to 1.00
Twelve months ending as of the end of each 1.20 to 1.00
calendar quarter thereafter
89
(ii) Minimum EBITDA. Company shall have, as of the last day of each calendar
quarter for the applicable period of measurement set forth below EBITDA of not
less than the following for such period:
PERIOD/CALENDAR QUARTER MINIMUM EBITDA
- --------------------------------------------- --------------------------
Quarter ending on September 30, 2003 $1,275,000
Six months ending on December 31, 2003 $2,500,000
Nine months ending on March 31, 2004 $2,500,000
Twelve months ending on June 30, 2004 $3,800,000
Twelve months ending on September 30, 2004 $4,200,000
Twelve months ending on December 31, 2004 $4,600,000
Twelve months ending on March 31, 2005 $4,600,000
Twelve months ending on June 30, 2005 $5,000,000
Twelve months ending on September 30, 2005 $5,300,000
Twelve months ending on December 30, 2005 $5,600,000
Twelve months ending as of the end of each $5,600,000
calendar quarter thereafter
(iii) Current Ratio. Company and its Subsidiaries on a consolidated basis
shall maintain a Current Ratio of not less than (a) 1.00 to 1.00 as of the end
of each calendar quarter ending March 31, commencing with the calendar quarter
ending on March 31, 2004 and (b) 1.10 to 1.00 as of the end of each calendar
quarter other than calendar quarters ending March 31, commencing with the
calendar quarter ending September 30, 2003.
For purposes of each of the above financial covenants, the following terms shall
have the following meanings:
(i) "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
other than funds borrowed by Company and its Subsidiaries.
(ii) "Current Assets" means, with respect to any Person, all current assets of
such Person as of any date of determination calculated in accordance with GAAP,
but excluding cash, cash equivalents and debts due from Affiliates.
(iii) "Current Liabilities" means, with respect to any Person, all liabilities
that should, in accordance with GAAP, be classified as current liabilities, and
in any event shall include all Indebtedness payable on demand or within one year
from any date of determination without any option on the part of the obligor to
90
extend or renew beyond such year, all accruals for federal or other taxes based
on or measured by income and payable within such year, but excluding the current
portion of long-term debt required to be paid within one year.
(iv) "Current Ratio" means, with respect to any Person as of any date of
determination, the ratio of (a) Current Assets to (b) Current Liabilities.
(v) "Fixed Charges" shall mean, with respect to Company for any period, the
aggregate of all consolidated interest expenses paid or accrued, plus Capital
Expenditures, plus obligations with respect to capital leases, plus the
Reimbursement Obligations, plus cash income taxes payable, plus amounts paid to
preferred shareholders, plus fees and scheduled payments of principal with
respect to Indebtedness, in all cases during such period by Company and its
Subsidiaries.
(vi) "Fixed Charge Coverage Ratio" means, with respect to any Person for any
period, the ratio of (a) EBITDA of such Person for such period to (b) the Fixed
Charges of such Person for such period.
(vii) "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 (x) interest expense, (y)
provision for income taxes and (z) depreciation and amortization expense
(including but not limited to legal fees and closing costs associated with this
Amendment and with the registration rights in respect of all outstanding
warrants), but excluding therefrom (c) all amounts included therein on account
of extraordinary items of income and expense, as well as gains from the sale of
assets outside the ordinary course of business."
Section 25. CONSENT. GE Capital consents to the Fifth Amended Certificate
of Designation of Cumulative Preferred Stock, Series D, of Thermoview
Industries, Inc., and the Fourth Amended Certificate of Designation of
Cumulative Preferred Stock, Series E, of Thermoview Industries, Inc., attached
hereto as Annexes 1 and 2, respectively (the "Certificate Amendments"), it being
understood and agreed that any provisions of the Purchase Agreement (including,
without limitation, Section 5.2(g). thereof) shall not be deemed to be modified
or amended or waived pursuant to this consent if the Certificate Amendments
shall conflict with such provisions.
Section 26. CONDITIONS PRECEDENT TO THE EFFECTIVENESS OF THIS AMENDMENT.
This Amendment shall be effective as of June 30, 2003 (such date is referred to
herein as the "Effective Date") upon full execution and delivery of the
following, in each case in form and substance satisfactory to the Lenders:
(a) this Amendment;
(b) the Eleventh Amendment to the Loan Agreement, dated as of the date
hereof, among Company and its Subsidiaries, Purchaser, as agent, and the lenders
party thereto (the "Eleventh Amendment");
(c) the Amended and Restated Series A Note, the Amended and Restated Series
B Notes, the Amended and Restated Series C Note, each dated as of the date
hereof, in each case issued by Company and its Subsidiaries;
(d) the Amendment to Security Agreement, dated as of the date hereof, among
Company and its Subsidiaries and the lenders party thereto;
91
(e) the Amendment to Pledge Agreement dated as of the date hereof among the
Borrowers and the Lenders party thereto;
(f) the Reimbursement Agreement, dated as of the date hereof, among Company
and its Subsidiaries and Purchaser;
(g) Warrant No. W-6A dated as of the date hereof issued by Company and its
Subsidiaries to GE Capital;
(h) the consent included in the signature pages hereto of each of the
Subsidiaries of Company party to the Guaranty and each of the lenders party to
the Eleventh Amendment; and
(i) the Certificate Amendments and the consents of the holders of the
preferred stock of ThermoView to the Certificate Amendments.
Section 27. 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 28. 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, EXCLUDING ITS CONFLICT OF LAWS RULES.
Section 29. 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 30. COUNTERPARTS. This Amendment may be executed in any number of
separate counterparts, each of which shall collectively and separately
constitute one agreement.
92
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
93
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.
THERMOVIEW INDUSTRIES, INC.
AMERICAN HOME DEVELOPERS CO., INC.
FIVE STAR BUILDERS, INC.
KEY HOME CREDIT, INC.
KEY HOME MORTGAGE, INC.
LEINGANG SIDING AND WINDOW, INC.
PRIMAX WINDOW CO.
PRECISION WINDOW MFG., INC.
ROLOX, INC.
TD WINDOWS, INC.
THERMAL LINE WINDOWS, INC.
THERMOVIEW OF MISSOURI, INC.
THERMO-TILT WINDOW COMPANY
THOMAS CONSTRUCTION, INC.
THERMO-SHIELD OF AMERICA (ARIZONA), INC.
THERMO-SHIELD OF AMERICA (MICHIGAN), INC.
THERMO-SHIELD COMPANY, LLC
THERMO-SHIELD OF AMERICA (WISCONSIN), LLC
THERMOVIEW ADVERTISING GROUP, INC.
By: _________________________________
Charles L. Smith, President
93
CONSENT OF LENDERS
GE CAPITAL EQUITY INVESTMENTS INC.
By: _____________________________
Name, Title
Rodney H. Thomas _________________________________
Charles L. Smith _________________________________
Robert L. Cox _________________________________
Robert L. Cox, ii _________________________________
Stephen A. Hoffmann _________________________________
Mitch M. Wexler _________________________________
Stephen TownzeN _________________________________
emerging business solutions, llc
By: _________________________________
Name:
Title:
Ronald l. Carmicle ________________________________
Raymond c. DaUenhauer _______________________________
j. Sherman Henderson, iii ___________________________
Bruce c. Merrick _________________________________
george t. Underhill, ii _____________________________
DANIEL F. DOOLEY ________________________________
94
Exhibit 10.122
REIMBURSEMENT AGREEMENT
THIS REIMBURSEMENT AGREEMENT, dated as of June 30, 2003, is made by and between
THERMOVIEW INDUSTRIES, INC., a Delaware corporation ("ThermoView"), each of its
subsidiaries party hereto (together with ThermoView, the "Borrowers"), and GE
CAPITAL EQUITY INVESTMENTS, INC., a Delaware corporation (the "Indemnitor").
RECITALS
A. The Borrowers have posted, with Westchester Fire Insurance Company as a
surety (the "Surety"), a Supersedeas Bond in the amount of $690,000 (the "Appeal
Bond") in connection with the appeal in Thermoview Industries, Inc. v. Clemmens,
Case No. 2003-CA-1043 (including any subsequent appeals).
B. The Indemnitor has agreed to indemnify the Surety for all losses and expenses
in respect of the Appeal Bond. C. In consideration for the Indemnitor's
agreement to indemnify the Surety in respect of the Appeal Bond, the Indemnitor
has requested, and the Borrowers have agreed, to reimburse the Indemnitor for
any payments made by the Indemnitor to the Surety in respect of the Appeal Bond.
NOW, THEREFORE, in consideration of the foregoing and the undertakings herein
set forth and intending to be legally bound, the Borrowers and the Indemnitor
hereby agree as follows:
ARTICLE 1
APPEAL BOND; INDEMNIFICATION; REIMBURSEMENT.
Section 1.01. Indemnification of Surety. Subject to the execution and delivery
of this Agreement by the parties hereto and the satisfaction by the Borrowers of
the requirements of this Agreement, the Indemnitor has agreed to indemnify the
Surety with respect to any losses or expenses suffered by the Surety in
connection with the Appeal Bond.
Section 1.02. Reimbursements.
|X| Principal. The Borrowers hereby unconditionally covenant and agree to
reimburse and/or pay to the Indemnitor all amounts which the Indemnitor
shall have paid to the Surety pursuant to any payments under the Appeal
Bond on the day immediately following the date of any such payment (each, a
"Repayment Date").
|X| Interest. The Borrowers hereby unconditionally covenant and agree to pay to
the Indemnitor interest on any and all amounts owing to the Indemnitor and
remaining unpaid by the Borrowers under clause (a) above, from and
including the applicable Repayment Date, to but not including the date of
payment in full thereof, at a rate of interest equal to 12% per annum.
Amounts payable under this Section 1.02(b) shall be payable at any time and
from time to time on demand of the Indemnitor.
|X| Renewal Fee. On May 31 of each year, if, on such date, the Appeal Bond
shall continue to be posted and the Indemnitor shall continue to agree to
indemnify the Surety with respect to the Appeal Bond, the Borrowers hereby
unconditionally covenant and agree to pay to the Indemnitor a renewal fee
95
in the amount of two and one-half percent (2-1/2%) of the face amount of
the Appeal Bond then posted.
ARTICLE 2
SECURITY INTERESTS; EVENT OF DEFAULT.
Section 2.01. Grant of Security Interest. To secure the obligations of the
Borrowers to make payments pursuant to Section 1.01 hereof (collectively, the
"Reimbursement Obligations"), the Borrowers hereby unconditionally covenant and
agree to grant to the Indemnitor, as secured party, a security interest in and
lien on all assets pursuant to that certain Security Agreement, dated as of
August 31, 1998, as amended, among the Borrowers and the lenders party thereto.
Section 2.02. Establishment of Cash Account. On the first day of each calendar
month, the Borrowers shall place cash in an account at Bankers Trust (Account
No. 50-265-154) and in the Indemnitor's name (the "Cash Account") in an amount
equal to at least (i) $50,000 for each month from (and including) July to
December and (ii) $30,000 for each month from (and including) January to June;
provided that, as of June 30, 2004, there shall be at least $600,000 available
in the Cash Account; provided further that the Borrowers shall not have any
further obligation to place cash in the Cash Account if funds in the Cash
Account are more than the face amount of the Appeal Bond then posted. The
Borrowers hereby grant to the Indemnitor a security interest in the Cash Account
for the prompt and complete payment and performance when due of all the
obligations to the Indemnitor under this Agreement, and the Indemnitor shall
retain control (as defined in the Uniform Commercial Code) of all funds therein
until satisfaction in full of the Borrowers' obligations under this Agreement.
The Borrowers agree that any amounts held in the Cash Account may be applied
against obligations of the Borrowers under this Agreement as the same shall
become due and payable. Upon satisfaction in full of the obligations under this
Agreement, any remaining amounts in the Cash Account will be used by the
Borrowers to prepay the obligations under the terms of that certain Loan
Agreement, dated as of August 31, 1998 (the "Loan Agreement"), as amended from
time to time, among the Borrowers and the lenders party thereto, which
prepayments shall be made in accordance with the terms of the Loan Agreement and
the related notes.
Section 2.03. Default. The following shall be "Events of Default" for purposes
of this Agreement: (i) failure by the Borrowers to pay any amount required to be
paid pursuant to Article I of this Agreement within two business days of the
date such amount becomes due and payable; (ii) failure of the Borrowers to pay
any other amount payable under this Agreement (including deposits to the Cash
Account in accordance with Section 2.02 within five business days of the date
such amount becomes due and payable; and (iii) failure by the Borrowers to
perform or comply with any other obligation under this Agreement which failure
is not cured within 30 days of notice by the Indemnitor.
Section 2.04. Remedies. The Indemnitor may, if an Event of Default has occurred
and is continuing, by written notice to the Borrowers: (i) declare the
Borrowers' obligations hereunder to be, whereupon the same shall become,
immediately due and payable; and (ii) exercise, or cause to be exercised, any
and all such remedies as it may have under this Agreement or at law or in
96
equity, it being understood and agreed that the Indemnitor shall exercise its
remedies against the Cash Account prior to exercising remedies with respect to
any other collateral of the Borrowers.
ARTICLE 3
MISCELLANEOUS
Notices. All notices and other communications provided for hereunder shall be
sent in accordance with the notice provisions contained in that certain
Securities Purchase Agreement, dated as of July 9, 1999, as amended, between
Thermoview and the Indemnitor.
Section 3.01. Successors and Assigns. This Agreement shall inure to the benefit
of and shall be binding upon the parties hereto and their respective successors
and assigns. No Borrower may assign its rights under this Agreement without the
prior written consent of the Indemnitor. The Borrowers and the Indemnitor intend
that no person other than the parties hereto and their successors and assigns as
permitted hereunder shall have any claim or interest under this Agreement or
right of action hereon or hereunder.
Section 3.02. Counterparts. The execution hereof by each party hereto shall
constitute a contract between them for the uses and purposes herein set forth,
and this Agreement may be executed in any number of counterparts, with each
executed counterpart constituting an original and all counterparts together
constituting one agreement.
Section 3.03. Amendments. This Agreement may be amended only by an instrument in
writing executed and delivered by the Borrowers and the Indemnitor.
Section 3.04. Complete Agreement. Taken together with the other instruments and
documents delivered in compliance herewith, this Agreement is a complete
memorandum of the agreement of the Borrowers and the Indemnitor.
Section 3.05. Consent to Jurisdiction; Venue; Waiver of Jury Trial. The
Borrowers hereby irrevocably (i) agree that any suit, action or other legal
proceeding arising out of or relating to this Agreement may be brought in any
federal or state court located in New York and consent to the non-exclusive
jurisdiction of such court in any such suit, action or proceeding, (ii) to the
extent allowed by law, waive any objection which they may have to the laying of
venue of any such suit, action or proceeding in any such court and any claim
that any such suit, action or proceeding has been brought in an inconvenient
forum. The Borrowers agree that a final judgment in any such action or
proceeding shall be conclusive and may be enforced in other jurisdictions by
suit on the judgment or in any other manner provided by applicable law. THE
PARTIES HERETO HEREBY WAIVE THE RIGHT TO TRIAL BY JURY IN ANY ACTION ARISING
HEREUNDER OR UNDER THIS AGREEMENT.
Section 3.06. Governing Law. This Agreement shall be governed by, and construed
in accordance with, the laws of the State of New York (without reference to its
principles of conflicts of law.
Section 3.07. Further Assurances. The Borrowers will execute and deliver such
further instruments and perform such further acts as may be requested by the
Indemnitor from time to time to confirm the provisions of this Agreement and/or
97
to confirm the priority and/or perfection of any lien, pledge, assignment or
security interest created or intended to be created by this Agreement in any
property, rights or interests of the Applicant. The Borrowers agrees to pay all
reasonable costs of any such acts required to be taken by the Borrowers
hereunder including without limitation the recording, filing and acknowledging
of such documents in such public offices as the Indemnitor may require.
98
IN WITNESS WHEREOF, the Borrowers and the Indemnitor have caused this
Reimbursement Agreement to be duly executed and delivered as of the date first
noted above.
GE CAPITAL EQUITY INVESTMENTS, INC.
By: _____________________________
Name, Title
THERMOVIEW INDUSTRIES, INC.
AMERICAN HOME DEVELOPERS CO., INC.
FIVE STAR BUILDERS, INC.
KEY HOME CREDIT, INC.
KEY HOME MORTGAGE, INC.
LEINGANG SIDING AND WINDOW, INC.
PRIMAX WINDOW CO.
PRECISION WINDOW MFG., INC.
ROLOX, INC.
TD WINDOWS, INC.
THERMAL LINE WINDOWS, INC.
THERMOVIEW OF MISSOURI, INC.
THERMO-TILT WINDOW COMPANY
THOMAS CONSTRUCTION, INC.
THERMO-SHIELD OF AMERICA (ARIZONA), INC.
THERMO-SHIELD OF AMERICA (MICHIGAN), INC.
THERMO-SHIELD COMPANY, LLC
THERMO-SHIELD OF AMERICA(WISCONSIN), LLC
THERMOVIEW ADVERTISING GROUP, INC.
By: _________________________________
Charles L. Smith, President
99
Exhibit 10.123
AMENDMENT TO PLEDGE AGREEMENT
AMENDMENT TO PLEDGE AGREEMENT (this "Amendment"), dated as of June 30, 2003, by
and among [i] THERMOVIEW INDUSTRIES, INC., a Delaware corporation ("ThermoView"
or "Grantor") having an address at 5611 Fern Valley Road, Louisville, Kentucky
40228, [ii] GE CAPITAL EQUITY INVESTMENTS, INC., a Delaware corporation ("GE
Capital" or the "Series A Lender" or the "Series C Lender") and [iii] GE Capital
as collateral agent, as applicable (in such capacity, the "Collateral Agent")
and [iv] GE Capital as Purchaser under that certain Securities Purchase
Agreement dated as of July 9, 1999 and [v] GE Capital as Indemnitor under that
certain Reimbursement Agreement dated as June 30, 2003 and [vi] Rodney H.
Thomas, Charles L. Smith, Robert L. Cox, Robert L. Cox, II, Stephen A. Hoffmann,
Mitch M. Wexler, Stephen Townzen, Emerging Business Solutions, LLC, Ronald L.
Carmicle, Raymond C. Dauenhauer, J. Sherman Henderson, III, Bruce C. Merrick,
George T. Underhill, II and Daniel F. Dooley (each, a "Series B Lender" and
collectively, the "Series B Lenders", and together with the Series A Lender and
the Series C Lender, the "Lenders").
W I T N E S S E T H:
A. The Grantor and the Lenders are party to that certain Pledge Agreement,
dated as of August 31, 1998, as amended from time to time (the "Pledge
Agreement"; capitalized terms used herein and not defined shall have the
meanings assigned to them in the Security Agreement).
B. GE Capital has requested, and the Grantors and Lenders have agreed to,
amendments to the Pledge Agreement (as more particularly described in this
Amendment) to secure the obligations of the Grantor to GE Capital as indemnitor
under that certain Reimbursement Agreement (as defined below).
NOW, THEREFORE, in consideration of the premises and mutual covenants contained
herein, the parties hereto agree as follows: Section 1. AMENDMENT TO THE PLEDGE
AGREEMENT. Effective as of the date hereof, the Pledge Agreement is amended as
follows:
1.1 Each reference to Bank, Lender or Secured Party thereunder shall be
deemed to include a reference to GE Capital as the "Indemnitor" under the terms
of the Reimbursement Agreement.
1.2 Section 2 shall be amended by adding the to the end of the penultimate
line thereof (immediately before the words "(collectively, the "Obligations")"
the following; ", including, without limitation, the obligations of the
Borrowers under that certain Reimbursement Agreement, dated as of the date
hereof among the Borrowers and GE Capital Equity Investments, Inc. ("GE
Capital")".
1.3 The following paragraph shall be added as new paragraph 18:
"23. Reimbursement Agreement. Notwithstanding anything to the contrary
contained herein, GE Capital shall be entitled to exercise all of its rights and
remedies with respect to the Collateral, including, without limitation, the Cash
100
Account (as defined in the Reimbursement Agreement), as a secured party with
respect to the Reimbursement Agreement and the Reimbursement Obligations without
the consent of the Lenders party hereto."
Section 2. EFFECT ON PLEDGE AGREEMENT.
(a) On and after the Effective Date, each reference in the Pledge Agreement
to "this Agreement", "herein", "hereof", "hereunder" or words of similar import,
shall mean and be a reference to such Security Agreement as amended hereby.
(b) Except as specifically amended above in connection herewith, the Pledge
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 the Lenders under the Pledge Agreement or constitute a waiver of any
provision of the Pledge Agreement.
Section 3. 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, EXCLUDING ITS CONFLICT OF LAWS RULES.
Section 4. 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 5. COUNTERPARTS. This Amendment may be executed in any number of
separate counterparts, each of which shall collectively and separately
constitute one agreement.
IN WITNESS WHEREOF, this Amendment has been duly executed as of the date first
written above.
GE CAPITAL EQUITY INVESTMENTS, INC., as Purchaser, Indemnitor, Series A Lender,
Series C Lender and as Collateral Agent
By: _____________________________
Name, Title
SERIES B LENDERS:
Rodney H. Thomas _________________________________
Charles L. Smith _________________________________
ROBERT l. Cox _________________________________
ROBERT l. Cox, II _________________________________
101
Stephen a. Hoffmann _________________________________
Mitch m. Wexler _________________________________
StePHEN TownzeN _________________________________
eMERGING BUSINESS SOLUTIONS, LLC
By: _________________________________
Name:
Title:
RonALD L. Carmicle _________________________________
RayMOND C. DaUenhauer _______________________________
J. Sherman Henderson, III ___________________________
Bruce c. Merrick ________________________________
GEORGE T. Underhill, II _____________________________
DANIEL F. DOOLEY _________________________________
GRANTOR:
THERMOVIEW INDUSTRIES, INC.
By: _________________________________
Charles L. Smith, President
102
Exhibit 10.124
AMENDMENT TO SECURITY AGREEMENT
AMENDMENT TO SECURITY AGREEMENT (this "Amendment"), dated as of June 30, 2003,
by and among [i] THERMOVIEW INDUSTRIES, INC., a Delaware corporation
("ThermoView"), [ii] AMERICAN HOME DEVELOPERS CO., INC., a California
corporation ("American Home"), [iii] FIVE STAR BUILDERS, INC., a California
corporation ("Five Star"), [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] PRECISION WINDOW MFG., INC., a Missouri
corporation ("Precision"), [viii] PRIMAX WINDOW CO., a Kentucky corporation
("Primax"), [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 ("Thermal Line"), [xii] THERMOVIEW OF MISSOURI, INC., a
Missouri corporation ("ThermoView-Missouri"), [xiii] THERMO-TILT WINDOW COMPANY,
a Delaware corporation ("Thermo-Tilt"), [xiv]THERMO-SHIELD OF AMERICA (ARIZONA),
INC., an Arizona corporation ("Thermo-Shield Arizona"), [xv] THERMO-SHIELD OF
AMERICA (MICHIGAN), INC., a Michigan corporation ("Thermo-Shield Michigan"),
[xvi] THERMO-SHIELD COMPANY, LLC, an Illinois limited liability company
("Thermo-Shield Company"), [xvii] THERMO-SHIELD OF AMERICA (WISCONSIN), LLC, a
Wisconsin limited liability company ("Thermo-Shield Wisconsin"), [xviii]
THERMOVIEW ADVERTISING GROUP, INC., a Delaware corporation ("ThermoView
Advertising") and [xix] THOMAS CONSTRUCTION, INC., a Missouri corporation
("Thomas Construction"), (ThermoView, American Home, Five Star, Key Home, Key
Home Mortgage, Leingang Siding, Precision, Primax, Rolox, TD Windows, Thermal
Line, ThermoView-Missouri, Thermo-Tilt, Thermo-Shield Arizona, Thermo-Shield
Michigan, Thermo-Shield Company, Thermo-Shield Wisconsin, ThermoView Advertising
and Thomas Construction individually are referred to in this Agreement as a
"Grantor" and collectively, as the "Grantors") having an address in care of
ThermoView Industries, Inc., 5611 Fern Valley Road, Louisville, Kentucky 40228
and [xx] GE CAPITAL EQUITY INVESTMENTS, INC., a Delaware corporation ("GE
Capital" or the "Series A Lender" or the "Series C Lender") and [xi] GE Capital
as collateral agent, as applicable (in such capacity, the "Collateral Agent")
and [xii] GE Capital as Purchaser under that certain Securities Purchase
Agreement dated as of July 9, 1999 and [xiii] GE Capital as Indemnitor under
that certain Reimbursement Agreement dated as June 30, 2003 and [xiv] Rodney H.
Thomas, Charles L. Smith, Robert L. Cox, Robert L. Cox, II, Stephen A. Hoffmann,
Mitch M. Wexler, Stephen Townzen, Emerging Business Solutions, LLC, Ronald L.
Carmicle, Raymond C. Dauenhauer, J. Sherman Henderson, III, Bruce C. Merrick,
George T. Underhill, II and Daniel F. Dooley (each, a "Series B Lender" and
collectively, the "Series B Lenders", and together with the Series A Lender and
the Series C Lender, the "Lenders"). -------
W I T N E S S E T H:
A. The Grantors and the Lenders are party to that certain Security
Agreement, dated as of August 31, 1998, as amended from time to time (the
"Security Agreement"; capitalized terms used herein and not defined shall have
the meanings assigned to them in the Security Agreement).
103
B. GE Capital has requested, and the Grantors and Lenders have agreed to,
amendments to the Security Agreement (as more particularly described in this
Amendment) to secure the obligations of the Grantors to GE Capital as indemnitor
under that certain Reimbursement Agreement (as defined below).
NOW, THEREFORE, in consideration of the premises and mutual covenants contained
herein, the parties hereto agree as follows: Section 6.
AMENDMENT TO THE SECURITY AGREEMENT. Effective as of the date hereof, the
Security Agreement is amended as follows:
6.1 Each reference to Bank or Lender thereunder shall be deemed to include
a reference to GE Capital as the "Indemnitor" under the terms of the
Reimbursement Agreement.
6.2 The following new definitions shall be added to Section 1:
`"Reimbursement Agreement" shall mean that certain Reimbursement Agreement
dated as of the date hereof among the Grantors and GE Capital Equity
Investments, Inc.'
`"Reimbursement Obligations" shall mean the obligations of the Grantors
under the Reimbursement Agreement.'
6.3 The definition of "Loan Agreement" shall be amended by adding the words
"and the Reimbursement Agreement" to the end thereof.
6.4 The definition of "Obligations" shall be amended by adding the words ",
including, without limitation, the Reimbursement Obligations" to the end
thereof.
6.5 The following paragraph shall be added as new paragraph 23:
"23. Reimbursement Agreement. Notwithstanding anything to the contrary
contained herein, GE Capital shall be entitled to exercise all of its rights and
remedies with respect to the Collateral, including, without limitation, the Cash
Account (as defined in the Reimbursement Agreement) as a secured party with
respect to the Reimbursement Agreement and the Reimbursement Obligations without
the consent of the Lenders party hereto."
Section 7. EFFECT ON SECURITY AGREEMENT.
(a) On and after the Effective Date, each reference in the Security
Agreement to "this Agreement", "herein", "hereof", "hereunder" or words of
similar import, shall mean and be a reference to such Security Agreement as
amended hereby.
(b) Except as specifically amended above in connection herewith, the
Security 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 the Lenders under the Security Agreement or constitute a waiver of any
provision of the Security Agreement.
104
Section 8. 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, EXCLUDING ITS CONFLICT OF LAWS RULES.
Section 9. 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 10. COUNTERPARTS. This Amendment may be executed in any number of
separate counterparts, each of which shall collectively and separately
constitute one agreement.
IN WITNESS WHEREOF, this Amendment has been duly executed as of the date first
written above.
GE CAPITAL EQUITY INVESTMENTS, INC., as Purchaser, Indemnitor, Series A Lender,
Series C Lender and as Collateral Agent
By: _____________________________
Name, Title
SERIES B LENDERS:
Rodney H. Thomas _________________________________
Charles L. Smith _________________________________
ROBERT l. Cox _________________________________
ROBERT l. Cox, II _________________________________
Stephen a. Hoffmann _________________________________
Mitch m. Wexler _________________________________
StePHEN TownzeN _________________________________
eMERGING BUSINESS SOLUTIONS, LLC
By: _________________________________
Name:
Title:
RonALD L. Carmicle _________________________________
RayMOND C. DaUenhauer _______________________________
J. Sherman Henderson, III ___________________________
Bruce c. Merrick ________________________________
105
GEORGE T. Underhill, II _____________________________
DANIEL F. DOOLEY ________________________________
GRANTORS:
THERMOVIEW INDUSTRIES, INC.
AMERICAN HOME DEVELOPERS CO., INC.
FIVE STAR BUILDERS, INC.
KEY HOME CREDIT, INC.
KEY HOME MORTGAGE, INC.
LEINGANG SIDING AND WINDOW, INC.
PRIMAX WINDOW CO.
PRECISION WINDOW MFG., INC.
ROLOX, INC.
TD WINDOWS, INC.
THERMAL LINE WINDOWS, INC.
THERMOVIEW OF MISSOURI, INC.
THERMO-TILT WINDOW COMPANY
THOMAS CONSTRUCTION, INC.
THERMO-SHIELD OF AMERICA (ARIZONA), INC.
THERMO-SHIELD OF AMERICA (MICHIGAN), INC.
THERMO-SHIELD COMPANY, LLC
THERMO-SHIELD OF AMERICA(WISCONSIN), LLC
THERMOVIEW ADVERTISING GROUP, INC.
By: _________________________________
Charles L. Smith, President
106
Exhibit 10.125
CONSENT TO AMENDMENT AND PARTIAL REDEMPTION
THIS CONSENT TO AMENDMENT is made and entered into as of the 27th day of
June, 2003, with an effective date of March 31, 2003, 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"). The Holder has previously provided to
ThermoView an oral agreement to: a) 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, attached hereto as Exhibit A
and incorporated herein by reference (the "Certificate"); and b) provide a
written consent for the partial redemption of 200,000 shares of Series D
preferred stock.
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. 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").
2. Consent to Partial Redemption. Holder consents to the partial redemption
of the collective sum of 200,000 shares of the Series D preferred stock held by
DART Investors, L.P. No. 2 and Charles L. Smith.
3. Miscellaneous.
(a) Entire Agreement. This Consent to Amendment 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
Consent to Amendment shall affect, or be used to interpret, change or restrict,
the express terms and provisions of this Consent to Amendment.
(b) Modifications and Amendments. The terms and provisions of this Consent
to Amendment may be modified or amended only by written agreement executed by
all parties hereto.
(c) Benefit. This Consent to Amendment 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 Consent
to Amendment 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 Consent to Amendment.
107
(d) Governing Law. This Consent to Amendment 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
Consent to Amendment 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 Consent to
Amendment shall nevertheless remain in full force and effect.
(f) Headings and Captions. The headings and captions of the various
subdivisions of this Consent to Amendment 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 Consent to Amendment 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 Consent to Amendment to be
executed by its duly authorized officer and Holder has executed this Consent to
Amendment all as of the date first above written.
THERMOVIEW INDUSTRIES, INC.
By:
---------------------------------------------
Title:
---------------------------------------------
---------------------------------------------
Holder
108
FIFTH AMENDED 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, by special meeting held on June
2, 2003, duly approved and adopted the following amendment and restatement 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 Certificate of Designation of Cumulative Preferred Stock, Series D
of ThermoView Industries, Inc. is hereby restated 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 "8% 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:
109
8% 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 of
the shares of the Company's 8% Cumulative Series E 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, 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
$0.40 per share of Series D Preferred Stock, with the exception of those
dividends which accrue from the period commencing October 1, 2001 and ending on
the earlier date of (i) the date on which the Company has fully satisfied that
certain Amended and Restated Series A Promissory Note dated June 30, 2003 in the
principal amount of $2,128,571.43, including any extensions, amendments or
replacements thereof, and, collectively, those certain Amended and Restated
Series B Promissory Notes dated June 30, 2003 issued by the Company to Series B
lenders in the collective amount of $1,596,428.57, including any extensions,
amendments or replacements thereof; or, (ii) March 31, 2006, which dividends
shall be paid by the issuance of an equivalent amount of Series D Preferred
Stock. Provided, however, that in the event that funds are legally available for
payment, and the Company, following distribution of such cash dividends, shall
remain in compliance with sections 4.I.[1] and 4.I.[2] of that certain Eighth
Amendment to Loan Agreement dated March 22, 2001, by and between GE Capital
Equity Investments, Inc., et al. and the Company, the Company shall pay cash
dividends from the period commencing January 1, 2003 and ending March 31, 2006.
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 July 31, 2006,
representing dividends due for the quarter ending June 30, 2006 (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
110
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. Accrued dividends earn
interest to the fullest extent allowed by applicable law. 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 and for payment of dividends on
Series E Preferred Stock, 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.
(3) Optional Redemption.
111
(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
112
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, twenty percent (20%)
of all shares of Series D Preferred Stock and Parity Stock, on an annual basis
commencing August 31, 2006, 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;
113
(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.
(i) 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 twelve percent (12%) 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.
(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
114
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.
IN WITNESS WHEREOF ThermoView Industries, Inc. has caused this Certificate to be
signed by its President on this 30th day of June 2003.
------------------------------------
Name: Charles L. Smith
Title: President
115
Exhibit 10.126
CONSENT TO AMENDMENT
THIS CONSENT TO AMENDMENT is made and entered into as of the 27th day of
June, 2003, with an effective date of March 31, 2003, 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 E Preferred Stock with a stated value
of $5.00 (the "Preferred Stock"). The Holder has previously provided to
ThermoView an oral agreement to 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, 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:
4. 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").
5. Miscellaneous.
(a) Entire Agreement. This Consent to Amendment 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
Consent to Amendment shall affect, or be used to interpret, change or restrict,
the express terms and provisions of this Consent to Amendment.
(b) Modifications and Amendments. The terms and provisions of this Consent
to Amendment may be modified or amended only by written agreement executed by
all parties hereto.
(c) Benefit. This Consent to Amendment 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 Consent
to Amendment 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 Consent to Amendment.
(d) Governing Law. This Consent to Amendment 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.
116
(e) Severability. In the event that any court of competent jurisdiction
shall determine that any provision, or any portion thereof, contained in this
Consent to Amendment 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 Consent to
Amendment shall nevertheless remain in full force and effect.
(f) Headings and Captions. The headings and captions of the various
subdivisions of this Consent to Amendment 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 Consent to Amendment 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 Consent to Amendment to be
executed by its duly authorized officer and Holder has executed this Consent to
Amendment all as of the date first above written.
THERMOVIEW INDUSTRIES, INC.
By:
---------------------------------------------
Title:
---------------------------------------------
---------------------------------------------
Holder
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FOURTH AMENDED CERTIFICATE OF DESIGNATION
OF
CUMULATIVE PREFERRED STOCK, SERIES E
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 special meeting held on
June 2, 2003, duly approved and adopted the following amendment and restatement
to the Certificate of Designation of 12% Series E Cumulative Preferred Stock
(the "Certificate of Designation") and with the written consent of all existing
holders of the 12% Series E Cumulative Preferred Stock:
A. The Certificate of Designation of Cumulative Preferred Stock, Series E
of ThermoView Industries, Inc., is hereby restated 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
500,000 shares designated as "8% 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:
8% CUMULATIVE SERIES E PREFERRED STOCK
(1) Ranking.
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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 of
the shares of the Company's 8% Cumulative Series D 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 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 dividends at the rate per annum of $.40
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 on the earlier of (i) the date on
which the Company has fully satisfied that certain Amended and Restated Series A
Promissory Note dated June 30, 2003 in the principal amount of $2,128,571.43,
including any extensions, amendments or replacements thereof, and, collectively,
those certain Amended and Restated Series B Promissory Notes dated June 30, 2003
issued by the Company to Series B lenders in the collective amount of
$1,596,428.57, including any extensions, amendments or replacements thereof; or,
July 31, 2006, representing dividends due for the quarter ending June 30, 2006
(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 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
Cumulative Series D Preferred Stock that is cancelled and replaced with Series E
Preferred Stock. Dividends which accrue from the period beginning from the
earlier of either the date of original issuance of Series E Preferred Stock, or
the original issuance date of ThermoView Cumulative Series D preferred stock
119
that is cancelled and replaced with Series E preferred Stock, of the Series E
Preferred Stock and ending on the earlier of (i) the date on which the Company
has fully satisfied that certain Amended and Restated Series A Promissory Note
dated June 30, 2003 in the principal amount of $2,128,571.43, including any
extensions, amendments or replacements thereof, and, collectively, those certain
Amended and Restated Series B Promissory Notes dated June 30, 2003 issued by the
Company to Series B lenders in the collective amount of $1,596,428.57, including
any extensions, amendments or replacements thereof; or, (ii)March 31, 2006 shall
be paid by the issuance of an equivalent amount of Series E Preferred Stock.
Provided, however, that in the event that funds are legally available for
payment, and the Company, following distribution of such cash dividends, shall
remain in compliance with sections 4.I.[1] and 4.I.[2] of that certain Eighth
Amendment to Loan Agreement dated March 22, 2001, by and between GE Capital
Equity Investments, Inc., et al. and the Company, the Company shall pay cash
dividends from the period commencing January 1, 2003 and ending March 31, 2006.
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 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. Accrued dividends earn interest to the fullest extent allowed by
applicable law. 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 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
120
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
121
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, twenty percent (20%)
of all shares of Series E Preferred Stock and Parity Stock, on an annual basis
commencing August 31, 2006, 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:
122
(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.
(h) 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 twelve percent (12%) 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)
123
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.
IN WITNESS WHEREOF ThermoView Industries, Inc. has caused this Certificate to be
signed by its President on this 30th day of June 2003.
------------------------------------
Name: Charles L. Smith
Title: President
124
Exhibit 10.127
AMENDED AND RESTATED SERIES A PROMISSORY NOTE
$2,128,571.43 New York, New York
June 30, 2003
FOR VALUE RECEIVED, the undersigned FOR VALUE RECEIVED, the undersigned [i]
THERMOVIEW INDUSTRIES, INC., a Delaware corporation ("ThermoView"), [ii]
AMERICAN HOME DEVELOPERS CO., INC., a California corporation ("American Home"),
[iii] FIVE STAR BUILDERS, INC., a California corporation ("Five Star"), [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]
PRECISION WINDOW MFG., INC., a Missouri corporation ("Precision"), [viii] PRIMAX
WINDOW CO., a Kentucky corporation ("Primax"), [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 ("Thermal
Line"), [xii] THERMOVIEW OF MISSOURI, INC., a Missouri corporation
("ThermoView-Missouri"), [xiii] THERMO-TILT WINDOW COMPANY, a Delaware
corporation ("Thermo-Tilt"), [xiv] THERMO-SHIELD OF AMERICA (ARIZONA), INC., an
Arizona corporation ("Thermo-Shield Arizona"), [xv] THERMO-SHIELD OF AMERICA
(MICHIGAN), INC., a Michigan corporation ("Thermo-Shield Michigan"), [xvi]
THERMO-SHIELD COMPANY, LLC, an Illinois limited liability company
("Thermo-Shield Company"), [xvii] THERMO-SHIELD OF AMERICA (WISCONSIN), LLC, a
Wisconsin limited liability company ("Thermo-Shield Wisconsin"), [xviii]
THERMOVIEW ADVERTISING GROUP, INC., a Delaware corporation ("ThermoView
Advertising") and [xix] THOMAS CONSTRUCTION, INC., a Missouri corporation
("Thomas Construction"), (ThermoView, American Home, Five Star, Key Home, Key
Home Mortgage, Leingang Siding, Precision, Primax, Rolox, TD Windows, Thermal
Line, ThermoView-Missouri, Thermo-Tilt, Thermo-Shield Arizona, Thermo-Shield
Michigan, Thermo-Shield Company, Thermo-Shield Wisconsin, ThermoView Advertising
and Thomas Construction individually are referred to in this Agreement as a
"Borrower" and collectively as the "Borrowers") having an address in care of
ThermoView Industries, Inc., 5611 Fern Valley Road, Louisville, Kentucky 40228,
hereby promises and agrees to pay to the order of GE Capital Equity Investments,
Inc., a Delaware corporation (the "Series A Lender"), having an address of 120
Long Ridge Road, Stamford, Connecticut 06927, the aggregate principal sum of TWO
MILLION ONE HUNDRED TWENTY-EIGHT THOUSAND FIVE HUNDRED SEVENTY-ONE AND 43/100
DOLLARS ($2,128,571.43), or so much thereof as may be advanced hereunder,
together with interest thereon as hereinafter provided, in lawful money of the
United States of America, in the manner set forth herein, on or before the Loan
Expiration Date as that term is defined in the Loan Agreement (as hereinafter
defined).
1. Other Loan Documents. This Series A Note is issued in connection with a
Loan Agreement dated August 31, 1998, as amended, to which the Borrowers, the
Series A Lender, the Series B Lenders and the Series C Lender (as defined
therein) are parties, (the "Loan Agreement") the terms of which are incorporated
herein by reference and other documents executed and delivered in connection
therewith (the "Loan Documents"; terms not otherwise defined herein are used
herein as therein defined in the Loan Documents), and is secured by the property
described in the Loan Documents and by such other collateral as previously may
have been or may in the future be granted to the Series A Lender (or the
Collateral Agent for the Lenders) to secure this Series A Note.
125
2. Rate of Interest. This Series A Note will bear interest at a rate per
annum (computed on the basis of a year of 360 days and the actual number of days
elapsed) equal to eight percent (8%).
3. Payment Terms. Principal of this Series A Note shall be paid in monthly
payments of $58,978.28 and shall be payable on the last day of each calendar
month commencing on July 31, 2004. The balance of the principal shall be paid in
a single payment on the Loan Expiration Date.
Interest on this Series A Note shall be payable on the last day of each
calendar month and on any and each date that the principal of this Series A Note
is paid in full, and on the Loan Expiration Date.
If any payment under this Series A Note shall become due on a Saturday, Sunday
or public holiday under the laws of the State where the Series A Lender's office
indicated above is located, such payment shall be made on the next succeeding
Business Day and such extension of time shall be included in computing interest
in connection with such payment. The Borrowers hereby authorize the Series A
Lender to charge any Borrower's deposit account at the Series A Lender for any
payment when due hereunder. Payments received will be applied to charges, fees
and expenses (including attorneys' fees), accrued interest and principal in any
order the Series A Lender may choose, in its sole discretion. "Business Day"
shall mean any day other than a Saturday or Sunday or a legal holiday on which
banks are authorized or required to be closed for business in New York, New
York.
4. Late Payments; Default Rate. If the Borrowers fail to make any payment
of principal, interest or other amount coming due pursuant to the provisions of
this Series A Note within ten (10) calendar days of the date due and payable,
the Borrowers also shall pay to the Series A Lender a late charge equal to the
lesser of two percent (2%) of the amount of such payment or $25.00. Such ten day
period shall not be construed in any way to extend the due date of any such
payment. The late charge is imposed for the purpose of defraying the Series A
Lender's expenses incident to the handling of delinquent payments and is in
addition to, and not in lieu of, the exercise by the Series A Lender of any
rights and remedies hereunder, under the other Loan Documents or under
applicable laws, and any fees and expenses of any agents or attorneys which the
Series A Lender may employ. Upon maturity, whether by acceleration, demand or
otherwise, and at the option of the Series A Lender upon the occurrence of any
Event of Default (as hereinafter defined) and during the continuance thereof,
this Series A Note shall bear interest at a rate per annum (based on a year of
360 days and actual days elapsed) which shall be two percentage points (2%) in
excess of the interest rate in effect from time to time under this Series A Note
but not more than the maximum rate allowed by law (the "Default Rate"). The
Default Rate shall continue to apply whether or not judgment shall be entered on
this Series A Note.
5. Prepayment. Principal of this Series A Note may be repaid or prepaid in
whole or in part without penalty or premium at any time, but only in the amount
of $10,000.00, or integral multiples thereof, or an amount equal to the entire
unpaid principal balance of this Series A Note, and only provided Borrowers have
given to the Series A Lender not less than three (3) Business Days prior written
notice of such prepayment. On July 31 and November 15 of each calendar year, the
Borrowers shall prepay this Series A Note in an amount outstanding equal to 100%
of the Borrowers' cash, cash equivalents and marketable securities balance on
its balance sheet which, collectively, is in excess of $1,000,000 as of June 30
or October 15, as applicable, of that year. Upon termination of that certain
Reimbursement Agreement, dated as of June 30, 2003, among GE Capital Equity
126
Investments, Inc. and the Borrowers (the "Reimbursement Agreement") and
fulfillment by the Borrowers of all of their obligations thereunder, any
remaining balance in the Cash Account (as defined in the Reimbursement
Agreement) shall be used to prepay this Series A Note. Subject to the provisions
of Section 8 hereof, any prepayment of this Series A Note and any prepayments in
respect of the second and third sentences of this Section 5 shall be applied in
the following order: (i) then due and payable fees and expenses; (ii) then due
and payable interest and principal payments on the Reimbursement Obligations;
(iii) then due and payable interest payments on the Series A Note, the Series B
Notes and the Series C Note on a pro rata basis; (iv) principal payments on the
Series A Note and the Series B Notes on a pro rata basis; and (v) principal
payments on the Series C Note. Any repayments or optional prepayments of this
Series A Note at maturity, including in connection with a sale or merger of any
Borrower or a sale of all or substantially all of the assets of any Borrower,
shall be applied in the following order: (i) then due and payable fees and
expenses; (ii) then due and payable interest and principal payments on the
Reimbursement Obligations; (iii) then due and payable interest payments on the
Series A Note, the Series B Notes and the Series C Note on a pro rata basis;
(iv) principal payments on the Series A Note; iv) principal payments on the
Series B Notes; and (vi) principal payments on the Series C Note.
6. Events of Default. The occurrence of any of the following events will be
deemed to be an "Event of Default" under this Series A Note: (i) the nonpayment
of any principal, interest or other indebtedness under this Series A Note or the
Loan Agreement when due; (ii) the occurrence of any event of default or default
and the lapse of any notice or cure period under any Loan Document, including
but not limited to the Series B Notes and the Series C Note, or any other debt,
liability or obligation to the Series A Lender of any Obligor; (iii) the filing
by or against any Obligor of any proceeding in bankruptcy, receivership,
insolvency, reorganization, liquidation, conservatorship or similar proceeding
(and, in the case of any such proceeding instituted against any Obligor, such
proceeding is not dismissed or stayed within 30 days of the commencement
thereof); (iv) any assignment by any Obligor for the benefit of creditors, or
any levy, garnishment attachment or similar proceeding is instituted against any
property or any Obligor held by or deposited with the Series A Lender; (v) a
default with respect to any other indebtedness of any Obligor for borrowed
money, if the effect of such default is to cause or permit the acceleration of
such debt; (vi) the commencement of any foreclosure or forfeiture proceeding,
execution or attachment against any collateral securing the obligations of any
Obligor to the Series A, B or C Lenders; (vii) the entry of a final judgment
against any Obligor in excess of $100,000, which judgment has not been stayed,
discharged or appealed within ten (10) Business Days of the date of entry
thereof, (viii) the Borrower ceases doing business as a going concern; (ix) the
revocation or attempted revocation, in whole or in part, of any guarantee for
the benefit of the Series A Lender by any Guarantor; (x) any representation or
warranty made by any Obligor to the Series A Lender in any Loan Document, or any
other documents now or in the future securing the obligations of any Obligor to
the Series A Lender, is false, erroneous or misleading in any material respect;
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(xi) the failure by Thermoview to perform or observe the financial covenant
contained in Section 4.I of the Loan Agreement; or (xii) the occurrence of any
Event of Default (as defined in any Loan Documents or any other documents now or
in the future securing the obligations of any Obligor to the Series A, B or C
Lenders) or any default under any of the Loan Documents or such other documents
that does not have a defined set of "Events of Default" and the lapse of any
notice or cure period provided in the Loan Documents or such other documents
with respect to such default. As used herein, the term "Obligor" means any
Borrower and any Guarantor, and the term "Guarantor" means any guarantor of the
obligations of any Borrower to the Series A Lender existing on the date of this
Series A Note or arising in the future.
Upon the occurrence and during the continuance of an Event of Default: (a) if an
Event of Default specified in clauses (iii) or (iv) above shall occur, the
outstanding principal balance and accrued interest hereunder together with any
additional amounts payable hereunder shall be immediately due and payable
without demand or notice of any kind; (b) if an Event of Default specified in
clauses (i), (vii) or (xi) above, or Section 6.E. or 6.F. of the Loan Agreement,
or an Event of Default resulting from a breach of Section 5.G. of the Loan
Agreement, shall occur, the outstanding principal balance and accrued interest
hereunder together with any additional amounts payable hereunder, at the option
of the Requisite A Lenders or, if the Series A Note shall no longer be
outstanding, the Requisite Lenders, and without demand or notice of any kind,
may be accelerated and become immediately due and payable;(c) if an Event of
Default specified in clause (v) shall occur in connection with the obligations
under that certain Securities Purchase Agreement, dated as of July 8, 1999,
between the Series A Lender and Thermoview, as amended from time to time, shall
be accelerated as a result of a default thereunder pursuant to Sections 5.1(h)
or 7.1(a) thereof, at the option of the Requisite A Lenders or, if the Series A
Note shall no longer be outstanding, the Requisite C Lender, and without demand
or notice of any kind, may be accelerated and become immediately due and
payable; (d) if any other Event of Default shall occur and the same shall
continue unremedied for a period of 30 days thereafter, the outstanding
principal balance and accrued interest hereunder together with any additional
amounts payable hereunder, at the option of the Requisite Lenders and without
demand or notice of any kind, may be accelerated and become immediately due and
payable; (e) at the option of the Requisite Lenders will bear interest at the
Default Rate from the date of the occurrence of the Event of Default; and (f)
the Series A Lender may exercise from time to time any of the rights and
remedies available to the Series A Lender under the Loan Documents or under
applicable law.
7. Right of Setoff. In addition to all liens upon and rights of setoff
against the money, securities or other property of each Borrower given to the
Series A Lender by law, the Series A Lender shall have, with respect to any
Borrower's obligations to the Series A Lender under this Series A Note and to
the extent permitted by law, a contractual possessory security interest in and a
contractual right of setoff against, and each Borrower hereby assigns, conveys,
delivers, pledges and transfers to the Series A Lender all of each Borrower's
right, title and interest in and to, all deposits, moneys, securities and other
property of such Borrower now or hereafter in the possession of or on deposit
with, or in transit to, the Series A Lender whether held in a general or special
account or deposit, whether held jointly with someone else, or whether held for
safekeeping or otherwise, excluding, however, all IRA, Keogh, employee
withholding accounts, and trust accounts. Every such security interest and right
of setoff may be exercised without demand upon or notice to any Borrower. Every
such right of setoff shall be deemed to have been exercised immediately upon the
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occurrence of an Event of Default hereunder without any action of the Series A
Lender, although the Series A Lender may enter such setoff on its books and
records at a later time.
8. Subordination, Priority and Payment Over Of Proceeds In Certain Events.
(a) The Borrowers and the Lenders and any other holder of a Note (the
Lenders and such holders being hereinafter referred to collectively as
"Holders") covenant and agree that all payments of the principal of and interest
in respect of the Series A Note, Series B Notes and the Series C Note shall be
subordinated in accordance with the provisions of this Section 8 to the prior
payment in full of the Senior Debt. For purposes of this Section 8, (x) the term
"Senior Debt" shall mean, (i) with respect to the Series A Note, the
Reimbursement Obligations, (ii) with respect to the Series B Notes, the
Reimbursement Obligations and the Series A Note, and (ii) with respect to the
Series C Note, the Reimbursement Obligations, the Series A Note and the Series B
Notes, and each of clauses (i), (ii) and (iii) above shall include principal of
and premium, if any, and interest (including interest accruing at the rate
provided for hereunder after the commencement of any proceedings of the type
referred to in clause (b) hereof, whether or not an allowed claim in such
proceeding) on all loans and other extensions of credit under, and all expenses,
fees, reimbursements, indemnities and other amounts owing pursuant to the Senior
Debt, to the extent permitted to be incurred pursuant to the Loan Documents ,
and (y) the term "Subordinated Debt" shall mean, (i) with respect to the
Reimbursement Obligations, the Series A Note, the Series B Notes and the Series
C Note, (ii) with respect to the Series A Note, the Series B Notes and the
Series C Note and (iii) with respect to the Series B Notes, the Series C Note.
The Borrowers and the Lenders further covenant and agree that all payments in
respect of this Series A Note shall be subordinated in accordance with the
provisions of this Section 8.
(b) Upon payment or distribution of assets or securities of the Borrowers
of any kind or character, whether in cash, property or securities, upon any
dissolution or winding up or total or partial liquidation or reorganization of
the Borrowers, whether voluntary or involuntary, or in bankruptcy, insolvency,
receivership or other proceedings or upon an assignment for the benefit of
creditors or any other marshalling of the assets and liabilities of the
Borrowers, the Senior Debt shall first be paid in full in cash, or payment
provided for in cash or cash equivalents in a manner satisfactory to the Holder
thereof, before any direct or indirect payments or distributions, including,
without limitation, by exercise of set-off, of any cash, property or securities
on account of principal of (or premium, if any) or interest on the Subordinated
Debt, and to that end the Senior Debt Holder shall be entitled to receive
directly, for application to the payment thereof (to the extent necessary to pay
the Senior Debt in full after giving effect to any substantially concurrent
payment or distribution to or provision for payment to the Senior Debt Holder in
respect of the Senior Debt), any payment or distribution of any kind or
character, whether in cash, property or securities, in respect of the
Subordinated Debt.
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(c) No direct or indirect payment by or on behalf of the Borrowers of
principal of (premium, if any), or interest on, the Subordinated Debt, whether
pursuant to the terms of Subordinated Debt, upon acceleration or otherwise,
shall be made if at the time of such payment there exists (i) a default in the
payment of all or any portion of principal of (premium, if any), interest on,
fees or other amounts owing in connection with any Senior Debt or (ii) any
default other than a default described in clause (i) above under any document or
instrument governing or evidencing any Senior Debt, and, in either case, such
default shall not have been cured or waived in writing.
9. Rights and Obligations of Holders.
(a) In the event that, notwithstanding anything contained in Section 8
prohibiting such payment or distribution, the Holders shall have received any
payment on account of the Subordinated Debt at a time when such payment is
prohibited by such provision before the Senior Debt is paid in full, then and in
such event, such payment or distribution shall be received and held in trust by
the Holders apart from their other assets and paid over or delivered to the
holders of the Senior Debt remaining unpaid to the extent necessary to pay in
full in cash the principal of (premium, if any), and interest on, such Senior
Debt in accordance with its terms and after giving effect to any concurrent
payment or distribution to the holders of such Senior Debt.
(b) Nothing contained in this Section 9 will limit the right of the Holders
of Subordinated Debt to take any action to accelerate the maturity of the
Subordinated Debt pursuant to Section 6 hereof, provided, however, that all
Senior Debt then due or thereafter declared to be due shall first be paid in
full before the Holders are entitled to receive any payment from any Borrowers
of principal of, or interest on, the Note.
(c) Upon any payment or distribution of assets or securities referred to in
this Section 9, the Holders shall be entitled to rely upon any order or decree
of a court of competent jurisdiction in which such dissolution, winding up,
liquidation or reorganization proceedings are pending, and upon a certificate of
the receiver, trustee in bankruptcy, liquidating trustee, agent or other person
making any such payment or distribution, delivered to the Holders for the
purpose of ascertaining the persons entitled to participate in such
distribution, the holders of Senior Debt and other Indebtedness of the Borrower,
the amount thereof or payable thereon, the amount or amounts paid or distributed
thereon and all other facts pertinent thereto or to this Section 9.
10. Rights of Holders of Senior Debt Not To Be Impaired.
(a) No right of any present or future holder of any Senior Debt to enforce
subordination as herein provided shall at any time in any way be prejudiced or
impaired by any act or failure to act by any such holder, or by any
noncompliance by the Borrowers with the terms and provisions and covenants
herein regardless of any knowledge thereof such holder may have or otherwise be
charged with.
(b) The provisions of these Sections 8-15 are intended to be for the
benefit of, and shall be enforceable directly by, the holders of the Senior
Debt. The Borrowers and each Holder of any Note, by its acceptance thereof,
130
acknowledges that the holders of the Senior Debt are relying upon the provisions
of these Sections 8-15 in extending such Senior Debt.
11. Subrogation.
(a) Upon the payment in full of all Senior Debt, the Holders shall be
subrogated to the extent of the payments or distributions made to the holders
of, or otherwise applied to payment of, the Senior Debt pursuant to the
provisions of these Sections 8-15 and to the rights of the holders of Senior
Debt to receive payments or distributions of assets of the Borrowers made on the
Senior Debt until this Series A Note shall be paid in full; and for the purposes
of such subrogation, no payments or distributions to holders of Senior Debt of
any cash, property or securities to which Holders of this Series A Note would be
entitled except for the provisions of these Sections 8-15 and no payment over
pursuant to the provisions of these Sections 8-15 to holders of Senior Debt by
the Holders, shall, as between the Borrowers, its creditors other than holders
of Senior Debt and the Holders, be deemed to be payment by the Borrowers to or
on account of Senior Debt, it being understood that the provisions of these
Sections 8-15 are solely for the purpose of defining the relative rights of the
holders of Senior Debt, on the one hand, and the Holders, on the other hand.
(b) If any payment or distribution to which the Holders would otherwise
have been entitled but for the provisions of these Sections 8-15 shall have been
applied, pursuant to the provisions of these Sections 8-15, to the payment of
Senior Debt, then and in such case, the Holders shall be entitled to receive
from the holders of Senior Debt at the time outstanding any payments or
distributions received by such holders of Senior Debt in excess of the amount
sufficient to pay all Senior Debt in full.
12. Obligations of Borrowers Unconditional.
(a) Nothing contained in these Sections 8-15 or elsewhere in the Loan
Documents or in this Series A Note is intended to or shall impair, as between
the Borrowers and the Holders, the obligations of the Borrowers, which are
absolute and unconditional, to pay to the Holders the principal of (premium, if
any), and interest on, this Series A Note as and when the same shall become due
and payable in accordance with its terms, or is intended to or shall affect the
relative rights of the Holders and creditors of the Borrowers other than the
holders of the Senior Debt, nor shall anything herein or therein prevent any
Holder from exercising all remedies otherwise permitted by applicable law upon
the occurrence of an Event of Default under the Loan Documents or under this
Series A Note, subject to the rights, if any, under these Sections 8-15 of the
holders of Senior Debt in respect of cash, property or securities of the
Borrowers received upon the exercise of any such remedy.
(b) The failure to make a payment on account of principal of, or interest
on, this Series A Note by reason of any provision of these Sections 8-15 shall
not be construed as preventing the occurrence of an Event of Default hereunder.
131
13. Notice to Holders. Each Borrowers shall give prompt written notice to
each Holder of any fact known to such Borrower which would prohibit the making
of any payment on or in respect of this Series A Note, but failure to give such
notice shall not affect the subordination of the Subordinated Debt to the Senior
Debt provided in Section 8. Notwithstanding the provisions of these Sections
8-15 or any other provision of the Loan Documents or this Series A Note, no
Holder shall be charged with knowledge of the existence of any facts which would
prohibit the making of any payment to or in respect hereof, unless and until the
Holders shall have received written notice thereof from a Borrower or a
representative of or holder of Senior Debt, and, prior to the receipt of any
such written notice, subject to the provisions of these Sections 8-15 the
Holders shall be entitled in all respects to assume no such facts exist. Nothing
contained in this Section 13 shall limit the right of the holders of Senior Debt
to recover payments as contemplated by Sections 8 and 9.
14. Right of Any Holder as Holder of Senior Debt. Any Holder in its
individual capacity shall be entitled to all the rights set forth in these
Sections 8-15 with respect to any Senior Debt which may at any time be held by
it, to the same extent as any other holder of Senior Debt, and nothing in this
agreement shall deprive such Holder of any of its rights as such holder.
15. Reinstatement. The provisions of these Sections 8-15 shall continue to
be effective or be reinstated, and the Senior Debt shall not be deemed to be
paid in full, as the case may be, if at any time any payment of any of the
Senior Debt is rescinded or must otherwise be returned by the holder thereof
upon the insolvency, bankruptcy or reorganization of the Borrowers or otherwise,
all as though such payment had not been made.
16. Miscellaneous. No delay or omission of the Series A Lender to exercise
any right or power arising hereunder shall impair any such right or power or be
considered to be a waiver of any such right or power, nor shall the Series A
Lender's action or inaction impair any such right or power. Each Borrower agrees
to pay on demand, to the extent permitted by law, all costs and expenses
incurred by the Series A Lender in the enforcement of its rights in this Series
A Note and in any security therefor, including without limitation reasonable
fees and expenses of the Series A Lender's counsel. If any provision of this
Series A Note is found to be invalid by a court, all the other provisions of
this Series A Note will remain in full force and effect. Each Borrower and all
other makers and indorsers of this Series A Note hereby forever waive
presentment, protest, notice of dishonor and notice of non-payment. Each
Borrower also waives all defenses based on suretyship or impairment of
collateral. This Series A Note is executed by more than one Borrower and,
therefore, the obligations of such entities hereunder are joint and several.
This Series A Note may be executed in counterparts and shall bind each Borrower
and its respective heirs, executors, administrators, successors and assigns, and
the benefits hereof shall inure to the benefit of the Series A Lender and its
successors and assigns.
This Series A Note has been delivered to and accepted by the Series A Lender and
will be deemed to be made in New York. THIS SERIES A NOTE WILL BE INTERPRETED
AND THE RIGHTS AND LIABILITIES OF THE SERIES A LENDER AND THE BORROWERS
DETERMINED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, EXCLUDING ITS
CONFLICT OF LAWS RULES. Each Borrower hereby irrevocably consents to the
jurisdiction of any state or federal court located in New York County, City of
New York, New York, and consents that all service of process be sent by
nationally recognized overnight courier service directed to each such Borrower
132
at each such Borrower's address set forth herein and service so made will be
deemed to be completed on the day of receipt by such Borrower; provided that
nothing contained in this Series A Note will prevent the Series A Lender from
bringing any action, enforcing any award or judgment or exercising any rights
against any Borrower individually, against any security or against any property
of any such Borrowers within any other county, state or other foreign or
domestic jurisdiction. Each Borrower acknowledges and agrees that the venue
provided above is the most convenient forum for both the Series A Lender and
each such Borrower. Each Borrower waives any objection to venue and any
objection based on a more convenient forum in any action instituted under this
Series A Note.
THERMOVIEW INDUSTRIES, INC.
AMERICAN HOME DEVELOPERS CO., INC.
FIVE STAR BUILDERS, INC.
KEY HOME CREDIT, INC.
KEY HOME MORTGAGE, INC.
LEINGANG SIDING AND WINDOW, INC.
PRIMAX WINDOW CO.
PRECISION WINDOW MFG., INC.
ROLOX, INC.
TD WINDOWS, INC.
THERMAL LINE WINDOWS, INC.
THERMOVIEW OF MISSOURI, INC.
THERMO-TILT WINDOW COMPANY
THOMAS CONSTRUCTION, INC.
THERMO-SHIELD OF AMERICA (ARIZONA), INC.
THERMO-SHIELD OF AMERICA (MICHIGAN), INC.
THERMO-SHIELD COMPANY, LLC
THERMO-SHIELD OF AMERICA(WISCONSIN), LLC
THERMOVIEW ADVERTISING GROUP, INC.
By: _________________________________
Charles L. Smith, President
133
Exhibit 10.128
AMENDED AND RESTATED SERIES C PROMISSORY NOTE
$6,738,281.00 New York, New York
June 30, 2003
FOR VALUE RECEIVED, the undersigned [i] THERMOVIEW INDUSTRIES, INC., a Delaware
corporation ("ThermoView"), [ii] AMERICAN HOME DEVELOPERS CO., INC., a
California corporation ("American Home"), [iii] FIVE STAR BUILDERS, INC., a
California corporation ("Five Star"), [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] PRECISION WINDOW MFG., INC., a
Missouri corporation ("Precision"), [viii] PRIMAX WINDOW CO., a Kentucky
corporation ("Primax"), [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 ("Thermal Line"), [xii] THERMOVIEW OF MISSOURI,
INC., a Missouri corporation ("ThermoView-Missouri"), [xiii] THERMO-TILT WINDOW
COMPANY, a Delaware corporation ("Thermo-Tilt"), [xiv] THERMO-SHIELD OF AMERICA
(ARIZONA), INC., an Arizona corporation ("Thermo-Shield Arizona"), [xv]
THERMO-SHIELD OF AMERICA (MICHIGAN), INC., a Michigan corporation
("Thermo-Shield Michigan"), [xvi] THERMO-SHIELD COMPANY, LLC, an Illinois
limited liability company ("Thermo-Shield Company"), [xvii] THERMO-SHIELD OF
AMERICA (WISCONSIN), LLC, a Wisconsin limited liability company ("Thermo-Shield
Wisconsin"), [xviii] THERMOVIEW ADVERTISING GROUP, INC., a Delaware corporation
("ThermoView Advertising") and [xix] THOMAS CONSTRUCTION, INC., a Missouri
corporation ("Thomas Construction"), (ThermoView, American Home, Five Star, Key
Home, Key Home Mortgage, Leingang Siding, Precision, Primax, Rolox, TD Windows,
Thermal Line, ThermoView-Missouri, Thermo-Tilt, Thermo-Shield Arizona,
Thermo-Shield Michigan, Thermo-Shield Company, Thermo-Shield Wisconsin,
ThermoView Advertising and Thomas Construction individually are referred to in
this Agreement as a "Borrower" and collectively as the "Borrowers") having an
address in care of ThermoView Industries, Inc., 5611 Fern Valley Road,
Louisville, Kentucky 40228, hereby promises and agrees to pay to the order of GE
Capital Equity Investments, Inc., a Delaware corporation (the "Series C
Lender"), having an address of 120 Long Ridge Road, Stamford, Connecticut 06927,
the aggregate principal sum of SIX MILLION SEVEN HUNDRED THIRTY EIGHT THOUSAND
TWO HUNDRED EIGHTY-ONE AND NO/100 DOLLARS ($6,738,281.00), or so much thereof as
may be advanced hereunder, together with interest thereon as hereinafter
provided, in lawful money of the United States of America, in the manner set
forth herein, on or before the Loan Expiration Date as that term is defined in
the Loan Agreement (as hereinafter defined).
1. Other Loan Documents. This Series C Note is issued in connection with a
Loan Agreement dated August 31, 1998, as amended, to which the Borrowers, the
Series A Lender, the Series B Lender and the Series C Lender (as defined
therein) are parties, (the "Loan Agreement") the terms of which are incorporated
herein by reference and other documents executed and delivered in connection
therewith (the "Loan Documents"; terms not otherwise defined herein are used
herein as therein defined in the Loan Documents), and is secured by the property
described in the Loan Documents and by such other collateral as previously may
have been or may in the future be granted to the Series C Lender (or the
Collateral Agent for the Lenders) to secure this Series C Note.
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2. Rate of Interest. This Series C Note will bear interest at a rate per
annum (computed on the basis of a year of 360 days and the actual number of days
elapsed) equal to eight percent (8%).
3. Payment Terms. From and after the earlier to occur of (i) April 1, 2005
and (ii) repayment in full of the Series A Note and the Series B Notes,
principal of this Series C Note shall be paid in monthly payments of $100,000
and shall be payable on the last day of each calendar month. The balance of the
principal shall be paid in a single payment on the Loan Expiration Date.
Interest on this Series C Note shall be payable on the last day of each
calendar month and on any and each date that the principal of this Series C Note
is paid in full, and on the Loan Expiration Date; provided that interest on this
Series C Note shall accrue and not be paid with respect to the period from the
Effective Date through and including December 31, 2001 (the amount of interest
that would otherwise have accrued except by reason of this proviso is referred
to as "Deferred Interest") and such Deferred Interest shall be added to the
principal amount of the Note on each interest payment date. Commencing on
January 31, 2002, interest on the principal amount of this Series C Note shall
be paid (exclusive of any amount of Deferred Interest added to the original
principal amount thereof) in cash on each interest payment date.
If any payment under this Series C Note shall become due on a Saturday, Sunday
or public holiday under the laws of the State where the Series C Lender's office
indicated above is located, such payment shall be made on the next succeeding
Business Day and such extension of time shall be included in computing interest
in connection with such payment. The Borrowers hereby authorize the Series C
Lender to charge any Borrower's deposit account at the Series C Lender for any
payment when due hereunder. Payments received will be applied to charges, fees
and expenses (including attorneys' fees), accrued interest and principal in any
order the Series C Lender may choose, in its sole discretion. "Business Day"
shall mean any day other than a Saturday or Sunday or a legal holiday on which
banks are authorized or required to be closed for business in New York, New
York.
4. Late Payments; Default Rate. If the Borrowers fail to make any payment
of principal, interest or other amount coming due pursuant to the provisions of
this Series C Note within ten (10) calendar days of the date due and payable,
the Borrowers also shall pay to the Series C Lender a late charge equal to the
lesser of two percent (2%) of the amount of such payment or $25.00. Such ten day
period shall not be construed in any way to extend the due date of any such
payment. The late charge is imposed for the purpose of defraying the Series C
Lender's expenses incident to the handling of delinquent payments and is in
addition to, and not in lieu of, the exercise by the Series C Lender of any
rights and remedies hereunder, under the other Loan Documents or under
applicable laws, and any fees and expenses of any agents or attorneys which the
Series C Lender may employ. Upon maturity, whether by acceleration, demand or
otherwise, and at the option of the Series C Lender upon the occurrence of any
Event of Default (as hereinafter defined) and during the continuance thereof,
this Series C Note shall bear interest at a rate per annum (based on a year of
360 days and actual days elapsed) which shall be two percentage points (2%) in
excess of the interest rate in effect from time to time under this Series C Note
but not more than the maximum rate allowed by law (the "Default Rate"). The
Default Rate shall continue to apply whether or not judgment shall be entered on
this Series C Note.
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5. Prepayment. Principal of this Series C Note may be repaid or prepaid in
whole or in part without penalty or premium at any time, but only in the amount
of $10,000.00, or integral multiples thereof, or an amount equal to the entire
unpaid principal balance of this Series C Note, and only provided Borrowers have
given to the Series C Lender not less than three (3) Business Days prior written
notice of such prepayment. Following repayment in full of the Series A Note and
the Series B Notes, on July 31 and November 15 of each calendar year, the
Borrowers shall prepay this Series C Note in an amount outstanding equal to 100%
of the Borrowers' cash, cash equivalents and marketable securities balance on
its balance sheet which, collectively, is in excess of $1,000,000 as of June 30
or October 15, as applicable, of that year. Upon termination of that certain
Reimbursement Agreement dated as of June 30, 2003 among GE Capital Equity
Investments, Inc. and the Borrowers (the "Reimbursement Agreement") and
fulfillment by the Borrowers of all of their obligations thereunder, any
remaining balance in the Cash Account (as defined in the Reimbursement
Agreement) shall be used to prepay this Series C Note. Subject to the provisions
of Section 8 hereof, any prepayment of this Series C Note and any prepayments in
respect of the second and third sentence of this Section 5 shall be applied in
the following order: (i) then due and payable fees and expenses; (ii) then due
and payable principal and interest payments on the Reimbursement Obligations;
(iii) then due and payable interest payments on the Series A Note, the Series B
Notes and the Series C Note on a pro rata basis; (iv) principal payments on the
Series A Note and the Series B Notes on a pro rata basis; and (v) principal
payments on the Series C Note. Any repayments or optional prepayments of this
Series C Note at maturity, including in connection with a sale or merger of any
Borrower or a sale of all or substantially all of the assets of any Borrower,
shall be applied in the following order: (i) then due and payable fees and
expenses; (ii) then due and payable principal and interests on the Reimbursement
Obligations; (iii) then due and payable interest payments on the Series A Note,
the Series B Notes and the Series C Note on a pro rata basis; (iv) principal
payments on the Series A Note; (v) principal payments on the Series B Notes; and
(vi) principal payments on the Series C Note.
6. Events of Default. The occurrence of any of the following events will be
deemed to be an "Event of Default" under this Series C Note: (i) the nonpayment
of any principal, interest or other indebtedness under this Series C Note or the
Loan Agreement when due; (ii) the occurrence of any event of default or default
and the lapse of any notice or cure period under any Loan Document, including
but not limited to the Series A Notes and the Series B Notes, or any other debt,
liability or obligation to the Series C Lender of any Obligor; (iii) the filing
by or against any Obligor of any proceeding in bankruptcy, receivership,
insolvency, reorganization, liquidation, conservatorship or similar proceeding
(and, in the case of any such proceeding instituted against any Obligor, such
proceeding is not dismissed or stayed within 30 days of the commencement
thereof); (iv) any assignment by any Obligor for the benefit of creditors, or
any levy, garnishment attachment or similar proceeding is instituted against any
property or any Obligor held by or deposited with the Series C Lender; (v) a
default with respect to any other indebtedness of any Obligor for borrowed
money, if the effect of such default is to cause or permit the acceleration of
such debt; (vi) the commencement of any foreclosure or forfeiture proceeding,
execution or attachment against any collateral securing the obligations of any
Obligor to the Series A, B or C Lenders; (vii) the entry of a final judgment
against any Obligor in excess of $100,000, which judgment has not been stayed,
discharged or appealed within ten (10) Business Days of the date of entry
thereof, (viii) the Borrower ceases doing business as a going concern; (ix) the
revocation or attempted revocation, in whole or in part, of any guarantee for
the benefit of the Series C Lender by any Guarantor; (x) any representation or
warranty made by any Obligor to the Series C Lender in any Loan Document, or any
other documents now or in the future securing the obligations of any Obligor to
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the Series C Lender, is false, erroneous or misleading in any material respect;
(xi) the failure by Thermoview to perform or observe the financial covenant
contained in Section 4.I of the Loan Agreement; or the occurrence of any Event
of Default (as defined in any Loan Documents or any other documents now or in
the future securing the obligations of any Obligor to the Series A, B or C
Lenders) or any default under any of the Loan Documents or such other documents
that does not have a defined set of "Events of Default" and the lapse of any
notice or cure period provided in the Loan Documents or such other documents
with respect to such default. As used herein, the term "Obligor" means any
Borrower and any Guarantor, and the term "Guarantor" means any guarantor of the
obligations of any Borrower to the Series C Lender existing on the date of this
Series C Note or arising in the future.
Upon the occurrence and during the continuance of an Event of Default: (a) if an
Event of Default specified in clauses (iii) or (iv) above shall occur, the
outstanding principal balance and accrued interest hereunder together with any
additional amounts payable hereunder shall be immediately due and payable
without demand or notice of any kind; (b) if an Event of Default specified in
clauses (i), (vii) or (xi) above, or Section 6.E. or 6.F. of the Loan Agreement,
or an Event of Default resulting from a breach of Section 5.G. of the Loan
Agreement, shall occur, the outstanding principal balance and accrued interest
hereunder together with any additional amounts payable hereunder, at the option
of the Requisite A Lenders or, if the Series A Note shall no longer be
outstanding, the Requisite Lenders, and without demand or notice of any kind,
may be accelerated and become immediately due and payable; (c) if an Event of
Default specified in clause (v) shall occur in connection with the obligations
under that certain Securities Purchase Agreement, dated as of July 8, 1999,
between the Series C Lender and Thermoview, as amended from time to time, shall
be accelerated as a result of a default thereunder pursuant to Sections 5.1(h)
or 7.1(a) thereof, at the option of the Requisite A Lenders or, if the Series A
Note shall no longer be outstanding, the Requisite C Lender, and without demand
or notice of any kind, may be accelerated and become immediately due and
payable; (d) if any other Event of Default shall occur and the same shall
continue unremedied for a period of 30 days thereafter, the outstanding
principal balance and accrued interest hereunder together with any additional
amounts payable hereunder, at the option of the Requisite Lenders and without
demand or notice of any kind, may be accelerated and become immediately due and
payable; (e) at the option of the Requisite Lenders will bear interest at the
Default Rate from the date of the occurrence of the Event of Default; and (f)
the Series C Lender may exercise from time to time any of the rights and
remedies available to the Series C Lender under the Loan Documents or under
applicable law. Notwithstanding anything contained in this Section 6, upon the
filing of a bankruptcy of Thermoview, whether voluntary or involuntary, the
Series A Lender and/or the Series B Lenders shall have the right to file a proof
of claim on the Series C Lender's behalf in respect of the Series C Note.
7. Right of Setoff. In addition to all liens upon and rights of setoff
against the money, securities or other property of each Borrower given to the
Series C Lender by law, the Series C Lender shall have, with respect to any
Borrower's obligations to the Series C Lender under this Series C Note and to
the extent permitted by law, a contractual possessory security interest in and a
contractual right of setoff against, and each Borrower hereby assigns, conveys,
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delivers, pledges and transfers to the Series C Lender all of each Borrower's
right, title and interest in and to, all deposits, moneys, securities and other
property of such Borrower now or hereafter in the possession of or on deposit
with, or in transit to, the Series C Lender whether held in a general or special
account or deposit, whether held jointly with someone else, or whether held for
safekeeping or otherwise, excluding, however, all IRA, Keogh, employee
withholding accounts, and trust accounts. Every such security interest and right
of setoff may be exercised without demand upon or notice to any Borrower. Every
such right of setoff shall be deemed to have been exercised immediately upon the
occurrence of an Event of Default hereunder without any action of the Series C
Lender, although the Series C Lender may enter such setoff on its books and
records at a later time.
8. Subordination, Priority and Payment Over Of Proceeds In Certain Events.
(a) The Borrowers and the Lenders and any other holder of a Note (the
Lenders and such holders being hereinafter referred to collectively as
"Holders") covenant and agree that all payments of the principal of and interest
in respect of the Series B Notes and the Series C Note shall be subordinated in
accordance with the provisions of this Section 8 to the prior payment in full of
the Senior Debt. For purposes of this Section 8, (x) the term "Senior Debt"
shall mean, (i) with respect to the Series B Note, the Series A Note, and (ii)
with respect to the Series C Note, the Series A Note and the Series B Notes, and
each of clauses (i) and (ii) above shall include principal of and premium, if
any, and interest (including interest accruing at the rate provided for
hereunder after the commencement of any proceedings of the type referred to in
clause (b) hereof, whether or not an allowed claim in such proceeding) on all
loans and other extensions of credit under, and all expenses, fees,
reimbursements, indemnities and other amounts owing pursuant to the Senior Debt,
to the extent permitted to be incurred pursuant to the Loan Documents , and (y)
the term "Subordinated Debt" shall mean, (i) with respect to the Series A Note,
the Series B Notes and the Series C Note, and (ii) with respect to the Series B
Notes, the Series C Note. The Borrowers and the Lenders further covenant and
agree that all payments in respect of this Series C Note shall be subordinated
in accordance with the provisions of this Section 8.
(b) Upon payment or distribution of assets or securities of the Borrowers
of any kind or character, whether in cash, property or securities, upon any
dissolution or winding up or total or partial liquidation or reorganization of
the Borrowers, whether voluntary or involuntary, or in bankruptcy, insolvency,
receivership or other proceedings or upon an assignment for the benefit of
creditors or any other marshalling of the assets and liabilities of the
Borrowers, the Senior Debt shall first be paid in full in cash, or payment
provided for in cash or cash equivalents in a manner satisfactory to the Holder
thereof, before any direct or indirect payments or distributions, including,
without limitation, by exercise of set-off, of any cash, property or securities
on account of principal of (or premium, if any) or interest on the Subordinated
Debt, and to that end the Senior Debt Holder shall be entitled to receive
directly, for application to the payment thereof (to the extent necessary to pay
the Senior Debt in full after giving effect to any substantially concurrent
138
payment or distribution to or provision for payment to the Senior Debt Holder in
respect of the Senior Debt), any payment or distribution of any kind or
character, whether in cash, property or securities, in respect of the
Subordinated Debt. The provisions of this Section shall not be applicable to
payments made in accordance with the terms of this Series C Note and received
prior to the commencement of any such dissolution or winding up or total or
partial liquidation or reorganization of the Borrowers, whether voluntary or
involuntary, or in bankruptcy, insolvency, receivership or other proceedings or
upon an assignment for the benefit of creditors or any other marshalling of the
assets and liabilities of the Borrowers.
(c) No direct or indirect payment by or on behalf of the Borrowers of
principal of (premium, if any), or interest on, the Subordinated Debt, whether
pursuant to the terms of Subordinated Debt, upon acceleration or otherwise,
shall be made if at the time of such payment there exists (i) a default in the
payment of all or any portion of principal of (premium, if any), interest on,
fees or other amounts owing in connection with any Senior Debt or (ii) any
default other than a default described in clause (i) above under any document or
instrument governing or evidencing any Senior Debt, and, in either case, such
default shall not have been cured or waived in writing.
9. Rights and Obligations of Holders.
(d) In the event that, notwithstanding anything contained in Section 8
prohibiting such payment or distribution, the Holders shall have received any
payment on account of the Subordinated Debt at a time when such payment is
prohibited by such provision before the Senior Debt is paid in full, then and in
such event, such payment or distribution shall be received and held in trust by
the Holders apart from their other assets and paid over or delivered to the
holders of the Senior Debt remaining unpaid to the extent necessary to pay in
full in cash the principal of (premium, if any), and interest on, such Senior
Debt in accordance with its terms and after giving effect to any concurrent
payment or distribution to the holders of such Senior Debt.
(e) Nothing contained in this Section 9 will limit the right of the Holders
of Subordinated Debt to take any action to accelerate the maturity of the
Subordinated Debt pursuant to Section 6 hereof, provided, however, that all
Senior Debt then due or thereafter declared to be due shall first be paid in
full before the Holders are entitled to receive any payment from any Borrowers
of principal of, or interest on, the Note.
(f) Upon any payment or distribution of assets or securities referred to in
this Section 9, the Holders shall be entitled to rely upon any order or decree
of a court of competent jurisdiction in which such dissolution, winding up,
liquidation or reorganization proceedings are pending, and upon a certificate of
the receiver, trustee in bankruptcy, liquidating trustee, agent or other person
making any such payment or distribution, delivered to the Holders for the
purpose of ascertaining the persons entitled to participate in such
distribution, the holders of Senior Debt and other Indebtedness of the
Borrowers, the amount thereof or payable thereon, the amount or amounts paid or
distributed thereon and all other facts pertinent thereto or to this Section 9.
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10. Rights of Holders of Senior Debt Not To Be Impaired.
(a) No right of any present or future holder of any Senior Debt to enforce
subordination as herein provided shall at any time in any way be prejudiced or
impaired by any act or failure to act by any such holder, or by any
noncompliance by the Borrowers with the terms and provisions and covenants
herein regardless of any knowledge thereof such holder may have or otherwise be
charged with.
(b) The provisions of these Sections 8-15 are intended to be for the
benefit of, and shall be enforceable directly by, the holders of the Senior
Debt. The Borrowers and each Holder of any Note, by its acceptance thereof,
acknowledges that the holders of the Senior Debt are relying upon the provisions
of these Sections 8-15 in extending such Senior Debt.
11. Subrogation.
(a) Upon the payment in full of all Senior Debt, the Holders shall be
subrogated to the extent of the payments or distributions made to the holders
of, or otherwise applied to payment of, the Senior Debt pursuant to the
provisions of these Sections 8-15 and to the rights of the holders of Senior
Debt to receive payments or distributions of assets of the Borrowers made on the
Senior Debt until this Series C Note shall be paid in full; and for the purposes
of such subrogation, no payments or distributions to holders of Senior Debt of
any cash, property or securities to which Holders of this Series C Note would be
entitled except for the provisions of these Sections 8-15 and no payment over
pursuant to the provisions of these Sections 8-15 to holders of Senior Debt by
the Holders, shall, as between the Borrowers, its creditors other than holders
of Senior Debt and the Holders, be deemed to be payment by the Borrowers to or
on account of Senior Debt, it being understood that the provisions of these
Sections 8-15 are solely for the purpose of defining the relative rights of the
holders of Senior Debt, on the one hand, and the Holders, on the other hand.
(b) If any payment or distribution to which the Holders would otherwise
have been entitled but for the provisions of these Sections 8-15 shall have been
applied, pursuant to the provisions of these Sections 8-15, to the payment of
Senior Debt, then and in such case, the Holders shall be entitled to receive
from the holders of Senior Debt at the time outstanding any payments or
distributions received by such holders of Senior Debt in excess of the amount
sufficient to pay all Senior Debt in full.
12. Obligations of Borrowers Unconditional.
(a) Nothing contained in these Sections 8-15 or elsewhere in the Loan
Documents or in this Series C Note is intended to or shall impair, as between
the Borrowers and the Holders, the obligations of the Borrowers, which are
absolute and unconditional, to pay to the Holders the principal of (premium, if
any), and interest on, this Series C Note as and when the same shall become due
and payable in accordance with its terms, or is intended to or shall affect the
140
relative rights of the Holders and creditors of the Borrowers other than the
holders of the Senior Debt, nor shall anything herein or therein prevent any
Holder from exercising all remedies otherwise permitted by applicable law upon
the occurrence of an Event of Default under the Loan Documents or under this
Series C Note, subject to the rights, if any, under these Sections 8-15 of the
holders of Senior Debt in respect of cash, property or securities of the
Borrowers received upon the exercise of any such remedy.
(b) The failure to make a payment on account of principal of, or interest
on, this Series C Note by reason of any provision of these Sections 8-15 shall
not be construed as preventing the occurrence of an Event of Default hereunder.
13. Notice to Holders. Each Borrowers shall give prompt written notice to
each Holder of any fact known to such Borrower which would prohibit the making
of any payment on or in respect of this Series C Note, but failure to give such
notice shall not affect the subordination of the Subordinated Debt to the Senior
Debt provided in Section 8. Notwithstanding the provisions of these Sections
8-15 or any other provision of the Loan Documents or this Series C Note, no
Holder shall be charged with knowledge of the existence of any facts which would
prohibit the making of any payment to or in respect hereof, unless and until the
Holders shall have received written notice thereof from a Borrower or a
representative of or holder of Senior Debt, and, prior to the receipt of any
such written notice, subject to the provisions of these Sections 8-15 the
Holders shall be entitled in all respects to assume no such facts exist. Nothing
contained in this Section 13 shall limit the right of the holders of Senior Debt
to recover payments as contemplated by Sections 8 and 9.
14. Right of Any Holder as Holder of Senior Debt. Any Holder in its
individual capacity shall be entitled to all the rights set forth in these
Sections 8-15 with respect to any Senior Debt which may at any time be held by
it, to the same extent as any other holder of Senior Debt, and nothing in this
agreement shall deprive such Holder of any of its rights as such holder.
15. Reinstatement. The provisions of these Sections 8-15 shall continue to
be effective or be reinstated, and the Senior Debt shall not be deemed to be
paid in full, as the case may be, if at any time any payment of any of the
Senior Debt is rescinded or must otherwise be returned by the holder thereof
upon the insolvency, bankruptcy or reorganization of the Borrowers or otherwise,
all as though such payment had not been made.
16. Miscellaneous. No delay or omission of the Series C Lender to exercise
any right or power arising hereunder shall impair any such right or power or be
considered to be a waiver of any such right or power, nor shall the Series C
Lender's action or inaction impair any such right or power. Each Borrower agrees
to pay on demand, to the extent permitted by law, all costs and expenses
incurred by the Series C Lender in the enforcement of its rights in this Series
C Note and in any security therefor, including without limitation reasonable
fees and expenses of the Series C Lender's counsel. If any provision of this
Series C Note is found to be invalid by a court, all the other provisions of
this Series C Note will remain in full force and effect. Each Borrower and all
other makers and indorsers of this Series C Note hereby forever waive
presentment, protest, notice of dishonor and notice of non-payment. Each
Borrower also waives all defenses based on suretyship or impairment of
141
collateral. This Series C Note is executed by more than one Borrower and,
therefore, the obligations of such entities hereunder are joint and several.
This Series C Note may be executed in counterparts and shall bind each Borrower
and its respective heirs, executors, administrators, successors and assigns, and
the benefits hereof shall inure to the benefit of the Series C Lender and its
successors and assigns.
This Series C Note has been delivered to and accepted by the Series C Lender and
will be deemed to be made in New York. THIS SERIES C NOTE WILL BE INTERPRETED
AND THE RIGHTS AND LIABILITIES OF THE SERIES C LENDER AND THE BORROWERS
DETERMINED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, EXCLUDING ITS
CONFLICT OF LAWS RULES. Each Borrower hereby irrevocably consents to the
jurisdiction of any state or federal court located in New York County, City of
New York, New York, and consents that all service of process be sent by
nationally recognized overnight courier service directed to each such Borrower
at each such Borrower's address set forth herein and service so made will be
deemed to be completed on the day of receipt by such Borrower; provided that
nothing contained in this Series C Note will prevent the Series C Lender from
bringing any action, enforcing any award or judgment or exercising any rights
against any Borrower individually, against any security or against any property
of any such Borrowers within any other county, state or other foreign or
domestic jurisdiction. Each Borrower acknowledges and agrees that the venue
provided above is the most convenient forum for both the Series C Lender and
each such Borrower. Each Borrower waives any objection to venue and any
objection based on a more convenient forum in any action instituted under this
Series C Note.
THERMOVIEW INDUSTRIES, INC.
AMERICAN HOME DEVELOPERS CO., INC.
FIVE STAR BUILDERS, INC.
KEY HOME CREDIT, INC.
KEY HOME MORTGAGE, INC.
LEINGANG SIDING AND WINDOW, INC.
PRIMAX WINDOW CO.
PRECISION WINDOW MFG., INC.
ROLOX, INC.
TD WINDOWS, INC.
THERMAL LINE WINDOWS, INC.
THERMOVIEW OF MISSOURI, INC.
THERMO-TILT WINDOW COMPANY
THOMAS CONSTRUCTION, INC.
THERMO-SHIELD OF AMERICA (ARIZONA), INC.
THERMO-SHIELD OF AMERICA (MICHIGAN), INC.
THERMO-SHIELD COMPANY, LLC
THERMO-SHIELD OF AMERICA(WISCONSIN), LLC
THERMOVIEW ADVERTISING GROUP, INC.
By: _________________________________
Charles L. Smith, President
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Exhibit 10.129
AMENDED AND RESTATED SERIES B PROMISSORY NOTE
$_________ New York, New York
June 30, 2003
FOR VALUE RECEIVED, the undersigned FOR VALUE RECEIVED, the undersigned [i]
THERMOVIEW INDUSTRIES, INC., a Delaware corporation ("ThermoView"), [ii]
AMERICAN HOME DEVELOPERS CO., INC., a California corporation ("American Home"),
[iii] FIVE STAR BUILDERS, INC., a California corporation ("Five Star"), [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]
PRECISION WINDOW MFG., INC., a Missouri corporation ("Precision"), [viii] PRIMAX
WINDOW CO., a Kentucky corporation ("Primax"), [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 ("Thermal
Line"), [xii] THERMOVIEW OF MISSOURI, INC., a Missouri corporation
("ThermoView-Missouri"), [xiii] THERMO-TILT WINDOW COMPANY, a Delaware
corporation ("Thermo-Tilt"), [xiv] THERMO-SHIELD OF AMERICA (ARIZONA), INC., an
Arizona corporation ("Thermo-Shield Arizona"), [xv] THERMO-SHIELD OF AMERICA
(MICHIGAN), INC., a Michigan corporation ("Thermo-Shield Michigan"), [xvi]
THERMO-SHIELD COMPANY, LLC, an Illinois limited liability company
("Thermo-Shield Company"), [xvii] THERMO-SHIELD OF AMERICA (WISCONSIN), LLC, a
Wisconsin limited liability company ("Thermo-Shield Wisconsin"), [xviii]
THERMOVIEW ADVERTISING GROUP, INC., a Delaware corporation ("ThermoView
Advertising") and [xix] THOMAS CONSTRUCTION, INC., a Missouri corporation
("Thomas Construction"), (ThermoView, American Home, Five Star, Key Home, Key
Home Mortgage, Leingang Siding, Precision, Primax, Rolox, TD Windows, Thermal
Line, ThermoView-Missouri, Thermo-Tilt, Thermo-Shield Arizona, Thermo-Shield
Michigan, Thermo-Shield Company, Thermo-Shield Wisconsin, ThermoView Advertising
and Thomas Construction individually are referred to in this Agreement as a
"Borrower" and collectively as the "Borrowers") having an address in care of
ThermoView Industries, Inc., 5611 Fern Valley Road, Louisville, Kentucky 40228,
hereby promises and agrees to pay to the order of _____________(the "Series B
Lender"), having an address of c/o Underhill Associates, 416 W. Muhammad Ali
Boulevard, Louisville, Kentucky 40202, the aggregate principal sum of
_____________________________ DOLLARS ($_____), or so much thereof as may be
advanced hereunder, together with interest thereon as hereinafter provided, in
lawful money of the United States of America, in the manner set forth herein, on
or before the Loan Expiration Date as that term is defined in the Loan Agreement
(as hereinafter defined).
1. Other Loan Documents. This Series B Note is issued in connection with a
Loan Agreement dated August 31, 1998, as amended, to which the Borrowers, the
Series A Lender, the Series B Lenders and the Series C Lender (as defined
therein) are parties, (the "Loan Agreement") the terms of which are incorporated
herein by reference and other documents executed and delivered in connection
therewith (the "Loan Documents"; terms not otherwise defined herein are used
herein as therein defined in the Loan Documents), and is secured by the property
described in the Loan Documents and by such other collateral as previously may
have been or may in the future be granted to the Series B Lender (or the
Collateral Agent for the Lenders) to secure this Series B Note.
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2. Rate of Interest. This Series B Note will bear interest at a rate per
annum (computed on the basis of a year of 360 days and the actual number of days
elapsed) equal to ten percent (10%).
3. Payment Terms. Principal of this Series B Note shall be paid in monthly
payments of $638.12 and shall be payable on the last day of each calendar month
commencing on July 31, 2004. The balance of the principal shall be paid in a
single payment on the Loan Expiration Date.
Interest on this Series B Note shall be payable on the last day of each
calendar month and on any and each date that the principal of this Series B Note
is paid in full, and on the Loan Expiration Date.
If any payment under this Series B Note shall become due on a Saturday, Sunday
or public holiday under the laws of the State where the Series B Lender's office
indicated above is located, such payment shall be made on the next succeeding
Business Day and such extension of time shall be included in computing interest
in connection with such payment. The Borrowers hereby authorize the Series B
Lender to charge any Borrower's deposit account at the Series B Lender for any
payment when due hereunder. Payments received will be applied to charges, fees
and expenses (including attorneys' fees), accrued interest and principal in any
order the Series B Lender may choose, in its sole discretion. "Business Day"
shall mean any day other than a Saturday or Sunday or a legal holiday on which
banks are authorized or required to be closed for business in New York, New
York.
4. Late Payments; Default Rate. If the Borrowers fail to make any payment
of principal, interest or other amount coming due pursuant to the provisions of
this Series B Note within ten (10) calendar days of the date due and payable,
the Borrowers also shall pay to the Series B Lender a late charge equal to the
lesser of two percent (2%) of the amount of such payment or $25.00. Such ten day
period shall not be construed in any way to extend the due date of any such
payment. The late charge is imposed for the purpose of defraying the Series B
Lender's expenses incident to the handling of delinquent payments and is in
addition to, and not in lieu of, the exercise by the Series B Lender of any
rights and remedies hereunder, under the other Loan Documents or under
applicable laws, and any fees and expenses of any agents or attorneys which the
Series B Lender may employ. Upon maturity, whether by acceleration, demand or
otherwise, and at the option of the Series B Lender upon the occurrence of any
Event of Default (as hereinafter defined) and during the continuance thereof,
this Series B Note shall bear interest at a rate per annum (based on a year of
360 days and actual days elapsed) which shall be two percentage points (2%) in
excess of the interest rate in effect from time to time under this Series B Note
but not more than the maximum rate allowed by law (the "Default Rate"). The
Default Rate shall continue to apply whether or not judgment shall be entered on
this Series B Note.
5. Prepayment. Principal of this Series B Note may be repaid or prepaid in
whole or in part without penalty or premium at any time, but only in the amount
of $10,000.00, or integral multiples thereof, or an amount equal to the entire
unpaid principal balance of this Series B Note, and only provided Borrowers have
given to the Series B Lenders not less than three (3) Business Days prior
written notice of such prepayment. On July 31 and November 15 of each calendar
year, the Borrowers shall prepay this Series B Note in an amount outstanding
equal to 100% of the Borrowers' cash, cash equivalents and marketable securities
balance on its balance sheet which, collectively, is in excess of $1,000,000 as
144
of June 30 or October 15, as applicable, of that year. Upon termination of that
certain Reimbursement Agreement dated as of June 30, 2003 among GE Capital
Equity Investments, Inc. and the Borrowers (the "Reimbursement Agreement") and
fulfillment by the Borrowers of all of their obligations thereunder, any
remaining balance in the Cash Account (as defined in the Reimbursement
Agreement) shall be used to prepay this Series B Note. Subject to the provisions
of Section 8 hereof, any prepayment of this Series B Note and any prepayments in
respect of the second and third sentences of this Section 5 shall be applied in
the following order: (i) then due and payable fees and expenses; (ii) then due
and payable interest and principal payments on the Reimbursement Obligations;
(iii) then due and payable interest payments on the Series A Note, the Series B
Notes and the Series C Note on a pro rata basis; (ivi) principal payments on the
Series A Note and the Series B Notes on a pro rata basis; and (iv) principal
payments on the Series C Note. Any repayments or optional prepayments of this
Series B Note at maturity, including in connection with a sale or merger of any
Borrower or a sale of all or substantially all of the assets of any Borrower,
shall be applied in the following order: (i) then due and payable fees and
expenses; (ii) then due and payable interest and principal payments on the
Reimbursement Obligations; (iii) then due and payable interest payments on the
Series A Note, the Series B Notes and the Series C Note on a pro rata basis;
(iv) principal payments on the Series A Note; (v) principal payments on the
Series B Notes; and (vi) principal payments on the Series C Note.
6. Events of Default. The occurrence of any of the following events will be
deemed to be an "Event of Default" under this Series B Note: (i) the nonpayment
of any principal, interest or other indebtedness under this Series B Note or the
Loan Agreement when due; (ii) the occurrence of any event of default or default
and the lapse of any notice or cure period under any Loan Document, including
but not limited to the Series A Notes and the Series C Note, or any other debt,
liability or obligation to the Series B Lender of any Obligor; (iii) the filing
by or against any Obligor of any proceeding in bankruptcy, receivership,
insolvency, reorganization, liquidation, conservatorship or similar proceeding
(and, in the case of any such proceeding instituted against any Obligor, such
proceeding is not dismissed or stayed within 30 days of the commencement
thereof); (iv) any assignment by any Obligor for the benefit of creditors, or
any levy, garnishment attachment or similar proceeding is instituted against any
property or any Obligor held by or deposited with the Series B Lender; (v) a
default with respect to any other indebtedness of any Obligor for borrowed
money, if the effect of such default is to cause or permit the acceleration of
such debt; (vi) the commencement of any foreclosure or forfeiture proceeding,
execution or attachment against any collateral securing the obligations of any
Obligor to the Series A, B or C Lenders; (vii) the entry of a final judgment
against any Obligor in excess of $100,000, which judgment has not been stayed,
discharged or appealed within ten (10) Business Days of the date of entry
thereof, (viii) the Borrower ceases doing business as a going concern; (ix) the
revocation or attempted revocation, in whole or in part, of any guarantee for
the benefit of the Series B Lender by any Guarantor; (x) any representation or
warranty made by any Obligor to the Series B Lender in any Loan Document, or any
other documents now or in the future securing the obligations of any Obligor to
the Series B Lender, is false, erroneous or misleading in any material respect;
(xi) the failure by Thermoview to perform or observe the financial covenant
contained in Section 4.I of the Loan Agreement; or (xii) the occurrence of any
145
Event of Default (as defined in any Loan Documents or any other documents now or
in the future securing the obligations of any Obligor to the Series A, B or C
Lenders) or any default under any of the Loan Documents or such other documents
that does not have a defined set of "Events of Default" and the lapse of any
notice or cure period provided in the Loan Documents or such other documents
with respect to such default. As used herein, the term "Obligor" means any
Borrower and any Guarantor, and the term "Guarantor" means any guarantor of the
obligations of any Borrower to the Series B Lender existing on the date of this
Series B Note or arising in the future.
Upon the occurrence and during the continuance of an Event of Default: (a)
if an Event of Default specified in clauses (iii) or (iv) above shall occur, the
outstanding principal balance and accrued interest hereunder together with any
additional amounts payable hereunder shall be immediately due and payable
without demand or notice of any kind; (b) if an Event of Default specified in
clauses (i), (vii) or (xi) above, or Section 6.E. or 6.F. of the Loan Agreement,
or an Event of Default resulting from a breach of Section 5.G. of the Loan
Agreement, shall occur, the outstanding principal balance and accrued interest
hereunder together with any additional amounts payable hereunder, at the option
of the Requisite A Lenders or, if the Series A Note shall no longer be
outstanding, the Requisite Lenders, and without demand or notice of any kind,
may be accelerated and become immediately due and payable; (c) if an Event of
Default specified in clause (v) shall occur in connection with the obligations
under that certain Securities Purchase Agreement, dated as of July 8, 1999,
between the Series A Lender and Thermoview, as amended from time to time, shall
be accelerated as a result of a default thereunder pursuant to Sections 5.1(h)
or 7.1(a) thereof, at the option of the Requisite A Lenders or, if the Series A
Note shall no longer be outstanding, the Requisite C Lender, and without demand
or notice of any kind, may be accelerated and become immediately due and
payable; (d) if any other Event of Default shall occur and the same shall
continue unremedied for a period of 30 days thereafter, the outstanding
principal balance and accrued interest hereunder together with any additional
amounts payable hereunder, at the option of the Requisite Lenders and without
demand or notice of any kind, may be accelerated and become immediately due and
payable; (e) at the option of the Requisite Lenders will bear interest at the
Default Rate from the date of the occurrence of the Event of Default; and (f)
the Series B Lender may exercise from time to time any of the rights and
remedies available to the Series B Lender under the Loan Documents or under
applicable law. Notwithstanding anything contained in this Section 6, upon the
filing of a bankruptcy of Thermoview, whether voluntary or involuntary, the
Series A Lender shall have the right to file a proof of claim on the Series B
Lenders' behalf in respect of the Series B Note.
7. Right of Setoff. In addition to all liens upon and rights of setoff
against the money, securities or other property of each Borrower given to the
Series B Lender by law, the Series B Lender shall have, with respect to any
Borrower's obligations to the Series B Lender under this Series B Note and to
the extent permitted by law, a contractual possessory security interest in and a
contractual right of setoff against, and each Borrower hereby assigns, conveys,
delivers, pledges and transfers to the Series B Lender all of each Borrower's
right, title and interest in and to, all deposits, moneys, securities and other
property of such Borrower now or hereafter in the possession of or on deposit
with, or in transit to, the Series B Lender whether held in a general or special
account or deposit, whether held jointly with someone else, or whether held for
safekeeping or otherwise, excluding, however, all IRA, Keogh, employee
withholding accounts, and trust accounts. Every such security interest and right
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of setoff may be exercised without demand upon or notice to any Borrower. Every
such right of setoff shall be deemed to have been exercised immediately upon the
occurrence of an Event of Default hereunder without any action of the Series B
Lender, although the Series B Lender may enter such setoff on its books and
records at a later time.
8. Subordination, Priority and Payment Over Of Proceeds In Certain Events.
(a) The Borrowers and the Lenders and any other holder of a Note (the
Lenders and such holders being hereinafter referred to collectively as
"Holders") covenant and agree that all payments of the principal of and interest
in respect of the Series A Note, the Series B Notes and the Series C Note shall
be subordinated in accordance with the provisions of this Section 8 to the prior
payment in full of the Senior Debt. For purposes of this Section 8, (x) the term
"Senior Debt" shall mean, (i) with respect to the Series A Note, the
Reimbursement Obligations, (ii) with respect to the Series B Notes, the
Reimbursement Obligations and the Series A Note and (iii) with respect to the
Series C Note, the Reimbursement Obligations, the Series A Note and the Series B
Notes, and each of clauses (i),(ii) and (iii) above shall include principal of
and premium, if any, and interest (including interest accruing at the rate
provided for hereunder after the commencement of any proceedings of the type
referred to in clause (b) hereof, whether or not an allowed claim in such
proceeding) on all loans and other extensions of credit under, and all expenses,
fees, reimbursements, indemnities and other amounts owing pursuant to the Senior
Debt, to the extent permitted to be incurred pursuant to the Loan Documents ,
and (y) the term "Subordinated Debt" shall mean, (i) with respect to the
Reimbursement Obligations, the Series A Note, the Series B Notes and the Series
C Note, (ii) with respect to the Series A Note, the Series B Notes and the
Series C Note and (iii) with respect to the Series B Notes, the Series C Note.
The Borrowers and the Lenders further covenant and agree that all payments in
respect of this Series B Note shall be subordinated in accordance with the
provisions of this Section 8.
(b) Upon payment or distribution of assets or securities of the Borrowers
of any kind or character, whether in cash, property or securities, upon any
dissolution or winding up or total or partial liquidation or reorganization of
the Borrowers, whether voluntary or involuntary, or in bankruptcy, insolvency,
receivership or other proceedings or upon an assignment for the benefit of
creditors or any other marshalling of the assets and liabilities of the
Borrowers, the Senior Debt shall first be paid in full in cash, or payment
provided for in cash or cash equivalents in a manner satisfactory to the Holder
thereof, before any direct or indirect payments or distributions, including,
without limitation, by exercise of set-off, of any cash, property or securities
on account of principal of (or premium, if any) or interest on the Subordinated
Debt, and to that end the Senior Debt Holder shall be entitled to receive
directly, for application to the payment thereof (to the extent necessary to pay
the Senior Debt in full after giving effect to any substantially concurrent
payment or distribution to or provision for payment to the Senior Debt Holder in
respect of the Senior Debt), any payment or distribution of any kind or
character, whether in cash, property or securities, in respect of the
Subordinated Debt. The provisions of this Section shall not be applicable to
147
payments made in accordance with the terms of this Series B Note and received
prior to the commencement of any such dissolution or winding up or total or
partial liquidation or reorganization of the Borrowers, whether voluntary or
involuntary, or in bankruptcy, insolvency, receivership or other proceedings or
upon an assignment for the benefit of creditors or any other marshalling of the
assets and liabilities of the Borrowers.
(c) No direct or indirect payment by or on behalf of the Borrowers of
principal of (premium, if any), or interest on, the Subordinated Debt, whether
pursuant to the terms of Subordinated Debt, upon acceleration or otherwise,
shall be made if at the time of such payment there exists (i) a default in the
payment of all or any portion of principal of (premium, if any), interest on,
fees or other amounts owing in connection with any Senior Debt or (ii) any
default other than a default described in clause (i) above under any document or
instrument governing or evidencing any Senior Debt, and, in either case, such
default shall not have been cured or waived in writing.
(d) All amounts paid to the Series B Lenders pursuant to the terms of this
Series B Note shall be distributed to each of the Series B Lenders on a pro rata
basis.
9. Rights and Obligations of Holders.
(g) In the event that, notwithstanding anything contained in Section 8
prohibiting such payment or distribution, the Holders shall have received any
payment on account of the Subordinated Debt at a time when such payment is
prohibited by such provision before the Senior Debt is paid in full, then and in
such event, such payment or distribution shall be received and held in trust by
the Holders apart from their other assets and paid over or delivered to the
holders of the Senior Debt remaining unpaid to the extent necessary to pay in
full in cash the principal of (premium, if any), and interest on, such Senior
Debt in accordance with its terms and after giving effect to any concurrent
payment or distribution to the holders of such Senior Debt.
(h) Nothing contained in this Section 9 will limit the right of the Holders
of Subordinated Debt to take any action to accelerate the maturity of the
Subordinated Debt pursuant to Section 6 hereof, provided, however, that all
Senior Debt then due or thereafter declared to be due shall first be paid in
full before the Holders are entitled to receive any payment from any Borrowers
of principal of, or interest on, the Note.
(i) Upon any payment or distribution of assets or securities referred to in
this Section 9, the Holders shall be entitled to rely upon any order or decree
of a court of competent jurisdiction in which such dissolution, winding up,
liquidation or reorganization proceedings are pending, and upon a certificate of
the receiver, trustee in bankruptcy, liquidating trustee, agent or other person
making any such payment or distribution, delivered to the Holders for the
purpose of ascertaining the persons entitled to participate in such
distribution, the holders of Senior Debt and other Indebtedness of the
Borrowers, the amount thereof or payable thereon, the amount or amounts paid or
distributed thereon and all other facts pertinent thereto or to this Section 9.
148
10. Rights of Holders of Senior Debt Not To Be Impaired.
(a) No right of any present or future holder of any Senior Debt to enforce
subordination as herein provided shall at any time in any way be prejudiced or
impaired by any act or failure to act by any such holder, or by any
noncompliance by the Borrowers with the terms and provisions and covenants
herein regardless of any knowledge thereof such holder may have or otherwise be
charged with.
(b) The provisions of these Sections 8-15 are intended to be for the
benefit of, and shall be enforceable directly by, the holders of the Senior
Debt. The Borrowers and each Holder of any Note, by its acceptance thereof,
acknowledges that the holders of the Senior Debt are relying upon the provisions
of these Sections 8-15 in extending such Senior Debt.
11. Subrogation.
(a) Upon the payment in full of all Senior Debt, the Holders shall be
subrogated to the extent of the payments or distributions made to the holders
of, or otherwise applied to payment of, the Senior Debt pursuant to the
provisions of these Sections 8-15 and to the rights of the holders of Senior
Debt to receive payments or distributions of assets of the Borrowers made on the
Senior Debt until this Series B Note shall be paid in full; and for the purposes
of such subrogation, no payments or distributions to holders of Senior Debt of
any cash, property or securities to which Holders of this Series B Note would be
entitled except for the provisions of these Sections 8-15 and no payment over
pursuant to the provisions of these Sections 8-15 to holders of Senior Debt by
the Holders, shall, as between the Borrowers, its creditors other than holders
of Senior Debt and the Holders, be deemed to be payment by the Borrowers to or
on account of Senior Debt, it being understood that the provisions of these
Sections 8-15 are solely for the purpose of defining the relative rights of the
holders of Senior Debt, on the one hand, and the Holders, on the other hand.
(b) If any payment or distribution to which the Holders would otherwise
have been entitled but for the provisions of these Sections 8-15 shall have been
applied, pursuant to the provisions of these Sections 8-15, to the payment of
Senior Debt, then and in such case, the Holders shall be entitled to receive
from the holders of Senior Debt at the time outstanding any payments or
distributions received by such holders of Senior Debt in excess of the amount
sufficient to pay all Senior Debt in full.
12. Obligations of Borrowers Unconditional.
(a) Nothing contained in these Sections 8-15 or elsewhere in the Loan
Documents or in this Series B Note is intended to or shall impair, as between
the Borrowers and the Holders, the obligations of the Borrowers, which are
absolute and unconditional, to pay to the Holders the principal of (premium, if
any), and interest on, this Series B Note as and when the same shall become due
and payable in accordance with its terms, or is intended to or shall affect the
relative rights of the Holders and creditors of the Borrowers other than the
149
holders of the Senior Debt, nor shall anything herein or therein prevent any
Holder from exercising all remedies otherwise permitted by applicable law upon
the occurrence of an Event of Default under the Loan Documents or under this
Series B Note, subject to the rights, if any, under these Sections 8-15 of the
holders of Senior Debt in respect of cash, property or securities of the
Borrowers received upon the exercise of any such remedy.
(b) The failure to make a payment on account of principal of, or interest
on, this Series B Note by reason of any provision of these Sections 8-15 shall
not be construed as preventing the occurrence of an Event of Default hereunder.
13. Notice to Holders. Each Borrowers shall give prompt written notice to
each Holder of any fact known to such Borrower which would prohibit the making
of any payment on or in respect of this Series B Note, but failure to give such
notice shall not affect the subordination of the Subordinated Debt to the Senior
Debt provided in Section 8. Notwithstanding the provisions of these Sections
8-15 or any other provision of the Loan Documents or this Series B Note, no
Holder shall be charged with knowledge of the existence of any facts which would
prohibit the making of any payment to or in respect hereof, unless and until the
Holders shall have received written notice thereof from a Borrower or a
representative of or holder of Senior Debt, and, prior to the receipt of any
such written notice, subject to the provisions of these Sections 8-15 the
Holders shall be entitled in all respects to assume no such facts exist. Nothing
contained in this Section 13 shall limit the right of the holders of Senior Debt
to recover payments as contemplated by Sections 8 and 9.
14. Right of Any Holder as Holder of Senior Debt. Any Holder in its
individual capacity shall be entitled to all the rights set forth in these
Sections 8-15 with respect to any Senior Debt which may at any time be held by
it, to the same extent as any other holder of Senior Debt, and nothing in this
agreement shall deprive such Holder of any of its rights as such holder.
15. Reinstatement. The provisions of these Sections 8-15 shall continue to
be effective or be reinstated, and the Senior Debt shall not be deemed to be
paid in full, as the case may be, if at any time any payment of any of the
Senior Debt is rescinded or must otherwise be returned by the holder thereof
upon the insolvency, bankruptcy or reorganization of the Borrowers or otherwise,
all as though such payment had not been made.
16. Miscellaneous. No delay or omission of the Series B Lender to exercise
any right or power arising hereunder shall impair any such right or power or be
considered to be a waiver of any such right or power, nor shall the Series B
Lender's action or inaction impair any such right or power. Each Borrower agrees
to pay on demand, to the extent permitted by law, all costs and expenses
incurred by the Series B Lender in the enforcement of its rights in this Series
B Note and in any security therefor, including without limitation reasonable
fees and expenses of the Series B Lender's counsel. If any provision of this
Series B Note is found to be invalid by a court, all the other provisions of
this Series B Note will remain in full force and effect. Each Borrower and all
other makers and indorsers of this Series B Note hereby forever waive
presentment, protest, notice of dishonor and notice of non-payment. Each
Borrower also waives all defenses based on suretyship or impairment of
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collateral. This Series B Note is executed by more than one Borrower and,
therefore, the obligations of such entities hereunder are joint and several.
This Series B Note may be executed in counterparts and shall bind each Borrower
and its respective heirs, executors, administrators, successors and assigns, and
the benefits hereof shall inure to the benefit of the Series B Lender and its
successors and assigns.
This Series B Note has been delivered to and accepted by the Series B Lender and
will be deemed to be made in New York. THIS SERIES B NOTE WILL BE INTERPRETED
AND THE RIGHTS AND LIABILITIES OF THE SERIES B LENDER AND THE BORROWERS
DETERMINED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, EXCLUDING ITS
CONFLICT OF LAWS RULES. Each Borrower hereby irrevocably consents to the
jurisdiction of any state or federal court located in New York County, City of
New York, New York, and consents that all service of process be sent by
nationally recognized overnight courier service directed to each such Borrower
at each such Borrower's address set forth herein and service so made will be
deemed to be completed on the day of receipt by such Borrower; provided that
nothing contained in this Series B Note will prevent the Series B Lenders from
bringing any action, enforcing any award or judgment or exercising any rights
against any Borrower individually, against any security or against any property
of any such Borrowers within any other county, state or other foreign or
domestic jurisdiction. Each Borrower acknowledges and agrees that the venue
provided above is the most convenient forum for both the Series B Lenders and
each such Borrower. Each Borrower waives any objection to venue and any
objection based on a more convenient forum in any action instituted under this
Series B Note.
THERMOVIEW INDUSTRIES, INC.
AMERICAN HOME DEVELOPERS CO., INC.
FIVE STAR BUILDERS, INC.
KEY HOME CREDIT, INC.
KEY HOME MORTGAGE, INC.
LEINGANG SIDING AND WINDOW, INC.
PRIMAX WINDOW CO.
PRECISION WINDOW MFG., INC.
ROLOX, INC.
TD WINDOWS, INC.
THERMAL LINE WINDOWS, INC.
THERMOVIEW OF MISSOURI, INC.
THERMO-TILT WINDOW COMPANY
THOMAS CONSTRUCTION, INC.
THERMO-SHIELD OF AMERICA (ARIZONA), INC.
THERMO-SHIELD OF AMERICA (MICHIGAN), INC.
THERMO-SHIELD COMPANY, LLC
THERMO-SHIELD OF AMERICA(WISCONSIN), LLC
THERMOVIEW ADVERTISING GROUP, INC.
By: _________________________________
Charles L. Smith, President
151
Exhibit 10.130
WARRANT
To Purchase Common Stock of
THERMOVIEW INDUSTRIES, INC.
Warrant No. W-__
No. of Shares of Common Stock: _____
152
THIS WARRANT AND THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR ANY APPLICABLE
STATE SECURITIES LAWS, AND MAY NOT BE TRANSFERRED IN VIOLATION OF THE ACT OR
SUCH LAWS, THE RULES AND REGULATIONS UNDER THE ACT OR THE PROVISIONS OF THIS
WARRANT.
No. of Shares of Common Stock: _____ Warrant No.W-__
WARRANT
To Purchase Common Stock of
THERMOVIEW INDUSTRIES, INC.
THIS IS TO CERTIFY THAT ____________________________________or registered
assigns, is entitled, at any time prior to the Expiration Date (as hereinafter
defined), to purchase from THERMOVIEW INDUSTRIES, INC., a Delaware corporation
("Company"), 680,000 shares of Common Stock (as hereinafter defined and subject
to adjustment as provided herein), in whole or in part, including fractional
parts, at a purchase price of $0.28 per share, all on the terms and conditions
and pursuant to the provisions hereinafter set forth.
I. DEFINITIONS
As used in this Warrant, the following terms have the respective meanings set
forth below:
"Additional Shares of Common Stock" shall mean all shares of Common Stock issued
by Company after the date hereof, other than Warrant Stock.
"Business Day" shall mean any day that is not a Saturday or Sunday or a day on
which banks are required or permitted to be closed in the State of New York.
"Commission" shall mean the Securities and Exchange Commission or any other
federal agency then administering the Securities Act and other federal
securities laws.
"Common Stock" shall mean (except where the context otherwise indicates) the
common stock, $.001 par value per share, of Company as constituted on the date
hereof, and any capital stock into which such Common Stock may thereafter be
changed, and shall also include (i) capital stock of Company of any other class
(regardless of how denominated) issued to the holders of shares of Common Stock
upon any reclassification thereof which is also not preferred as to dividends or
assets over any other class of stock of Company and which is not subject to
redemption and (ii) shares of common stock of any successor or acquiring
corporation (as defined in Section 4.8) received by or distributed to the
holders of Common Stock of Company in the circumstances contemplated by Section
4.8.
"Convertible Securities" shall mean evidences of indebtedness, shares of stock
or other securities which are convertible into or exchangeable, with or without
payment of additional consideration in cash or property, for Additional Shares
153
of Common Stock, either immediately or upon the occurrence of a specified date
or a specified event.
"Current Market Price" shall mean, in respect of any share of Common Stock on
any date herein specified the average of the daily market prices for 30
consecutive Business Days commencing 45 days before such date. The daily market
price for each such Business Day shall be (i) the last sale price on such day on
the principal stock exchange or NASDAQ Stock Market ("NASDAQ") on which such
Common Stock is then listed or admitted to trading, (ii) if no sale takes place
on such day on any such exchange or NASDAQ the average of the last reported
closing bid and asked prices on such day as officially quoted on any such
exchange or NASDAQ, (iii) if the Common Stock is not then listed or admitted to
trading on any stock exchange or NASDAQ, the average of the last reported
closing bid and asked prices on such day in the over-the-counter market, as
furnished by the National Association of Securities Dealers Automatic Quotation
System or the National Quotation Bureau, Inc., (iv) if neither such corporation
at the time is engaged in the business of reporting such prices, as furnished by
any similar firm then engaged in such business or (v) if there is no such firm,
as furnished by any member of the NASD selected mutually by the Majority Holders
and Company or, if they cannot agree upon such selection, as selected by two
such members of the NASD, one of which shall be selected by the Majority Holders
and one of which shall be selected by Company.
"Current Warrant Price" shall mean, in respect of a share of Common Stock at any
date herein specified, the price at which a share of Common Stock may be
purchased pursuant to this Warrant on such date.
"date hereof" shall mean June 20, 2003.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as amended, or
any similar federal statute, and the rules and regulations of the Commission
thereunder, all as the same shall be in effect from time to time.
"Exercise Period" shall mean the period during which this Warrant is exercisable
pursuant to Section 2.1.
"Expiration Date" shall mean March 22, 2013.
"Fully Diluted Outstanding" shall mean, when used with reference to Common
Stock, at any date as of which the number of shares thereof is to be determined,
all shares of Common Stock Outstanding at such date and all shares of Common
Stock issuable in respect of this Warrant and other options or warrants to
purchase, or securities convertible into, shares of Common Stock outstanding on
such date which would be deemed outstanding in accordance with GAAP for purposes
of determining book value or net income per share.
"GAAP" shall mean generally accepted accounting principles in the United States
of America as from time to time in effect.
"GE Capital" shall mean GE Capital Equity Investments, Inc., a Delaware
corporation.
"Holder" shall mean the Person in whose name the Warrant set forth herein is
registered on the books of Company maintained for such purpose.
154
"Loan Agreement" shall mean that certain Loan Agreement, dated as of August 31,
1998, among PNC Bank, National Association, and Company and each of its
subsidiaries, as amended from time to time.
"Majority Holders" shall mean the holders of Warrants exercisable for in excess
of 50% of the aggregate number of shares of Common Stock then purchasable upon
exercise of all Warrants, whether or not then exercisable.
"NASD" shall mean the National Association of Securities Dealers, Inc., or any
successor corporation thereto.
"Note" shall mean any of (i) the Note (as defined in the Securities Purchase
Agreement) and (ii) any Note (as defined in the Loan Agreement).
"Other Property" shall have the meaning set forth in Section 4.8.
"Outstanding" shall mean, when used with reference to Common Stock, at any date
as of which the number of shares thereof is to be determined, all issued shares
of Common Stock, except shares then owned or held by or for the account of
Company or any subsidiary thereof, and shall include all shares issuable in
respect of outstanding scrip or any certificates representing fractional
interests in shares of Common Stock.
"Permitted Issuances" shall mean (i) the existing issued and outstanding
warrants and stock options for the purchase of shares of Common Stock or
existing series of preferred stock, (ii) the issuance of additional stock
options to Company's employees or directors for the purchase of up to 1,400,000
shares of Common Stock and (iii) the issuance of shares of Common Stock upon
exercise of the warrants and stock options referred to in clauses (i) and (ii)
or upon conversion of presently outstanding preferred stock of Company.
"Person" shall mean any individual, sole proprietorship, partnership, limited
liability company, joint venture, trust, unincorporated organization,
association, corporation, institution, public benefit corporation, entity or
government (whether federal, state, county, city, municipal or otherwise,
including, without limitation, any instrumentality, division, agency, body or
department thereof).
"Restricted Common Stock" shall mean shares of Common Stock which are, or which
upon their issuance on the exercise of this Warrant would be, evidenced by a
certificate bearing the restrictive legend set forth in Section 9.1(a).
"Securities Act" shall mean the Securities Act of 1933, as amended, or any
similar federal statute, and the rules and regulations of the Commission
thereunder, all as the same shall be in effect at the time.
"Securities Purchase Agreement" shall mean the Securities Purchase Agreement
dated July 8, 1999, between Company and GE Capital, as amended from time to
time.
"Transfer" shall mean any disposition of any Warrant or Warrant Stock or of any
interest in either thereof, which would constitute a sale thereof within the
meaning of the Securities Act.
"Transfer Notice" shall have the meaning set forth in Section 9.2.
155
"Warrants" shall mean this Warrant and all warrants issued upon transfer,
division or combination of, or in substitution for, any thereof. All Warrants
shall at all times be identical as to terms and conditions and date, except as
to the number of shares of Common Stock for which they may be exercised.
"Warrant Price" shall mean an amount equal to (i) the number of shares of Common
Stock being purchased upon exercise of this Warrant pursuant to Section 2.1,
multiplied by (ii) the Current Warrant Price as of the date of such exercise.
"Warrant Stock" shall mean the shares of Common Stock purchased by the holders
of the Warrants upon the exercise thereof.
II. EXERCISE OF WARRANT
2.1 Manner of Exercise. From and after the Date hereof and until 5:00 P.M., New
York time, on the Expiration Date, Holder may exercise this Warrant, on any
Business Day, for all or any part of the number of shares of Common Stock
purchasable hereunder.
In order to exercise this Warrant, in whole or in part, Holder shall deliver to
Company at its principal office at 5611 Fern Valley Road, Louisville, Kentucky
40228 or at the office or agency designated by Company pursuant to Section 12,
(i) a written notice of Holder's election to exercise this Warrant, which notice
shall specify the number of shares of Common Stock to be purchased and (ii)
payment of the Warrant Price; provided that promptly following exercise of this
Warrant, Holder shall deliver to Company this Warrant. Such notice shall be
substantially in the form of the subscription form appearing at the end of this
Warrant as Exhibit A, duly executed by Holder or its agent or attorney. Upon
receipt thereof, Company shall, as promptly as practicable, and in any event
within five (5) Business Days thereafter, execute or cause to be executed and
deliver or cause to be delivered to Holder a certificate or certificates
representing the aggregate number of full shares of Common Stock issuable upon
such exercise, together with cash in lieu of any fraction of a share, as
hereinafter provided. The stock certificate or certificates so delivered shall
be, to the extent possible, in such denomination or denominations as such Holder
shall request in the notice and shall be registered in the name of Holder or,
subject to Section 9, such other name as shall be designated in the notice. This
Warrant shall be deemed to have been exercised and such certificate or
certificates shall be deemed to have been issued, and Holder or any other Person
so designated to be named therein shall be deemed to have become a holder of
record of such shares for all purposes, as of the date the notice, together with
the cash or check or checks, is received by Company as described above and all
taxes required to be paid by Holder, if any, pursuant to Section 2.2 prior to
the issuance of such shares have been paid. If this Warrant shall have been
exercised in part, Company shall, at the time of delivery of the certificate or
certificates representing Warrant Stock, deliver to Holder a new Warrant
evidencing the rights of Holder to purchase the unpurchased shares of Common
Stock called for by this Warrant, which new Warrant shall in all other respects
be identical with this Warrant, or, at the request of Holder, appropriate
notation may be made on this Warrant and the same returned to Holder.
Notwithstanding any provision herein to the contrary, Company shall not be
required to register shares in the name of any Person who acquired this Warrant
(or part hereof) or any Warrant Stock otherwise than in accordance with this
Warrant.
156
Payment of the Warrant Price shall be made at the option of the Holder by (i)
certified or official bank check, (ii) transfer of immediately available funds,
(iii) by the surrender of any Note and evidencing the loan made pursuant to the
Securities Purchase Agreement or the Loan Agreement and/or (iv) by the Holder's
surrender to Company of that number of shares of Warrant Stock (or the right to
receive such number of shares) or shares of Common Stock having an aggregate
Current Market Price equal to or greater than the Current Warrant Price for all
shares then being purchased (including those being surrendered) or (iv) any
combination thereof, duly endorsed by or accompanied by appropriate instruments
of transfer duly executed by Holder or by Holder's attorney duly authorized in
writing. For the purposes of making payment of the Warrant Price, any Note shall
have a value equal to 100% of the principal amount thereof plus accrued and
unpaid interest thereon to the date of surrender in respect of payment of the
Warrant Price.
If a Holder surrenders any Note having an aggregate value which exceeds the
aggregate Warrant Price, the portion of such surrendered value equal to the
integral multiple of $500 which is next higher than such aggregate Warrant Price
shall be applied to the payment of the Warrant Price and Company shall pay the
Holder an amount in cash equal to the excess (if any) of such integral multiple
over the Warrant Price. A new Note shall be issued in the principal amount equal
to that portion of such surrendered principal amount not applied to the Warrant
Price and not paid in cash to the Holder. If the Holder surrenders any Note, the
Holder shall specify the portion of the value of such surrendered Note to be
applied toward the Warrant Price.
2.2. Payment of Taxes. All shares of Common Stock issuable upon the
exercise of this Warrant pursuant to the terms hereof shall be validly issued,
fully paid and nonassessable and without any preemptive rights. Company shall
pay all expenses in connection with, and all taxes and other governmental
charges that may be imposed with respect to, the issue or delivery thereof,
unless such tax or charge is imposed by law upon Holder, in which case such
taxes or charges shall be paid by Holder. Company shall not be required,
however, to pay any tax or other charge imposed in connection with any transfer
involved in the issue of any certificate for shares of Common Stock issuable
upon exercise of this Warrant in any name other than that of Holder, and in such
case Company shall not be required to issue or deliver any stock certificate
until such tax or other charge has been paid or it has been established to the
satisfaction of Company that no such tax or other charge is due.
2.3. Fractional Shares. Company shall not be required to issue a fractional
share of Common Stock upon exercise of any Warrant. As to any fraction of a
share which the Holder of one or more Warrants, the rights under which are
exercised in the same transaction, would otherwise be entitled to purchase upon
such exercise, Company shall pay a cash adjustment in respect of such final
fraction in an amount equal to the same fraction of the Current Market Price per
share of Common Stock on the date of exercise, if there is a public market for
the Common Stock, or the fair market value thereof as determined in good faith
by the Board of Directors of Company.
2.4. Continued Validity A holder of shares of Common Stock issued upon the
exercise of this Warrant, in whole or in part (other than a holder who acquires
such shares after the same have been publicly sold pursuant to a Registration
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Statement under the Securities Act or sold pursuant to Rule 144 thereunder),
shall continue to be entitled with respect to such shares to all rights to which
it would have been entitled as Holder under Sections 9, 10 and 18 of this
Warrant. Company will, at the time of each exercise of this Warrant, in whole or
in part, upon the request of the holder of the shares of Common Stock issued
upon such exercise hereof, acknowledge in writing, in form reasonably
satisfactory to such holder, its continuing obligation to afford to such holder
all such rights; provided, however, that if such holder shall fail to make any
such request, such failure shall not affect the continuing obligation of Company
to afford to such holder all such rights.
III. TRANSFER, DIVISION AND COMBINATION
3.1. Transfer. Subject to compliance with Section 9, transfer of this
Warrant and all rights hereunder, in whole or in part, shall be registered on
the books of Company to be maintained for such purpose, upon surrender of this
Warrant at the principal office of Company referred to in Section 2.1 or the
office or agency designated by Company pursuant to Section 12, together with a
written assignment of this Warrant substantially in the form of Exhibit B hereto
duly executed by Holder or its agent or attorney and funds sufficient to pay any
transfer taxes payable upon the making of such transfer. Upon such surrender
and, if required, such payment, Company shall, subject to Section 9, execute and
deliver a new Warrant or Warrants in the name of the assignee or assignees and
in the denomination specified in such instrument of assignment, and shall issue
to the assignor a new Warrant evidencing the portion of this Warrant not so
assigned, and this Warrant shall promptly be cancelled. A Warrant, if properly
assigned in compliance with Section 9, may be exercised by a new Holder for the
purchase of shares of Common Stock without having a new Warrant issued.
3.2. Division and Combination. Subject to Section 9, this Warrant may be
divided or combined with other Warrants upon presentation hereof at the
aforesaid office or agency of Company, together with a written notice specifying
the names and denominations in which new Warrants are to be issued, signed by
Holder or its agent or attorney. Subject to compliance with Section 3.1 and with
Section 9, as to any transfer which may be involved in such division or
combination, Company shall execute and deliver a new Warrant or Warrants in
exchange for the Warrant or Warrants to be divided or combined in accordance
with such notice.
3.3. Expenses. Company shall prepare, issue and deliver at its own expense
(other than transfer taxes) the new Warrant or Warrants under this Section 3.
3.4. Maintenance of Books. Company agrees to maintain, at its aforesaid
office or agency, books for the registration and the registration of transfer of
the Warrants.
IV. ADJUSTMENTS
The number of shares of Common Stock for which this Warrant is exercisable, or
the price at which such shares may be purchased upon exercise of this Warrant,
shall be subject to adjustment from time to time as set forth in this Section 4.
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Company shall give each Holder notice of any event described below which
requires an adjustment pursuant to this Section 4 at the time of such event.
4.1. Stock Dividends, Subdivisions and Combinations. If at any time Company
shall:
(a) take a record of the holders of its Common Stock for the purpose of
entitling them to receive a dividend payable in, or other distribution of,
Additional Shares of Common Stock,
(b) subdivide its outstanding shares of Common Stock into a larger number
of shares of Common Stock, or
(c) combine its outstanding shares of Common Stock into a smaller number of
shares of Common Stock, then (i) the number of shares of Common Stock for which
this Warrant is exercisable immediately after the occurrence of any such event
shall be adjusted to equal the number of shares of Common Stock which a record
holder of the same number of shares of Common Stock for which this Warrant is
exercisable immediately prior to the occurrence of such event would own or be
entitled to receive after the happening of such event, and (ii) the Current
Warrant Price shall be adjusted to equal (A) the Current Warrant Price
multiplied by the number of shares of Common Stock for which this Warrant is
exercisable immediately prior to the adjustment divided by (B) the number of
shares for which this Warrant is exercisable immediately after such adjustment.
4.2. Certain Other Distributions. If at any time Company shall take a
record of the holders of its Common Stock for the purpose of entitling them to
receive any dividend or other distribution of:
(a) cash,
(b) any evidences of its indebtedness, any shares of its stock or any other
securities or property of any nature whatsoever (other than cash, Convertible
Securities or Additional Shares of Common Stock), or
(c) any warrants or other rights to subscribe for or purchase any evidences
of its indebtedness, any shares of its stock or any other securities or property
of any nature whatsoever (other than cash, Convertible Securities or Additional
Shares of Common Stock), then Holder shall be entitled to receive such dividend
or distribution as if Holder had exercised the Warrant. A reclassification of
the Common Stock (other than a change in par value, or from par value to no par
value or from no par value to par value) into shares of Common Stock and shares
of any other class of stock shall be deemed a distribution by Company to the
holders of its Common Stock of such shares of such other class of stock within
the meaning of this Section 4.2 and, if the outstanding shares of Common Stock
shall be changed into a larger or smaller number of shares of Common Stock as a
part of such reclassification, such change shall be deemed a subdivision or
combination, as the case may be, of the outstanding shares of Common Stock
within the meaning of Section 4.1.
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4.3. Issuance of Additional Shares of Common Stock.
(a) If at any time Company shall (except as hereinafter provided) issue or
sell any Additional Shares of Common Stock, other than Permitted Issuances, in
exchange for consideration in an amount per Additional Share of Common Stock
less than the Current Warrant Price at the time the Additional Shares of Common
Stock are issued, then (i) the Current Warrant Price as to the number of shares
for which this Warrant is exercisable prior to such adjustment shall be reduced
to a price determined by dividing (A) an amount equal to the sum of (x) the
number of shares of Common Stock Outstanding immediately prior to such issue or
sale multiplied by the then existing Current Warrant Price, plus (y) the
consideration, if any, received by Company upon such issue or sale, by (B) the
total number of shares of Common Stock Outstanding immediately after such issue
or sale; and (ii) the number of shares of Common Stock for which this Warrant is
exercisable shall be adjusted to equal the product obtained by multiplying the
Current Warrant Price in effect immediately prior to such issue or sale by the
number of shares of Common Stock for which this Warrant is exercisable
immediately prior to such issue or sale and dividing the product thereof by the
Current Warrant Price resulting from the adjustment made pursuant to clause (i)
above.
(b) If at any time Company shall (except as hereinafter provided) issue or
sell any Additional Shares of Common Stock, other than Permitted Issuances, for
consideration in an amount per Additional Share of Common Stock less than the
Current Market Price at a time when there is a public market for the Common
Stock, then (i) the number of shares of Common Stock for which this Warrant is
exercisable shall be adjusted to equal the product obtained by multiplying the
number of shares of Common Stock for which this Warrant is exercisable
immediately prior to such issue or sale by a fraction (A) the numerator of which
shall be the number of shares of Common Stock Outstanding immediately after such
issue or sale, and (B) the denominator of which shall be the number of shares of
Common Stock Outstanding immediately prior to such issue or sale plus the number
of shares which the aggregate offering price of the total number of such
Additional Shares of Common Stock would purchase at the then Current Market
Price; and (ii) the Current Warrant Price as to the number of shares for which
this Warrant is exercisable prior to such adjustment shall be adjusted by
multiplying such Current Warrant Price by a fraction (X) the numerator of which
shall be the number of shares for which this Warrant is exercisable immediately
prior to such issue or sale; and (Y) the denominator of which shall be the
number of shares of Common Stock purchasable immediately after such issue or
sale.
(c) If at any time Company (except as hereinafter provided) shall issue or
sell any Additional Shares of Common Stock, other than Permitted Issuances, in
exchange for consideration in an amount per Additional Shares of Common Stock
which is less than the Current Warrant Price and Current Market Price (as
defined above) at the time the Additional Shares of Common Stock are issued, the
adjustment required under Section 4.3 shall be made in accordance with the
formula in paragraph (a) or (b) above which results in the lower Current Warrant
Price following such adjustment. The provisions of paragraphs (a) and (b) of
this Section 4.3 shall not apply to any issuance of Additional Shares of Common
Stock for which an adjustment is provided under Section 4.1 or 4.2. No
adjustment of the number of shares of Common Stock for which this Warrant shall
be exercisable shall be made under paragraph (a) or (b) of this Section 4.3 upon
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the issuance of any Additional Shares of Common Stock which are issued pursuant
to the exercise of any warrants or other subscription or purchase rights or
pursuant to the exercise of any conversion or exchange rights in any Convertible
Securities, if any such adjustment shall previously have been made upon the
issuance of such warrants or other rights or upon the issuance of such
Convertible Securities (or upon the issuance of any warrant or other rights
therefor) pursuant to Section 4.4 or Section 4.5.
4.4. Issuance of Warrants or Other Rights. If at any time Company shall
take a record of the holders of its Common Stock for the purpose of entitling
them to receive a distribution of, or shall in any manner (whether directly or
by assumption in a merger in which Company is the surviving corporation) issue
or sell, any warrants or other rights to subscribe for or purchase any
Additional Shares of Common Stock or any Convertible Securities, whether or not
the rights to exchange or convert thereunder are immediately exercisable, and
the price per share for which Common Stock is issuable upon the exercise of such
warrants or other rights or upon conversion or exchange of such Convertible
Securities shall be less than the Current Warrant Price or the Current Market
Price, at a time when there is a public market price for the Common Stock, in
effect immediately prior to the time of such issue or sale, then the number of
shares of Common Stock for which this Warrant is exercisable and the Current
Warrant Price shall be adjusted as provided in Section 4.3 on the basis that the
maximum number of Additional Shares of Common Stock issuable pursuant to all
such warrants or other rights or necessary to effect the conversion or exchange
of all such Convertible Securities shall be deemed to have been issued and
outstanding and Company shall be deemed to have received all of the
consideration payable therefor, if any, as of the date of the issuance of such
warrants or other rights. No further adjustments of the Current Warrant Price or
the number of shares of Common Stock for which this Warrant is exercisable and
the Current Warrant Price shall be made upon the actual issue of such Common
Stock or of such Convertible Securities upon exercise of such warrants or other
rights or upon the actual issue of such Common Stock upon such conversion or
exchange of such Convertible Securities.
4.5 Issuance of Convertible Securities. If at any time Company shall take a
record of the holders of its Common Stock for the purpose of entitling them to
receive a distribution of, or shall in any manner (whether directly or by
assumption in a merger in which Company is the surviving corporation) issue or
sell, any Convertible Securities, whether or not the rights to exchange or
convert thereunder are immediately exercisable, and the price per share for
which Common Stock is issuable upon such conversion or exchange shall be less
than the Current Warrant Price or the Current Market Price, at a time when there
is a public market price for the Common Stock, in effect immediately prior to
the time of such issue or sale, then the number of shares of Common Stock for
which this Warrant is exercisable and the Current Warrant Price shall be
adjusted as provided in Section 4.3 on the basis that the maximum number of
Additional Shares of Common Stock necessary to effect the conversion or exchange
of all such Convertible Securities shall be deemed to have been issued and
outstanding and Company shall have received all of the consideration payable
therefore, if any, as of the date of issuance of such Convertible Securities. No
adjustment of the number of shares of Common Stock for which this Warrant is
exercisable and the Current Warrant Price shall be made under this Section 4.5
upon the issuance of any Convertible Securities which are issued pursuant to the
exercise of any warrants or other subscription or purchase rights therefore, if
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any such adjustment shall previously have been made upon the issuance of such
warrants or other rights pursuant to Section 4.4. No further adjustments of the
number of shares of Common Stock for which this Warrant is exercisable and the
Current Warrant Price shall be made upon the actual issue of such Common Stock
upon conversion or exchange of such Convertible Securities and, if any issue or
sale of such Convertible Securities is made upon exercise of any warrant or
other right to subscribe for or to purchase any such Convertible Securities for
which adjustments of the number of shares of Common Stock for which this Warrant
is exercisable and the Current Warrant Price have been or are to be made
pursuant to other provisions of this Section 4, no further adjustments of the
number of shares of Common Stock for which this Warrant is exercisable and the
Current Warrant Price shall be made by reason of such issue or sale.
4.6. Superseding Adjustment. If, at any time after any adjustment of the
number of shares of Common Stock for which this Warrant is exercisable and the
Current Warrant Price shall have been made pursuant to Section 4.4 or Section
4.5 as the result of any issuance of warrants, rights or Convertible Securities,
(a) such warrants or rights, or the right of conversion or exchange in such
other Convertible Securities, shall expire, and all or a portion of such
warrants or rights, or the right of conversion or exchange with respect to all
or a portion of such other Convertible Securities, as the case may be, shall not
have been exercised, or
(b) the consideration per share for which shares of Common Stock are
issuable pursuant to such warrants or rights, or the terms of such other
Convertible Securities, shall be increased solely by virtue of provisions
therein contained for an automatic increase in such consideration per share upon
the occurrence of a specified date or event, then for each outstanding Warrant
such previous adjustment shall be rescinded and annulled and the Additional
Shares of Common Stock which were deemed to have been issued by virtue of the
computation made in connection with the adjustment so rescinded and annulled
shall no longer be deemed to have been issued by virtue of such computation.
Thereupon, a recomputation shall be made of the effect of such rights or options
or other Convertible Securities on the basis of
(c) treating the number of Additional Shares of Common Stock or other
property, if any, theretofore actually issued or issuable pursuant to the
previous exercise of any such warrants or rights or any such right of conversion
or exchange, as having been issued on the date or dates of any such exercise and
for the consideration actually received and receivable therefor, and
(d) treating any such warrants or rights or any such other Convertible
Securities which then remain outstanding as having been granted or issued
immediately after the time of such increase of the consideration per share for
which shares of Common Stock or other property are issuable under such warrants
or rights or other Convertible Securities; whereupon a new adjustment of the
number of shares of Common Stock for which this Warrant is exercisable and the
Current Warrant Price shall be made, which new adjustment shall supersede the
previous adjustment so rescinded and annulled.
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4.7. Other Provisions Applicable to Adjustments under this Section. The
following provisions shall be applicable to the making of adjustments of the
number of shares of Common Stock for which this Warrant is exercisable and the
Current Warrant Price provided for in this Section 4:
(a) Computation of Consideration. To the extent that any Additional Shares
of Common Stock or any Convertible Securities or any warrants or other rights to
subscribe for or purchase any Additional Shares of Common Stock or any
Convertible Securities shall be issued for cash consideration, the consideration
received by Company therefore shall be the amount of the cash received by
Company therefore, or, if such Additional Shares of Common Stock or Convertible
Securities are offered by Company for subscription, the subscription price, or,
if such Additional Shares of Common Stock or Convertible Securities are sold to
underwriters or dealers for public offering without a subscription offering, the
initial public offering price (in any such case subtracting any amounts paid or
receivable for accrued interest or accrued dividends and without taking into
account any compensation, discounts or expenses paid or incurred by Company for
and in the underwriting of, or otherwise in connection with, the issuance
thereof). To the extent that such issuance shall be for a consideration other
than cash, then, except as herein otherwise expressly provided, the amount of
such consideration shall be deemed to be the fair value of such consideration at
the time of such issuance as determined in good faith by the Board of Directors
of Company. In case any Additional Shares of Common Stock or any Convertible
Securities or any warrants or other rights to subscribe for or purchase such
Additional Shares of Common Stock or Convertible Securities shall be issued in
connection with any merger in which Company issues any securities, the amount of
consideration therefore shall be deemed to be the fair value, as determined in
good faith by the Board of Directors of Company, of such portion of the assets
and business of the non-surviving corporation as such Board in good faith shall
determine to be attributable to such Additional Shares of Common Stock,
Convertible Securities, warrants or other rights, as the case may be. The
consideration for any Additional Shares of Common Stock issuable pursuant to any
warrants or other rights to subscribe for or purchase the same shall be the
consideration received by Company for issuing such warrants or other rights plus
the additional consideration payable to Company upon exercise of such warrants
or other rights. The consideration for any Additional Shares of Common Stock
issuable pursuant to the terms of any Convertible Securities shall be the
consideration received by Company for issuing warrants or other rights to
subscribe for or purchase such Convertible Securities, plus the consideration
paid or payable to Company in respect of the subscription for or purchase of
such Convertible Securities, plus the additional consideration, if any, payable
to Company upon the exercise of the right of conversion or exchange in such
Convertible Securities. In case of the issuance at any time of any Additional
Shares of Common Stock or Convertible Securities in payment or satisfaction of
any dividends upon any class of stock other than Common Stock, Company shall be
deemed to have received for such Additional Shares of Common Stock or
Convertible Securities a consideration equal to the amount of such dividend so
paid or satisfied.
(b) When Adjustments to Be Made. The adjustments required by this Section 4
shall be made whenever and as often as any pecified event requiring an
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adjustment shall occur, except that any adjustment of the number of shares of
Common Stock for which this Warrant is exercisable that would otherwise be
required may be postponed (except in the case of a subdivision or combination of
shares of Common Stock, as provided for in Section 4.1) up to, but not beyond
the date of exercise if such adjustment either by itself or with other
adjustments not previously made adds or subtracts less than 1% of the shares of
Common Stock for which this Warrant is exercisable immediately prior to the
making of such adjustment; provided that Company shall promptly provide Holder
with calculations, in reasonable detail, of any such adjustment. Any adjustment
representing a change of less than such minimum amount (except as aforesaid)
which is postponed shall be carried forward and made as soon as such adjustment,
together with other adjustments required by this Section 4 and not previously
made, would result in a minimum adjustment or on the date of exercise. For the
purpose of any adjustment, any specified event shall be deemed to have occurred
at the close of business on the date of its occurrence.
(c) Fractional Interests. In computing adjustments under this Section 4,
fractional interests in Common Stock shall be taken into account to the nearest
1/10th of a share.
(d) When Adjustment Not Required. If Company shall take a record of the
holders of its Common Stock for the purpose of entitling them to receive a
dividend or distribution or subscription or purchase rights and shall,
thereafter and before the distribution to stockholders thereof, legally abandon
its plan to pay or deliver such dividend, distribution, subscription or purchase
rights, then thereafter no adjustment shall be required by reason of the taking
of such record and any such adjustment previously made in respect thereof shall
be rescinded and annulled.
(e) Escrow of Warrant Stock. If after any property becomes distributable
pursuant to this Section 4 by reason of the taking of any record of the holders
of Common Stock, but prior to the occurrence of the event for which such record
is taken, and Holder exercises this Warrant, any Additional Shares of Common
Stock issuable upon exercise by reason of such adjustment shall be deemed the
last shares of Common Stock for which this Warrant is exercised (notwithstanding
any other provision to the contrary herein) and such shares or other property
shall be held in escrow for Holder by Company to be issued to Holder upon and to
the extent that the event actually takes place, upon payment of the then Current
Warrant Price. Notwithstanding any other provision to the contrary herein, if
the event for which such record was taken fails to occur or is rescinded, then
such escrowed shares shall be cancelled by Company and escrowed property
returned.
(f) Challenge to Good Faith Determination. Whenever the Board of Directors
of Company shall be required to make a determination in good faith of the fair
value of any item under this Section 4, such determination may be challenged in
good faith by the Majority Holders, and any dispute shall be resolved by an
investment banking firm of recognized national standing selected by Company and
acceptable to the Majority Holders.
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4.8. Reorganization, Reclassification, Merger, Consolidation or Disposition
of Assets. In case Company shall reorganize its capital, reclassify its capital
stock, consolidate or merge with or into another corporation (where Company is
not the surviving corporation or entity or where there is a change in or
distribution with respect to the Common Stock of Company), or sell, transfer or
otherwise dispose of all or substantially all its property, assets or business
to another corporation or entity and, pursuant to the terms of such
reorganization, reclassification, merger, consolidation or disposition of
assets, shares of common stock of the successor or acquiring corporation or
entity, or any cash, shares of stock or other securities or property of any
nature whatsoever (including warrants or other subscription or purchase rights)
in addition to or in lieu of common stock of the successor or acquiring
corporation ("Other Property"), are to be received by or distributed to the
holders of Common Stock of Company, then each Holder shall have the right
thereafter to receive, upon exercise of such Warrant, the number of shares of
common stock of the successor or acquiring corporation or entity or of Company,
if it is the surviving corporation or entity, and Other Property receivable upon
or as a result of such reorganization, reclassification, merger, consolidation
or disposition of assets by a holder of the number of shares of Common Stock for
which this Warrant is exercisable immediately prior to such event. In case of
any such reorganization, reclassification, merger, consolidation or disposition
of assets, the successor or acquiring corporation or entity (if other than
Company) shall expressly assume the due and punctual observance and performance
of each and every covenant and condition of this Warrant to be performed and
observed by Company and all the obligations and liabilities hereunder, subject
to such modifications as may be deemed appropriate (as determined by resolution
of the Board of Directors of Company) in order to provide for adjustments of
shares of Common Stock for which this Warrant is exercisable which shall be as
nearly equivalent as practicable to the adjustments provided for in this Section
4. For purposes of this Section 4.8, "common stock of the successor or acquiring
corporation or entity" shall include stock of such corporation or entity of any
class which is not preferred as to dividends or assets over any other class of
stock of such corporation and which is not subject to redemption and shall also
include any evidences of indebtedness, shares of stock or other securities which
are convertible into or exchangeable for any such stock, either immediately or
upon the arrival of a specified date or the happening of a specified event and
any warrants or other rights to subscribe for or purchase any such stock. The
foregoing provisions of this Section 4.8 shall similarly apply to successive
reorganizations, reclassifications, mergers, consolidations or dispositions of
assets.
4.9. Certain Limitations. Notwithstanding anything herein to the contrary,
Company agrees not to enter into any transaction which, by reason of any
adjustment hereunder, would cause the Current Warrant Price to be less than the
par value per share of Common Stock.
V. NOTICES TO WARRANT HOLDERS
5.1. Notice of Adjustments. Whenever the number of shares of Common Stock
for which this Warrant is exercisable, or whenever the price at which a share of
such Common Stock may be purchased upon exercise of the Warrants, shall be
adjusted pursuant to Section 4, Company shall forthwith prepare a certificate to
be executed by the chief financial officer of Company setting forth, in
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reasonable detail, the event requiring the adjustment and the method by which
such adjustment was calculated (including a description of the basis on which
the Board of Directors of Company determined the fair value of any evidences of
indebtedness, shares of stock, other securities or property or warrants or other
subscription or purchase rights referred to in Section 4.2 or 4.7(a)),
specifying the number of shares of Common Stock for which this Warrant is
exercisable and (if such adjustment was made pursuant to Section 4.7 or 4.8)
describing the number and kind of any other shares of stock or Other Property
for which this Warrant is exercisable, and any change in the purchase price or
prices thereof, after giving effect to such adjustment or change. Company shall
promptly cause a signed copy of such certificate to be delivered to each Holder
in accordance with Section 18.2. Company shall keep at its office or agency
designated pursuant to Section 12 copies of all such certificates and cause the
same to be available for inspection at said office during normal business hours
by any Holder or any prospective purchaser of a Warrant designated by a Holder
thereof.
5.2. Notice of Corporate Action. If at any time
(a) Company shall take a record of the holders of its Common Stock for the
purpose of entitling them to receive a dividend or other distribution, or any
right to subscribe for or purchase any evidences of its indebtedness, any shares
of stock of any class or any other securities or property, or to receive any
other right, or
(b) there shall be any capital reorganization of Company, any
reclassification or recapitalization of the capital stock of Company or any
consolidation or merger of Company with, or any sale, transfer or other
disposition of all or substantially all the property, assets or business of
Company to, another corporation, or
(c) there shall be a voluntary or involuntary dissolution, liquidation or
winding up of Company;
then, in any one or more of such cases, Company shall give to Holder (i) at
least 30 days' prior written notice (or in the case of an involuntary
dissolution, as soon as practicable) of the date on which a record date shall be
selected for such dividend, distribution or right or for determining rights to
vote in respect of any such reorganization, reclassification, merger,
consolidation, sale, transfer, disposition, dissolution, liquidation or winding
up and (ii) in the case of any such reorganization, reclassification, merger,
consolidation, sale, transfer, disposition, dissolution, liquidation or winding
up, at least 30 days' prior written notice of the date when the same shall take
place. Such notice in accordance with the foregoing clause also shall specify
(i) the date on which any such record is to be taken for the purpose of such
dividend, distribution or right, the date on which the holders of Common Stock
shall be entitled to any such dividend, distribution or right, and the amount
and character thereof, and (ii) the date on which any such reorganization,
reclassification, merger, consolidation, sale, transfer, disposition,
dissolution, liquidation or winding up is to take place and the time, if any
such time is to be fixed, as of which the holders of Common Stock shall be
entitled to exchange their shares of Common Stock for securities or other
property deliverable upon such reorganization, reclassification, merger,
consolidation, sale, transfer, disposition, dissolution, liquidation or winding
up. Each such written notice shall be sufficiently given if addressed to Holder
at the last address of Holder appearing on the books of Company and delivered in
accordance with Section 18.2.
VI. NO IMPAIRMENT
Company shall not by any action, including, without limitation, amending its
certificate of incorporation or through any reorganization, transfer of assets,
consolidation, merger, dissolution, issue or sale of securities or any other
voluntary action, avoid or seek to avoid the observance or performance of any of
the terms of this Warrant, but will at all times in good faith assist in the
carrying out of all such terms and in the taking of all such actions as may be
necessary or appropriate to protect the rights of Holder against impairment.
Without limiting the generality of the foregoing, Company will (a) not increase
the par value of any shares of Common Stock receivable upon the exercise of this
Warrant above the amount payable therefor upon such exercise immediately prior
to such increase in par value, (b) take all such action as may be necessary or
appropriate in order that Company may validly and legally issue fully paid and
nonassessable shares of Common Stock upon the exercise of this Warrant, and (c)
use its best efforts to obtain all such authorizations, exemptions or consents
from any public regulatory body having jurisdiction thereof as may be necessary
to enable Company to perform its obligations under this Warrant. Upon the
request of Holder, Company will at any time during the period this Warrant is
outstanding acknowledge in writing, in form satisfactory to Holder, the
continuing validity of this Warrant and the obligations of Company hereunder.
VII. RESERVATION AND AUTHORIZATION OF COMMON STOCK; REGISTRATION WITH OR
APPROVAL OF ANY GOVERNMENTAL AUTHORITY
From and after the date hereof, Company shall at all times reserve and keep
available for issue upon the exercise of Warrants such number of its authorized
but unissued shares of Common Stock as will be sufficient to permit the exercise
in full of all outstanding Warrants. All shares of Common Stock which shall be
so issuable, when issued upon exercise of any Warrant and payment therefore in
accordance with the terms of such Warrant, shall be duly and validly issued and
fully paid and non-assessable, and not subject to preemptive rights.
Before taking any action which would cause an adjustment reducing the Current
Warrant Price below the then par value, if any, of the shares of Common Stock
issuable upon exercise of the Warrants, Company shall take any corporate action
which may be necessary in order that Company may validly and legally issue fully
paid and non-assessable shares of such Common Stock at such adjusted Current
Warrant Price.
Before taking any action which would result in an adjustment in the number of
shares of Common Stock for which this Warrant is exercisable or in the Current
Warrant Price, Company shall obtain all such authorizations or exemptions
thereof, or consents thereto, as may be necessary from any public regulatory
body or bodies having jurisdiction thereof.
If any shares of Common Stock required to be reserved for issuance upon exercise
of Warrants require registration or qualification with any governmental
authority or other governmental approval or filing under any federal or state
167
law (otherwise than as provided in Section 9) before such shares may be so
issued, Company will in good faith and as expeditiously as possible and at its
expense endeavor to cause such shares to be duly registered.
VIII. TAKING OF RECORD; STOCK AND WARRANT TRANSFER BOOKS
In the case of all dividends or other distributions by Company to the holders of
its Common Stock with respect to which any provision of Section 4 refers to the
taking of a record of such holders, Company will in each such case take such a
record and will take such record as of the close of business on a Business Day.
Company will not at any time, except upon dissolution, liquidation or winding up
of Company, close its stock transfer books or Warrant transfer books so as to
result in preventing or delaying the exercise or transfer of any Warrant.
IX. RESTRICTIONS ON TRANSFERABILITY
The Warrants and the Warrant Stock shall not be transferred, hypothecated or
assigned before satisfaction of the conditions specified in this Section 9 and
in no case in violation of applicable provisions of the Securities Act. Holder,
by acceptance of this Warrant, agrees to be bound by the provisions of this
Section 9.
9.1. Restrictive Legend.
(a) Except as otherwise provided in this Section 9, each certificate for
Warrant Stock initially issued upon the exercise of this Warrant, and each
certificate for Warrant Stock issued to any subsequent transferee of any such
certificate, shall be stamped or otherwise imprinted with a legend in
substantially the following form:
"The shares represented by this certificate have not been registered
under the Securities Act of 1933, as amended, or any applicable state
securities laws, and are subject to the conditions specified in a certain
Warrant dated June 30, 2003, originally issued by THERMOVIEW INDUSTRIES,
INC. No transfer of the shares represented by this certificate shall be
valid or effective until such conditions have been fulfilled. A copy of the
form of said Warrant is on file with the Secretary of THERMOVIEW
INDUSTRIES, INC. The holder of this certificate, by acceptance of this
certificate, agrees to be bound by the provisions of such Warrant."
(b) Except as otherwise provided in this Section 9, each Warrant shall be
stamped or otherwise imprinted with a legend in substantially the following
form:
"This Warrant and the securities represented hereby have not been
registered under the Securities Act of 1933, as amended (the "Act"), or any
applicable state securities laws, and may not be transferred in violation
of the Act or such laws, the rules and regulations under the Act or the
provisions of this Warrant."
168
9.2. Registration Rights The Warrants and the Warrant Stock issuable
pursuant to this Warrant shall constitute "Warrant Stock" under and as described
in the Warrant to purchase 1,666,028 Shares of Common Stock of the Company dated
as of July 8, 1999, as such Warrant may be amended, modified, supplemented or
restated from time to time, and shall have all of the rights and benefits
described in Sections 9.2 through 9.7 therein; provided, however, that Company
shall not be required to effect any registration of Warrant Stock issued or
issuable upon exercise of this Warrant until the earlier to occur of (i)
December 31, 2002 and (ii) the date on which Company shall again be eligible to
file a registration statement on Form S-3 (or other comparable short form) under
the Securities Act.
9.3. Termination of Restrictions. Notwithstanding the foregoing provisions
of Section 9, the restrictions imposed by this Section upon the transferability
of the Warrants, the Warrant Stock and the Restricted Common Stock (or Common
Stock issuable upon the exercise of the Warrants) and the legend requirements of
Section 9.1 shall terminate as to any particular Warrant or share of Warrant
Stock or Restricted Common Stock (or Common Stock issuable upon the exercise of
the Warrants) (i) when and so long as such security shall have been effectively
registered under the Securities Act and disposed of pursuant thereto or (ii)
when Company shall have received an opinion of counsel reasonably satisfactory
to it that such shares may be transferred without registration thereof under the
Securities Act. Whenever the restrictions imposed by Section 9 shall terminate
as to this Warrant, as hereinabove provided, the Holder hereof shall be entitled
to receive from Company, at the expense of Company, a new Warrant bearing the
following legend in place of the restrictive legend set forth hereon:
"THE RESTRICTIONS ON TRANSFERABILITY OF THE WITHIN WARRANT
CONTAINED IN SECTION 9 HEREOF TERMINATED ON __________, AND ARE OF NO
FURTHER FORCE AND EFFECT."
All Warrants issued upon registration of transfer, division or combination of,
or in substitution for, any Warrant or Warrants entitled to bear such legend
shall have a similar legend endorsed thereon. Whenever the restrictions imposed
by this Section shall terminate as to any share of Restricted Common Stock, as
hereinabove provided, the holder thereof shall be entitled to receive from
Company, at Company's expense, a new certificate representing such Common Stock
not bearing the restrictive legend set forth in Section 9.1(a).
9.4. Listing on Securities Exchange. If Company shall list any shares of
Common Stock on any securities exchange, it will, at its expense, list thereon,
maintain and, when necessary, increase such listing of, all shares of Common
Stock issued or, to the extent permissible under the applicable securities
exchange rules, issuable upon the exercise of this Warrant so long as any shares
of Common Stock shall be so listed during any such Exercise Period.
9.5. Certain Limitations on Registration Rights. Notwithstanding the other
provisions of Section 9:
169
(i) Company shall not be obligated to register the Warrant Stock
of any holder if, in the opinion of counsel to Company reasonably
satisfactory to the holder and its counsel (or, if the holder has
engaged an investment banking firm, to such investment banking firm
and its counsel), the sale or other disposition of such holder's
Warrant Stock, in the manner proposed by such holder (or by such
investment banking firm), may be effected without registering such
Warrant Stock under the Securities Act; and
(ii) Company shall not be obligated to register the Warrant Stock
of any holder pursuant to Section 9.3, if Company has had a
registration statement, under which such holder had a right to have
its Warrant Stock included pursuant to Sections 9.3 or 9.4, declared
effective within six months prior to the date of the request pursuant
to Section 9.3.
9.6. Selection of Managing Underwriters. The managing underwriter or
underwriters for any offering of Warrant Stock to be registered pursuant to
Section 9.3 shall be selected by the holders of a majority of the shares being
so registered (other than any shares being registered pursuant to Section 9.4)
and shall be reasonably acceptable to Company.
X. SUPPLYING INFORMATION
Company shall cooperate with each Holder of a Warrant and each holder of
Restricted Common Stock in supplying such information as may be reasonably
necessary for such holder to complete and file any information reporting forms
presently or hereafter required by the Commission as a condition to the
availability of an exemption from the Securities Act for the sale of any Warrant
or Restricted Common Stock.
XI. LOSS OR MUTILATION
Upon receipt by Company from any Holder of evidence reasonably satisfactory to
it of the ownership of and the loss, theft, destruction or mutilation of this
Warrant and indemnity reasonably satisfactory to it (it being understood that
the written agreement of GE Capital shall be sufficient indemnity), and in case
of mutilation upon surrender and cancellation hereof, Company will execute and
deliver in lieu hereof a new Warrant of like tenor to such Holder; provided in
the case of mutilation, no indemnity shall be required if this Warrant in
identifiable form is surrendered to Company for cancellation.
XII. OFFICE OF COMPANY
As long as any of the Warrants remain outstanding, Company shall maintain an
office or agency (which may be the principal executive offices of Company) where
the Warrants may be presented for exercise, registration of transfer, division
or combination as provided in this Warrant.
XIII. FINANCIAL AND BUSINESS INFORMATION
13.1. Quarterly Information. Company will deliver to each Holder, as soon
as practicable after the end of each of the first three quarters of Company, and
in any event within 45 days thereafter, one copy of an unaudited consolidated
170
balance sheet of Company and its subsidiaries as at the close of such quarter,
and the related unaudited consolidated statements of income and cash flows of
Company for such quarter and, in the case of the second and third quarters, for
the portion of the fiscal year ending with such quarter, setting forth for each
quarter in comparative form the figures for the corresponding periods in the
previous fiscal year. Such financial statements shall be prepared by Company in
accordance with GAAP and accompanied by the certification of Company's chief
executive officer or chief financial officer that such financial statements are
complete and correct and present fairly the consolidated financial position,
results of operations and cash flows of Company and its subsidiaries as at the
end of such quarter and for such year-to-date period, as the case may be.
13.2. Annual Information. Company will deliver to each Holder as soon as
practicable after the end of each fiscal year of Company, and in any event
within 90 days thereafter, one copy of:
(i) an audited consolidated balance sheet of Company and its
subsidiaries as at the end of such year, and
(ii) audited consolidated statements of income, retained earnings
and cash flows of Company and its subsidiaries for such year;
setting forth in each case in comparative form the figures for the corresponding
periods in the previous fiscal year, all prepared in accordance with GAAP, and
which audited financial statements shall be accompanied by (i) an opinion
thereon of the independent certified public accountants regularly retained by
Company, or any other "Big 5" accounting firm (or any successor thereto)
selected by Company and (ii) a report of such independent certified public
accountants confirming any adjustment made pursuant to Section 4 during such
year.
13.3. Filings. Company will file on or before the required date all regular
or periodic reports (pursuant to the Exchange Act) with the Commission and will
deliver to Holder promptly upon their becoming available one copy of each
report, notice or proxy statement sent by Company to its stockholders generally,
and of each regular or periodic report (pursuant to the Exchange Act) and any
Registration Statement, prospectus or written communication (other than
transmittal letters) (pursuant to the Securities Act), filed by Company with (i)
the Commission or (ii) any securities exchange on which shares of Common Stock
are listed.
XIV. [INTENTIONALLY OMITTED].
XV. [INTENTIONALLY OMITTED].
XVI. LIMITATION OF LIABILITY
No provision hereof, in the absence of affirmative action by Holder to purchase
shares of Common Stock, and no enumeration herein of the rights or privileges of
Holder hereof, shall give rise to any liability of such Holder for the purchase
price of any Common Stock or as a stockholder of Company, whether such liability
is asserted by Company or by creditors of Company. XVII. [INTENTIONALLY
OMITTED].
171
XVII. [INTENTIONALLY OMITTED].
XVIII. MISCELLANEOUS
18.1. Nonwaiver and Expenses. No course of dealing or any delay or failure
to exercise any right hereunder on the part of Holder shall operate as a waiver
of such right or otherwise prejudice Holder's rights, powers or remedies. If
Company fails to make, when due, any payments provided for hereunder, or fails
to comply with any other provision of this Warrant, Company shall pay to Holder
such amounts as shall be sufficient to cover any costs and expenses including,
but not limited to, reasonable attorneys' fees, including those of appellate
proceedings, incurred by Holder in collecting any amounts due pursuant hereto or
in otherwise enforcing any of its rights, powers or remedies hereunder.
18.2. Notice Generally. Any notice, demand, request, consent, approval,
declaration, delivery or other communication hereunder to be made pursuant to
the provisions of this Warrant shall be sufficiently given or made if in writing
and either delivered in person with receipt acknowledged or sent by registered
or certified mail, return receipt requested, postage prepaid, or by telecopy and
confirmed by telecopy answerback, addressed as follows:
(a) If to any Holder or holder of Warrant Stock, at its last
known address appearing on the books of Company maintained for such
purpose.
(b) If to Company at
ThermoView Industries, Inc.
5611 Fern Valley Road
Louisville, Kentucky 40228
Attention: Charles L. Smith, Chief Executive Officer
Telecopy Number: (502) 968-2020
with a copy to:
Stites & Harbison
400 West Market Street
Suite 1800
Louisville, Kentucky 40202
Attention: Alex P. Herrington, Jr. (Mike)
Telecopy Number: (502) 587-6391
or at such other address as may be substituted by notice given as herein
provided. The giving of any notice required hereunder may be waived in writing
by the party entitled to receive such notice. Every notice, demand, request,
consent, approval, declaration, delivery or other communication hereunder shall
be deemed to have been duly given or served on the date on which personally
delivered, with receipt acknowledged, telecopied and confirmed by telecopy
answerback, or three (3) Business Days after the same shall have been deposited
in the United States mail. Failure or delay in delivering copies of any notice,
demand, request, approval, declaration, delivery or other communication to the
person designated above to receive a copy shall in no way adversely affect the
effectiveness of such notice, demand, request, approval, declaration, delivery
or other communication.
172
18.3. Indemnification. Company agrees to indemnify and hold harmless Holder
from and against any liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, claims, costs, attorneys' fees, expenses and
disbursements of any kind which may be imposed upon, incurred by or asserted
against Holder in any manner relating to or arising out of (i) Holder's exercise
of this Warrant and/or ownership of any shares of Warrant Stock issued in
consequence thereof or (ii) any litigation to which Holder is made a party in
its capacity as a stockholder of Company; provided, however, that Company will
not be liable hereunder to the extent that any liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, claims, costs, attorneys' fees,
expenses or disbursements are found in a final non-appealable judgment by a
court to have resulted from Holder's gross negligence, bad faith or willful
misconduct in its capacity as a stockholder or warrantholder of Company.
18.4. Remedies. Each holder of Warrant and Warrant Stock, in addition to
being entitled to exercise all rights granted by law, including recovery of
damages, will be entitled to specific performance of its rights under Section 9
of this Warrant. Company agrees that monetary damages would not be adequate
compensation for any loss incurred by reason of a breach by it of the provisions
of Section 9 of this Warrant and hereby agrees to waive the defense in any
action for specific performance that a remedy at law would be adequate.
18.5. Successors and Assigns. Subject to the provisions of Sections 3.1 and
9, this Warrant and the rights evidenced hereby shall inure to the benefit of
and be binding upon the successors of Company and the successors and assigns of
Holder. The provisions of this Warrant are intended to be for the benefit of all
Holders from time to time of this Warrant and, with respect to Section 9 hereof,
holders of Warrant Stock, and shall be enforceable by any such Holder or holder
of Warrant Stock.
18.6. Amendment. This Warrant and all other Warrants may be modified or
amended or the provisions hereof waived with the written consent of Company and
the Majority Holders, provided that no such Warrant may be modified or amended
to reduce the number of shares of Common Stock for which such Warrant is
exercisable or to increase the price at which such shares may be purchased upon
exercise of such Warrant (before giving effect to any adjustment as provided
therein) without the prior written consent of the Holder thereof.
18.7. Severability. Wherever possible, each provision of this Warrant shall
be interpreted in such manner as to be effective and valid under applicable law,
but if any provision of this Warrant shall be prohibited by or invalid under
applicable law, such provision shall be ineffective to the extent of such
prohibition or invalidity, without invalidating the remainder of such provision
or the remaining provisions of this Warrant.
18.8. Headings. The headings used in this Warrant are for the convenience
of reference only and shall not, for any purpose, be deemed a part of this
Warrant.
18.9. Governing Law. This Warrant shall be governed by the laws of the
State of New York, without regard to the provisions thereof relating to conflict
of laws.
173
18.10. Waiver of Jury Trial. Company hereby waives all right to trial by
jury in any action or proceeding to enforce or defend any rights under this
Warrant.
IN WITNESS WHEREOF, Company has caused this Warrant to be duly executed by its
duly authorized officer.
Dated: June 30, 2003
THERMOVIEW INDUSTRIES, INC.
By:___________________________
Name:
Title:
174
EXHIBIT A
SUBSCRIPTION FORM
[To be executed only upon exercise of Warrant]
The undersigned registered owner of this Warrant irrevocably exercises this
Warrant for the purchase of ______ Shares of Common Stock of THERMOVIEW
INDUSTRIES, INC. and herewith makes payment therefore, all at the price and on
the terms and conditions specified in this Warrant and requests that
certificates for the shares of Common Stock hereby purchased (and any securities
or other property issuable upon such exercise) be issued in the name of and
delivered to _____________ whose address is _________________ and, if such
shares of Common Stock shall not include all of the shares of Common Stock
issuable as provided in this Warrant, that a new Warrant of like tenor and date
for the balance of the shares of Common Stock issuable hereunder be delivered to
the undersigned.
-------------------------------
(Name of Registered Owner)
-------------------------------
(Signature of Registered Owner)
-------------------------------
(Street Address)
-------------------------------
(City) (State) (Zip Code)
NOTICE: The signature on this subscription must correspond with the name as
written upon the face of the within Warrant in every particular, without
alteration or enlargement or any change whatsoever.
175
EXHIBIT B
ASSIGNMENT FORM
FOR VALUE RECEIVED the undersigned registered owner of this Warrant hereby
sells, assigns and transfers unto the Assignee named below all of the rights of
the undersigned under this Warrant, with respect to the number of shares of
Common Stock set forth below:
Name and Address of Assignee No. of Shares of
Common Stock
and does hereby irrevocably constitute and appoint __________________________
attorney-in-fact to register such transfer on the books of THERMOVIEW
INDUSTRIES, INC. maintained for the purpose, with full power of substitution in
the premises.
Dated:__________________ Print Name:
-----------------------------
Signature:
-----------------------------
Witness:
---------------------------------
NOTICE: The signature on this subscription must correspond with the name as
written upon the face of the within Warrant in every particular,
without alteration or enlargement or any change whatsoever.
1. DEFINITIONS...........................................................2
2. EXERCISE OF WARRANT...................................................5
2.1. Manner of Exercise...........................................5
2.2. Payment of Taxes.............................................6
2.3. Fractional Shares............................................6
2.4. Continued Validity...........................................6
3. TRANSFER, DIVISION AND COMBINATION....................................7
3.1. Transfer.....................................................7
3.2. Division and Combination.....................................7
3.3. Expenses.....................................................7
3.4. Maintenance of Books.........................................7
4. ADJUSTMENTS...........................................................7
4.1. Stock Dividends, Subdivisions and Combinations...............7
4.2. Certain Other Distributions..................................8
4.3. Issuance of Additional Shares of Common Stock................8
176
4.4. Issuance of Warrants or Other Rights.........................9
4.5. Issuance of Convertible Securities..........................10
4.6. Superseding Adjustment......................................10
4.7. Other Provisions Applicable to Adjustments
under this Section....................................11
4.8. Reorganization, Reclassification, Merger,
Consolidation or Disposition of Assets................13
4.9. Certain Limitations.........................................13
5. NOTICES TO WARRANT HOLDERS...........................................14
5.1. Notice of Adjustments.......................................14
5.2. Notice of Corporate Action..................................14
6. NO IMPAIRMENT........................................................15
7. RESERVATION AND AUTHORIZATION OF COMMON STOCK; REGISTRATION
WITH OR APPROVAL OF ANY GOVERNMENTAL AUTHORITY........15
8. TAKING OF RECORD; STOCK AND WARRANT TRANSFER BOOKS...................16
9. RESTRICTIONS ON TRANSFERABILITY......................................16
9.1. Restrictive Legend..........................................16
9.2. Registration Rights.........................................16
9.3. Termination of Restrictions.................................17
9.4. Listing on Securities Exchange..............................17
9.5. Certain Limitations on Registration Rights..................17
9.6. Selection of Managing Underwriters..........................17
10. SUPPLYING INFORMATION................................................18
11. LOSS OR MUTILATION...................................................18
12. OFFICE OF COMPANY....................................................18
13. FINANCIAL AND BUSINESS INFORMATION...................................18
13.1. Quarterly Information.......................................18
13.2. Annual Information..........................................18
13.3. Filings.....................................................19
14. [INTENTIONALLY OMITTED]..............................................19
15. [INTENTIONALLY OMITTED]..............................................19
16. LIMITATION OF LIABILITY..............................................19
17. [INTENTIONALLY OMITTED]..............................................19
18. MISCELLANEOUS........................................................19
18.1. Nonwaiver and Expenses......................................19
18.2. Notice Generally............................................19
18.3. Indemnification.............................................20
18.4. Remedies....................................................20
177
18.5. Successors and Assigns......................................20
18.6. Amendment...................................................21
18.7. Severability................................................21
18.8. Headings....................................................21
18.9. Governing Law...............................................21
18.10. Waiver of Jury Trial..........................................21
EXHIBIT A SUBSCRIPTION FORM....................................................2
EXHIBIT B ASSIGNMENT FORM......................................................3
178
Exhibit 10.131
SECOND AMENDMENT TO NOTES
THIS SECOND AMENDMENT TO NOTES (the "Amendment") is made and entered into
as of the 30th day of June, 2003, by and between [I] THERMOVIEW INDUSTRIES,
INC., a Delaware corporation ("ThermoView") , [ii] AMERICAN HOME DEVELOPERS CO.,
INC., a California corporation ("American Home"), [iii] FIVE STAR BUILDERS,
INC., a California corporation ("Five Star"), [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] PRECISION WINDOW
MFG., INC., a Missouri corporation ("Precision"), [viii] PRIMAX WINDOW CO., a
Kentucky corporation ("Primax"), [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 ("Thermal Line"), [xii]
THERMOVIEW OF MISSOURI, INC., a Missouri corporation ("ThermoView-Missouri"),
[xiii] THERMO-TILT WINDOW COMPANY, a Delaware corporation ("Thermo-Tilt"),
[xiv]THERMO-SHIELD OF AMERICA (ARIZONA), INC., an Arizona corporation
("Thermo-Shield Arizona"), [xv] THERMO-SHIELD OF AMERICA (MICHIGAN), INC., a
Michigan corporation ("Thermo-Shield Michigan"), [xvi] THERMO-SHIELD COMPANY,
LLC, an Illinois limited liability company ("Thermo-Shield Company"), [xvii]
THERMO-SHIELD OF AMERICA (WISCONSIN), LLC, a Wisconsin limited liability company
("Thermo-Shield Wisconsin"), [xviii] THERMOVIEW ADVERTISING GROUP, INC., a
Delaware corporation ("ThermoView Advertising") and [xix] THOMAS CONSTRUCTION,
INC., a Missouri corporation ("Thomas Construction"), (ThermoView, American
Home, Five Star, Key Home, Key Home Mortgage, Leingang Siding, Precision,
Primax, Rolox, TD Windows, Thermal Line, ThermoView-Missouri, Thermo-Tilt,
Thermo-Shield Arizona, Thermo-Shield Michigan, Thermo-Shield Company,
Thermo-Shield Wisconsin, ThermoView Advertising and Thomas Construction
individually are referred to in this Agreement as a "Maker" and collectively as
the "Makers") having an address in care of ThermoView Industries, Inc., 5611
Fern Valley Road, Louisville, Kentucky 40228, and Stephen A. Hoffmann
(hereinafter referred to as "Lender"), having an address at 2631 Bushwood Rd.,
Anchorage, Kentucky 40223.
PRELIMINARY STATEMENTS
ThermoView and Makers have previously issued to Lender two promissory notes
dated March 22, 2001 in the principal amounts of $900,000.00 and $300,000.00
(the "Notes"), both of which are due and payable on June 30, 2003 (the "Maturity
Date"). The Lender has previously provided to ThermoView and Makers an oral
agreement to amend the Maturity Date of the Notes from December 31, 2004 to
September 30, 2006.
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. Amendment to Maturity Date
(a) Lender hereby consents to amend the Maturity Date of the Notes from
December 31, 2004 to September 30, 2006.
179
(b) Except as specifically amended above in connection herewith, each Note
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 the Lenders under any of the Notes or constitute a waiver of any
provision of any of the Notes.
2. Miscellaneous.
(a) Entire Agreement. This Amendment embodies the entire agreement and
understanding between the parties hereto with respect to the Maturity Date of
the Notes 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 Amendment shall affect, or be used
to interpret, change or restrict, the express terms and provisions of this
Amendment.
(b) Modifications and Amendments. The terms and provisions of this
Amendment may be modified or amended only by written agreement executed by all
parties hereto.
(c) Benefit. This Amendment 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 Amendment 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
Amendment.
(d) Governing Law. This Amendment 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
Amendment 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 Amendment shall
nevertheless remain in full force and effect.
(f) Headings and Captions. The headings and captions of the various
subdivisions of this Amendment 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 Amendment 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 and the Makers have caused this Amendment to
be executed by its duly authorized officer and Lender has executed this
180
Amendment all as of the date first above written.
MAKERS:
THERMOVIEW INDUSTRIES, INC.
AMERICAN HOME DEVELOPERS CO., INC.
FIVE STAR BUILDERS, INC.
KEY HOME CREDIT, INC.
KEY HOME MORTGAGE, INC.
LEINGANG SIDING AND WINDOW, INC.
PRIMAX WINDOW CO.
PRECISION WINDOW MFG., INC.
ROLOX, INC.
TD WINDOWS, INC.
THERMAL LINE WINDOWS, INC.
THERMOVIEW OF MISSOURI, INC.
THERMO-TILT WINDOW COMPANY
THOMAS CONSTRUCTION, INC.
THERMO-SHIELD OF AMERICA (ARIZONA), INC.
THERMO-SHIELD OF AMERICA (MICHIGAN), INC.
THERMO-SHIELD COMPANY, LLC
THERMO-SHIELD OF AMERICA(WISCONSIN), LLC
THERMOVIEW ADVERTISING GROUP, INC.
By: ___________________________
Charles L. Smith, President
LENDER:
_______________________________
Stephen A. Hoffmann
181
Exhibit 10.132
June 27, 2003
13397 Lakefront Drive, LLC
13397 Lakefront Drive
Earth City, Missouri 63045
Attention: Rodney H. Thomas
RE: Lease dated January 1, 1999 (the "Lease") between 13397 Lakefront Drive,
LLC ("Landlord") and Thomas Construction, Inc. ("Tenant")
This letter is from Tenant to Landlord with respect to the referenced Lease. All
terms used in the Lease shall have the same meaning in this letter unless
redefined.
Under the terms of the Lease the Initial Lease Term will expire on December 31,
2003. Pursuant to the terms of the Lease the Tenant may exercise its right to
renew the Lease. Tenant hereby exercises such right and gives this irrevocable
written notice to Landlord that the Renewal Term, commencing as of January 1,
2004 and continuing for a three year period expiring December 31, 2006, has been
exercised and may be relied upon by Landlord, subject to the following
conditions:
a) Amendment to triple net lease agreement signed and dated April 14, 2000
between Thomas Construction, Inc., and 13397 Lakefront Drive, LLC is
voided.
b) The refinancing agreement between G.E.Capital Equity Investments, Inc., is
signed and concluded no later than June 30, 2003. c) All of ThermoView's
preferred shareholders consent by June 30, 2003 to revisions in the
preferred stock agreements as outlined in the draft agreements.
d) Thomas Construction Inc. and Rodney H. Thomas agree to the exchange of two
predictive dialers owned by Rodney H. Thomas for the phone system (and
related hardware, software, and peripheral equipment) currently owned by
Thomas Construction and used at the premises subject to this lease. Thomas
Construction will retain the use of the phone system at the premises during
the term of this lease, including any extensions or renewals thereof.
Please execute a duplicate original of this letter evidencing your receipt of
this written notice exercising the renewal option for the first Renewal Term of
the Lease. The written signature of the Tenant, which we have mutually agreed
may be by facsimile, and acceptance by Landlord on the duplicate copy of this
letter (by facsimile, mailing or both) is agreed to satisfy the notice
requirements of the Lease. In any event, the original of this letter containing
the Tenant's signature will be promptly forwarded to Landlord even though the
timely giving of this notice by facsimile as aforesaid will bind the parties.
Regards,
Thomas Construction, Inc.,
By:
--------------------------------------------------
Charles L. Smith, President
ACCEPTED:
13397 Lakefront Drive, LLC,
By:
--------------------------------------------------
Rodney H. Thomas, Member
182
CERTIFICATION Exhibit 31.1
I, Charles L. Smith, certify that:
1) I have reviewed this quarterly report on Form 10-Q of ThermoView
Industries, Inc.;
2) Based on my knowledge, this report does not contain any untrue statement of
a material fact or omit to state a material fact necessary to make the
statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this
report;
3) Based on my knowledge, the financial statements and other financial
information included in this report, fairly present in all material
respects the financial condition, results of operations and cash flows of
the registrant as of, and for, the periods presented in this report;
4) The registrant's other certifying officer(s) and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined
in Exchange Act Rules 13a-15(e) and 15d-15e) for the registrant and have:
a) Designed such disclosure controls and procedures, or caused such
disclosure controls and procedures to be designed under our
supervision, to ensure that material information relating to the
registrant, including its consolidated subsidiaries, is made known to
us by others within those entities, particularly during the period in
which this report is being prepared;
b) Evaluated the effectiveness of the registrant's disclosure controls
and procedures; and presented in this report our conclusions about the
effectiveness of the disclosure controls and procedures as of the end
of the period covered by this report based on such evaluation; and
c) Disclosed in this report any change in the registrant's internal
control over financial reporting that occurred during the registrant's
most recent fiscal quarter (the registrant's fourth fiscal quarter in
the case of an annual report) that has materially affected, or is
reasonably likely to materially affect, the registrant's internal
control over financial reporting; and
5) The registrant's other certifying officers and I have disclosed, based on
our most recent evaluation of internal control over financial reporting, to
the registrant's auditors and the audit committee of the registrant's board
of directors (or persons performing the equivalent function):
a) All significant deficiencies and material weaknesses in the design or
operation of internal controls over financial reporting which are
reasonably likely to adversely affect the registrant's ability to
record, process, summarize and report financial information; and
b) Any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal
control over financial reporting.
Signature and Title: /s/ Charles L. Smith Date: August 14, 2003
--------------------------------- ---------------------
Chief Executive Officer
A signed original of this written statement required by Section 906 of the
Sarbanes-Oxley Act of 2002 has been provided to ThermoView Industries, Inc. and
will be retained by ThermoView Industries, Inc. and furnished to the Securities
and Exchange Commission or its staff upon request.
184
CERTIFICATION Exhibit 31.2
I, James J. TerBeest, certify that:
1) I have reviewed this quarterly report on Form 10-Q of ThermoView
Industries, Inc.;
2) Based on my knowledge, this report does not contain any untrue statement of
a material fact or omit to state a material fact necessary to make the
statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this
report;
3) Based on my knowledge, the financial statements and other financial
information included in this report, fairly present in all material
respects the financial condition, results of operations and cash flows of
the registrant as of, and for, the periods presented in this report;
4) The registrant's other certifying officer(s) and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined
in Exchange Act Rules 13a-15(e) and 15d-15e) for the registrant and have:
a) Designed such disclosure controls and procedures, or caused such
disclosure controls and procedures to be designed under our
supervision, to ensure that material information relating to the
registrant, including its consolidated subsidiaries, is made known to
us by others within those entities, particularly during the period in
which this report is being prepared;
b) Evaluated the effectiveness of the registrant's disclosure controls
and procedures; and presented in this report our conclusions about the
effectiveness of the disclosure controls and procedures as of the end
of the period covered by this report based on such evaluation; and
c) Disclosed in this report any change in the registrant's internal
control over financial reporting that occurred during the registrant's
most recent fiscal quarter (the registrant's fourth fiscal quarter in
the case of an annual report) that has materially affected, or is
reasonably likely to materially affect, the registrant's internal
control over financial reporting; and
5) The registrant's other certifying officers and I have disclosed, based on
our most recent evaluation of internal control over financial reporting, to
the registrant's auditors and the audit committee of the registrant's board
of directors (or persons performing the equivalent function):
a) All significant deficiencies and material weaknesses in the design or
operation of internal controls over financial reporting which are
reasonably likely to adversely affect the registrant's ability to
record, process, summarize and report financial information; and
b) Any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal
control over financial reporting.
Signature and Title: /s/ James J. TerBeest Date: August 14, 2003
------------------------ ----------------------
Chief Financial Officer
A signed original of this written statement required by Section 906 of the
Sarbanes-Oxley Act of 2002 has been provided to ThermoView Industries, Inc. and
will be retained by ThermoView Industries, Inc. and furnished to the Securities
and Exchange Commission or its staff upon request.
184
Exhibit 32.1
Charles L. Smith and James J. TerBeest, being the Chief Executive Officer
and Chief Financial Officer, respectively, of ThermoView Industries, Inc.,
hereby certify as of this 14th day of August, 2003, that the Form 10-Q for the
Quarter ended June 30, 2003, fully complies with the requirements of Section
13(a) or 15(d) of the Securities Exchange Act of 1934 and that the information
contained in the Form 10-Q fairly presents, in all material respects, the
financial condition and results of operations of ThermoView Industries, Inc.
By: /s/ Charles L. Smith
- -----------------------------------------
Charles L. Smith,
Chief Executive Officer
By: /s/ James J. TerBeest
- -----------------------------------------
James J. TerBeest,
Chief Financial Officer
185
Exhibit . 99.1
NEWS RELEASE
FOR IMMEDIATE RELEASE
ThermoView Industries Inc. Reports Income for Second Quarter 2003 After
Recognizing Gains from Debt and Preferred Stock Restructuring
LOUISVILLE, Ky. (August 13, 2003) - ThermoView Industries Inc. (AMEX: THV),
which designs, manufactures and markets home improvements under the brand name
"THV: America's Home Improvement Company," today reported financial results for
the second quarter and six months ending June 30, 2003.
Second quarter 2003 revenues were $18.1 million, compared to year-ago
quarterly revenues of $23.8 million. The net income attributable to common
stockholders was $795,000, or 9 cents per basic share and 8 cents per diluted
share, for the second quarter of 2003 after a $796,000 unusual gain related to
converting $1 million of debt to 680,000 common stock warrants and a $796,000
benefit from redeeming $1 million of the Series D preferred stock for another
680,000 common stock warrants. That compares to a net income related to common
stockholders of $579,000, or 6 cents per share for the second quarter of 2002.
Revenues for the first six months of 2003 were $34.3 million, compared to
revenues of $44.5 million for the first six months of 2002. The net loss
attributable to common stockholders was $963,000, or 10 cents per basic and
diluted share, for the first six months of 2003 after a $796,000 unusual gain
related to converting $1 million of debt to 680,000 common stock warrants and a
$796,000 benefit from redeeming $1 million of the Series D preferred stock for
another 680,000 common stock warrants. That compares to a net loss attributable
to common stockholders for the first six months of 2002 of $30.4 million, or
$3.39 per share, including a non-cash charge for writing off impaired goodwill.
Without the $30 million ($3.35 per share) charge for impaired goodwill, the net
loss attributable to common stockholders for the first six months of 2002 was
$361,000, or 4 cents per share.
"ThermoView's second quarter reflects the accomplishment of one of our
major long term goals in the restructure of our debt, tempered by a period of
disappointing sales," said Charles L. Smith, CEO and President of ThermoView.
"The benefits of our debt restructure should allow us to strengthen our bottom
line, as we expect sales to improve in what is historically our best selling
season of the year," said Smith.
Smith continued "We are aware, as management will outline in our second
quarter 10-Q, if our third quarter performance does not significantly improve,
ThermoView could encounter financial loan covenant issues and cash shortages. I
am confident that we are taking the necessary steps to improve our performance,"
said Smith.
ThermoView's August 13 conference call and webcast
As previously announced, ThermoView will hold a webcast today at 2:00 p.m.
EDT to allow securities analysts and shareholders the opportunity to hear
management discuss the company's quarterly results. Live audio of the conference
186
call can be accessed from http://www.thv.com, or
http://www.vcall.com/CEPage.asp?ID=84355. First time listeners should visit
www.vcall.com in advance to download and install any necessary audio software.
About ThermoView Industries, Inc.
ThermoView is a national company that designs, manufactures, markets and
installs high-quality replacement windows and doors as part of a full-service
array of home improvements for residential homeowners. ThermoView markets home
improvements in 16 Midwest and Western states under well-known regional home
center brands that include Thomas, Primax, Rolox, Leingang and ThermoView. All
of these brands are consolidating under a national brand, "THV, America's Home
Improvement Company." ThermoView's common stock is listed on the American Stock
Exchange under the ticker symbol "THV." Additional information is available at
http://www.thv.com.
Safe harbor statement
Statements in this news release that are not descriptions of historical facts
are forward-looking statements that are subject to risks and uncertainties.
Words such as "expect," "intends," "believes," "plans," "anticipates" and
"likely" also identify forward-looking statements. All forward-looking
statements are based on current facts and analyses. Actual results may differ
materially from those currently anticipated due to a number of factors
including, but not limited to our history of operating losses, anticipated
future losses, competition, future capital needs, the need for market
acceptance, dependence upon third parties, disruption of vital infrastructure,
general economic downturn and intellectual property rights. All forward-looking
statements are made pursuant to the Securities Litigation Reform Act of 1995.
Additional information on factors that may affect the business and financial
results of the Company can be found in filings of the Company with the
Securities and Exchange Commission.
Contacts:
James J. TerBeest, Chief Financial Officer, ThermoView Industries, Inc.,
502-968-2020.
* * *
187
ThermoView Industries, Inc.
Condensed Consolidated Statements of Operations
(Unaudited)
For the three months ended For the six months ended
June 30, June 30,
------------------------ -------------------------
2002 2003 2002 2003
---- ---- ---- ----
Revenues $23,822,546 $18,112,855 $44,479,808 $34,305,868
Cost of revenues earned 11,658,576 9,244,077 21,981,255 17,700,298
----------- ----------- ----------- ------------
Gross profit 12,163,970 8,868,778 22,498,553 16,605,570
----------- ----------- ----------- ------------
Selling, general and
administrative expenses 10,479,852 8,487,674 20,626,896 16,883,855
Unusual credit-gain on
conversion of debt to
warrants - (796,000) (796,000)
Depreciation expense 253,747 199,642 527,129 413,743
Amortization expense 33,890 5,065 8,537 10,129
----------- ----------- ----------- ------------
Income from operations 1,396,481 972,397 1,275,991 93,843
Equity in earnings (loss)
of joint venture 19,096 (20,017) 32,280 (46,224)
Interest expense (657,146) (706,366) (1,320,446) (1,338,496)
Interest income 13,059 6,965 28,738 16,729
----------- ----------- ----------- ------------
Income (loss) before
income taxes 771,490 252,979 16,563 (1,274,148)
Income tax expense (benefit) (746) 12,653 (7,166) 12,229
----------- ----------- ----------- ------------
Income (loss) before
cumulative effect of an
accounting change 772,236 240,326 23,729 (1,286,377)
Cumulative effect of an
accounting change--charge
for impairment of goodwill - - (30,000,000) -
----------- ----------- ----------- ------------
Net income (loss) 772,236 240,326 (29,976,271) (1,286,377)
Less non-cash Series D and
E preferred stock
dividends (193,486) (240,997) (384,854) (472,494)
Plus benefit of Series D
preferred stock redemption - 796,000 - 796,000
----------- ----------- ----------- ------------
(193,486) 555,003 (384,854) 323,506
----------- ----------- ----------- ------------
Net income (loss)
attributable to common
stockholders $ 578,750 $ 795,329 $(30,361,125) $ (962,871)
=========== =========== =========== ============
Basic income (loss) per common share:
Income (loss) attributable
to common stockholders $ 0.06 $ 0.09 $ (0.04) $ (0.10)
Cumulative effect of an
accounting change - - (3.35) -
----------- ----------- ----------- ------------
Net income (loss)
attributable to common
stockholders $ 0.06 $ 0.09 $ (3.39) $ (0.10)
=========== =========== =========== ============
Diluted income (loss) per common share:
Income (loss) attributable
to common stockholders $ 0.06 $ 0.08 $ (0.04) $ (0.10)
Cumulative effect of an
accounting change - - (3.35) -
----------- ----------- ----------- ------------
Net income (loss)
attributable to common
stockholders $ 0.06 $ 0.08 $ (3.39) $ (0.10)
=========== =========== =========== ============
Weighted average shares
outstanding-basic 9,130,375 9,190,059 8,946,634 9,190,059
Weighted average shares
outstanding-diluted 10,137,000 9,718,672 8,946,634 9,190,059