EXHIBIT 10.4
AGREEMENT
---------
THIS AGREEMENT is made and entered into as of the 14th day
of April, 2000, by and between THERMOVIEW INDUSTRIES, INC., a
Delaware corporation ("ThermoView") and XXXXX X. XXXXXXXX
("Xxxxxxxx").
PRELIMINARY STATEMENTS
----------------------
As of August 14, 1998, ThermoView acquired all of the
outstanding shares of capital stock of Ice, Inc., a North Dakota
corporation and Blizzard Enterprises, Inc., a Minnesota
corporation, pursuant to a certain Stock Purchase Agreement (the
"Stock Agreement") among ThermoView, Xxxxxx X. Xxxx and Xxxxxxxx.
Under the terms of the Stock Agreement, Xxxxxxxx is entitled
to receive post-closing earn-out payments (the "Earn-out
Payments"), if earned, on December 31, 1998, 1999 and 2000. As
of December 31, 1999, ThermoView owed Xxxxxxxx payments of cash
and ThermoView common stock, par value $.001 (the "Common
Stock"), equal to approximately $484,588 (the "Year Two Earn-out
Payment") under the terms of the Stock Agreement pursuant to the
earn-out provision.
ThermoView has issued 60,574 shares of Common Stock to
Xxxxxxxx in full satisfaction of the Common Stock portion of the
Year Two Earn-out Payment.
ThermoView desires to make the remainder of the Year Two
Earn-out Payment in ThermoView 12% Cumulative Series D Preferred
Stock with a stated value of $5.00 (the "Preferred Stock") in
lieu of cash and Xxxxxxxx desires to accept the Preferred Stock
in consideration of the remainder of the Year Two Earn-out
Payment. The terms and conditions of the Preferred Stock are
further described in the Certificate of Designation, attached
hereto as EXHIBIT A and incorporated herein by reference (the
"Certificate").
NOW, THEREFORE, in consideration of these preliminary
statements and the mutual promises contained herein, and for
other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereby
agree as follows:
1. STOCK ISSUANCE. In exchange for any and all amounts
due to Xxxxxxxx by ThermoView pursuant to the Year Two Earn-out
Payment under the Stock Agreement, ThermoView hereby transfers to
Xxxxxxxx and Xxxxxxxx hereby agrees to accept 49,735 shares of
Preferred Stock. The delivery of the Preferred Stock to Xxxxxxxx
shall occur with fifteen (15) business days of the execution of
this Agreement.
2. FULL SATISFACTION. Xxxxxxxx hereby acknowledges that
his receipt of the 60,574 shares of Common Stock and the 49,735
shares of Preferred Stock is in full and complete satisfaction of
the obligation owed to Xxxxxxxx by ThermoView for the Year Two
Earn-out Payment.
3. NO AMENDMENT OR TERMINATION. Nothing contained in this
Agreement shall amend or terminate any obligations of ThermoView
to make any and all other Earn-out Payments, if earned, under the
terms of the Stock Agreement.
4. XXXXXXXX'X REPRESENTATIONS AND WARRANTIES. Xxxxxxxx
hereby represents and warrants to ThermoView as follows:
(a) INVESTMENT INTENT. Xxxxxxxx is acquiring the
Preferred Stock for his own account and not with a present
view to or for distributing or reselling the Preferred Stock
in violation of the Securities Act of 1933, as amended (the
"Securities Act"). Xxxxxxxx agrees that such shares of
Preferred Stock may not be sold, transferred, offered for
sale, pledged, hypothecated or otherwise disposed of without
registration under the Securities Act, except pursuant to an
exemption available under the Securities Act. Xxxxxxxx will
not sell, offer to sell or solicit offers to buy any of the
shares of Preferred Stock in violation of the Securities Act
or any securities act of any state. Xxxxxxxx understands
that the shares of Preferred Stock have not been registered
under federal or any state securities laws.
(b) XXXXXXXX'X STATUS. Xxxxxxxx is (i) an "accredited
investor" as defined in Rule 501 of the Securities Act and
(ii) has such knowledge, sophistication and experience in
business and financial matters so as to be capable of
evaluating the merits and risks of the prospective
investment in the Preferred Stock.
(c) RELIANCE. Xxxxxxxx understands and acknowledges
that (i) the Preferred Stock is being offered and sold to
Xxxxxxxx without registration under the Securities Act in a
private placement that is exempt from the registration
provisions of the Securities Act under Section 4(2) of the
Securities Act or Regulation D promulgated thereunder or
other applicable federal and state securities laws and (ii)
the availability of such exemptions depends in part on, and
ThermoView will rely upon the accuracy and truthfulness of,
the representations set forth in this Section 4 and Xxxxxxxx
consents to such reliance.
(d) INFORMATION. Xxxxxxxx and his advisors, if any,
have been furnished with all materials relating to the
business, finances and operations of ThermoView and
materials relating to the offer and sale of the Preferred
Stock, including the Certificate, which have been requested
by Xxxxxxxx or his advisors. Xxxxxxxx and his advisors, if
any, have been afforded the opportunity to ask questions of
ThermoView. Xxxxxxxx acknowledges receipt of the ThermoView
prospectus dated December 2, 1999 (the "Prospectus") and
that ThermoView will deliver a copy of its most recent Form
10-K filing with the Securities and Exchange Commission as
soon as it becomes publicly available. Xxxxxxxx understands
that his investment in the Preferred Stock involves a
significant degree of risk, some of which risks associated
with the investment in the Preferred Stock are set forth in
EXHIBIT B, attached hereto and incorporated herein by
reference, and in the Prospectus.
2
5. MISCELLANEOUS.
(a) NOTICES. All notices, requests, consents and
other communications hereunder shall be in writing, shall be
addressed to the receiving party's address set forth below
or to such other address as a party may designate by notice
hereunder, and shall be either (i) delivered by hand,
(ii) made by telex, telecopy or facsimile transmission,
(iii) sent by overnight courier, or (iv) sent by certified
mail, return receipt requested, postage prepaid.
If to ThermoView:
ThermoView Industries, Inc.
0000 Xxxx Xxxx
Xxxxxxxxxx, Xxxxxxxx 00000
Attn: Xxxxxx X. Xxxxxxxx, President
Fax No. (000) 000-0000
With a copy to:
Xxxxxx & Xxxxxxxx
000 Xxxx Xxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxxxx, Xxxxxxxx 00000
Attn: Xxxx X. Xxxxxxxxxx, Xx., Esq.
Fax No. (000) 000-0000
If to Xxxxxxxx:
Xxxxx X. Xxxxxxxx
0000 Xxxxx Xxxxx, Xxx 000
Xxxxxx, Xxxxx Xxxxxx 00000
Fax No.
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All notices, requests, consents and other communications
hereunder shall be deemed to have been received either
(i) if by hand, at the time of the delivery thereof to the
receiving party at the address of such party set forth
above, (ii) if made by telecopy or facsimile transmission,
at the time that receipt thereof has been acknowledged by
electronic confirmation or otherwise, (iii) if sent by
overnight courier, on the next business day following the
day such notice is delivered to the courier service, or
(iv) if sent by certified mail, on the fifth business day
following the day such mailing is made.
(b) ENTIRE AGREEMENT. This Agreement embodies the
entire agreement and understanding between the parties
hereto with respect to the Year Two Earn-out Payment and
supersedes all prior oral or written agreements and
understandings relating to the Year Two Earn-out Payment.
No statement, representation, warranty, covenant or
agreement of any kind not expressly set forth in this
Agreement shall affect, or be used to interpret, change or
restrict, the express terms and provisions of this
Agreement.
3
(c) MODIFICATIONS AND AMENDMENTS. The terms and
provisions of this Agreement may be modified or amended only
by written agreement executed by all parties hereto.
(d) BENEFIT. This Agreement shall be binding on the
parties hereto and shall inure to the benefit of the parties
hereto and the respective successors and permitted assigns
of each party hereto. Nothing in this Agreement shall be
construed to create any rights or obligations except among
the parties hereto, and no person or entity shall be
regarded as a third-party beneficiary of this Agreement.
(e) GOVERNING LAW. This Agreement and the rights and
obligations of the parties hereunder shall be construed in
accordance with and governed by the law of the Commonwealth
of Kentucky, without giving effect to the conflict of law
principles thereof.
(f) SEVERABILITY. In the event that any court of
competent jurisdiction shall determine that any provision,
or any portion thereof, contained in this Agreement shall be
unreasonable or unenforceable in any respect, then such
provision shall be deemed limited to the extent that such
court deems it reasonable and enforceable, and as so limited
shall remain in full force and effect. In the event that
such court shall deem any such provision, or portion
thereof, wholly unenforceable, the remaining provisions of
this Agreement shall nevertheless remain in full force and
effect.
(g) HEADINGS AND CAPTIONS. The headings and captions
of the various subdivisions of this Agreement are for
convenience of reference only and shall in no way modify, or
affect the meaning or construction of any of the terms or
provisions hereof.
(h) COUNTERPARTS. This Agreement may be executed in
one or more counterparts, and by different parties hereto on
separate counterparts, each of which shall be deemed an
original, but all of which together shall constitute one and
the same instrument.
4
IN WITNESS WHEREOF, ThermoView has caused this Agreement to
be executed by its duly authorized officer and Xxxxxxxx has
executed this Agreement all as of the date first above written.
THERMOVIEW INDUSTRIES, INC.
By: /s/ Xxxxxx X. Xxxxxxxx
--------------------------------
Title: President
/s/ Xxxxx X. Xxxxxxxx
-----------------------------------
XXXXX X. XXXXXXXX
5
EXHIBIT A
CERTIFICATE OF DESIGNATION
CERTIFICATE OF THE VOTING POWERS, DESIGNATIONS, PREFERENCES
AND RELATIVE, PARTICIPATING, OPTIONAL OR OTHER
SPECIAL RIGHTS, AND QUALIFICATIONS, LIMITATIONS OR
RESTRICTIONS THEREOF, OF 12% SERIES D CUMULATIVE
PREFERRED STOCK
OF
THERMOVIEW INDUSTRIES, INC.
PURSUANT TO SECTION 151 OF THE GENERAL CORPORATION LAW
OF THE STATE OF DELAWARE
Pursuant to Section 141(f) of the General Corporation Law of
the State of Delaware (the "DGCL"), the Board of Directors of
ThermoView Industries, Inc., a Delaware corporation (the
"Company"), hereby unanimously consents to, adopts and ratifies
the following resolution:
RESOLVED, that pursuant to the authority expressly
granted to and vested in the Board of Directors of the
Company by the provisions of Section 4.2 of Article IV
of the Restated Certificate of Incorporation of the
Company (the "Restated Certificate of Incorporation"),
and Section 151(g) of the DGCL, such Board of Directors
hereby creates, from the 50,000,000 authorized shares
of Preferred Stock, par value $.001 per share (the
"Preferred Stock"), of the Company authorized to be
issued pursuant to the Restated Certificate of
Incorporation, a series of Preferred Stock, and hereby
fixes by this certificate of designation (this
"Certificate of Designation") the voting powers,
designations, preferences and relative, participating,
optional or other special rights, and qualifications,
limitations or restrictions thereof, of the shares of
such series as follows:
The series of Preferred Stock hereby
established shall consist of 1,500,000 shares
designated as "12% Cumulative Series D
Preferred Stock" (hereinafter called the
"Series D Preferred Stock"), which shall have
a stated value of $5.00 per share. The
relative rights, preferences and limitations
of such series shall be as follows:
12% CUMULATIVE SERIES D PREFERRED STOCK
(1) RANKING. The Series D Preferred Stock will, with
respect to payment of dividends and amounts upon liquidation,
dissolution or winding up, rank (i) senior to the Common Stock of
the Company, $.001 par value (the "Common Stock") and to shares
of all other series of Preferred Stock issued by the Company the
terms of which specifically provide that the capital stock of
such series rank junior to such Series D Preferred Stock with
respect to dividend rights or distributions upon dissolution of
the Company ("Junior Stock"); (ii) on a parity with (a) all
shares of the Company's 6.6% Cumulative Convertible Series C
Preferred Stock and (b) the shares of all capital stock issued by
the Company whether or not the dividend rates, dividend payment
dates, or redemption or liquidation prices per share thereof
shall be different from those of the Series D Preferred Stock, if
the holders of stock of such class or series shall be entitled by
the terms thereof to the receipt of dividends or of amounts
distributable upon liquidation, dissolution or winding up, as the
case may be, in proportion to their respective dividend rates or
liquidation prices, without preference or priority of one over
the other as between the holders of such stock and the holders of
shares of Series D Preferred Stock (collectively (a) and (b)
being "Parity Stock"); and (iii) junior to all capital stock
issued by the Company the terms of which specifically provide
that the shares rank senior to the Series D Preferred Stock with
respect to dividends and distributions upon dissolution of the
Company ("Senior Stock").
(2) DIVIDENDS.
(a) Holders of shares of Series D Preferred Stock will
be entitled to receive, when, as and if declared by the Board of
Directors of the Company and only with the consent of PNC Bank,
N.A. or any successor lender thereto, out of funds of the Company
legally available for payment, subject to the prior and superior
rights of Senior Stock, but pari passu with Parity Stock, and in
preference to Junior Stock, cumulative cash dividends at the rate
per annum of $0.60 per share of Series D Preferred Stock.
Dividends on the Series D Preferred Stock will be payable
quarterly in arrears on the last calendar day of April, July,
October and January of each year, commencing July 31, 2000 (and
in the case of any accumulated and unpaid dividends not paid on
the corresponding dividend payment date, at such additional times
and for such interim periods, if any, as determined by the Board
of Directors). Each such dividend will be payable to holders of
record as they appear on the stock records of the Company at the
close of business on such record dates, not more than 60 days nor
less than 10 days preceding the payment dates thereof, as shall
be fixed by the Board of Directors of the Company. Dividends
will accrue from the date of the original issuance of the Series
D Preferred Stock. Dividends will be cumulative from such date,
whether or not in any dividend period or periods there shall be
funds of the Company legally available for the payment of such
dividends. Accumulations of dividends on shares of Series D
Preferred Stock will not bear interest. Dividends payable on the
Series D Preferred Stock for any period greater or less than a
full dividend period will be computed on the basis of actual
days. Dividends payable on the Series D Preferred Stock for each
full dividend period will be computed by dividing the annual
dividend rate by four.
(b) Except as provided in the next sentence, no
dividend will be declared or paid on any Parity Stock unless full
cumulative dividends have been declared and paid or are
contemporaneously declared and funds sufficient for payment set
aside on the Series D Preferred Stock for all prior dividend
periods. If accrued dividends on the Series D Preferred Stock
for all prior periods have not been paid in full, then any
dividends declared on the Series D Preferred Stock for any
dividend period and on any Parity Stock will be declared ratably
in proportion to accumulated and unpaid dividends on the Series D
Preferred Stock and such Parity Stock.
(c) So long as the shares of the Series D Preferred
Stock shall be outstanding, unless (i) full cumulative dividends
shall have been paid or declared and set apart for payment on all
outstanding shares of the Series D Preferred Stock and any Parity
Stock, (ii) sufficient funds have been paid or set apart for the
payment of the dividend for the current dividend period with
respect to the Series D Preferred Stock and any Parity Stock and
(iii) the Company is not in default or in arrears with respect to
the mandatory or optional redemption or mandatory repurchase or
other mandatory retirement of, or with respect to any sinking or
other analogous fund for, the Series D Preferred Stock or any
Parity Stock, the Company may not declare any dividends on any
Junior Stock, or make any payment on account of, or set apart
money for, the purchase, redemption or other retirement of, or
for a sinking or other analogous fund for, any shares of Junior
Stock or make any distribution in respect thereof, whether in
cash or property or in obligations or stock of the Company, other
than (x) Junior Stock which is neither convertible into, nor
exchangeable or exercisable for, any securities of the Company
other than Junior Stock, or (y) Common Stock acquired in
connection with the cashless exercise of options under employee
incentive or benefit plans of the Company or any subsidiary or
any other redemption or purchase or other acquisition of Common
Stock made in the ordinary course of business, which has been
approved by the Board of Directors of the Company, for the
purpose of any employee incentive or benefit plan of the Company.
The limitations in this paragraph do not restrict the Company's
ability to take the actions in this paragraph with respect to any
Parity Stock. As used in this subparagraph (c), the term
"dividend" with respect to Junior Stock does not include
dividends payable solely in shares of Junior Stock on Junior
Stock, or in options, warrants on rights to holders of Junior
Stock to subscribe for or purchase any Junior Stock.
(3) REDEMPTION.
(a) The shares of Series D Preferred Stock will be
redeemable at the option of the Company in whole or in part, for
cash or for such number of shares of Common Stock as equals the
Liquidation Preference (defined hereinafter in paragraph (4)) of
the Series D Preferred Stock to be redeemed (without regard to
accumulated and unpaid dividends) as of the opening of business
on the date set for such redemption. In order to exercise its
redemption option, the Company must notify the holders of record
of its Series D Preferred Stock in writing (the "Conditions
Satisfaction Notice") prior to the opening of business on the
second trading day after the conditions in the preceding
sentences have, from time to time, been satisfied.
(b) Notice of redemption (the "Redemption Notice")
will be given by mail to the holders of the Series D Preferred
Stock not less than 30 nor more than 60 days prior to the date
selected by the Company to redeem the Series D Preferred Stock.
The Redemption Notice shall be deemed to have been given when
deposited in the United States mail, first-class mail, postage
prepaid, whether or not such notice is actually received. The
Company's right to exercise its redemption option will not be
affected by changes in the closing price of the
Common Stock following such 30-day period. If fewer than all of
the shares of Series D Preferred Stock are to be redeemed, the
shares to be redeemed shall be selected by lot or pro rata or in
some other equitable manner determined by the Board of Directors
of the Company; provided, however, that the Company shall not be
required to effect the redemption in any manner that results in
additional fractional shares being outstanding. If full
cumulative dividends on the outstanding shares of Series D
Preferred Stock shall not have been paid or declared and set
apart for payment for all regular dividend payment dates to and
including the last dividend payment date prior to the date fixed
for redemption, the Corporation shall not call for redemption any
shares of Series D Preferred Stock unless all such shares then
outstanding are called for simultaneous redemption.
(c) On the redemption date, the Company must pay, in
cash, on each share of Series D Preferred Stock to be redeemed
any accumulated and unpaid dividends through the redemption date.
In the case of a redemption date falling after a dividend payment
record date and prior to the related payment date, the holders of
the Series D Preferred Stock at the close of business on such
record date will be entitled to receive the dividend payable on
such shares on the corresponding dividend payment date,
notwithstanding the redemption of such shares following such
dividend payment record date. Except as provided for in the
preceding sentence, no payment or allowance will be made for
accumulated and unpaid dividends on any shares of Series D
Preferred Stock called for redemption or on the shares of Common
Stock issuable upon such redemption.
(d) On and after the date fixed for redemption,
provided that the Company has made available at the office of its
registrar and transfer agent a sufficient number of shares of
Common Stock and an amount of cash to effect the redemption,
dividends will cease to accrue on the Series D Preferred Stock
called for redemption (except that, in the case of a redemption
date after a dividend payment record date and prior to the
related dividend payment date, holders of Series D Preferred
Stock on the dividend payment record date will be entitled on
such dividend payment date to receive the dividend payable on
such shares), such shares shall be cancelled and shall no longer
be deemed to be outstanding and all rights of the holders of such
shares of Series D Preferred Stock shall cease except the right
to receive the shares of Common Stock upon such redemption and
any cash payable upon such redemption, without interest from the
date of such redemption. Such cancelled shares shall be restored
to the status of authorized but unissued shares of Preferred
Stock, without designation as to series, and may thereafter be
issued but not as shares of Series D Preferred Stock. At the
close of business on the redemption date upon surrender in
accordance with such notice of the certificates representing any
such shares (properly endorsed or assigned for transfer, if the
Board of Directors of the Company shall so require and the notice
shall so state), each holder of Series D Preferred Stock (unless
the Company defaults in the delivery of the shares of Common
Stock or cash) will be, without any further action, deemed a
holder of the number of shares of Common Stock for which such
Series D Preferred Stock is redeemable.
(e) Fractional shares of Common Stock are not to be
issued upon redemption of the Series D Preferred Stock, but, in
lieu thereof, the Company will pay a cash adjustment based on the
current market price of the Common Stock on the day prior to the
redemption date. If fewer than all the shares represented by any
such certificate are redeemed, a new certificate shall be issued
representing the unredeemed shares of Series D Preferred Stock
without cost to the holder thereof.
(f) Any shares or cash set aside by the Company
pursuant to subparagraph (e) and unclaimed at the end of three
years from the date fixed for redemption shall revert to the
Company.
(g) Subject to applicable law and the limitation on
purchases when dividends on the Series D Preferred Stock are in
arrears, the Company may, at any time and from time to time,
purchase any shares of the Series D Preferred Stock by tender or
by private agreement.
(4) LIQUIDATION PREFERENCE.
(a) The holders of shares of Series D Preferred Stock
will be entitled to receive in the event of any liquidation,
dissolution or winding up of the Company, whether voluntary or
involuntary, $5.00 per share of Series D Preferred Stock (the
"Liquidation Preference"), plus an amount per share of Series D
Preferred Stock equal to all dividends (whether or not earned or
declared) accumulated and unpaid thereon to the date of final
distribution to such holders, and no more. If, upon any
liquidation, dissolution or winding up of the Company, the assets
of the Company, or proceeds thereof, distributable among the
holders of the Series D Preferred Stock are insufficient to pay
in full the liquidation preference with respect to the Series D
Preferred Stock and any other Parity Stock, then such assets, or
the proceeds thereof, will be distributed among the holders of
Series D Preferred Stock and any such Parity Stock ratably in
accordance with the respective amounts which would be payable on
such Series D Preferred Stock and any such Parity Stock if all
amounts payable thereon were paid in full.
(b) Neither a consolidation or merger of the Company
with or into another corporation, nor a sale, lease or transfer
of all or substantially all of the Company's assets will be
considered a liquidation, dissolution or winding up, voluntary or
involuntary, of the Company.
(5) VOTING RIGHTS. Except as may be required by applicable
law from time to time, the holders of shares of Series D
Preferred Stock will have no voting rights.
(6) SINKING FUND. The Series D Preferred Stock shall not
be entitled to any mandatory redemption or prepayment (except on
liquidation, dissolution or winding up of the affairs of the
Company) or to the benefit of any sinking fund.
WITNESS THE SIGNATURE of the undersigned who is the Chairman
of the Board and Chief Executive Officer of ThermoView
Industries, Inc. as of this day of April, 2000.
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Xxxxxxx X. Xxxxxxxx
EXHIBIT B
RISK FACTORS
PRIOR TO MAKING AN INVESTMENT DECISION, A PROSPECTIVE
PURCHASER OF THE 12% CUMULATIVE SERIES D PREFERRED STOCK OFFERED
HEREBY SHOULD EVALUATE THE FOLLOWING RISK FACTORS INCLUDING THOSE
IN THE THERMOVIEW PROSPECTUS, DATED DECEMBER 2, 1999.
SERIES D PREFERRED STOCK
There can be no assurance that ThermoView's continuing
losses or consolidated earnings, if ever, in the future will be
sufficient to cover its combined fixed charges and dividends on
(i) the 12% Series D Cumulative Preferred Stock alone, or (ii)
its 9.6% Series C Convertible Preferred Stock and the Series D
Preferred Stock.
ABSENCE OF TRADING MARKET FOR SERIES D PREFERRED STOCK
There is no public market for the Series C Preferred Stock
and Series D Preferred Stock and ThermoView does not anticipate
that any public market will develop in the future. However, the
Series C Preferred Stock is convertible into Common Stock at a
conversion price, subject to adjustment in certain circumstances
of $15.00 per share of Common Stock (initially equivalent to a
conversion rate of 66 2/3 shares of stock per share of Series C
Preferred Stock). The Series D Preferred Stock has no such
conversion feature. The ThermoView Common Stock trades on the
American Stock Exchange, so a public market does exist for the
Common Stock. Without the ability to convert the Series D
Preferred Stock into Common Stock or have a market available to
sell the Series D Preferred Stock, the holders of the Series D
Preferred Stock may not be able to liquidate their investment at
any time.
RESTRICTION OF PAYMENT OF CASH DIVIDENDS ON SERIES D PREFERRED
STOCK
Pursuant to ThermoView's current line of credit with its
principal secured lender and documentation related to financings
with other parties, it may not pay dividends on its Common Stock
until all obligations thereunder have been paid in full and on
the Series D Preferred Stock until satisfaction of all covenants
under the line of credit and other financings. ThermoView cannot
provide any assurance that it will be able to satisfy these
covenants so as to pay quarterly the dividends due on the Series
D Preferred Stock. Considering that ThermoView has in the past
received waivers from its lenders for non-compliance with its
covenants, a history exists that non-compliance with its loan or
other covenants may occur in the future. Accordingly, it is
possible that ThermoView may not be able to pay any dividends due
on its Series D Preferred Stock.
LITIGATION
On March 3, 2000, Pro Futures Bridge Capital Fund, L.P. and
Pro Futures Bridge Capital Fund, L.P. filed an action titled PRO
FUTURES BRIDGE CAPITAL FUND, L.P. V. THERMOVIEW INDUSTRIES, INC.,
ET AL., Civil Action No. 00CV0559 (Colo. Dist. Ct., March 3,
2000) alleging breach of
contract, common law fraud, fraudulent misstatements and
omissions in connection with the sale of securities, negligent
misrepresentations and breach of fiduciary duty. These claims
are in connection with (i) the mandatory conversion of the
ThermoView 10% Series A Convertible Preferred Stock, held by the
two funds, into ThermoView Common Stock upon completion of the
ThermoView public offering in December 1999, and (ii) purchases
by the two funds of ThermoView Common Stock from ThermoView
stockholders. The funds are seeking (a) rescission of their
purchases of the Series A Preferred Stock in the amount of
$3,250,000 plus interest and (b) unspecified damages in
connection with their purchases of the ThermoView Common Stock.
Although ThermoView believes that the claims are without merit
and intends to vigorously defend the suit, an adverse outcome in
this action could have a material adverse effect on the financial
position or results of operations of ThermoView.
