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 XXXXXX X. XXXXXX ("Xxxxxx").
PRELIMINARY STATEMENTS
As of January 1, 1999, ThermoView acquired all of the outstanding
shares of capital stock of Xxxxxx Construction, Inc., a Missouri corporation,
Castle Associates, Inc., a Missouri corporation and Showplace Home Improvements,
Inc., a Missouri corporation, pursuant to a certain Stock Purchase Agreement
(the "Stock Agreement"), dated December 22, 1998, between ThermoView and Xxxxxx.
Under the terms of the Stock Agreement, Xxxxxx is entitled to receive
post-closing earn-out payments (the "Earn-out Payments"), if earned, on December
31, 1999, December 31, 2000 and December 31, 2001. As of December 31, 1999,
ThermoView owed Xxxxxx xxxx payments of approximately $6,500,000.00 (the "Year
One Earn-out Payment") under the terms of the Stock Agreement pursuant to the
earn-out provision.
ThermoView has paid $1,000,000.00 of the Year One Earn-out Payment in
cash to Xxxxxx.
ThermoView desires to make the remainder of the Year One 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 Xxxxxx desires to
accept the Preferred Stock in consideration of the remainder of the Year One
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. TRANSFERS AND EXCHANGES. ThermoView hereby agrees upon execution hereof (i)
to transfer to Xxxxxx 1,113,500 shares of Preferred Stock, (ii) to effect
execution of and to deliver to Xxxxxx the amendment to Xxxxxx' Noncompetition
Agreement attached hereto as Exhibit D, the amendment to the Lease for 00000
Xxxxxxxxx Xxxxx, Xxxxx Xxxx, Xxxxxxxx attached hereto as Exhibit E and the
amendment to Furniture and Fixture Lease attached hereto as Exhibit F, (iii) to
deliver to Xxxxxx in exchange for Xxxxxx' delivery to ThermoView of the
Promissory Note attached hereto as Exhibit G and the Stock Pledge Agreement
attached hereto as Exhibit H the sum of $1,500,000 in cash (by cashier's check
or wire transfer per Xxxxxx' directions), and Xxxxxx hereby agrees to accept all
of the foregoing in exchange for any and all amounts due to Xxxxxx by ThermoView
pursuant to the Year One Earn-out Payment under the Stock Agreement. The
delivery of the certificate for the Preferred Stock to Xxxxxx shall occur within
fifteen (15) business days.
2. REPRESENTATIONS AND WARRANTIES OF THERMOVIEW. In order to induce Xxxxxx to
enter into this Agreement and to accept the Preferred Stock, the Company hereby
represents and warrants to Xxxxxx that:
2.1 ORGANIZATION AND STANDING; ARTICLES AND BYLAWS. ThermoView
is duly incorporated, validly existing and in good standing under the laws of
the State of Delaware. ThermoView has full corporate power and authority to own
its properties and carry on its business as it is currently being conducted by
ThermoView and as is currently proposed to be conducted by ThermoView.
ThermoView is duly licensed or qualified to transact business as a foreign
corporation and is in good standing in all other jurisdictions in which the
nature of the business transacted by it or the character of the properties owned
or leased by it requires such licensing or qualification, except where the
failure to be so qualified will not have a material adverse effect on
ThermoView.
2.2 CORPORATE POWER AND AUTHORITY. ThermoView has full
corporate power and authority to enter into this Agreement, the amendments to
agreements referred to in Section 1 above and the transactions contemplated
hereby, issue the Preferred Stock and carry out and perform its obligations
under the terms of this Agreement and the Exhibits attached hereto.
2.3 VALID ISSUANCE. The Preferred Stock upon receipt by Xxxxxx
will be duly authorized and validly issued, fully paid and nonassessable and
owned of record and beneficially by Xxxxxx free of any liens or encumbrances,
and will have been offered, issued, sold and delivered by ThermoView in
compliance with applicable federal and state securities laws, assuming the truth
and accuracy of Xxxxxx' representations and warranties set forth in Section 5
hereof.
2.4 AUTHORIZATION; NO CONFLICTS. All corporate action on the
part of ThermoView, its directors and shareholders necessary for the
authorization, execution, delivery and performance by ThermoView of this
Agreement and the Exhibits attached hereto, and the consummation of the
transactions contemplated herein and for the authorization, offer, issuance,
sale and delivery of the Preferred Stock has been taken. This Agreement is the
valid and binding obligation of ThermoView, enforceable in accordance with its
terms, subject to laws of general application relating to bankruptcy, insolvency
and the relief of debtors. The execution, delivery and performance by ThermoView
of this Agreement and compliance herewith and the offer, issuance, sale and
delivery of the Preferred Stock will not, assuming the truth and accuracy of the
Xxxxxx' representations and warranties set forth in Section 3 hereof, result in
any violation of and will not conflict with, or result in any breach of any of
the terms of, or constitute a default under, any provision of federal or state
law to which ThermoView is subject, the Articles or the Bylaws, as amended as of
the Closing Date, or any mortgage, indenture, agreement, instrument, judgment,
decree, order, rule or regulation or other restriction to which ThermoView is a
party or by which it is bound. No shareholder of ThermoView has any preemptive
rights or rights of first refusal by reason of the issuance of the Preferred
Stock, or such shareholder has waived any such rights in writing.
2.5 FINANCIAL INFORMATION. The audited financial
statements of ThermoView (including the notes thereto) as of December 31, 1999
and for the year then ended, present fairly the financial position and results
of operations of ThermoView at the date and for the period to
2
which they relate, have been prepared in accordance with generally accepted
accounting principles consistently applied throughout the periods indicated, and
show all material liabilities, absolute or contingent, of ThermoView required to
be recorded thereon in accordance with generally accepted accounting principles.
2.6 CONSENTS. All consents, approvals, orders or
authorizations of, or registrations, qualifications, designations, declarations
or filings with, any federal or state governmental authority (including under
the "blue sky" laws of any such state governmental authority), any party to a
contract to which ThermoView is bound or any other third party, required on the
part of ThermoView, in connection with the consummation of the transactions
contemplated by this Agreement, shall have been obtained prior to, and will be
effective as of, the issuance of the Preferred Stock, other than any notice
filing required to be made after the Closing Date pursuant to Regulation D under
the Securities Act of 1933 (the "1933 Act") and any applicable "blue sky" laws.
2.7 ISSUANCE TAXES. All taxes imposed upon ThermoView by law
as a result of the issuance, sale and delivery of the shares of Preferred Stock
shall have been fully paid, and all laws imposing such taxes shall have been or
will be fully complied with, on or prior to the issuance of the Preferred Stock.
2.8 OFFERING. Neither ThermoView nor anyone authorized to act
on its behalf has taken an action that will cause the issuance, sale and
delivery of the Preferred Stock as contemplated by this Agreement (assuming the
truth and accuracy of the representations and warranties of Xxxxxx set forth in
Section 5 hereof) to constitute a violation of the 1933 Act or any applicable
state securities laws.
2.9 COMPLIANCE. ThermoView is not in violation of any term of
its Articles or Bylaws as amended. ThermoView is not in violation of any term of
any law, judgment, decree, order, rule or regulation to which ThermoView is
subject and a violation of which would have a material adverse effect on the
condition, financial or otherwise, or operations of ThermoView.
2.10 LOANS TO OTHER PERSONS. Neither ThermoView nor a
subsidiary of ThermoView is obligated or committed to make any loan or advance
to any person or entity, except for loans or advances to employees or customers
in the ordinary course of business, consistent with past practice.
2.11 BOOKS AND RECORDS. The books of account, stock record
books, minute books, bank accounts and other corporate records of ThermoView are
true, correct and complete and have been maintained in accordance with good
business practices.
2.12 INSURANCE. ThermoView and each subsidiary of ThermoView
maintains insurance which is customary in its industry and which ThermoView
reasonably believes is commercially reasonable given the risks involved in the
business conducted by ThermoView.
2.13 DISCLOSURE. Neither this Agreement, nor any
certificate or statement furnished to the Xxxxxx by ThermoView pursuant to this
Agreement, contains any untrue
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statement of a material fact, and none of this Agreement, such certificates or
statements omits to state a material fact necessary in order to make the
statements contained herein or therein not misleading in the light of the
circumstances under which they were made.
2.14 ENVIRONMENTAL AND SAFETY LAWS. Neither ThermoView nor a
subsidiary of ThermoView is in violation of any applicable statute, law or
regulation relating to the environment or occupational health and safety, which
violations, either singly or in the aggregate, would have a material adverse
effect on ThermoView's or such subsidiary's business, and no material
expenditures are or will be required in order to comply with any such statute,
law or regulation.
3. FULL SATISFACTION. Subject to the validity of the representations and
warranties of ThermoView set forth in Section 2 above, Xxxxxx hereby
acknowledges that his receipt of the $1,000,000 cash payment, the 1,113,500
shares of Preferred Stock and the other items recited in Section 1 above, will
be in full and complete satisfaction of the obligation owed to Xxxxxx by
ThermoView for the Year One Earn-out Payment.
4. 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.
5. XXXXXX' REPRESENTATIONS AND WARRANTIES. Xxxxxx hereby represents and
warrants to ThermoView as follows:
(1) INVESTMENT INTENT. Xxxxxx 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"). Xxxxxx 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. Xxxxxx 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. Xxxxxx
understands that the shares of Preferred Stock have not been registered
under federal or any state securities laws.
(2) XXXXXX' STATUS. Xxxxxx 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.
(3) RELIANCE. Xxxxxx understands and acknowledges that (i) the Preferred
Stock is being offered and sold to Xxxxxx 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 Xxxxxx consents to such reliance.
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(4) INFORMATION. Xxxxxx 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 Xxxxxx or his advisors. Xxxxxx and his advisors, if any, have been
afforded the opportunity to ask questions of ThermoView. Xxxxxx
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. Xxxxxx understands
that his investment in the Preferred Stock involves a significant
degree of risk, some of which risks associated with the investment in
the Preferred Stock are set forth in EXHIBIT B, attached hereto and
incorporated herein by reference, and in the Prospectus.
(5) PLEDGE EXCEPTION. Xxxxxx shall only be permitted to pledge the
Preferred Stock to the extent contemplated in Section 1 hereof.
6. MISCELLANEOUS.
(1) 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
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If to Xxxxxx:
Xxxxxx X. Xxxxxx
00000 Xxxx Xxxxx Xxxxx
Xxxxx Xxxx, Xxxxxxxx 00000
Fax No. (000) 000-0000
With a copy to:
Blitz, Bardgett & Deutsch, L.C.
000 Xxxxx Xxxxxxx, Xxxxx 000
Xx. Xxxxx, Xxxxxxxx 00000
Attn: Xxxxxxx X. Xxxxxxx, Esq.
Fax No. (000) 000-0000
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.
(2) ENTIRE AGREEMENT. This Agreement embodies the entire agreement and
understanding between the parties hereto with respect to the Year One
Earn-out Payment and supersedes all prior oral or written agreements
and understandings relating to the Year One Earn-out Payment. No
statement, representation, warranty, covenant or agreement of any kind
not expressly set forth in this Agreement shall affect, or be used to
interpret, change or restrict, the express terms and provisions of this
Agreement.
(3) MODIFICATIONS AND AMENDMENTS. The terms and provisions of this
Agreement may be modified or amended only by written agreement executed
by all parties hereto.
(4) 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.
(5) 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 State of Missouri, without giving effect to the conflict
of law principles thereof.
(6) 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
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such provision, or portion thereof, wholly unenforceable, the
remaining provisions of this Agreement shall nevertheless remain in
full force and effect.
(7) 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.
(8) COUNTERPARTS. This Agreement may be executed in one or more
counterparts, and by different parties hereto on separate counterparts,
each of which shall be deemed an original, but all of which together
shall constitute one and the same instrument.
IN WITNESS WHEREOF, ThermoView has caused this Agreement to be executed
by its duly authorized officer and Xxxxxx has executed this Agreement all as of
the date first above written.
THERMOVIEW INDUSTRIES, INC.
By: /s/ Xxxxxx X. Xxxxxxxx
----------------------
Title: President
/s/ Xxxxxx X. Xxxxxx
----------------------
XXXXXX X. XXXXXX
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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, and 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 14th
day of April 2000.
------------------------------
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.
EXHIBIT C
[INTENTIONALLY OMITTED]
EXHIBIT D
AMENDMENT TO NONCOMPETITION AGREEMENT
THIS AMENDMENT TO NONCOMPETITION AGREEMENT (the "Amendment") is made
and entered into as of the 14th day of April 2000, by and between ThermoView
Industries, Inc., a Delaware corporation ("ThermoView"), and Xxxxxx X. Xxxxxx
(the "Shareholder").
PREMISES:
The Shareholder and ThermoView entered into a Noncompetition Agreement
dated as of January 1, 1999 (the "Noncompetition Agreement").
The parties desire to amend the Noncompetition Agreement, but only to
the extent, and subject to the terms and conditions set forth in this Amendment.
NOW, THEREFORE, in consideration of the foregoing premises and the
mutual covenants and agreements contained herein and for other good and valuable
consideration, the receipt and adequacy of which are hereby acknowledged, the
parties hereto agree as follows:
ARTICLE 1
DEFINITION OF TERMS
Terms used herein with their initial letters capitalized and not
otherwise defined herein shall have the meanings given to such terms in the
Noncompetition Agreement.
ARTICLE 2
AMENDMENTS TO NONCOMPETITION AGREEMENT
The Noncompetition Agreement is hereby amended in the following
respects:
2.1 ADDITION TO SECTION 1.2. A new paragraph is hereby added at the end
of Section 1.2 of the Noncompetition Agreement, which paragraph shall provide in
its entirety as follows:
"Notwithstanding anything in this Agreement to the contrary:
(a) if ThermoView has not redeemed all of the 1,113,500 shares
of ThermoView's 12% Cumulative Series D Preferred Stock issued
to the Shareholder pursuant to an Agreement dated April 14,
2000, by and between ThermoView (the "Shareholder's Series D
Stock") by October 14, 2001, then this Agreement, including,
without limitation the Noncompete Period, shall forthwith
terminate, become null and void and of no further force or
effect; or,
(b) if ThermoView has not redeemed at least fifty
percent of the Shareholder's Series D Preferred Stock by to
April 14, 2001, and caused the
holder of the Promissory Note dated April 14, 2000, made by
the Shareholder payable to the order of Founders Group, LLC,
to extend its maturity date to October 14, 2001, then this
Agreement, including, without limitation the Noncompete
Period, shall forthwith terminate, become null and void and of
no further force or effect; or,
(c) if ThermoView has not paid in full all of the accrued
dividends to the Shareholder on account of the Series D
Preferred Stock by April 14, 2001, then this Agreement,
including, without limitation the Noncompete Period, shall
forthwith terminate, become null and void and of no further
force or effect."
ARTICLE 3
ACKNOWLEDGMENT AND RATIFICATION
3.1 RATIFICATION. Except as expressly amended by this Amendment, the
Noncompetition Agreement is and shall be unchanged, and all of the terms,
provisions, covenants and agreements thereof or thereto shall remain and
continue in full force and effect and are hereby ratified, reaffirmed and
confirmed by the Shareholder and ThermoView in all respects on and as of the
effective date of this Amendment.
ARTICLE 4
GENERAL PROVISIONS
4.1 GOVERNING LAW. The laws of the State of Missouri shall
govern the construction of this Amendment and the rights and remedies and
duties of the parties hereto.
4.2 SECTION HEADINGS. The section headings contained in this
Amendment have been inserted solely for convenience of reference, and shall not
be construed as part of this Amendment.
4.3 COUNTERPARTS. This Amendment may be signed by each party
hereto upon a separate copy, in which event all of said copies shall constitute
a single counterpart to this Amendment. This Amendment may be executed in any
number of counterparts, each of which shall be deemed to be an original, but all
of which together shall constitute but one and the same instrument. It shall not
be necessary, in making proof of this Amendment, to produce or account for more
than one such counterpart.
2
IN TESTIMONY WHEREOF, ThermoView has caused its duly authorized
representative to execute and deliver, and the Shareholder has executed and
delivered, this Amendment, effective as of the day and year first above written.
ThermoView Industries, Inc.
BY:________________________
TITLE:_____________________
___________________________
Xxxxxx X. Xxxxxx
3
EXHIBIT E
AMENDMENT TO TRIPLE NET LEASE AGREEMENT
THIS AMENDMENT TO THAT CERTAIN TRIPLE NET LEASE AGREEMENT (the
"Amendment") is made and entered into as of the ____ day of April, 2000, by and
between Xxxxxx Construction, Inc., a Missouri corporation ("Tenant"), and 00000
Xxxxxxxxx Xxxxx, LLC, a Missouri limited liability company ("Landlord").
PREMISES:
The parties desire to amend the terms pursuant to which Tenant leases
certain Premises situated at 00000 Xxxxxxxxx Xxxxx, Xxxxx Xxxx, Xxxxxxxx.
ThermoView Industries, Inc., a Delaware corporation ("ThermoView"), the
owner of Tenant, has requested Xxxxxx X. Xxxxxx (the "Shareholder"), an
affiliate of Landlord, to exchange certain amounts owed to the Shareholder by
ThermoView for 1,113,500 shares of the ThermoView's 12% Cumulative Series D
Preferred Stock, and the Shareholder has requested that as part of the
consideration for such exchange Tenant and Landlord agree to amend the Lease,
but only to the extent, and subject to the terms and conditions set forth in
this Amendment.
NOW, THEREFORE, in consideration of the foregoing premises and the
mutual covenants and agreements contained herein and for other good and valuable
consideration, the receipt and adequacy of which are hereby acknowledged, the
parties hereto agree as follows:
ARTICLE 1
DEFINITION OF TERMS
[Intentionally omitted]
ARTICLE 2
AMENDMENTS TO LEASE
Such lease is hereby amended in the following respects:
2.1 ADDITION THERETO. A new paragraph is hereby added at
the end of such lease, which new paragraph shall provide
in its entirety as follows:
"Notwithstanding anything in this Lease to the contrary, until such
time as ThermoView Industries, Inc., a Delaware corporation
("ThermoView") has redeemed all of the 1,113,500 shares of ThermoView's
12% Cumulative Series D Preferred Stock issued to Xxxxxx X. Xxxxxx (the
"Shareholder") pursuant to an Agreement dated April 14, 2000, by and
between ThermoView and the Shareholder (the "Shareholder's Series D
Stock"), Landlord shall have the right and power to terminate this
Lease by delivering a written notice to Tenant specifying a termination
date at the end of the month following the month in which such notice
was delivered, and upon Tenant's receipt of such notice the term of
this Lease shall be deemed to have expired on such termination date."
ARTICLE 3
ACKNOWLEDGMENT AND RATIFICATION
3.1 RATIFICATION. Except as expressly amended by this
Amendment, such lease is and shall be unchanged, and all of the terms,
provisions, covenants and agreements thereof or thereto shall remain
and continue in full force and effect, and are hereby ratified,
reaffirmed and confirmed by the parties. The parties acknowledge that
the Landlord, to the extent not a party to this Amendment, under such
lease is a third party beneficiary of this Amendment.
ARTICLE 4
GENERAL PROVISIONS
4.1 GOVERNING LAW. The laws of the State of Missouri
shall govern the construction of this Amendment and the rights and
remedies and duties of the parties hereto.
4.2 SECTION HEADINGS. The section headings contained
in this Amendment have been inserted solely for convenience of
reference, and shall not be construed as part of this Amendment.
4.3 COUNTERPARTS. This Amendment may be signed by each
party hereto upon a separate copy, in which event all of said copies
constitute a single counterpart to this Amendment. This Amendment may
shall be executed in any number of counterparts, each of which shall be
deemed to be an original, but all of which together shall constitute
but one and the same instrument. It shall not be necessary, in making
proof of this Amendment, to produce or account for more than one such
counterpart.
IN TESTIMONY WHEREOF, the Tenant has caused its duly authorized
representative to execute and deliver, and the Landlord has executed and
delivered, this Amendment, effective as of the day and year first above written.
00000 Xxxxxxxxx Xxxxx, LLC Xxxxxx Construction, Inc.
BY:_______________________ BY: ________________________
TITLE:______________________ TITLE:______________________
____________________________
Xxxxxx X. Xxxxxx
2
EXHIBIT F
AMENDMENT TO FURNITURE AND FIXTURE LEASE
THIS AMENDMENT TO THAT CERTAIN FURNITURE AND FIXTURE LEASE (the
"Amendment") is made and entered into as of the 14th day of April, 2000, by and
between Xxxxxx Construction, Inc., a Missouri corporation ("Lessee"), and
Investors Property Holding I, LLC, a Missouri limited liability company
("Lessor").
PREMISES:
The parties entered into a Furniture and Fixture Lease dated January 1,
1999, (the "Lease") in connection with Lessee's lease of the Premises situated
at 00000 Xxxxxxxxx Xxxxx, Xxxxx Xxxx, Xxxxxxxx.
ThermoView Industries, Inc., a Delaware corporation ("ThermoView"), the
owner of Lessee, has requested Xxxxxx X. Xxxxxx (the "Shareholder"), an
affiliate of Lessor, to exchange certain amounts owed to the Shareholder by
ThermoView for 1,113,500 shares of the ThermoView's 12% Cumulative Series D
Preferred Stock, and the Shareholder has requested that as part of the
consideration for such exchange Lessee and Lessor agree to amend the Lease, but
only to the extent, and subject to the terms and conditions set forth in this
Amendment.
NOW, THEREFORE, in consideration of the foregoing premises and the
mutual covenants and agreements contained herein and for other good and valuable
consideration, the receipt and adequacy of which are hereby acknowledged, the
parties hereto agree as follows:
ARTICLE 1
DEFINITION OF TERMS
Terms used herein with their initial letters capitalized and not
otherwise defined herein shall have the meanings given to such terms in the
Lease.
ARTICLE 2
AMENDMENTS TO LEASE
The Lease is hereby amended in the following respects:
2.1 ADDITION TO SECTION 2. A new Section 2.D. is hereby
added at the end of Section 2 of the Lease, which Section 2.D shall provide
in its entirety as follows:
"D. Notwithstanding anything in this Lease to the contrary, until
such time as ThermoView Industries, Inc., a Delaware corporation
("ThermoView") has redeemed all
1
of the 1,113,500 shares of ThermoView's 12% Cumulative Series D
Preferred Stock issued to Xxxxxx X. Xxxxxx (the "Shareholder") pursuant
to an Agreement dated April 14, 2000, by and between ThermoView and the
Shareholder (the "Shareholder's Series D Stock"), Lessor shall have the
right and power to terminate this Lease by delivering a written notice
to Lessee specifying a termination date at the end of the month
following the month in which such notice was delivered, and upon
Lessee's receipt of such notice the term of this Lease shall be deemed
to have expired on such termination date."
ARTICLE 3
ACKNOWLEDGMENT AND RATIFICATION
3.1 RATIFICATION. Except as expressly amended by this
Amendment, the Lease is and shall be unchanged, and all of the terms,
provisions, covenants and agreements thereof or thereto shall remain
and continue in full force and effect, and are hereby ratified,
reaffirmed and confirmed by Lessee and Lessor in all respects on and as
of the effective date of this Amendment.
ARTICLE 4
GENERAL PROVISIONS
4.1 GOVERNING LAW. The laws of the State of Missouri
shall govern the construction of this Amendment and the rights and
remedies and duties of the parties hereto.
4.2 SECTION HEADINGS. The section headings contained
in this Amendment have been inserted solely for convenience of
reference, and shall not be construed as part of this Amendment.
4.3 COUNTERPARTS. This Amendment may be signed by each
party hereto upon a separate copy, in which event all of said copies
shall constitute a single counterpart to this Amendment. This Amendment
may be executed in any number of counterparts, each of which shall be
deemed to be an original, but all of which together shall constitute
but one and the same instrument. It shall not be necessary, in making
proof of this Amendment, to produce or account for more than one such
counterpart.
IN TESTIMONY WHEREOF, the Lessee has caused its duly
authorized representative to execute and deliver, and the Lessor has
executed and delivered, this Amendment, effective as of the day and
year first above written.
2
Investors Property Holding I, LLC Xxxxxx Construction, Inc.
BY:_______________________ BY: ________________________
TITLE:______________________ TITLE:______________________
3
EXHIBIT G
PROMISSORY NOTE
$1,500,000.00 Louisville, Kentucky
April 14, 2000
FOR VALUE RECEIVED, the undersigned, Xxxxxx X. Xxxxxx ("Borrower"), an
individual and a resident of St. Louis County, Missouri, having a business
address at 00000 Xxxxxxxxx Xxxxx, Xxxxx Xxxx Xxxxxxxx 00000, promises to pay to
the order of Founders Group, LLC (the "Lender"), a Kentucky limited liability
company having an address at 0000-X Xxxx Xxxx, Xxxxxxxxxx, Xxxxxxxx 00000,
Attention: Xx. Xxxxxxx Xxxxxxxx, the principal sum of ONE MILLION FIVE HUNDRED
THOUSAND DOLLARS ($1,500,000.00), together with interest on the principal of
this Note from time to time outstanding. Principal and interest are payable in
lawful currency of the United States.
The Borrower's obligations under this Note are secured by a Stock
Pledge Agreement of even date (the "Stock Pledge Agreement"), pursuant to which
the Borrower has pledged to the Lender certain stock (the "Stock"), as more
particularly described in the Stock Pledge Agreement. If and when any shares of
the Stock are redeemed, sold or otherwise transferred, the Borrower shall
immediately make a payment under this Note, in an amount equal to (a) all
accrued but unpaid interest, plus (b) the product of:
(i) the then-outstanding principal balance of this Note,
multiplied by
(ii) the quotient of (A) the number of shares of Stock
redeemed, sold or transferred, divided by (B) the total number
of shares of Stock pledged to the Lender.
For example, if fifty percent of the Stock pledged to the Lender were redeemed,
then this Note would require that the Borrower immediately make a prepayment in
an amount equal to (a) all accrued interest, plus (b) fifty percent of the
then-outstanding principal balance of this Note. Each such payment shall be due
and payable in full immediately upon the occurrence of such redemption, sale or
transfer, without notice or demand of any kind. Additionally, any provisions of
this Note to the contrary notwithstanding, all principal of and interest
accruing on this Note shall be due and payable in full on April 14, 2001 (the
"Maturity Date").
Interest on this Note shall accrue from the date of this Note until the
entire principal balance of and all accrued interest on this Note have been paid
in full. This Note shall bear interest at a rate of twelve percent (12.0%) per
annum. All interest shall be computed over an assumed month of thirty days and
an assumed year of three hundred and sixty (360) days and over the actual number
of days elapsed. Any provision of this Note to the contrary notwithstanding, on
the Maturity Date, all unpaid principal and all accrued but unpaid interest then
outstanding shall be due and payable in full.
This Note may be prepaid by the Borrower in whole or in part, without
premium or penalty, at any time, provided that no such prepayment shall relieve
the Borrower from the obligation to make the payments of principal and interest
called for in this Note until such time
as this Note is paid in full. All payments on this Note shall be applied first
to accrued charges under this Note, second to unpaid interest, and then to
unpaid principal.
All payments hereunder shall be paid to the Lender in immediately
available funds at 0000-X Xxxx Xxxx, Xxxxxxxxxx, Xxxxxxxx 00000, Attention:
Xxxxxxx Xxxxxxxx, or to such other person and at such other place as may be
designated in a writing sent to the Borrower by the holder hereof. If any
principal of, or interest on, this Note is not paid within ten (10) days
following the date such payment becomes due and payable, such overdue principal
and, to the extent permitted by applicable law, overdue interest, shall bear
interest from the due date (whether stated or by acceleration) until paid at a
rate (the "Default Rate") equal to fourteen percent (14.0%). Additionally, if
the Borrower fails to make any payment of principal, interest or other amount
due pursuant to the provisions of this Note within ten (10) calendar days after
such amount becomes due and payable, the Borrower shall pay to the Lender a late
fee equal to the greater of two percent (2.0%) of the amount of such payment or
Twenty-Five Dollars ($25.00). The charging and/or collection of any such late
charge shall not in any way be deemed a waiver of (i) any rights of the holder
to declare a default, or (ii) any of the holder's rights arising thereby or
hereunder.
Any security interest granted by Borrower to the Lender in any
collateral, real or personal, whether by way of mortgage, security agreement,
assignment, pledge, hypothecation or otherwise to secure this Note shall also
secure all amendments, renewals, extensions, or modifications hereof. Failure of
the holder of this Note to exercise any of its rights and remedies shall not
constitute a waiver of the right to exercise the same at that or any other time.
All rights and remedies of the holder hereof for default hereunder shall be
cumulative to the greatest extent permitted by law. This Note is secured as
provided in the Pledge Agreement. The occurrence of an Event of Default under
the Pledge Agreement shall constitute a default under this Note. Upon the
occurrence of a default under this Note, the outstanding principal balance of,
and all accrued but unpaid interest on, this Note shall become immediately due
and payable in full, this Note shall thereafter bear interest at the Default
Rate, and the Lender may exercise any rights and remedies available to the
Lender under this Note, the Pledge Agreement, at law or in equity.
If there is any default under this Note and this Note is placed in the
hands of an attorney for collection or is collected through any suit, including
but not limited to any bankruptcy court, the Borrower promises to pay to the
holder hereof its reasonable attorneys' fees and court costs incurred in
collecting or attempting to collect, or securing or attempting to secure, this
Note, or enforcing or attempting to enforce the holder's right in any collateral
securing this Note, to the extent allowed by law.
All parties hereto, whether makers, endorsers, sureties, guarantors, or
otherwise, hereby waive all acts on the part of the holder otherwise required in
fixing the liabilities of sureties, including, among other acts, presentment,
demand, notice of dishonor, protest, notice of nonpayment and all other notice
and further waive all legal diligence to enforce collection. The Lender may,
with or without notice to any other party, (1) extend the time for payment of
either principal or interest from time to time, (2) release or discharge any
party liable on this Note, (3) suspend or release the right to enforce this Note
with respect to any person, (4) change, exchange or release any property in
which the Lender or any other holder of this Note has any interest securing this
Note, (5) justifiably or otherwise impair any collateral securing this Note or
2
suspend or release the right to enforce against such collateral, and (6) call
for and accept additional collateral. The Lender shall not be under an
obligation to exercise any of its rights hereunder, and no failure to do so or
delay in doing so shall waive or impair any rights or remedies which the Lender
may otherwise have. In case this Note shall be transferred, the transferee shall
be entitled to all rights secured to the Lender hereunder.
Time is of the essence in the payment of this Note.
This Note has been delivered in, and shall be governed by and construed
in accordance with the laws of, the Commonwealth of Kentucky. The Borrower
irrevocably consents to the exclusive jurisdiction of the Jefferson County,
Kentucky Circuit Court and the United States District Court for the Western
District of Kentucky, and agrees that all process may be served by any
nationally-recognized overnight courier to the Borrower at the address indicated
above. Service so made will be deemed to have been made upon receipt by the
Borrower. Borrower further agrees that nothing contained in this Note is
intended to, or shall, prevent the Lender from bringing any action, enforcing
any award or judgment or exercising any rights against the Borrower or any of
his property in any other county, state, foreign or domestic jurisdiction. The
Borrower agrees that the foregoing courts offer the most convenience forum for
the Borrower and the Lender and waivers any objection to venue or based upon the
inconvenience of the foregoing forum.
This Note is delivered in connection with a Stock Pledge Agreement of
even date between the Borrower and the Lender (the "Stock Pledge Agreement") and
is secured by a perfected pledge of certain stock pursuant to the Stock Pledge
Agreement. Reference is made to the Stock Pledge Agreement for a statements of
terms and provisions relevant to this Note but not contained herein, provided,
however, that neither reference herein to the Stock Pledge Agreement nor to any
provision thereof shall impair the absolute and unconditional obligation of the
Borrower to pay the principal of and interest on this Note when and as due. ANY
PROVISION OF THIS NOTE AND/OR THE STOCK PLEDGE AGREEMENT TO THE CONTRARY
NOTWITHSTANDING, EXCEPT IN THE CASE OF FRAUDULENT OR WILLFUL MISCONDUCT ON THE
PART OF THE BORROWER IN CONNECTION WITH HIS EXECUTION, DELIVERY OR PERFORMANCE
OF THE STOCK PLEDGE AGREEMENT, THE HOLDER OF THIS NOTE SHALL HAVE NO CLAIM OR
RIGHT TO PROCEED AGAINST THE BORROWER FOR ANY DEFICIENCY OR OTHER SUM OWING ON
ACCOUNT OF THE INDEBTEDNESS EVIDENCED BY THIS NOTE, AND THE HOLDER HEREOF BY ITS
ACCEPTANCE OF THIS NOTE AGREES TO LOOK SOLELY TO THE ASSETS PLEDGED PURSUANT TO
THE STOCK PURCHASE AGREEMENT FOR PAYMENT OF SUCH INDEBTEDNESS; PROVIDED,
HOWEVER, THAT NOTHING HEREIN CONTAINED SHALL LIMIT, RESTRICT OR IMPAIR THE RIGHT
OF THE HOLDER OF THIS NOTE TO FORECLOSE UPON OR OTHERWISE RECOVER UPON ANY
PLEDGES, LIENS OR SECURITY INTERESTS GRANTED PURSUANT TO THE STOCK PLEDGE
AGREEMENT.
--------------------------------------
Xxxxxx X. Xxxxxx
3
EXHIBIT H
STOCK PLEDGE AGREEMENT
THIS STOCK PLEDGE AGREEMENT, made and entered into as of the 14th day
of April, 2000, by and between (i) Xxxxxx X. Xxxxxx (the "Stockholder"), an
individual and a resident of St. Louis County, Missouri; and (ii) Founders
Group, LLC (the "Lender"), a Kentucky limited liability company.
PREMISES:
The Stockholder owns One Million One Hundred Thirteen Thousand Five
Hundred (1,113,500) of the outstanding shares of Series D Preferred Stock of
ThermoView Industries, Inc. (the "Stock").
Simultaneously with the execution of this Stock Pledge Agreement, the
Stockholder is making a Promissory Note (the "Note") payable to the order of the
Lender, pursuant to which the Lender will make a One Million Five Hundred
Thousand Dollar ($1,500,000) loan (the "Loan") available to the Stockholder.
To induce the Lender to make the Loan, the Stockholder has agreed to
pledge all of the Stock to secure its obligations under the Note.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants and agreements herein contained, and for other good and valuable
consideration, the parties hereto hereby covenant, agree, represent and warrant
as follows:
1. DEPOSIT AND PLEDGE OF SHARES. Contemporaneously with the execution
of this Stock Pledge Agreement, the Stockholder has deposited and hereby pledges
and assigns to the Lender, and grants to the Lender a security interest in, the
Stock, such Stock being represented by Certificate No. 1, standing in the
Stockholder's name, with a duly executed stock power attached thereto. All new
shares of capital stock or securities created in respect to the Stock, whether
by stock split, stock dividend, merger, consolidation or otherwise, that the
Stockholder may hereafter acquire, shall be delivered by the Stockholder to, and
shall be held by, the Lender subject to the terms, provisions and conditions of
this Stock Pledge Agreement, and the term "Stock" as used herein shall be deemed
to include all such new shares of securities.
1
2. OBLIGATIONS SECURED. All Stock pledged pursuant to this Agreement
shall be held by the Lender as security for (i) the due and punctual payment of
all amounts payable by the Stockholder pursuant to the Note, and (ii) the due
and punctual performance and observance of all other agreements, covenants,
obligations, warranties and representations of the Stockholder as set forth in
this Stock Pledge Agreement (collectively, the "Secured Obligations").
3. VOTING AND OWNERSHIP OF SHARES. So long as no Event of Default
occurs hereunder or under the Note (and upon the occurrence of an Event of
Default, then following the cure of such Event of Default), the Stockholder
shall be entitled to vote the Stock, but only for purposes not inconsistent with
the covenants, obligations and conditions contained in this Stock Pledge
Agreement. Immediately upon the occurrence of any "Event of Default", as
hereinafter defined, and for so long as such Event of Default continues, the
Lender shall be entitled to exercise all voting rights and privileges whatsoever
with respect to the Stock, and to that end the Stockholder hereby appoints the
Lender as its proxy and attorney-in-fact for purposes of voting the Stock, and
this appointment shall be deemed coupled with an interest and is and shall be
irrevocable until all of the Stockholder's obligations to the Lender have been
fully and finally paid. All persons whatsoever shall be conclusively entitled to
rely upon the Lender's oral or written certification that it is entitled to vote
the Stock hereunder. The Stockholder shall execute and deliver to the Lender any
additional proxies and powers of attorney that the Lender may desire in order to
vote more effectively the Stock in its own name. Upon the occurrence of any
Event of Default hereunder and for so long as such Event of Default continues,
the Lender may (but shall not be obligated to) vote the Stock.
4. PAYMENTS OF DIVIDENDS AND NEW SHARES. During the period
that the Stock is being held as security hereunder:
(a) The Stockholder shall not, without the prior
written consent of the Lender, vote the Stock in favor of allowing ThermoView
Industries, Inc., to pay any partial or complete liquidating distributions;
and
(b) The Stockholder shall not, without the prior
written consent of the Lender, vote the Stock in favor of allowing ThermoView
Industries, Inc., to issue any additional shares or options,
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subscription rights, warrants or other instruments with respect to the Stock.
5. STATUS OF STOCK. The Stockholder hereby represents and warrants to
the Lender that the Stock is validly issued and outstanding, fully paid and
nonassessable; that the Stockholder is the registered owner of the Stock, free
and clear of all liens, charges, equities and encumbrances; and that Stockholder
has the full power and authority to pledge the Stock to the Lender pursuant to
this Stock Pledge Agreement. Stockholder covenants and agrees that none of the
Stock shall be sold, transferred, or assigned without the Lender's prior written
consent, which consent may be arbitrarily withheld so long as this Stock Pledge
Agreement is in effect.
6. MAINTENANCE OF PRIORITY OF PLEDGE. The Stockholder shall be liable
for and shall from time to time pay and discharge all taxes, assessments and
governmental charges imposed upon the Stock by federal, state or local
authority, the liens of which would or might be held prior to the right of the
Lender in and to the Stock. The Stockholder shall not, at any time while this
Stock Pledge Agreement is in effect, do or suffer any act or thing whereby the
rights of the Lender in the Stock would or might be impaired. The Stockholder
shall execute and deliver such further documents and take such further actions
as may be reasonably required to confirm the rights of the Lender in and to the
Stock or otherwise to effectuate the intention of this Stock Pledge Agreement.
7. EVENTS OF DEFAULT. Each of the following shall be deemed an
"Event(s) of Default" hereunder:
(a) Any default occurs in the payment of interest or principal
or other sums due with respect to the Secured Obligations, when the same are due
and payable in accordance with their respective terms (provided, that any
required notices have been given and any applicable grace periods have expired);
or
(b) A breach of any kind whatsoever occurs under the terms of
this Stock Pledge Agreement or any covenant, warranty, representation or
agreement made by the Stockholder herein, or in connection herewith, shall be
broken or proven to be untrue at any time (provided, that any required notices
have been given and any applicable grace periods have expired).
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8. REMEDIES UPON EVENT OF DEFAULT. Upon the occurrence of any Event of
Default, as referred to in Section 7 hereof, and for so long as such Event of
Default continues, the Lender shall have the following rights and remedies, in
addition to all other rights and remedies provided at law or in equity, all of
which shall be cumulative and may be exercised from time to time, either
successively or concurrently, either by itself or through a court or courts of
appropriate jurisdiction:
(a) The Lender may exercise its rights as proxy and
attorney-in-fact pursuant to Section 3 hereof to exercise all voting rights and
privileges granted to shareholders of ThermoView Industries, Inc.
(b) The Lender may exercise all rights of a secured party
under the Uniform Commercial Code and all other applicable laws.
(c) The Lender may take such steps as may be necessary to
cause all or any portion of the Stock as it, in its sole discretion, deems
necessary or desirable to be transferred into the Lender's name or into the name
of the Lender's nominee on the books of ThermoView Industries, Inc., and
following such transfer, the Lender may exercise all rights granted to holders
of shares of Series D Preferred Stock of ThermoView Industries, Inc., under its
Certificate of Incorporation and By-laws, and applicable law, including without
limitation, the right to arrange a bona fide sale of the Stock or any portion
thereof within a reasonable time at a public sale or sales or at a private sale
or sales or to vote the Stock in favor of the declaration of a dividend in kind.
In the event that a sale or sales of the Stock is determined
necessary in the Lender's sole discretion, the Lender will give notice to the
Stockholder and grant the Stockholder a reasonable time (as determined by the
Lender, giving consideration to the Stockholder's and ThermoView Industries,
Inc.'s then existing financial condition) either to purchase the Stock or to
arrange for a purchase of the Stock by another person who has such knowledge and
experience concerning the financial affairs of the Stockholder and ThermoView
Industries, Inc., that registration of the Stock under any federal or state
securities laws is not deemed necessary or advisable in the opinion of the
Lender's counsel before such sale, for an amount not less than all the Secured
Obligations then due and
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payable. In the event such a sale satisfactory to the Lender cannot be arranged,
then the Lender may take such steps as may be necessary to effect either a
public sale of the Stock or a sale of the Stock not involving a public offering
within the meaning of the regulations of the Securities and Exchange Commission,
at the cost and expense of the Stockholder. In either event, the Lender may sell
the Stock, or any portion thereof, from time to time, upon not less than ten
(10) days prior written notice to the Stockholder of the time and place of sale
(which notice the Stockholder hereby agrees is commercially reasonable), for
cash or for future delivery, the Stockholder hereby waiving all rights, if any,
of marshaling the Stock and other security for the payment of the Obligations.
At such sale or sales, the Lender may bid for and acquire the Stock or any
portion thereof free from any further redemption rights of the Stockholder, and
in lieu of paying cash therefor, may make settlement for the selling price of
the Stock or part thereof by crediting upon the payment of the Secured
Obligations the net selling price of the Stock, after deducting all of the
Lender's reasonable costs and expenses of every kind and nature therefrom,
including the Lender's reasonable attorneys' fee incurred in connection with
realizing upon the Stock, provided the same is not prohibited by applicable law.
In the case of any sale by the Lender of the Stock, or any
portion thereof, on credit or for future delivery, which may be elected at the
option and in the complete discretion of the Lender, the Stock so sold may, at
the Lender's option, either be delivered to the purchaser or retained by the
Lender until the selling price is paid by the purchaser, but in either event the
Lender shall incur no liability in case of failure of the purchaser to take up
and pay for the Stock so sold. In case of any such failure, such Stock may be
sold again by the Lender in the manner provided in this paragraph.
After deducting all its reasonable costs and expenses of every
kind, including without limitation, legal and accounting fees incident to a
registration of the stock under the Securities Act of 1933 or any rule or rules
adopted pursuant thereto or under the securities (Blue Sky) laws of any state or
incident to a public or private offering in connection with the sale of the
Stock, the Lender shall apply the residue of the proceeds of the sale or sales
of the Stock to the Secured Obligations in the order or priority selected by the
Lender. The Lender shall not incur any liability as a result of the sale of the
Stock at any private sale or sales, and the
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Stockholder hereby waives any claim arising by reason of the fact that the price
or prices for which the Stock, or any portion thereof, is sold at such private
sale or sales is less than the price which would have been obtained at a public
sale or sales or is less than the amount due on the Note, even if the Lender
accepts the first offer received and does not offer the Stock, or any portion
thereof, to more than one offeree. The Stockholder shall remain liable for any
deficiency remaining due with respect to the Secured Obligations. The Lender
will account to the Stockholder for any surplus resulting from such sale or
sales within sixty (60) days following the Lender's receipt of final payment in
cash.
9. NOTICES. All notices, elections, requests, demands and other
communications hereunder shall be in writing and shall be given at the time
delivered or deposited in the United States mails, certified or registered mail,
postage prepaid, return receipt requested, or sent by telex or telecopy,
addressed to the parties as follows (or to such other person or place of which
any party hereto shall have given written notice to the other):
If to the Lender: Founders Group, LLC
0000-X Xxxx Xxxx
Xxxxxxxxxx, Xxxxxxxx 00000
Attn: Xx. Xxxxxxx Xxxxxxxx
If to the Stockholder: Xxxxxx X. Xxxxxx
00000 Xxxxxxxxx Xxxxx
Xxxxx Xxxx, Xxxxxxxx 00000
The address of any party for any purpose may be changed at any time and
from time to time in the manner provided for in this Section 9 and shall be the
most recent such address furnished in writing to the other party. A notice shall
be deemed to have been given when dispatched, if by telex or telecopy, addressed
as aforesaid (or to such other designated address), or if by mail on the third
Business Day after it is enclosed in an envelope, addressed to the party to be
notified at the address stated above (or to such other designated address),
properly stamped, sealed and deposited in the United States mail.
10. GOVERNING LAW. THE LAWS OF THE COMMONWEALTH OF KENTUCKY
SHALL GOVERN THE CONSTRUCTION OF THIS STOCK PLEDGE AGREEMENT AND THE RIGHTS
AND REMEDIES AND DUTIES OF THE PARTIES HEREUNDER.
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11. SUCCESSORS AND ASSIGNS. This Stock Pledge Agreement shall
bind the Stockholder, its successors and assigns, and shall inure to the
benefit of the Lender, its successors and assigns.
12. TIME OF ESSENCE. Time shall be of the essence in the
performance of the Stockholder's obligations hereunder.
13. WAIVER OF TRIAL BY JURY. Each of the parties hereto waives
all right to trial by jury in any action or proceeding to enforce or defend his
or its rights under this Agreement and/or the Note.
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IN WITNESS WHEREOF, the parties hereto have caused their duly
authorized representatives to duly execute and deliver this Stock Pledge
Agreement on the dates set forth opposite their respective signatures, but
effective as of the date first above written.
The "Stockholder"
Xxxxxx X. Xxxxxx
By:________________________
Title:________________________
The "Lender"
Founders Group, LLC
By:________________________
Title:________________________
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