LOAN AGREEMENT
THIS LOAN AGREEMENT (the "AGREEMENT"), is entered into as of August
31, 1998, among [i] THERMOVIEW INDUSTRIES, INC., a Delaware corporation
("ThermoView"), [ii] AMERICAN HOME DEVELOPERS CO., INC., a California
corporation ("American Home"), [iii] AMERICAN HOME REMODELING, a California
corporation ("American Home Remodeling"), [iv] BLIZZARD ENTERPRISES, INC., a
Minnesota corporation ("Blizzard Enterprises"), [v] FIVE STAR BUILDERS, INC., a
California corporation ("Five Star"), [vi] ICE, INC., a North Dakota business
corporation ("Ice"), [vii] KEY HOME CREDIT, INC., a Delaware corporation ("Key
Home"), [viii] KEY HOME MORTGAGE, INC., a Delaware corporation ("Key Home
Mortgage"), [ix] XXXXXXXX SIDING AND WINDOW, INC., a North Dakota business
corporation ("Xxxxxxxx Siding"), [x] PRIMAX WINDOW CO., a Kentucky corporation
("Primax"), [xi] ROLOX, INC., a Kansas corporation ("Rolox"), [xii] TD WINDOWS,
INC., a Kentucky corporation ("TD Windows"), [xiii] THERMAL LINE WINDOWS,
L.L.P., a Minnesota limited liability partnership ("Thermal Line"), [xiv]
THERMOVIEW OF MISSOURI, INC., a Missouri corporation ("ThermoView-Missouri"),
and [xv] THERMO-TILT WINDOW COMPANY, a Delaware corporation ("Thermo-Tilt"),
[(ThermoView, American Home, American Home Remodeling, Blizzard Enterprises,
Five Star, Ice, Key Home, Key Home Mortgage, Xxxxxxxx Siding, Primax, Rolox, TD
Windows, Thermal Line, ThermoView-Missouri and Thermo-Tilt individually are
referred to in this Agreement as the "ORIGINAL BORROWERS", the "ORIGINAL
BORROWERS" together with each other entity acquired or formed by any of the
aforementioned Original Borrowers (each an "ACQUIRED ENTITY") and that hereafter
joins this Agreement as an obligor pursuant to the provisions hereof are
referred to each individually as a "BORROWER" and collectively as the
"BORROWERS") and PNC BANK, NATIONAL ASSOCIATION, a national banking association
(the "BANK")].
The Borrower and the Bank, with the intent to be legally bound, agree as
follows:
1. LOAN. The $15,000,000.00 Committed Line of Credit (the "LOAN") made
by the Bank for the purpose of [i] allowing the Borrowers to make acquisitions,
[ii] providing the Borrowers with working capital and [iii] providing the
initial funding of Key Home Credit Inc., a Delaware corporation ("Key Home
Credit"), shall be subject to and governed by this Agreement. The Loan is or
will be evidenced by that certain Promissory Note (Committed Line of Credit
Note) of the Borrowers (the "NOTE") acceptable to the Bank, which shall set
forth the interest rate, repayment and other provisions, the terms of which are
incorporated into this Agreement by reference.
1. LOAN COMMITMENT. The Bank agrees to disburse to the Borrowers
from time to time after the date hereof, subject to and in accordance with the
terms and conditions of this Agreement, an aggregate principal amount not to
exceed at any one time outstanding the lesser of Fifteen Million Dollars
($15,000,000.00) or the amount which is prescribed by the Section of this
Agreement entitled "Limitation of Commitment." Within such limits, Borrowers
may borrow, repay and reborrow. ANYTHING TO THE CONTRARY CONTAINED IN THIS
SECTION OR THIS AGREEMENT OR
THE OTHER LOAN DOCUMENTS TO THE CONTRARY NOTWITHSTANDING, BORROWERS SHALL NOT
BE ENTITLED TO OBTAIN AND THE BANK SHALL NOT BE REQUIRED TO MAKE ANY ADVANCE
OF THE LOAN AT ANY TIME AT WHICH THERE EXISTS AN EVENT OF DEFAULT UNDER THIS
AGREEMENT. FOR PURPOSES OF THIS AGREEMENT THE TERM "ADVANCE" MEANS A
DISBURSEMENT OF FUNDS BY THE BANK TO THE BORROWERS PURSUANT TO ANY OF THE
LOAN DOCUMENTS.
2. APPLICATION FOR ADVANCES. Subject to the provisions of the
Note, which shall control in the case of any inconsistency with the
provisions of this Section, Borrowers apply for each Advance of the Loan in
writing, accompanied by a certificate in form and substance acceptable to the
Bank confirming (including showing the requisite calculations) that the
aggregate principal amount of the Loan will not exceed the Commitment Limit
(hereinafter defined) after giving effect to the Advance being requested, and
certifying that the representations and warranties of Borrowers contained in
this Agreement remain in full force and effect and that no Event of Default,
as hereinafter defined (or circumstance that with any applicable required
notice and/or period of cure would become an Event of Default), is existing
or will exist after giving effect to the Advance being requested. Each
Advance shall be in the aggregate amount of not less than Five Hundred
Thousand and No/100 Dollars ($500,000.00), or integral multiples thereof, and
shall be credited into a demand deposit account maintained by the Borrowers
with the Bank. The Bank shall endeavor to effect credit of the proceeds of
any Advance requested prior to 11:00 a.m. on the same business day on which
application for such Advance is received by the Bank. Proceeds of any
Advance for which a request is received by the Bank after 11:00 a.m. may not
be credited, at the option of the Bank, until the next business day. The
date and amount of each Advance made by the Bank, and the date and amount of
each payment or prepayment of principal of the Loan shall be recorded by the
Bank, but any failure of the Bank so to record such dates or amounts shall
not relieve the Borrowers of their obligations hereunder or under the Note
evidencing the Loan. Each Borrower agrees that the Bank's books and records
as to the amounts due under the Loan shall be deemed to be presumptively
correct except for manifest error.
3. LIMITATION OF COMMITMENT. Notwithstanding any other provision
of this or any other Loan Document, the aggregate unpaid principal amount of
Advances of the Loan shall not at any time exceed an amount (the "COMMITMENT
LIMIT") equal to the lesser of:
[1] $15,000,000.00 (the "DOLLAR LIMITATION"); or
[2] 3.5 times the collective (a) Modified Borrower EBITDA, as
hereinafter defined, for all Borrowers for the immediately preceding four
(4) fiscal quarters of Borrowers calculated as of the date of the
requested Advance using information on the Borrowers as of the most
recently ended fiscal quarter of Borrowers for which Financial Statements,
as hereinafter defined, have been delivered to the Bank (the "ADVANCE
LIMITATION"). Notwithstanding the foregoing Advance Limitation, no Advance
will be allowed the result of which will be to cause the outstanding
principal balance of the Loan to exceed $6,500,000 unless and until [i] the
Bank has received projections and budgets for the finances and operations
of Borrowers for fiscal years 1998 and 1999 of Borrowers (including balance
sheets, income statements and monthly cash flow projections), in such
detail and containing such disclosures of the assumptions underlying that
information as
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Bank reasonably requests, reflecting that the financial results of
Borrowers during such periods will not result in a breach of any
of the covenants contained in this Agreement, [ii] the Bank has conducted
the September Field Audit, as hereinafter defined, of the Borrowers, and
[iii] the Borrowers have provided the Bank with evidence satisfactory to
Bank that the Borrowers have raised not less than $10,000,000.00 in capital
from the issuance of the Convertible Preferred Stock, as hereinafter
defined.
4. TERMINATION OF COMMITMENT. Lender's obligation to make
Advances under the Loan (the "COMMITMENT") shall continue until the earlier of
August 31, 2000, or any later date or dates, if applicable, as to which
Borrowers and the Bank (each in their sole and absolute discretion, which may be
exercised arbitrarily) may agree in writing (August 31, 2000 or such later date
is referred to herein as the "LOAN EXPIRATION DATE"), and the amount of all
Advances not earlier repaid, together with interest thereon, shall be due and
payable in full as of the Loan Expiration Date.
5. UNUSED LOAN FEE. Borrowers shall pay to the Bank a fee (the
"UNUSED LOAN FEE"), in arrears, on October 1, 1998, and on the first day of
each calendar quarter thereafter, and on the Loan Expiration Date (the period
from the date of this Agreement until and including October 1, 1998, and each
calendar quarter thereafter, and the portion of any calendar quarter, if
applicable, that includes the Loan Expiration Date, are referred to as the
"UNUSED LOAN FEE CALCULATION PERIOD"). The Unused Loan Fee applicable to any
Unused Loan Fee Calculation Period shall be the product derived by multiplying
the Unused Loan Fee Rate times the average amount by which the Dollar Limitation
during the applicable Unused Loan Fee Calculation Period exceeded the average
daily outstanding principal amount of the Loan during that interval, divided by
360, multiplied by the number of days during the applicable Unused Loan Fee
Calculation Period. The applicable Unused Loan Fee rate (the "UNUSED LOAN FEE
RATE") shall be based upon the collective Funded Debt to Modified Borrower
EBITDA of all Borrowers as of the end of the applicable Unused Loan Fee
Calculation Period as set forth in LOAN FEE CALCULATION SCHEDULE attached to and
made a part of this Agreement.
2. SECURITY. The security for repayment of the Loan shall include but
not be limited to the collateral, and other documents heretofore,
contemporaneously or hereafter executed and delivered to the Bank (the "SECURITY
DOCUMENTS"), which shall secure repayment of the Loan, the Note and all other
loans, Advances, debts, liabilities, obligations, covenants and duties owing by
the Borrowers to the Bank of any kind or nature, present or future, whether or
not evidenced by any note, guaranty or other instrument, whether arising under
any agreement, instrument or document, whether or not for the payment of money,
whether arising by reason of an extension of credit, opening of a letter of
credit, loan or guarantee or in any other manner, whether arising out of
overdrafts on deposit or other accounts or electronic funds transfers (whether
through automatic clearing houses or otherwise) or out of the Bank's non-receipt
of or inability to collect funds or otherwise not being made whole in connection
with depository transfer check or other similar arrangements, whether direct or
indirect (including those acquired by assignment or participation), absolute or
contingent, joint or several, due or to become due, now existing or hereafter
arising, and any amendments, extensions, renewals or increases and all costs and
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expenses of the Bank incurred in the documentation, negotiation,
modification, enforcement, collection or otherwise in connection with any of
the foregoing, including but not limited to reasonable attorneys' fees and
expenses (hereinafter referred to collectively as the "OBLIGATIONS"). Unless
expressly provided to the contrary in documentation for any other loan or
loans, it is the express intent of the Bank and the Borrowers that all
Obligations including those included in the Loan be cross-defaulted, such
that a default under any Obligation shall be a default under all Obligations.
This Agreement, the Note and the Security Documents are collectively
referred to as the "LOAN DOCUMENTS".
3. REPRESENTATIONS AND WARRANTIES. The Borrowers hereby make the
following representations and warranties, which shall be continuing in nature
and remain in full force and effect until the Obligations are paid in full, and
which shall be true and correct except as otherwise set forth in any Schedule
attached hereto.
1. YEAR 2000. Each Borrower has reviewed the areas within their
respective businesses and operations which could be adversely affected by,
and have developed or are developing a program to address on a timely basis,
the risk that certain computer applications used by each of the Borrowers (or
any of their respective material suppliers, customers or vendors) may be
unable to recognize and perform properly date-sensitive functions involving
dates before and after December 31, 1999 (the "YEAR 2000 PROBLEM"). The Year
2000 Problem will not result in any Material Adverse Change. For purposes of
the above provision the term "Material Adverse Change" shall mean any set of
circumstances or events which (a) has or could reasonably be expected to have
any material adverse effect whatsoever upon the validity or enforceability of
this Agreement or any of the other Loan Documents, (b) is or could reasonably
be expected to be material and adverse to the business, properties, assets,
financial condition, results of operations or prospects of any Borrower taken
as a whole, (c) impairs materially or could reasonably be expected to impair
materially the ability of any Borrower to duly and punctually pay or
perform its Obligations, or (d) impairs materially or could reasonably be
expected to impair materially the ability of the Bank, to the extent
permitted, to enforce its legal remedies pursuant to this Agreement and the
Loan Documents.
2. EXISTENCE, POWER AND AUTHORITY. Each of the Borrowers is duly
organized, validly existing and in good standing under the laws of the State of
its respective incorporation and each such Borrower has the power and authority
to own and operate its respective assets and to conduct its respective business
as now or proposed to be carried on, and is duly qualified, licensed and in good
standing to do business in all jurisdictions where its respective ownership of
property or the nature of its respective business requires such qualification or
licensing. Each Borrower is duly authorized to execute and deliver the Loan
Documents, all necessary action to authorize the execution and delivery of the
Loan Documents has been properly taken, and each Borrower is and will continue
to be duly authorized to borrow under this Agreement and to perform all of the
other terms and provisions of the Loan Documents.
3. CAPITAL STRUCTURE. Each Borrower other than ThermoView and
Thermal Line is a wholly-owned subsidiary of ThermoView. All of the partnership
interest of Thermal Line is owned by, collectively, Blizzard Enterprises and
Ice. The number of authorized, issued,
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and outstanding shares of capital stock of each Borrower other than
ThermoView and Thermal Line is as set forth on the CAPITAL STRUCTURE SCHEDULE
attached to and made a part of this Agreement.
4. FINANCIAL STATEMENTS. Each Borrower has delivered or caused to
be delivered its most recent balance sheet, income statement and statement of
cash flows (the "HISTORICAL FINANCIAL STATEMENTS"). The Historical Financial
Statements are true, complete and accurate in all material respects and fairly
present the financial condition, assets and liabilities, whether accrued,
absolute, contingent or otherwise and the results of such Borrower's operations
for the period specified therein. The Historical Financial Statements have been
prepared in accordance with generally accepted accounting principles ("GAAP")
consistently applied from period to period subject in the case of interim
statements to normal year-end adjustments and to any comments and notes
acceptable to the Bank in its sole discretion.
5. NO MATERIAL ADVERSE CHANGE. Since the date of the most recent
Financial Statements, no Borrower has suffered any damage, destruction or loss,
and no event or condition has occurred or exists, which has resulted or would
result in a material adverse change in its respective business, assets,
operations, financial condition or results of operation.
6. BINDING OBLIGATIONS. Each Borrower has full power and authority
to enter into the transactions provided for in this Agreement and has been duly
authorized to do so by appropriate action of its respective Board of Directors;
and the Loan Documents, when executed and delivered by each such Borrower, will
constitute the legal, valid and binding obligations of each such Borrower
enforceable in accordance with their terms.
7. NO DEFAULTS OR VIOLATIONS. There does not exist any Event of
Default under this Agreement or any default or violation by any Borrower of
or under any of the terms, conditions or obligations of: (i) its respective
articles or certificate of incorporation, regulations or bylaws; (ii) any
indenture, mortgage, deed of trust, franchise, permit, contract, agreement,
or other instrument to which any such Borrower is a party or by which any
such Borrower is bound; or (iii) any law, regulation, ruling, order,
injunction, decree, condition or other requirement applicable to or imposed
upon any such Borrower by any law, the action by any court or any
governmental authority or agency; and the consummation of this Agreement and
the transactions set forth herein will not result in any such default or
violation.
8. TITLE TO ASSETS. Each Borrower has good and marketable title to
the assets reflected on the most recent Historical Financial Statements, free
and clear of all liens and encumbrances, except for (i) current taxes and
assessments not yet due and payable, (ii) liens and encumbrances, if any,
reflected or noted in the Historical Financial Statements, (iii) assets disposed
of by each such Borrower in the ordinary course of its respective business since
the date of the most recent Historical Financial Statements, and (iv) those
liens or encumbrances specified on the ENCUMBRANCES SCHEDULE, which is attached
to and made a part of this Agreement.
9. LITIGATION. Except as set forth in the LITIGATION SCHEDULE which
is attached to and made a part of this Agreement, there are no actions, suits,
proceedings or governmental
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investigations pending or, to the knowledge of any Borrower, threatened
against any Borrower, none of which could result in a material adverse change
in any such Borrower's respective business, assets, operations, financial
condition or results of operations and there is no basis known to any
Borrower for any action, suit, proceedings or investigation which could
result in such a material adverse change. All pending or threatened
litigation against any Borrower is listed on the LITIGATION SCHEDULE, which
is attached to and made a part of this Agreement.
10. TAX RETURNS. Each Borrower has filed all returns and reports
that are required to be filed by each such Borrower in connection with any
federal, state or local tax, duty or charge levied, assessed or imposed upon it
or its respective property or withheld by any such Borrower, including
unemployment, social security and similar taxes and all of such taxes, have been
either paid or adequate reserve or other provision has been made or such taxes
are being contested in good faith in which case a brief description of each such
contest is set forth in the LITIGATION SCHEDULE.
11. EMPLOYEE BENEFIT PLANS. Each employee benefit plan as to which
any Borrower may have any liability complies in all material respects with
applicable provisions of the Employee Retirement Income Security Act of 1974
("ERISA"), including minimum funding requirements, and (i) no Prohibited
Transaction (as defined under ERISA) has occurred with respect to any such plan,
(ii) no Reportable Event (as defined under Section 4043 of ERISA) has occurred
with respect to any such plan which would cause the Pension Benefit Guaranty
Corporation to institute proceedings under Section 4042 of ERISA, (iii) no
Borrower has withdrawn from any such plan or initiated steps to do so, and (iv)
no steps have been taken to terminate any such plan.
12. ENVIRONMENTAL MATTERS. Each Borrower is in compliance, in all
material respects, with all Environmental Laws, including, without
limitation, all Environmental Laws in jurisdictions in which each such
Borrower owns or operates, or has owned or operated, a facility or site,
stores Collateral, arranges or has arranged for disposal or treatment of
hazardous substances, solid waste or other waste, accepts or has accepted for
transport any hazardous substances, solid waste or other wastes or holds or
has held any interest in real property or otherwise. Except as otherwise
disclosed on the LITIGATION SCHEDULE, no litigation or proceeding arising
under, relating to or in connection with any Environmental Law is pending or,
to any Borrower's knowledge, threatened against any Borrower, any real
property which any Borrower holds or has held an interest or any past or
present operation of any of the Borrowers. No release, threatened release or
disposal of hazardous waste, solid waste or other wastes is occurring, or to
any Borrower's knowledge has occurred, on, under or to any real property in
which any Borrower holds any interest or performs any of its respective
operations, in violation of any Environmental Law. As used in this Section,
"LITIGATION OR PROCEEDING" means any demand, claim, notice, suit, suit in
equity, action, administrative action, investigation or inquiry whether
brought by a governmental authority or other person, and "ENVIRONMENTAL LAWS"
means all provisions of laws, statutes, ordinances, rules, regulations,
permits, licenses, judgments, writs, injunctions, decrees, orders, awards and
standards promulgated by any governmental authority concerning health,
safety and protection of, or regulation of the discharge of substances into,
the environment.
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13. INTELLECTUAL PROPERTY. Each Borrower owns or is licensed to
use all patents, patent rights, trademarks, trade names, service marks,
copyrights, intellectual property, technology, know-how and processes
necessary for the conduct of its respective business as currently conducted
that are material to the condition (financial or otherwise), business or
operations of each such Borrower.
14. REGULATORY MATTERS. No part of the proceeds of the Loan will be
used for "purchasing" or "carrying" any "margin stock" within the respective
meanings of each of the quoted terms under Regulation U of the Board of
Governors of the Federal Reserve System as now and from time to time in effect
or for any purpose which violates the provisions of the Regulations of such
Board of Governors.
15. SOLVENCY. As of the date hereof and after giving effect to the
transactions contemplated by the Loan Documents, (i) the aggregate value of each
Borrower's assets will exceed its liabilities (including contingent,
subordinated, unmatured and unliquidated liabilities), (ii) each Borrower will
have sufficient cash flow to enable it to pay its debts as they mature, and
(iii) each Borrower will not have unreasonably small capital for the business in
which it is engaged.
16. DISCLOSURE. None of the Loan Documents contains or will contain
any untrue statement of material fact or omits or will omit to state a material
fact necessary in order to make the statements contained in this Agreement or
the Loan Documents not misleading. There is no fact known to any Borrower which
materially adversely affects or, so far as any Borrower can now foresee, might
materially adversely affect the business, assets, operations, financial
condition or results of operation of any Borrower and which has not otherwise
been fully set forth in this Agreement or in the Loan Documents.
4. AFFIRMATIVE COVENANTS. The Borrowers agree that from the date of
execution of this Agreement until all Obligations have been fully paid and any
commitments of the Bank to the Borrowers have been terminated, the Borrowers
will:
1. BOOKS AND RECORDS. Maintain books and records in accordance with
GAAP and give representatives of the Bank access thereto at all reasonable
times, including permission to examine, copy and make abstracts from any of such
books and records and such other information as the Bank may from time to time
reasonably request, and each Borrower will make available to the Bank for
examination copies of any reports, statements or returns which any such Borrower
may make to or file with any governmental department, bureau or agency, federal
or state.
2. INTERIM FINANCIAL STATEMENTS; CERTIFICATE OF NO DEFAULT. Within
forty-five (45) days after the end of each calendar quarter of ThermoView,
furnish the Bank with the Financial Statements of ThermoView for such period, in
reasonable detail, certified by an authorized officer of ThermoView and prepared
in accordance with GAAP applied from period to period. ThermoView shall also
deliver a certificate as to its compliance with applicable
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financial covenants for the period then ended and whether any Event of
Default exists, and, if so, the nature thereof and the corrective measures
ThermoView proposes to take. "FINANCIAL STATEMENTS" means ThermoView's
consolidated and, if required by the Bank in its sole discretion,
consolidating, balance sheets, income statements and statements of cash flows
for the year, month or quarter together with, in regard to any Borrowers for
which comparable data is available, year-to-date figures and comparative
figures for the corresponding periods of the prior year.
3. ANNUAL FINANCIAL STATEMENTS. Within one hundred twenty (120)
days after the end of the fiscal year of ThermoView, furnish the Bank with
the Financial Statements of ThermoView for such period. Those Financial
Statements will be prepared on an audited basis in accordance with GAAP by an
independent certified public accountant selected by the Borrowers and
satisfactory to the Bank and [ii] shall contain the unqualified opinion of an
independent certified public accountant and its examination shall have been
made in accordance with GAAP consistently applied from period to period.
4. PAYMENT OF TAXES AND OTHER CHARGES. Pay and discharge when due
all indebtedness and all taxes, assessments, charges, levies and other
liabilities imposed upon each of the Borrowers, their income, profits, property
or business, except those which currently are being contested in good faith by
appropriate proceedings and for which each such applicable Borrower shall have
set aside adequate reserves or made other adequate provision with respect
thereto acceptable to the Bank in its reasonable discretion.
5. MAINTENANCE OF EXISTENCE, OPERATION AND ASSETS. Do all things
necessary to maintain, renew and keep in full force and effect each
Borrower's organizational existence and all rights, permits and franchises
necessary to enable each such Borrower to continue its respective business;
continue in operation in substantially the same manner as at present; keep
its respective properties in good operating condition and repair; and make
all necessary and proper repairs, renewals, replacements, additions and
improvements thereto. Without limitation of the foregoing, Borrowers will
provide Bank, promptly upon request of Bank except in any event immediately
upon moving property of any Borrower that is collateral for the Loan to a
location that is leased by a Borrower, with a landlord lien waiver in form
and substance acceptable to Bank from such landlord.
6. INSURANCE. Maintain with financially sound and reputable
insurers, insurance with respect to its respective property and business
against such casualties and contingencies, of such types and in such amounts
as is customary for established companies engaged in the same or similar
business and similarly situated. In the event of a conflict between the
provisions of this Section and the terms of any Security Documents relating
to insurance, the provisions in the Security Documents will control.
7. COMPLIANCE WITH LAWS. Comply in all material respects with
all laws applicable to each Borrower and to the operation of its respective
business (including any statute, rule or regulation relating to employment
practices and pension benefits or to environmental, occupational and health
standards and controls).
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8. BANK ACCOUNTS. Establish and maintain at the Bank the primary
depository accounts of ThermoView, which shall include one or more "sweep
accounts" into which regularly shall be deposited from time to time a
substantial portion of the deposits of each other Borrower.
9. FINANCIAL COVENANTS. Comply with each of the following financial
covenants, determined in accordance with GAAP:
[1] FUNDED DEBT TO MODIFIED BORROWER EBITDA. The ratio,
calculated as of the end of each fiscal quarter of Borrowers beginning June
30, 1998 (each a "CALCULATION DATE"), of the consolidated (and combined, if
applicable) Funded Debt of Borrowers as of each Calculation Date divided by
the consolidated (and combined, if applicable) Modified Borrower EBITDA for
Borrowers for the four (4) fiscal quarters of Borrowers immediately
preceding the applicable Calculation Date shall not be greater than 3.50 to
1.00. For purposes of this financial covenant, the following terms shall
have the following meanings:
[1] "BASE EARNINGS" is defined as the consolidated (and
combined, if applicable) sum of all earnings before interest, taxes,
depreciation and amortization LESS any extraordinary gain, PLUS
expenses, calculated and estimated by Borrowers in a manner and
amount acceptable to Bank in each case, incurred by each Borrower,
if and to the extent applicable, that reasonably are expected no
longer to be incurred because of operating efficiencies realized
as a result of and following each such entity having become a
Borrower ("NON-RECURRING EXPENSES"), and before giving effect to
the Corporate Income and Corporate Overhead, each hereinafter defined.
[2] "EBITDA" is defined as the sum of [i] Base Earnings of
Borrowers, PLUS [ii] an amount, not to exceed $1,000,000, equal to
all non-cash charges to income incurred by Borrowers on or before
the date of this Agreement in respect of stock options heretofore
issued by Borrowers ("STOCK OPTION CHARGES"), PLUS [iii] the amount
of "corporate income" (e.g. interest income and similar revenues
generated by investment of cash on hand; referred to in this
Agreement as "CORPORATE INCOME"), except that Corporate Income
during the four (4) fiscal quarters of Borrowers preceding
September 30, 1998 and December 31, 1998, respectively, shall be
deemed to be $100,000 even if the actual amount of Corporate
Income during such period is greater or less than $100,000,
and LESS [iv] an allocation for corporate overhead incurred by
Borrowers ("CORPORATE OVERHEAD") during the period of
calculation, except that Corporate Overhead during the four (4)
fiscal quarters of Borrowers preceding September 30, 1998 and
December 31, 1998, respectively, shall be deemed to be $1,425,000,
even if the actual amount of Corporate Overhead during such
periods is greater or less than $1,425,000, and Corporate
Overhead as of each Calculation Date after December 31, 1998,
shall be deemed equal to the GREATER of either (a) the actual
amount thereof as established by Borrowers in a manner acceptable
to the Bank, or (b) $2,000,000.
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[3] "FUNDED DEBT" is defined as the consolidated (and
combined, if applicable) sum of all line borrowings, plus current
(i.e. less than or equal to one (1) year) and non-current maturities
of long term debt of each of the Borrowers (including but not
limited to any "earn-outs", i.e. obligations of any Borrower that
are determined based on the future performance of any Acquired
Entity) that in each case are not subordinated to all indebtedness
of whatsoever nature of Borrower to the Bank pursuant to
documentation acceptable in form and substance to the Bank.
[4] "MODIFIED BORROWER EBITDA" is defined as the EBITDA
of the Borrowers for which the Funded Debt to Modified Borrower EBITDA
financial covenant is being calculated, except without giving effect
to the EBITDA of any Borrower (each an "UNAUDITED BORROWER") for
which the Bank has not received both [a] audited financial
statements in form and detail acceptable to the Bank, as well as
[b] other due diligence information concerning such Borrower as Bank
may request, in form and substance acceptable to the Bank plus
[i] fifty percent (50%) of the EBITDA of each Unaudited Borrower.
[2] MODIFIED BORROWER EBIT TO INTEREST AND DIVIDENDS. The ratio
as of each Calculation Date of the consolidated (and combined, if
applicable) EBIT of Borrowers during the immediately preceding four (4)
fiscal quarters of Borrowers divided by the sum of consolidated (and
combined, if applicable) interest and dividends for Borrowers during the
same period shall be greater than 3.00 to 1.00. For purposes of this
financial covenant, the terms "EBIT" and "MODIFIED BORROWER EBIT" have the
same meanings and shall be calculated in the same manner as EBITDA and
Modified Borrower EBITDA, respectively, except that, for purposes of
defining and calculating EBIT and Modified Borrower EBIT, Base Earnings
shall mean earnings before interest and taxes, LESS any extraordinary gain.
10. NET WORTH. Borrowers will maintain at all times a consolidated
(and combined, if applicable) minimum Net Worth in an amount equal to ninety
percent (90%) of Borrowers' actual book net worth as indicated in Borrowers'
consolidated (and combined, if applicable) Financial Statements dated as of June
30, 1998 (the "BASE NET WORTH"), plus, for each fiscal year of Borrowers (or
portion thereof, in the case of the fiscal year ending 12/31/98) ending after
June 30, 1998, an amount equal to the sum of [i] seventy-five percent (75%) of
Borrowers' consolidated (and combined, if applicable) net income for each such
fiscal year and [ii] seventy-five percent (75%) of the net proceeds of any
equity offering for Borrowers for each such fiscal year. As used in this
financial covenant the term "Net Worth" means stockholders' equity in the
Borrower.
11. CONVERTIBLE PREFERRED STOCK. Raise a minimum of $10,000,000 in
capital (including the $8,500,000 that is one of the conditions hereinafter
described to the Bank making any Advances of the Loan) from the issuance of the
Borrowers' convertible preferred stock (the "CONVERTIBLE PREFERRED STOCK") on or
before September 30, 1998.
-10-
12. ADDITIONAL REPORTS. Provide prompt written notice to the Bank
of the occurrence of any of the following (together with a description of the
action which the Borrowers propose to take with respect thereto): [i] any
Event of Default or potential Event of Default, [ii] any litigation filed by
or against any Borrower, [iii] any Reportable Event or Prohibited Transaction
with respect to any Employee Benefit Plan(s) (as defined in ERISA) or [iv]
any event which might result in a material adverse change in the business,
assets, operations, financial condition or results of operation of any
Borrower.
13. KEY HOME CREDIT FUNDING. Obtain additional funding for Key
Home Credit once and to the extent that Key Home Credit's then (and
thereafter, from time to time) outstanding loan portfolio exceeds
$5,000,000.00. In addition, neither Key Home Credit nor any other Borrower
shall either [a] purchase or otherwise acquire for value any account or note
receivable or other evidence of indebtedness from any person or entity not a
Borrower, or [b] create or permit to exist any loan or note receivable
arising in the course of their respective businesses that is not either "A"
or "B" paper as defined by the so-called "FICO" scoring system utilized by
the Bank and other institutional lenders in asset securitization valuation
procedures.
14. FINANCIAL PROJECTIONS. Provide the Bank with financial
projections with respect to the consolidating and consolidated (and combined,
if applicable) operations of the Borrowers for the fiscal years of Borrowers
ended December 31, 1998 and December 31, 1999 that are acceptable to the Bank
in its sole discretion before September 30, 1998.
15. KEY-MAN LIFE INSURANCE. Provide the Bank with evidence of
key-man life insurance insuring the lives of Xxxxxx Xxxxxxx and Xxxx Xxxxxx
who are members of the Borrowers' executive management on or before October
30, 1998.
16. FIELD AUDIT. On or before September 30, 1998, allow
representatives of the Bank to conduct a "field audit", satisfactory to the
Bank in its sole discretion, of the operations of the Borrowers (the
"SEPTEMBER FIELD AUDIT"). The September Field Audit will primarily be
focused on due diligence procedures utilized by the Borrowers when reviewing
potential acquisitions, the integration and conversion of acquisitions, and
on the Borrowers' accounting and systems areas including the adequacy of
Borrowers' procedures and controls. The Bank may require additional field
audits no more frequently than once every six (6) months during the term of
this Agreement. The Borrowers shall be responsible for all expenses incurred
by the Bank in connection with the September Field Audit and all subsequent
field audits.
17. JOINDER OF ACQUIRED ENTITIES. Each Acquired Entity shall join
this Loan Agreement and the Security Agreement and the other Loan Documents
as a Borrower, pursuant to documentation (including UCC-1 Financing
Statements) acceptable to Bank, promptly upon being acquired or formed by any
Borrower, and until such joinder has been completed to the satisfaction of
Bank, any EBITDA of such Acquired Entity shall not be considered in
calculating the Commitment Limit.
-11-
5. NEGATIVE COVENANTS. Each Borrower covenants and agrees that from the
date of execution of this Agreement until all Obligations have been fully paid
and any commitments of the Bank to the Borrowers have been terminated, no
Borrower will, except as set forth in the ENCUMBRANCES SCHEDULE, without the
Bank's prior written consent:
1. INDEBTEDNESS. Incur any indebtedness for borrowed money
(including but not limited to capitalized leases) other than: (i) the Loan and
any subsequent indebtedness to the Bank; (ii) existing indebtedness disclosed on
the Historical Financial Statements referred to in the "Financial Statements"
Section of this Agreement; and (ii) indebtedness that is subordinated in form
and substance acceptable to the Bank.
2. LIENS AND ENCUMBRANCES. Except for liens and encumbrances in
favor of the Bank and except as provided in the "Title to Assets" Section of
this Agreement, create, assume or permit to exist any mortgage, pledge,
encumbrance or other security interest or lien upon any assets now owned or
hereafter acquired or enter into any arrangement for the acquisition of property
subject to any conditional sales agreement.
3. GUARANTEES. Guarantee, endorse or become contingently liable for
the obligations of any person, firm or corporation, except in connection with
the endorsement and deposit of checks in the ordinary course of business for
collection.
4. LOANS OR ADVANCES. Purchase or hold beneficially any stock,
other securities or evidences of indebtedness of any loans or advances to, or
make any investment or acquire any interest whatsoever in, any other person,
firm or corporation, except investments disclosed on the Borrowers' Historical
Financial Statements or acceptable to the Bank in its sole discretion.
5. MERGER OR TRANSFER OF ASSETS. Merge or consolidate with or into
any person, firm or corporation or lease, sell, transfer or otherwise dispose of
all, or substantially all, of its property, assets and business whether now
owned or hereafter acquired, except for internal consolidations or
reorganizations after which a Borrower or an Acquired Entity is the surviving
entity.
6. CHANGE IN BUSINESS, MANAGEMENT OR OWNERSHIP. Make or permit any
material change [i] in the nature of its respective business as carried on as of
the date hereof, [ii] in the composition of its respective current executive
management, or [iii] in its respective equity ownership.
7. DIVIDENDS. Except for those dividends payable pursuant to the
Convertible Preferred Offering dated as of June 12, 1998, declare or pay any
dividends on or make any distribution with respect to any class of its equity or
ownership interest, or purchase, redeem, retire or otherwise acquire any of its
equity, except for the amount of federal and state income tax of the principals
of any Borrower attributable to the earnings of any such Borrower where any such
Borrower is an S corporation.
-12-
6. EVENTS OF DEFAULT. The occurrence of any of the following
will be deemed to be an "EVENT OF DEFAULT":
1. COVENANT DEFAULT. Any Borrower shall default in the
performance of any of the covenants or agreements contained in this
Agreement, including but not limited to those covenants contained in the
"Interim Financial Statements; Certificate of No Default" and "Annual
Financial Statements" Sections of this Agreement, and such default is not
cured to the satisfaction of the Bank on or before twenty-one (21) calendar
days after the Bank has given written notice thereof to any such Borrower.
Notwithstanding the foregoing, the twenty-one (21) day cure period described
above shall not be applicable to those covenants contained in Sections 4(M),
5(A), 5(B), 5(C), 5(D) and 5(E) of this Agreement.
2. BREACH OF WARRANTY. Any Financial Statement, other
financial information or due diligence, representation, warranty or
certificate made or furnished by any Borrower to the Bank in connection with
this Agreement shall be false, incorrect or incomplete when made.
3. OTHER DEFAULT. The occurrence of an Event of Default as
defined in the Note or any of the Security Documents.
A0 POST-CLOSING DELIVERIES. If Borrower shall not, as
applicable, have satisfied those conditions and delivered to Bank those items
described in the POST CLOSING DELIVERIES SCHEDULE attached to and made a part
of this Agreement on or before the respective dates indicated therein.
Upon the occurrence of an Event of Default, the Bank will have all rights and
remedies specified in the Note and the Security Documents and all rights and
remedies (which are cumulative and not exclusive) available under applicable law
or in equity.
7. CONDITIONS. The Bank's obligation to make any Advance under the Loan
is subject to the conditions set forth below, all of which must be satisfied on
or before September 30, 1998 (time being of the essence) or this Agreement shall
be voidable at any time thereafter at the option of the Bank:
1. CONVERTIBLE PREFERRED STOCK. The Borrower shall have
demonstrated to the reasonable satisfaction of the Bank that Borrowers have
irrevocably raised at least $8,500,000.00 in capital from the issuance of
Convertible Preferred Stock.
2. NO EVENT OF DEFAULT. No Event of Default or event which with the
passage of time, provision of notice or both would constitute an Event of
Default shall have occurred and be continuing.
3. AUTHORIZATION DOCUMENTS. The Bank shall have been furnished
certified copies of resolutions of the board of directors of any corporation
that executes this Agreement, the Note or any of the Security Documents; or
other proof of authorization in the case of each Borrower satisfactory to the
Bank.
-13-
4. RECEIPT OF LOAN DOCUMENTS. The Bank shall have received the
Loan Documents and such other instruments and documents which the Bank may
reasonably request in connection with the transactions provided for in this
Agreement, which may include an opinion of counsel for any party executing
any of the Loan Documents in form and substance satisfactory to the Bank.
5. LOAN FEE. The Bank shall have received the remainder not already
paid, if any, of a fee in the amount of $50,000.00 for providing and committing
to the Loan.
6. INTERIM FINANCIAL STATEMENTS. The Borrowers shall have provided
the Bank with interim unaudited Financial Statements on each of the Borrowers
for the period ended June 30, 1998.
B0 ADDITIONAL AUDITED FINANCIAL STATEMENTS. The Borrowers shall
have provided the Bank with the Financial Statements of Thermo-Tilt, Primax,
Rolox and American Home as of December 31, 1997, prepared on an audited basis in
accordance with GAAP by an independent certified public accountant selected by
the Borrowers and satisfactory to the Bank (the "ADDITIONAL AUDITED FINANCIAL
STATEMENTS") collectively reflecting combined or consolidated Base Earnings of
such Borrowers of at least $1,359,000.00. Such Additional Audited Financial
Statements shall contain the unqualified opinion of an independent certified
public accountant and its examination shall have been made in accordance with
GAAP consistently applied from period to period.
C0 OTHER FINANCIAL INFORMATION. Without limitation of Section 7.F
above, Borrowers shall have provided the Bank with [i] the unaudited Financial
Statements for each of Five Star, Xxxxxxxx Siding, TD Windows, Thermal Line,
Blizzard Enterprises, Ice, Key Home, Key Home Mortgage and American Home
Remodeling collectively reflecting combined Base Earnings for such Borrowers of
at least $2,250,000 during the four fiscal quarters immediately preceding June
30, 1998, and [ii] documentation adequately supporting, in the opinion of the
Bank, an additional $100,000 during the same period in Corporate Income, and
[iii] summaries of all due diligence, in form and substance reasonably
acceptable to Bank, on all acquisitions by each Borrower occurring on or before
the date of this Agreement.
7. LIQUIDATION OF CURRENT INDEBTEDNESS. The Borrowers shall have or
shall simultaneously with the execution and delivery of this Agreement [i] pay
in full any and all indebtedness owed by any Borrower to Bank One, Kentucky, NA,
and [ii] pay in full that certain Promissory Note (Interim Term Note) executed
and delivered on or about August 13, 1998 in the face principal amount of
$4,000,000 from Borrowers to the Bank.
8. EXPENSES. The Borrowers agree to pay the Bank, upon the closing of
this Agreement, and otherwise on demand, all costs and expenses incurred by the
Bank in connection with the (i) preparation, negotiation and delivery of this
Agreement and the other Loan Documents, and any modifications thereto, and (ii)
collecting the loan or instituting, maintaining, preserving, enforcing and
foreclosing the security interest in any of the collateral securing the
-14-
Loan, whether through judicial proceedings or otherwise, or in defending or
prosecuting any actions or proceedings arising out of or relating to this
Agreement, including reasonable fees and expenses of counsel (which may
include costs of in-house counsel), expenses for auditors, appraisers and
environmental consultants, lien searches, recording and filing fees and taxes.
9. INCREASED COSTS. On written demand, together with the written
evidence of the justification therefor, the Borrowers agree to pay the Bank, all
direct costs incurred and any losses suffered or payments made by the Bank as a
consequence of making the Loan by reason of any change in law or regulation or
its interpretation imposing any reserve, deposit, allocation of capital or
similar requirement (including without limitation, Regulation D of the Board of
Governors of the Federal Reserve System) on the Bank, its holding company or any
of their respective assets.
10. MISCELLANEOUS.
1. NOTICES. Each Borrower acknowledges and agrees that any notice
given in accordance with the provisions of this Section of this Agreement solely
to Thermo-View shall constitute notice to each Borrower. All notices, demands,
requests, consents, approvals and other communications required or permitted
hereunder must be in writing and will be effective upon receipt if delivered
personally to such party, or if sent by facsimile transmission with confirmation
of delivery, or by nationally recognized overnight courier service, to the
address set forth below or to such other address as any party may give to the
other in writing for such purpose:
To the Bank: PNC Bank, National Association
000 Xxxx Xxxxxxxxx Xxxxxx
Xxxxxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxxx, Vice President
Facsimile No.: (000) 000-0000
Telephone No.: (000) 000-0000
To the Borrower: ThermoView Industries, Inc.
0000-X Xxxx Xxxx
Xxxxxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxxxx, President
Facsimile No.: (000) 000-0000
Telephone No.: (000) 000-0000
2. PRESERVATION OF RIGHTS. No delay or omission on the part of the
Bank to exercise any right or power arising hereunder will impair any such right
or power or be considered a waiver of any such right or power or any
acquiescence therein, nor will the action or inaction of the Bank impair any
right or power arising hereunder. The Bank's rights and remedies hereunder are
cumulative and not exclusive of any other rights or remedies which the Bank may
have under other agreements, at law or in equity.
3. ILLEGALITY. In case any one or more of the provisions contained
in this Agreement should be invalid, illegal or unenforceable in any respect,
the validity, legality and
-15-
enforceability of the remaining provisions contained herein shall not in any
way be affected or impaired thereby.
4. CHANGES IN WRITING. No modification, amendment or waiver of any
provision of this Agreement nor consent to any departure by any Borrower
therefrom, will in any event be effective unless the same is in writing and
signed by the Bank, and then such waiver or consent shall be effective only in
the specific instance and for the purpose for which given. No notice to or
demand on any Borrower in any case will entitle any Borrower to any other or
further notice or demand in the same, similar or other circumstance.
5. ENTIRE AGREEMENT. This Agreement (including the documents and
instruments referred to herein) constitutes the entire agreement and supersedes
all other prior agreements and understandings, both written and oral, between
the parties with respect to the subject matter hereof.
6. COUNTERPARTS. This Agreement may be signed in any number of
counterpart copies and by the parties hereto on separate counterparts, but all
such copies shall constitute one and the same instrument.
7. SUCCESSORS AND ASSIGNS. This Agreement will be binding upon and
inure to the benefit of all of the Borrowers and the Bank and their respective
heirs, executors, administrators, successors and assigns; PROVIDED, HOWEVER,
that no Borrower may assign this Agreement in whole or in part without the
prior written consent of the Bank and the Bank at any time may assign this
Agreement in whole or in part.
8. INTERPRETATION. In this Agreement, unless the Bank and the
Borrowers otherwise agree in writing, the singular includes the plural and the
plural the singular; words importing any gender include the other genders;
references to statutes are to be construed as including all statutory provisions
consolidating, amending or replacing the statute referred to; the word "or"
shall be deemed to include "and/or", the words "including", "includes" and
"include" shall be deemed to be followed by the words "without limitation";
references to articles, sections (or subdivisions of sections) or exhibits are
to those of this Agreement unless otherwise indicated; and references to
agreements and other contractual instruments shall be deemed to include all
subsequent amendments and other modifications to such instruments, but only to
the extent such amendments and other modifications are not prohibited by the
terms of this Agreement. Section headings in this Agreement are included for
convenience of reference only and shall not constitute a part of this Agreement
for any other purpose. Unless otherwise specified in this Agreement, all
accounting terms shall be interpreted and all accounting determinations shall be
made in accordance with GAAP. This Agreement is executed by more than one
Borrower, and, therefore, the obligations of all such entities are joint and
several.
9. INDEMNITY. Each Borrower agrees to indemnify each of the Bank,
its directors, officers and employees and each legal entity, if any, who
controls the Bank (the "INDEMNIFIED PARTIES") and to hold each Indemnified Party
harmless from and against any and all claims, damages, losses, liabilities and
expenses (including, without limitation, all fees of
-16-
counsel with whom any Indemnified Party may consult and all expenses of
litigation or preparation therefor) which any Indemnified Party may incur or
which may be asserted against any Indemnified Party in connection with or
arising out of the matters referred to in this Agreement or in the other Loan
Documents by any person, entity or governmental authority (including any
person or entity claiming derivatively on behalf of any Borrower), whether
(a) arising from or incurred in connection with any breach of a
representation, warranty or covenant by any Borrower, or (b) arising out of
or resulting from any suit, action, claim, proceeding or governmental
investigation, pending or threatened, whether based on statute, regulation or
order, or tort, or contract or otherwise, before any court or governmental
authority, which arises out of or relates to this Agreement, any other Loan
Document, or the use of the proceeds of the Loan; PROVIDED, HOWEVER, that the
foregoing indemnity agreement shall not apply to claims, damages, losses,
liabilities and expenses solely attributable to an Indemnified Party's gross
negligence or willful misconduct. The indemnity agreement contained in this
Section shall survive the termination of this Agreement, payment of any Loan
and assignment of any rights hereunder. Any Borrower may participate at its
expense in the defense of any such action or claim.
10. ASSIGNMENTS AND PARTICIPATIONS. At any time, without any
notice to any Borrower, the Bank may sell, assign, transfer, negotiate,
grant participations in, or otherwise dispose of all or any part of the
Bank's interest in the Loan. Each Borrower hereby authorizes the Bank to
provide, iwthout any notice to any such Borrower, any information concerning
the any Borrower, including information pertaining to such Borrower's
financial condition, business operations or general creditworthiness, to any
person or entity which may succeed to or participate in all or any part of
the Bank's interest in the Loan.
11. GOVERNING LAW AND JURISDICTION. This Agreement has been
delivered to and accepted by the Bank and will be deemed to be made in the
State where the Bank's office indicated above is located. THIS AGREEMENT
WILL BE INTERPRETED AND THE RIGHTS AND LIABILITIES OF THE PARTIES HERETO
DETERMINED IN ACCORDANCE WITH THE LAWS OF THE STATE WHERE THE BANK'S OFFICE
INDICATED ABOVE IS LOCATED, EXCLUDING ITS CONFLICT OF LAWS RULES. Each
Borrower hereby irrevocably consents to the exclusive jurisdiction of any
state or federal court for the county or judicial district where the Bank's
office indicated above is located, and consents that all service of process
be sent by nationally recognized overnight courier service directed to such
Borrower at such Borrower's address set forth herein and service so made
will be deemed to be completed on the business day after deposit with such
courier; provided that nothing contained in this Agreement will prevent the
Bank from bringing any action, enforcing any award or judgment or exercising
any rights against any such Borrower individually, against any security or
against any property of any such Borrower within any other county, state or
other foreign or domestic jurisdiction. The Bank and the Borrowers agree
that the venue provided above is the most convenient forum for both the Bank
and the Borrowers. Each Borrower waives any objection to venue and any
objection based on a more convenient forum in any action instituted under
this Agreement.
EACH BORROWER ACKNOWLEDGES THAT SUCH BORROWER HAS READ AND UNDERSTOOD ALL THE
PROVISIONS OF THIS AGREEMENT AND HAS BEEN ADVISED BY COUNSEL AS NECESSARY OR
APPROPRIATE.
-17-
WITNESS the due execution hereof as a document under seal, as of the
date first written above.
"BORROWERS"
THERMOVIEW INDUSTRIES, INC.,
a Delaware corporation
By: /s/ Xxxxxxx X. Xxxxxxxx
---------------------------------
Xxxxxxx X. Xxxxxxxx, President
AMERICAN HOME DEVELOPERS CO., INC., a California
corporation
By: /s/ Xxxxxxx X. Xxxxxxxx
---------------------------------
Xxxxxxx X. Xxxxxxxx, President
AMERICAN HOME REMODELING, a California
corporation
By: /s/ Xxxxxxx X. Xxxxxxxx
---------------------------------
Xxxxxxx X. Xxxxxxxx, President
BLIZZARD ENTERPRISES, INC., a Minnesota
corporation
By: /s/ Xxxxxxx X. Xxxxxxxx
---------------------------------
Xxxxxxx X. Xxxxxxxx, President
FIVE STAR BUILDERS, INC., a California
corporation
By: /s/ Xxxxxxx X. Xxxxxxxx
---------------------------------
Xxxxxxx X. Xxxxxxxx, President
-18-
ICE, INC., a North Dakota business corporation
By: /s/ Xxxxxxx X. Xxxxxxxx
---------------------------------
Xxxxxxx X. Xxxxxxxx, President
KEY HOME CREDIT, INC., a
Delaware corporation
By: /s/ Xxxxxx X. Xxxxxxxx
---------------------------------
Xxxxxx X. Xxxxxxxx, President
KEY HOME MORTGAGE, INC., a Delaware
corporation
By: /s/ Xxxxxx X. Xxxxxxxx
---------------------------------
Xxxxxx X. Xxxxxxxx, President
XXXXXXXX SIDING AND WINDOW, INC.,
a North Dakota business corporation
By: /s/ Xxxxxxx X. Xxxxxxxx
---------------------------------
Xxxxxxx X. Xxxxxxxx, President
PRIMAX WINDOW CO., a Kentucky corporation
By: /s/ Xxxxxxx X. Xxxxxxxx
---------------------------------
Xxxxxxx X. Xxxxxxxx, President
ROLOX, INC. a Kansas corporation
By: /s/ Xxxxxxx X. Xxxxxxxx
---------------------------------
Xxxxxxx X. Xxxxxxxx, President
-19-
TD WINDOWS, INC. a Kentucky corporation
By: /s/ Xxxxxxx X. Xxxxxxxx
---------------------------------
Xxxxxxx X. Xxxxxxxx, President
THERMAL LINE WINDOWS, L.L.P. a
Minnesota limited liability partnership
By: /s/ Xxxxxxx X. Xxxxxxxx
---------------------------------
Xxxxxxx X. Xxxxxxxx, Manager
By: /s/ Xxxxxxxxx X. Xxxxxxx
---------------------------------
Xxxxxxxxx X. Xxxxxxx, Manager
THERMOVIEW OF MISSOURI, INC., a
Missouri corporation
By: /s/ Xxxxxxx X. Xxxxxxxx
---------------------------------
Xxxxxxx X. Xxxxxxxx, President
THERMO-TILT WINDOW COMPANY, a
Delaware corporation
By: /s/ Xxxxxxx X. Xxxxxxxx
---------------------------------
Xxxxxxx X. Xxxxxxxx, President
ATTACHMENTS:
-- Loan Fee Calculation Schedule
-- Capital Structure Schedule
-- Encumbrances Schedule
-- Litigation Schedule
-- Post-Closing Deliveries Schedule
-20-
LOAN FEE CALCULATION SCHEDULE
TO
AGREEMENT
---------------------------------------- --------------------------------------
---------------------------------------- --------------------------------------
FUNDED DEBT TO MODIFIED BORROWER EBITDA APPLICABLE UNUSED LOAN FEE RATE
---------------------------------------- --------------------------------------
---------------------------------------- --------------------------------------
Less than 1.25 to 1.0 .175%
---------------------------------------- --------------------------------------
Greater than or equal to 1.25 .175%
to 1.0 but less than 1.75 to 1.0
---------------------------------------- --------------------------------------
Greater than or equal to 1.75 to .250%
1.0 but less than 2.25 to 1.0
---------------------------------------- --------------------------------------
Greater than or equal to 2.25 to .300%
1.0 but less than 2.75 to 1.0
---------------------------------------- --------------------------------------
---------------------------------------- --------------------------------------
Greater than or equal to 2.75 to .350%
1.0 but less than 3.50 to 1.0
---------------------------------------- --------------------------------------
---------------------------------------- --------------------------------------
-00-
XXXXXXX XXXXXXXXX SCHEDULE
TO
AGREEMENT
ThermoView Industries, Inc.
Company Authorized Shares Issued and Outstanding
------- ----------------- ----------------------
ThermoView 50,000,000 13,423,746
American Home 1,000 100
American Home Remodeling 1,000 100
Five Star 1,000 100
Key Home 10,000 1,000
Xxxxxxxx Siding 25,000 24,408
Primax 1,000 100
Rolox 1,000 100
TD Windows 1,000 000
Xxxxxxx Xxxx X/X X/X
Thermo-Tilt 20,000,000 100*
Thermo-View-Missouri 1,000 100
Key Home Mortgage 10,000 1,000
Blizzard Enterprises 5,000 voting common 500
95,000 non-voting common 9,500
Ice, Inc. 2,500 1,000
* 5,381,475 shares were canceled for the 100 shares of Thermo-Tilt
ENCUMBRANCES SCHEDULE
TO
-22-
AGREEMENT
(Describe additional Liens and Encumbrances)
-------------------------------------------------------------------------------
SCHEDULE OF PERMITTED ENCUMBRANCES
FILE DATE FILE NO. TYPE ADDITIONAL INFORMATION COMMENTS
AMERICAN HOME REMODELING
04/19/95 9511460165 UCC-1 Copelco Capital, Inc. LEASE: ETS 4-station
telemarketing system
07/31/95 9521460825 UCC-1 Milguard PMSI: Inventory-aluminum
Manufacturing, Inc. windows and doors
06/30/97 9718360563 UCC-1 Green Tree Vendor LEASE: Predictive
Services Corporation dialing hardware
FIVE STAR BUILDERS, INC.
01/08/96 0000000000 UCC-1 Copelco Capital, Inc. LEASE: Notice
marketing hardware
10/18/96 9629660662 UCC-1 Copelco Capital, Inc. LEASE: Notice
marketing hardware
03/03/97 9706660394 UCC-1 Sun Data, Inc. LEASE: Notice
marketing hardware
04/11/97 97105C0221 Assig Norwest Equipment Assignment at
Finance, Inc. 03/03/97 #9706660394
03/13/97 9707760731 UCC-1 Matsushita Electric Telephone equipment
Corporation of America
08/03/98 9821860024 UCC-1 Matsushita Electric Telephone Equipment
Corporation
PRIMAX WINDOW CO.
11/25/97 973170560564 TLS Bank One 1998 Ford Windstar
04/24/98 972810560378 TLS Bank One 1997 Ford cargo van
09/10/98 49863 TLS Ford Motor Credit 1990 Ford F-250
AMERICAN HOME REMODELING D/B/A PACIFIC EXTERIORS, INC.
03/21/94 94055064 UCC-1 Eberhard Equipment Heavy
equipment-tractor
-------------------------------------------------------------------------------
-23-
-------------------------------------------------------------------------------
SCHEDULE OF PERMITTED ENCUMBRANCES
FILE DATE FILE NO. TYPE ADDITIONAL INFORMATION COMMENTS
06/06/94 94112915 UCC-1 Ford Motor Credit Heavy
Company equipment-tractor
10/27/94 9432260059 UCC-1 Ford Motor Credit Heavy
Company equipment-tractor
10/27/94 9432260338 UCC-1 Associates Commercial Xxxxxx Xxxxxxxx skip
Corp. loader
10/23/95 9529760567 UCC-1 Ford New Holland Ford heavy
Credit Company equipment-tractor,
loader, hydraulic
scraper
TD WINDOWS (ALLHOM EAGLE WINDOWS & DOORS, INC.)
09/01/98 9807781 TLS Chelsea Building Equipment
Products, Inc.
06/17/97 T734237 TLS Huntington Acceptance 1997 Chevy 1500
THERMAL LINE WINDOWS, L.L.P.
03/14/96 1832278 UCC-1 Norwest Bank North Equipment
Dakota, NA
01/12/98 98-000741420 UCC-1 Norwest Equipment LEASE: Complast
Finance Manuf. Equipment
THERMO-TILT WINDOW COMPANY
08/05/96 979393 UCC-1 Ford Motor Credit TLS: 1997 F-150 truck
Company
06/02/97 989114 UCC-1 Ford Motor Credit TLS: 1997 F-150 truck
Company
09/26/97 993247 UCC-1 National City Bank TLS: 1992 Ford pickup
09/26/97 993248 UCC-1 National City Bank TLS: 1990 Chevy van
11/07/97 994777 UCC-1 The Owensboro National TLS: 1994 Chevy S-10
Bank truck
01/09/98 996591 UCC-1 Lincolnland Bank TLS: 1998 Dodge Ram
truck
-------------------------------------------------------------------------------
-24-
-------------------------------------------------------------------------------
SCHEDULE OF PERMITTED ENCUMBRANCES
FILE DATE FILE NO. TYPE ADDITIONAL INFORMATION COMMENTS
01/09/98 996592 UCC-1 Lincolnland Bank TLS: 1998 Dodge Ram
truck
01/09/98 996593 UCC-1 Lincolnland Bank TLS: 1998 Dodge Ram
truck
01/27/98 997130 UCC-1 Lincolnland Bank TLS: 1998 Dodge Ram
truck
01/27/98 997131 UCC-1 Lincolnland Bank TLS: 1998 Dodge Ram
truck
01/27/98 997132 UCC-1 Lincolnland Bank TLS: 1998 Dodge Ram
truck
02/23/98 997955 UCC-1 Lincolnland Bank TLS: 1998 Dodge Ram
truck
THERMOVIEW INDUSTRIES, INC.
06/21/98 98-06463 UCC-1 LCDA, Inc. Telephone equipment
-------------------------------------------------------------------------------
LEGEND:
LOC = Line of Credit
TLS = Title Lien Statement
Lease = Equipment Leased - Notice Only
PMSI = Purchase Money Security Interest
-25-
LITIGATION SCHEDULE
TO
AGREEMENT
(Describe Pending or Threatened Litigation, Proceedings, Etc.)
-26-
POST-CLOSING DELIVERIES SCHEDULE
TO
AGREEMENT
1. If Borrower shall not have provided Bank on or before October 31, 1998 with
evidence satisfactory to Lender that each of the security interests and
other matters described below in to this Schedule has been terminated of
record.
2. If Borrower shall not have provided Bank on or before October 31, 1998 with
landlord lien waivers substantially in the form attached to the Schedule
(containing no variations not acceptable to Bank) from each landlord of
premises leased to Borrower at which any collateral for the Loan is
located.
-------------------------------------------------------------------------------
SCHEDULE OF LIEN TERMINATIONS TO BE PROVIDED POST-CLOSING
FILE DATE FILE NO. TYPE ADDITIONAL INFORMATION COMMENTS
AMERICAN HOME REMODELING
03/10/98 9807061235 UCC-1 CitiBank, FSB LOC: Account closed;
UCC3 termination to
follow
FIVE STAR BUILDERS, INC.
07/02/98 9818760481 UCC-1 Xxxxx Fargo Bank LOC: Account closed;
Business Lending UCC3 termination to
follow
XXXXXXXX SIDING AND WINDOW, INC.
11/03/78 00000 XXX-0 Xxxxx Xxxxxxxxxx XXX: Account closed;
National Bank of Manda UCC3 termination to
be filed
07/18/83 28499 Cont Norwest Bank Mandan, LOC: Account closed;
National Association UCC3 termination to
be filed
05/06/96 00000 Xxxxx Xxxxxxx Xxxx, Xxxxxx, XXX: Account closed;
NA UCC3 termination to
be filed
01/04/88 37242 Assn Midwest Federal LOC: Account closed;
Savings Bank UCC3 termination to
be filed
-------------------------------------------------------------------------------
-27-
-------------------------------------------------------------------------------
SCHEDULE OF LIEN TERMINATIONS TO BE PROVIDED POST-CLOSING
FILE DATE FILE NO. TYPE ADDITIONAL INFORMATION COMMENTS
06/13/88 38202 Cont Midwest Federal LOC: Account closed;
Savings Bank UCC3 termination to
be filed
07/02/90 40929 Assn Midwest Federal LOC: Account closed;
Savings Bank of Minot UCC3 termination to
be filed
07/02/90 40930 Assn Norwest Bank North LOC: Account closed;
Dakota, NC UCC3 termination to
be filed
08/16/93 98-000789968 Cont Norwest Bank North LOC: Account closed;
Dakota, NA UCC3 termination to
be filed
PRIMAX WINDOW CO.
07/22/96 96-06318 XXX-0 Xxxx Xxx, XX NA UCC3 termination to
be filed
06/11/97 97-04994 UCC-1 Bank One, Kentucky NA UCC3 termination to
be filed
TD WINDOWS (ALLHOM EAGLE WINDOWS & DOORS, INC.)
04/30/93 9303709 UCC-1 Liberty National Bank UCC3 termination to
follow
10/25/94 9303709A Amend Liberty National Bank UCC3 termination to
follow
11/21/97 9709753 Cont Liberty National Bank UCC3 termination to
follow
03/17/98 9709753 Amend Liberty National Bank UCC3 termination to
follow
THERMAL LINE WINDOWS, L.L.P.
03/12/96 96-000579239 XXX-0 Xxxxxxx Xxxx Xxxxx XXX0 release to be
Dakota, NA filed
THERMO-TILT WINDOW COMPANY
12/16/94 071455 UCC-1 The Owensboro Account closed UCC3
National Bank termination to be
filed
-------------------------------------------------------------------------------
-28-
-------------------------------------------------------------------------------
SCHEDULE OF LIEN TERMINATIONS TO BE PROVIDED POST-CLOSING
FILE DATE FILE NO. TYPE ADDITIONAL INFORMATION COMMENTS
10/09/95 969617 UCC-1 PNC Account closed UCC3
termination to be
filed
03/14/97 076181 UCC-1 National City Bank of Account closed UCC3
KY termination to be
filed
03/31/97 076279 UCC-1 National City Bank of UCC3 release to be
KY filed
-------------------------------------------------------------------------------
LEGEND:
LOC = Line of Credit
TLS = Title Lien Statement
Lease = Equipment Leased - Notice Only
PMSI = Purchase Money Security Xxxxxxxx
-00-
XXXXXXXX'X XXXXXX
Date: August _____, 1998
PREMISES: ________________________________
________________________________
TENANT: ________________________________
The Undersigned is/are the owner(s) and/or landlord(s) of the above
premises (the "PREMISES") which are rented to the above-named tenant (the
"TENANT"). The Tenant has granted or is granting a continuing lien and security
interest to PNC Bank, National Association, a national banking association (the
"BANK"), whose address is 000 Xxxx Xxxxxxxxx Xxxxxx, Xxxxxxxxxx, Xxxxxxxx
00000, in the following collateral (the "COLLATERAL"):
ALL OF THE TENANT'S NOW EXISTING AND HEREAFTER ACQUIRED OR ARISING
PROPERTY, INCLUDING WITHOUT LIMITATION ACCOUNTS, CHATTEL PAPER, DOCUMENTS,
INSTRUMENTS, GENERAL INTANGIBLES, GOODS, INVENTORY, EQUIPMENT, FURNITURE
AND FIXTURES, AND ALL CASH AND NON-CASH PROCEEDS AND PRODUCTS (INCLUDING
WITHOUT LIMITATION INSURANCE PROCEEDS) OF THE FOREGOING, AND ALL ADDITIONS
AND ACCESSIONS THERETO, SUBSTITUTIONS THEREFOR AND REPLACEMENTS THEREOF.
NOW, THEREFORE, the Undersigned, intending to be legally bound hereby, and
for other good, valuable and sufficient consideration, receipt whereof is hereby
acknowledged, hereby agrees as follows:
1. Any and all liens, claims, demands, or rights, including but not
limited to the right to levy or distrain for unpaid rent, which the Undersigned
now has or hereafter acquires on or in any of the Collateral shall be
subordinate and inferior to the lien and security interest of the Bank, and as
to the Bank, the Undersigned hereby specifically waives and relinquishes all
rights of levy, distraint or execution with respect to such property.
2. Any Collateral of the Tenant shall, at all times, be considered to be
personal property and shall not become a part of the Premises, so long as any
monies are owing to the Bank by the Tenant.
3. The Bank may at any time enter upon the Premises and remove the
Collateral. The Bank may also take possession of the Collateral on the
Premises, and may remain on the Premises for a period of time not to exceed
sixty (60) days, without charge, in order to dismantle, prepare for disposition
or removal, dispose of or otherwise deal with the Collateral. If the Bank stays
on the Premises for longer than sixty (60) days, the Bank shall pay to the
Undersigned a use and occupancy fee equal to the rent which the Tenant would
have paid to the Undersigned during such additional period, pro rated for each
day the Bank remains on the Premises.
-30-
4. The Undersigned will notify any purchaser of the Premises and any
subsequent landlord or other encumbrance holder of the existence of this waiver,
which shall be binding upon the heirs, executors, administrators, successors,
transferees or assignees of the Undersigned and shall inure to the benefit of
the successors and assigns of the Bank.
5. The Undersigned will give the Bank ten (10) days prior written notice
of the termination or modification of the Tenant's Lease or the termination of
the Tenant's right to possess the Premises.
6. THIS DOCUMENT WILL BE INTERPRETED AND THE RIGHTS AND LIABILITIES OF THE
TENANT, THE BANK AND THE UNDERSIGNED DETERMINED IN ACCORDANCE WITH THE LAWS OF
THE STATE WHERE THE BANK'S OFFICE INDICATED ABOVE IS LOCATED, EXCLUDING ITS
CONFLICT OF LAWS RULES.
WITNESS the due execution hereof as a document under seal, as of the
date first written above.
LANDLORD
______________________________, a
______________________________
By:_________________________________
Name:______________________________
Title:_______________________________
LANDLORD'S ADDRESS:
-----------------------------------
-----------------------------------
-----------------------------------
-31-
STATE OF ____________________ )
) SS
COUNTY OF ____________________ )
The foregoing instrument was acknowledged before me this _____ day of
August, 1998, by ____________________, as ____________________ of
____________________, a ____________________, on behalf of the
___________________
My commission expires: ______________________
------------------------------
NOTARY PUBLIC
-32-
