THIS WARRANT AND THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR ANY APPLICABLE
STATE SECURITIES LAWS, AND MAY NOT BE TRANSFERRED IN VIOLATION OF THE ACT OR
SUCH LAWS, THE RULES AND REGULATIONS UNDER THE ACT OR THE PROVISIONS OF THIS
WARRANT.
No. of Shares of Common Stock: 1,666,028 Warrant No. 4
WARRANT
To Purchase Common Stock of
THERMOVIEW INDUSTRIES, INC.
THIS IS TO CERTIFY THAT GE CAPITAL EQUITY INVESTMENTS, INC., or registered
assigns, is entitled, at any time prior to the Expiration Date (as
hereinafter defined), to purchase from THERMOVIEW INDUSTRIES, INC., a
Delaware corporation ("Company"), 1,666,028 shares of Common Stock (as
hereinafter defined and subject to adjustment as provided herein), in whole
or in part, including fractional parts, at a purchase price of $0.01 per
share, all on the terms and conditions and pursuant to the provisions
hereinafter set forth.
1. DEFINITIONS
As used in this Warrant, the following terms have the
respective meanings set forth below:
"Additional Shares of Common Stock" shall mean all shares of
Common Stock issued by Company after the Closing Date, other than Warrant
Stock.
"Business Day" shall mean any day that is not a Saturday or
Sunday or a day on which banks are required or permitted to be closed in the
State of New York.
"Certificate of Designation" shall have the meaning set forth
in Section 4.6.
"Closing Date" shall have the meaning set forth in the
Securities Purchase Agreement.
"Commission" shall mean the Securities and Exchange Commission
or any other federal agency then administering the Securities Act and other
federal securities laws.
"Common Stock" shall mean (except where the context otherwise
indicates) the common stock, $.001 par value per share, of Company as
constituted on the
1
Closing Date, and any capital stock into which such Common Stock may
thereafter be changed, and shall also include (i) capital stock of Company of
any other class (regardless of how denominated) issued to the holders of
shares of Common Stock upon any reclassification thereof which is also not
preferred as to dividends or assets over any other class of stock of Company
and which is not subject to redemption and (ii) shares of common stock of any
successor or acquiring corporation (as defined in Section 4.9) received by or
distributed to the holders of Common Stock of Company in the circumstances
contemplated by Section 4.9.
"Conversion Price" shall have the meaning set forth in the
Certificate of Designation.
"Convertible Securities" shall mean evidences of indebtedness,
shares of stock or other securities which are convertible into or
exchangeable, with or without payment of additional consideration in cash or
property, for Additional Shares of Common Stock, either immediately or upon
the occurrence of a specified date or a specified event.
"Current Market Price" shall mean, in respect of any share of
Common Stock on any date herein specified the average of the daily market
prices for 30 consecutive Business Days commencing 45 days before such date.
The daily market price for each such Business Day shall be (i) the last sale
price on such day on the principal stock exchange or NASDAQ Stock Market
("NASDAQ") on which such Common Stock is then listed or admitted to trading,
(ii) if no sale takes place on such day on any such exchange or NASDAQ the
average of the last reported closing bid and asked prices on such day as
officially quoted on any such exchange or NASDAQ, (iii) if the Common Stock
is not then listed or admitted to trading on any stock exchange or NASDAQ,
the average of the last reported closing bid and asked prices on such day in
the over-the-counter market, as furnished by the National Association of
Securities Dealers Automatic Quotation System or the National Quotation
Bureau, Inc., (iv) if neither such corporation at the time is engaged in the
business of reporting such prices, as furnished by any similar firm then
engaged in such business or (v) if there is no such firm, as furnished by any
member of the NASD selected mutually by the Majority Holders and Company or,
if they cannot agree upon such selection, as selected by two such members of
the NASD, one of which shall be selected by the Majority Holders and one of
which shall be selected by Company.
"Current Warrant Price" shall mean, in respect of a share of
Common Stock at any date herein specified, the price at which a share of
Common Stock may be purchased pursuant to this Warrant on such date.
"EBITDA" shall have the meaning set forth in the Securities
Purchase Agreement.
"Exchange Act" shall mean the Securities Exchange Act of 1934,
as amended, or any similar federal statute, and the rules and regulations of
the Commission thereunder, all as the same shall be in effect from time to
time.
2
"Exercise Period" shall mean the period during which this
Warrant is exercisable pursuant to Section 2.1.
"Expiration Date" shall mean July 8, 2007.
"Fully Diluted Outstanding" shall mean, when used with
reference to Common Stock, at any date as of which the number of shares
thereof is to be determined, all shares of Common Stock Outstanding at such
date and all shares of Common Stock issuable in respect of this Warrant and
other options or warrants to purchase, or securities convertible into, shares
of Common Stock outstanding on such date which would be deemed outstanding in
accordance with GAAP for purposes of determining book value or net income per
share.
"GAAP" shall mean generally accepted accounting principles in
the United States of America as from time to time in effect.
"GE Capital" shall mean GE Capital Equity Investments, Inc., a
Delaware corporation.
"Holder" shall mean the Person in whose name the Warrant set
forth herein is registered on the books of Company maintained for such
purpose.
"Majority Holders" shall mean the holders of Warrants
exercisable for in excess of 50% of the aggregate number of shares of Common
Stock then purchasable upon exercise of all Warrants, whether or not then
exercisable.
"NASD" shall mean the National Association of Securities
Dealers, Inc., or any successor corporation thereto.
"Notes" shall have the meaning set forth in Section 2.1.
"Other Property" shall have the meaning set forth in Section
4.9.
"Outstanding" shall mean, when used with reference to Common
Stock, at any date as of which the number of shares thereof is to be
determined, all issued shares of Common Stock, except shares then owned or
held by or for the account of Company or any subsidiary thereof, and shall
include all shares issuable in respect of outstanding scrip or any
certificates representing fractional interests in shares of Common Stock.
"Permitted Issuances" shall mean (i) the existing issued and
outstanding warrants and stock options for the purchase of shares of Common
Stock or existing series of preferred stock, (ii) the issuance of additional
warrants or stock options to Company's employees or directors for the
purchase of up to 1,461,426 shares of Common Stock, (iii) the issuance of
shares of Common Stock upon exercise of the warrants and stock options
referred to in clauses (i) and (ii) or upon conversion of presently
outstanding preferred stock of Company, (iv) the issuance of 800,000 shares
of Common Stock (or other equity securities of Company convertible into such
number of shares of Common Stock) for consideration of not less than $5.00
per share of Common Stock, (v) the payment of
3
dividends in respect of the Series C Convertible Preferred Stock consisting
of additional shares of capital stock of Company with respect to the Series C
Convertible Preferred Stock and (vi) the existing "earn-outs" of Common Stock
set forth on Schedule A hereto granted in connection with acquisitions by
Company or any of its Subsidiaries.
"Person" shall mean any individual, sole proprietorship,
partnership, limited liability company, joint venture, trust, unincorporated
organization, association, corporation, institution, public benefit
corporation, entity or government (whether federal, state, county, city,
municipal or otherwise, including, without limitation, any instrumentality,
division, agency, body or department thereof).
"Restricted Common Stock" shall mean shares of Common Stock
which are, or which upon their issuance on the exercise of this Warrant would
be, evidenced by a certificate bearing the restrictive legend set forth in
Section 9.1(a).
"Securities Act" shall mean the Securities Act of 1933, as
amended, or any similar federal statute, and the rules and regulations of the
Commission thereunder, all as the same shall be in effect at the time.
"Securities Purchase Agreement" shall mean the Securities
Purchase Agreement, dated the date hereof, between Company and GE Capital.
"Series C Convertible Preferred Stock" shall mean the Series C
Convertible Preferred Stock, $.001 par value per share, of the Company issued
pursuant to the Certificate of Designation.
"Transfer" shall mean any disposition of any Warrant or Warrant
Stock or of any interest in either thereof, which would constitute a sale
thereof within the meaning of the Securities Act.
"Transfer Notice" shall have the meaning set forth in Section
9.2.
"Warrants" shall mean this Warrant and all warrants issued upon
transfer, division or combination of, or in substitution for, any thereof.
All Warrants shall at all times be identical as to terms and conditions and
date, except as to the number of shares of Common Stock for which they may be
exercised.
"Warrant Price" shall mean an amount equal to (i) the number of
shares of Common Stock being purchased upon exercise of this Warrant pursuant
to Section 2.1, multiplied by (ii) the Current Warrant Price as of the date
of such exercise.
"Warrant Stock" shall mean the shares of Common Stock purchased
by the holders of the Warrants upon the exercise thereof.
2. EXERCISE OF WARRANT
2.1. MANNER OF EXERCISE. From and after the Closing Date and until
5:00 P.M., New York time, on the Expiration Date, Holder may exercise this
Warrant, on any
4
Business Day, for all or any part of the number of shares of Common Stock
purchasable hereunder.
In order to exercise this Warrant, in whole or in part, Holder
shall deliver to Company at its principal office at 0000 Xxxx Xxxx,
Xxxxxxxxxx, Xxxxxxxx 00000 or at the office or agency designated by Company
pursuant to Section 12, (i) a written notice of Holder's election to exercise
this Warrant, which notice shall specify the number of shares of Common Stock
to be purchased, (ii) payment of the Warrant Price and (iii) this Warrant.
Such notice shall be substantially in the form of the subscription form
appearing at the end of this Warrant as Exhibit A, duly executed by Holder or
its agent or attorney. Upon receipt thereof, Company shall, as promptly as
practicable, and in any event within five (5) Business Days thereafter,
execute or cause to be executed and deliver or cause to be delivered to
Holder a certificate or certificates representing the aggregate number of
full shares of Common Stock issuable upon such exercise, together with cash
in lieu of any fraction of a share, as hereinafter provided. The stock
certificate or certificates so delivered shall be, to the extent possible, in
such denomination or denominations as such Holder shall request in the notice
and shall be registered in the name of Holder or, subject to Section 9, such
other name as shall be designated in the notice. This Warrant shall be deemed
to have been exercised and such certificate or certificates shall be deemed
to have been issued, and Holder or any other Person so designated to be named
therein shall be deemed to have become a holder of record of such shares for
all purposes, as of the date the notice, together with the cash or check or
checks and this Warrant, is received by Company as described above and all
taxes required to be paid by Holder, if any, pursuant to Section 2.2 prior to
the issuance of such shares have been paid. If this Warrant shall have been
exercised in part, Company shall, at the time of delivery of the certificate
or certificates representing Warrant Stock, deliver to Holder a new Warrant
evidencing the rights of Holder to purchase the unpurchased shares of Common
Stock called for by this Warrant, which new Warrant shall in all other
respects be identical with this Warrant, or, at the request of Holder,
appropriate notation may be made on this Warrant and the sme returned to
Holder. Notwithstanding any provision herein to the contrary, Company shall
not be required to register shares in the name of any Person who acquired
this Warrant (or part hereof) or any Warrant Stock otherwise than in
accordance with this Warrant.
Payment of the Warrant Price shall be made at the option of the
Holder by (i) certified or official bank check, (ii) transfer of immediately
available funds, (iii) by the surrender of the Note (as defined in the
Securities Purchase Agreement) of Company and evidencing the loan made
pursuant to the Securities Purchase Agreement, and/or (iv) by the Holder's
surrender to Company of that number of shares of Warrant Stock (or the right
to receive such number of shares) or shares of Common Stock having an
aggregate Current Market Price equal to or greater than the Current Warrant
Price for all shares then being purchased (including those being surrendered)
or (iv) any combination thereof, duly endorsed by or accompanied by
appropriate instruments of transfer duly executed by Holder or by Holder's
attorney duly authorized in writing. For the purposes of making payment of
the Warrant Price, the Note shall have a value equal to 100% of the principal
amount thereof plus accrued and unpaid interest thereon to the date of
surrender in respect of payment of the Warrant Price.
5
If a Holder surrenders any Note having an aggregate value which
exceeds the aggregate Warrant Price, the portion of such surrendered value
equal to the integral multiple of $500 which is next higher than such
aggregate Warrant Price shall be applied to the payment of the Warrant Price
and Company shall pay the Holder an amount in cash equal to the excess (if
any) of such integral multiple over the Warrant Price. A new Note shall be
issued in the principal amount equal to that portion of such surrendered
principal amount not applied to the Warrant Price and not paid in cash to the
Holder. If the Holder surrenders the Note, the Holder shall specify the
portion of the value of such surrendered Note to be applied toward the
Warrant Price.
2.2. PAYMENT OF TAXES. All shares of Common Stock issuable upon the
exercise of this Warrant pursuant to the terms hereof shall be validly
issued, fully paid and nonassessable and without any preemptive rights.
Company shall pay all expenses in connection with, and all taxes and other
governmental charges that may be imposed with respect to, the issue or
delivery thereof, unless such tax or charge is imposed by law upon Holder, in
which case such taxes or charges shall be paid by Holder. Company shall not
be required, however, to pay any tax or other charge imposed in connection
with any transfer involved in the issue of any certificate for shares of
Common Stock issuable upon exercise of this Warrant in any name other than
that of Holder, and in such case Company shall not be required to issue or
deliver any stock certificate until such tax or other charge has been paid or
it has been established to the satisfaction of Company that no such tax or
other charge is due.
2.3. FRACTIONAL SHARES. Company shall not be required to issue a
fractional share of Common Stock upon exercise of any Warrant. As to any
fraction of a share which the Holder of one or more Warrants, the rights
under which are exercised in the same transaction, would otherwise be
entitled to purchase upon such exercise, Company shall pay a cash adjustment
in respect of such final fraction in an amount equal to the same fraction of
the Current Market Price per share of Common Stock on the date of exercise,
if there is a public market for the Common Stock, or the fair market value
thereof as determined in good faith by the Board of Directors of Company.
2.4. CONTINUED VALIDITY A holder of shares of Common Stock issued
upon the exercise of this Warrant, in whole or in part (other than a holder
who acquires such shares after the same have been publicly sold pursuant to a
Registration Statement under the Securities Act or sold pursuant to Rule 144
thereunder), shall continue to be entitled with respect to such shares to all
rights to which it would have been entitled as Holder under Sections 9, 10,
17 and 18 of this Warrant. Company will, at the time of each exercise of
this Warrant, in whole or in part, upon the request of the holder of the
shares of Common Stock issued upon such exercise hereof, acknowledge in
writing, in form reasonably satisfactory to such holder, its continuing
obligation to afford to such holder all such rights; PROVIDED, HOWEVER, that
if such holder shall fail to make any such request, such failure shall not
affect the continuing obligation of Company to afford to such holder all such
rights.
6
3. TRANSFER, DIVISION AND COMBINATION
3.1. TRANSFER. Subject to compliance with Section 9, transfer of
this Warrant and all rights hereunder, in whole or in part, shall be
registered on the books of Company to be maintained for such purpose, upon
surrender of this Warrant at the principal office of Company referred to in
Section 2.1 or the office or agency designated by Company pursuant to Section
12, together with a written assignment of this Warrant substantially in the
form of Exhibit B hereto duly executed by Holder or its agent or attorney and
funds sufficient to pay any transfer taxes payable upon the making of such
transfer. Upon such surrender and, if required, such payment, Company shall,
subject to Section 9, execute and deliver a new Warrant or Warrants in the
name of the assignee or assignees and in the denomination specified in such
instrument of assignment, and shall issue to the assignor a new Warrant
evidencing the portion of this Warrant not so assigned, and this Warrant
shall promptly be cancelled. A Warrant, if properly assigned in compliance
with Section 9, may be exercised by a new Holder for the purchase of shares
of Common Stock without having a new Warrant issued.
3.2. DIVISION AND COMBINATION. Subject to Section 9, this Warrant
may be divided or combined with other Warrants upon presentation hereof at
the aforesaid office or agency of Company, together with a written notice
specifying the names and denominations in which new Warrants are to be
issued, signed by Holder or its agent or attorney. Subject to compliance
with Section 3.1 and with Section 9, as to any transfer which may be involved
in such division or combination, Company shall execute and deliver a new
Warrant or Warrants in exchange for the Warrant or Warrants to be divided or
combined in accordance with such notice.
3.3. EXPENSES. Company shall prepare, issue and deliver at its own
expense (other than transfer taxes) the new Warrant or Warrants under this
Section 3.
3.4. MAINTENANCE OF BOOKS. Company agrees to maintain, at its
aforesaid office or agency, books for the registration and the registration
of transfer of the Warrants.
4. ADJUSTMENTS
The number of shares of Common Stock for which this Warrant is
exercisable, or the price at which such shares may be purchased upon exercise
of this Warrant, shall be subject to adjustment from time to time as set
forth in this Section 4. Company shall give each Holder notice of any event
described below which requires an adjustment pursuant to this Section 4 at
the time of such event.
4.1. STOCK DIVIDENDS, SUBDIVISIONS AND COMBINATIONS. If at any time
Company shall:
(a) take a record of the holders of its Common Stock for the
purpose of entitling them to receive a dividend payable in, or other
distribution of, Additional Shares of Common Stock,
7
(b) subdivide its outstanding shares of Common Stock into a
larger number of shares of Common Stock, or
(c) combine its outstanding shares of Common Stock into a
smaller number of shares of Common Stock,
then (i) the number of shares of Common Stock for which this Warrant is
exercisable immediately after the occurrence of any such event shall be
adjusted to equal the number of shares of Common Stock which a record holder
of the same number of shares of Common Stock for which this Warrant is
exercisable immediately prior to the occurrence of such event would own or be
entitled to receive after the happening of such event, and (ii) the Current
Warrant Price shall be adjusted to equal (A) the Current Warrant Price
multiplied by the number of shares of Common Stock for which this Warrant is
exercisable immediately prior to the adjustment divided by (B) the number of
shares for which this Warrant is exercisable immediately after such
adjustment.
4.2. CERTAIN OTHER DISTRIBUTIONS. If at any time Company shall take
a record of the holders of its Common Stock for the purpose of entitling them
to receive any dividend or other distribution of:
(a) cash,
(b) any evidences of its indebtedness, any shares of its stock
or any other securities or property of any nature whatsoever (other than
cash, Convertible Securities or Additional Shares of Common Stock), or
(c) any warrants or other rights to subscribe for or purchase
any evidences of its indebtedness, any shares of its stock or any other
securities or property of any nature whatsoever (other than cash,
Convertible Securities or Additional Shares of Common Stock),
then Holder shall be entitled to receive such dividend or distribution as if
Holder had exercised the Warrant. A reclassification of the Common Stock
(other than a change in par value, or from par value to no par value or from
no par value to par value) into shares of Common Stock and shares of any
other class of stock shall be deemed a distribution by Company to the holders
of its Common Stock of such shares of such other class of stock within the
meaning of this Section 4.2 and, if the outstanding shares of Common Stock
shall be changed into a larger or smaller number of shares of Common Stock as
a part of such reclassification, such change shall be deemed a subdivision or
combination, as the case may be, of the outstanding shares of Common Stock
within the meaning of Section 4.1.
4.3. ISSUANCE OF ADDITIONAL SHARES OF COMMON STOCK.
(a) If at any time Company shall (except as hereinafter
provided) issue or sell any Additional Shares of Common Stock, other than
Permitted Issuances, for consideration in an amount per Additional Share
of Common Stock less than the Current Market Price at a time when there
is a public market for the Common
8
Stock, then (i) the number of shares of Common Stock for which this
Warrant is exercisable shall be adjusted to equal the product obtained by
multiplying the number of shares of Common Stock for which this Warrant
is exercisable immediately prior to such issue or sale by a fraction (A)
the numerator of which shall be the number of shares of Common Stock
Outstanding immediately after such issue or sale, and (B) the denominator
of which shall be the number of shares of Common Stock Outstanding
immediately prior to such issue or sale plus the number of shares which
the aggregate offering price of the total number of such Additional
Shares of Common Stock would purchase at the then Current Market Price;
and (ii) the Current Warrant Price as to the number of shares for which
this Warrant is exercisable prior to such adjustment shall be adjusted by
multiplying such Current Warrant Price by a fraction (X) the numerator
of which shall be the number of shares for which this Warrant is
exercisable immediately prior to such issue or sale; and (Y) the
denominator of which shall be the number of shares of Common Stock
purchasable immediately after such issue or sale.
(b) The provisions of paragraph (a) of this Section 4.3 shall
not apply to any issuance of Additional Shares of Common Stock for which
an adjustment is provided under Section 4.1 or 4.2. No adjustment of the
number of shares of Common Stock for which this Warrant shall be
exercisable shall be made under paragraph (a) of this Section 4.3 upon
the issuance of any Additional Shares of Common Stock which are issued
pursuant to the exercise of any warrants or other subscription or
purchase rights or pursuant to the exercise of any conversion or exchange
rights in any Convertible Securities, if any such adjustment shall
previously have been made upon the issuance of such warrants or other
rights or upon the issuance of such Convertible Securities (or upon the
issuance of any warrant or other rights therefor) pursuant to Section 4.4
or Section 4.5.
4.4. ISSUANCE OF WARRANTS OR OTHER RIGHTS. If at any time Company
shall take a record of the holders of its Common Stock for the purpose of
entitling them to receive a distribution of, or shall in any manner (whether
directly or by assumption in a merger in which Company is the surviving
corporation) issue or sell, any warrants or other rights to subscribe for or
purchase any Additional Shares of Common Stock or any Convertible Securities,
whether or not the rights to exchange or convert thereunder are immediately
exercisable, and the price per share for which Common Stock is issuable upon
the exercise of such warrants or other rights or upon conversion or exchange
of such Convertible Securities shall be less than the Current Market Price,
at a time when there is a public market price for the Common Stock, in effect
immediately prior to the time of such issue or sale, then the number of
shares of Common Stock for which this Warrant is exercisable and the Current
Warrant Price shall be adjusted as provided in Section 4.3 on the basis that
the maximum number of Additional Shares of Common Stock issuable pursuant to
all such warrants or other rights or necessary to effect the conversion or
exchange of all such Convertible Securities shall be deemed to have been
issued and outstanding and Company shall be deemed to have received all of
the consideration payable therefor, if any, as of the date of the issuance of
such warrants or other rights. No further adjustments of the number of
shares of Common Stock for which this Warrant is exercisable and the Current
Warrant Price shall be made upon the actual issue of such
9
Common Stock or of such Convertible Securities upon exercise of such warrants
or other rights or upon the actual issue of such Common Stock upon such
conversion or exchange of such Convertible Securities.
4.5. ISSUANCE OF CONVERTIBLE SECURITIES. If at any time Company
shall take a record of the holders of its Common Stock for the purpose of
entitling them to receive a distribution of, or shall in any manner (whether
directly or by assumption in a merger in which Company is the surviving
corporation) issue or sell, any Convertible Securities, whether or not the
rights to exchange or convert thereunder are immediately exercisable, and the
price per share for which Common Stock is issuable upon such conversion or
exchange shall be less than the Current Market Price, at a time when there is
a public market price for the Common Stock, in effect immediately prior to
the time of such issue or sale, then the number of shares of Common Stock for
which this Warrant is exercisable and the Current Warrant Price shall be
adjusted as provided in Section 4.3 on the basis that the maximum number of
Additional Shares of Common Stock necessary to effect the conversion or
exchange of all such Convertible Securities shall be deemed to have been
issued and outstanding and Company shall have received all of the
consideration payable therefor, if any, as of the date of issuance of such
Convertible Securities. No adjustment of the number of shares of Common
Stock for which this Warrant is exercisable and the Current Warrant Price
shall be made under this Section 4.5 upon the issuance of any Convertible
Securities which are issued pursuant to the exercise of any warrants or other
subscription or purchase rights therefor, if any such adjustment shall
previously have been made upon the issuance of such warrants or other rights
pursuant to Section 4.4. No further adjustments of the number of shares of
Common Stock for which this Warrant is exercisable and the Current Warrant
Price shall be made upon the actual issue of such Common Stock upon
conversion or exchange of such Convertible Securities and, if any issue or
sale of such Convertible Securities is made upon exercise of any warrant or
other right to subscribe for or to purchase any such Convertible Securities
for which adjutments of the number of shares of Common Stock for which this
Warrant is exercisable and the Current Warrant Price have been or are to be
made pursuant to other provisions of this Section 4, no further adjustments
of the number of shares of Common Stock for which this Warrant is exercisable
and the Current Warrant Price shall be made by reason of such issue or sale.
4.6. SERIES C CONDITIONAL RESET. If Company shall adjust the
Conversion Price, pursuant to Section 10 of the Certificate of Designation of
Series C Convertible Preferred Stock of the Company filed with the Delaware
Secretary of State on April 23, 1999 (the "Certificate of Designation"),
then the number of shares of Common Stock for which this Warrant is
exercisable shall be increased by 6% of the number of additional shares of
Common Stock issuable in respect of the Series C Convertible Preferred Stock
as a result of such adjustment to the Conversion Price in lieu of any other
adjustment pursuant to this Section 4.
4.7. SUPERSEDING ADJUSTMENT. If, at any time after any adjustment
of the number of shares of Common Stock for which this Warrant is exercisable
and the Current Warrant Price shall have been made pursuant to Section 4.4 or
Section 4.5 as the result of any issuance of warrants, rights or Convertible
Securities,
10
(a) such warrants or rights, or the right of conversion or
exchange in such other Convertible Securities, shall expire, and all or a
portion of such warrants or rights, or the right of conversion or
exchange with respect to all or a portion of such other Convertible
Securities, as the case may be, shall not have been exercised, or
(b) the consideration per share for which shares of Common
Stock are issuable pursuant to such warrants or rights, or the terms of
such other Convertible Securities, shall be increased solely by virtue of
provisions therein contained for an automatic increase in such
consideration per share upon the occurrence of a specified date or event,
then for each outstanding Warrant such previous adjustment shall be rescinded
and annulled and the Additional Shares of Common Stock which were deemed to have
been issued by virtue of the computation made in connection with the adjustment
so rescinded and annulled shall no longer be deemed to have been issued by
virtue of such computation. Thereupon, a recomputation shall be made of the
effect of such rights or options or other Convertible Securities on the basis of
(c) treating the number of Additional Shares of Common Stock or
other property, if any, theretofore actually issued or issuable pursuant
to the previous exercise of any such warrants or rights or any such right
of conversion or exchange, as having been issued on the date or dates of
any such exercise and for the consideration actually received and
receivable therefor, and
(d) treating any such warrants or rights or any such other
Convertible Securities which then remain outstanding as having been
granted or issued immediately after the time of such increase of the
consideration per share for which shares of Common Stock or other
property are issuable under such warrants or rights or other Convertible
Securities; whereupon a new adjustment of the number of shares of Common
Stock for which this Warrant is exercisable and the Current Warrant Price
shall be made, which new adjustment shall supersede the previous
adjustment so rescinded and annulled.
4.8. OTHER PROVISIONS APPLICABLE TO ADJUSTMENTS UNDER THIS SECTION.
The following provisions shall be applicable to the making of adjustments of the
number of shares of Common Stock for which this Warrant is exercisable and the
Current Warrant Price provided for in this Section 4:
(a) COMPUTATION OF CONSIDERATION. To the extent that any
Additional Shares of Common Stock or any Convertible Securities or any
warrants or other rights to subscribe for or purchase any Additional
Shares of Common Stock or any Convertible Securities shall be issued for
cash consideration, the consideration received by Company therefor shall
be the amount of the cash received by Company therefor, or, if such
Additional Shares of Common Stock or Convertible Securities are offered
by Company for subscription, the subscription price, or, if such
Additional Shares of Common Stock or Convertible Securities
11
are sold to underwriters or dealers for public offering without a
subscription offering, the initial public offering price (in any such
case subtracting any amounts paid or receivable for accrued interest or
accrued dividends and without taking into account any compensation,
discounts or expenses paid or incurred by Company for and in the
underwriting of, or otherwise in connection with, the issuance thereof).
To the extent that such issuance shall be for a consideration other than
cash, then, except as herein otherwise expressly provided, the amount of
such consideration shall be deemed to be the fair value of such
consideration at the time of such issuance as determined in good faith
by the Board of Directors of Company. In case any Additional Shares of
Common Stock or any Convertible Securities or any warrants or other
rights to subscribe for or purchase such Additional Shares of Common
Stock or Convertible Securities shall be issued in connection with any
merger in which Company issues any securities, the amount of
consideration therefor shall be deemed to be the fair value, as
determined in good faith by the Board of Directors of Company, of such
portion of the assets and business of the nonsurviving corporation as
such Board in good faith shall determine to be attributable to such
Additional Shares of Common Stock, Convertible Securities, warrants or
other rights, as the case may be. The consideration for any Additional
Shares of Common Sock issuable pursuant to any warrants or other rights
to subscribe for or purchase the same shall be the consideration
received by Company for issuing such warrants or other rights plus the
additional consideration payable to Company upon exercise of such
warrants or other rights. The consideration for any Additional Shares
of Common Stock issuable pursuant to the terms of any Convertible
Securities shall be the consideration received by Company for issuing
warrants or other rights to subscribe for or purchase such Convertible
Securities, plus the consideration paid or payable to Company in respect
of the subscription for or purchase of such Convertible Securities, plus
the additional consideration, if any, payable to Company upon the
exercise of the right of conversion or exchange in such Convertible
Securities. In case of the issuance at any time of any Additional
Shares of Common Stock or Convertible Securities in payment or
satisfaction of any dividends upon any class of stock other than Common
Stock, Company shall be deemed to have received for such Additional
Shares of Common Stock or Convertible Securities a consideration equal to
the amount of such dividend so paid or satisfied.
(b) WHEN ADJUSTMENTS TO BE MADE. The adjustments required by
this Section 4 shall be made whenever and as often as any specified event
requiring an adjustment shall occur, except that any adjustment of the
number of shares of Common Stock for which this Warrant is exercisable
that would otherwise be required may be postponed (except in the case of
a subdivision or combination of shares of Common Stock, as provided for
in Section 4.1) up to, but not beyond the date of exercise if such
adjustment either by itself or with other adjustments not previously made
adds or subtracts less than 1% of the shares of Common Stock for which
this Warrant is exercisable immediately prior to the making of such
adjustment; PROVIDED that Company shall promptly provide Holder with
calculations, in reasonable detail, of any such adjustment. Any
adjustment
12
representing a change of less than such minimum amount (except as
aforesaid) which is postponed shall be carried forward and made as soon
as such adjustment, together with other adjustments required by this
Section 4 and not previously made, would result in a minimum adjustment
or on the date of exercise. For the purpose of any adjustment, any
specified event shall be deemed to have occurred at the close of business
on the date of its occurrence.
(c) FRACTIONAL INTERESTS. In computing adjustments under this
Section 4, fractional interests in Common Stock shall be taken into
account to the nearest 1/10th of a share.
(d) WHEN ADJUSTMENT NOT REQUIRED. If Company shall take a
record of the holders of its Common Stock for the purpose of entitling
them to receive a dividend or distribution or subscription or purchase
rights and shall, thereafter and before the distribution to stockholders
thereof, legally abandon its plan to pay or deliver such dividend,
distribution, subscription or purchase rights, then thereafter no
adjustment shall be required by reason of the taking of such record and
any such adjustment previously made in respect thereof shall be rescinded
and annulled.
(e) ESCROW OF WARRANT STOCK. If after any property becomes
distributable pursuant to this Section 4 by reason of the taking of any
record of the holders of Common Stock, but prior to the occurrence of the
event for which such record is taken, and Holder exercises this Warrant,
any Additional Shares of Common Stock issuable upon exercise by reason of
such adjustment shall be deemed the last shares of Common Stock for which
this Warrant is exercised (notwithstanding any other provision to the
contrary herein) and such shares or other property shall be held in
escrow for Holder by Company to be issued to Holder upon and to the
extent that the event actually takes place, upon payment of the then
Current Warrant Price. Notwithstanding any other provision to the
contrary herein, if the event for which such record was taken fails to
occur or is rescinded, then such escrowed shares shall be cancelled by
Company and escrowed property returned.
(f) CHALLENGE TO GOOD FAITH DETERMINATION. Whenever the Board
of Directors of Company shall be required to make a determination in
good faith of the fair value of any item under this Section 4, such
determination may be challenged in good faith by the Majority Holders,
and any dispute shall be resolved by an investment banking firm of
recognized national standing selected by Company and acceptable to the
Majority Holders.
4.9. REORGANIZATION, RECLASSIFICATION, MERGER, CONSOLIDATION OR
DISPOSITION OF ASSETS. In case Company shall reorganize its capital,
reclassify its capital stock, consolidate or merge with or into another
corporation (where Company is not the surviving corporation or where there is
a change in or distribution with respect to the Common Stock of Company), or
sell, transfer or otherwise dispose of all or substantially all its property,
assets or business to another corporation and, pursuant to the terms of
13
such reorganization, reclassification, merger, consolidation or disposition
of assets, shares of common stock of the successor or acquiring corporation,
or any cash, shares of stock or other securities or property of any nature
whatsoever (including warrants or other subscription or purchase rights) in
addition to or in lieu of common stock of the successor or acquiring
corporation ("Other Property"), are to be received by or distributed to the
holders of Common Stock of Company, then each Holder shall have the right
thereafter to receive, upon exercise of such Warrant, the number of shares of
common stock of the successor or acquiring corporation or of Company, if it
is the surviving corporation, and Other Property receivable upon or as a
result of such reorganization, reclassification, merger, consolidation or
disposition of assets by a holder of the number of shares of Common Stock for
which this Warrant is exercisable immediately prior to such event. In case
of any such reorganization, reclassification, merger, consolidation or
disposition of assets, the successor or acquiring corporation (if other than
Company) shall expressly assume the due and punctual observance and
performance of each and every covenant and condition of this Warrant to be
performed and observed by Company and all the obligations and liabilities
hereunder, subject to such modifications as may be deemed appropriate (as
determined by resolution of the Board of Directors of Company) in order to
provide for adjustments of shares of Common Stock for which this Warrant is
exercisable which shall be as nearly equivalent as practicable to the
adjustments provided for in this Section 4. For purposes of this Section
4.9, "common stock of the successor or acquiring corporation" shall include
stock of such corporation of any class which is not preferred as to dividends
or assets over any other class of stock of such corporation and which is not
subject to redemption and shall also include any evidences of indebtedness,
shares of stock or other securities which are convertible into or
exchangeable for any such stock, either immediately or upon the arrival of a
specified date or the happening of a specified event and any warrants or
other rights to subscribe for or purchase any such stock. The foregoing
provisions of this Section 4.9 shall similarly apply to successive
reorganizations, reclassifications, mergers, consolidations or disposition of
assets.
4.10. CERTAIN LIMITATIONS. Notwithstanding anything herein to the
contrary, Company agrees not to enter into any transaction which, by reason
of any adjustment hereunder, would cause the Current Warrant Price to be less
than the par value per share of Common Stock.
5. NOTICES TO WARRANT HOLDERS
5.1. NOTICE OF ADJUSTMENTS. Whenever the number of shares of Common
Stock for which this Warrant is exercisable, or whenever the price at which a
share of such Common Stock may be purchased upon exercise of the Warrants,
shall be adjusted pursuant to Section 4, Company shall forthwith prepare a
certificate to be executed by the chief financial officer of Company setting
forth, in reasonable detail, the event requiring the adjustment and the
method by which such adjustment was calculated (including a description of
the basis on which the Board of Directors of Company determined the fair
value of any evidences of indebtedness, shares of stock, other securities or
property or warrants or other subscription or purchase rights referred to in
Section 4.2 or 4.8(a)), specifying the number of shares of Common Stock for
which this Warrant is exercisable
14
and (if such adjustment was made pursuant to Section 4.9 or 4.10) describing
the number and kind of any other shares of stock or Other Property for which
this Warrant is exercisable, and any change in the purchase price or prices
thereof, after giving effect to such adjustment or change. Company shall
promptly cause a signed copy of such certificate to be delivered to each
Holder in accordance with Section 18.2. Company shall keep at its office or
agency designated pursuant to Section 12 copies of all such certificates and
cause the same to be available for inspection at said office during normal
business hours by any Holder or any prospective purchaser of a Warrant
designated by a Holder thereof.
5.2. NOTICE OF CORPORATE ACTION. If at any time
(a) Company shall take a record of the holders of its Common
Stock for the purpose of entitling them to receive a dividend or other
distribution, or any right to subscribe for or purchase any evidences of
its indebtedness, any shares of stock of any class or any other
securities or property, or to receive any other right, or
(b) there shall be any capital reorganization of Company, any
reclassification or recapitalization of the capital stock of Company or
any consolidation or merger of Company with, or any sale, transfer or
other disposition of all or substantially all the property, assets or
business of Company to, another corporation, or
(c) there shall be a voluntary or involuntary dissolution,
liquidation or winding up of Company;
then, in any one or more of such cases, Company shall give to Holder (i) at
least 30 days' prior written notice (or in the case of an involuntary
dissolution, as soon as practicable) of the date on which a record date shall
be selected for such dividend, distribution or right or for determining
rights to vote in respect of any such reorganization, reclassification,
merger, consolidation, sale, transfer, disposition, dissolution, liquidation
or winding up and (ii) in the case of any such reorganization,
reclassification, merger, consolidation, sale, transfer, disposition,
dissolution, liquidation or winding up, at least 30 days' prior written
notice of the date when the same shall take place. Such notice in accordance
with the foregoing clause also shall specify (i) the date on which any such
record is to be taken for the purpose of such dividend, distribution or
right, the date on which the holders of Common Stock shall be entitled to any
such dividend, distribution or right, and the amount and character thereof,
and (ii) the date on which any such reorganization, reclassification, merger,
consolidation, sale, transfer, disposition, dissolution, liquidation or
winding up is to take place and the time, if any such time is to be fixed, as
of which the holders of Common Stock shall be entitled to exchange their
shares of Common Stock for securities or other property deliverable upon such
reorganization, reclassification, merger, consolidation, sale, transfer,
disposition, dissolution, liquidation or winding up. Each such written
notice shall be sufficiently given if addressed to Holder at the last address
of Holder appearing on the books of Company and delivered in accordance with
Section 18.2.
15
6. NO IMPAIRMENT
Company shall not by any action, including, without limitation,
amending its certificate of incorporation or through any reorganization,
transfer of assets, consolidation, merger, dissolution, issue or sale of
securities or any other voluntary action, avoid or seek to avoid the
observance or performance of any of the terms of this Warrant, but will at
all times in good faith assist in the carrying out of all such terms and in
the taking of all such actions as may be necessary or appropriate to protect
the rights of Holder against impairment. Without limiting the generality of
the foregoing, Company will (a) not increase the par value of any shares of
Common Stock receivable upon the exercise of this Warrant above the amount
payable therefor upon such exercise immediately prior to such increase in par
value, (b) take all such action as may be necessary or appropriate in order
that Company may validly and legally issue fully paid and nonassessable
shares of Common Stock upon the exercise of this Warrant, and (c) use its
best efforts to obtain all such authorizations, exemptions or consents from
any public regulatory body having jurisdiction thereof as may be necessary to
enable Company to perform its obligations under this Warrant.
Upon the request of Holder, Company will at any time during the
period this Warrant is outstanding acknowledge in writing, in form
satisfactory to Holder, the continuing validity of this Warrant and the
obligations of Company hereunder.
7. RESERVATION AND AUTHORIZATION OF COMMON STOCK; REGISTRATION WITH OR
APPROVAL OF ANY GOVERNMENTAL AUTHORITY
From and after the Closing Date, Company shall at all times
reserve and keep available for issue upon the exercise of Warrants such
number of its authorized but unissued shares of Common Stock as will be
sufficient to permit the exercise in full of all outstanding Warrants. All
shares of Common Stock which shall be so issuable, when issued upon exercise
of any Warrant and payment therefor in accordance with the terms of such
Warrant, shall be duly and validly issued and fully paid and nonassessable,
and not subject to preemptive rights.
Before taking any action which would cause an adjustment
reducing the Current Warrant Price below the then par value, if any, of the
shares of Common Stock issuable upon exercise of the Warrants, Company shall
take any corporate action which may be necessary in order that Company may
validly and legally issue fully paid and non-assessable shares of such Common
Stock at such adjusted Current Warrant Price.
Before taking any action which would result in an adjustment in
the number of shares of Common Stock for which this Warrant is exercisable or
in the Current Warrant Price, Company shall obtain all such authorizations or
exemptions thereof, or consents thereto, as may be necessary from any public
regulatory body or bodies having jurisdiction thereof.
If any shares of Common Stock required to be reserved for
issuance upon exercise of Warrants require registration or qualification with
any governmental authority
16
or other governmental approval or filing under any federal or state law
(otherwise than as provided in Section 9) before such shares may be so
issued, Company will in good faith and as expeditiously as possible and at
its expense endeavor to cause such shares to be duly registered.
8. TAKING OF RECORD; STOCK AND WARRANT TRANSFER BOOKS
In the case of all dividends or other distributions by Company
to the holders of its Common Stock with respect to which any provision of
Section 4 refers to the taking of a record of such holders, Company will in
each such case take such a record and will take such record as of the close
of business on a Business Day. Company will not at any time, except upon
dissolution, liquidation or winding up of Company, close its stock transfer
books or Warrant transfer books so as to result in preventing or delaying the
exercise or transfer of any Warrant.
9. RESTRICTIONS ON TRANSFERABILITY
The Warrants and the Warrant Stock shall not be transferred,
hypothecated or assigned before satisfaction of the conditions specified in
this Section 9 and in no case in violation of applicable provisions of the
Securities Act. Holder, by acceptance of this Warrant, agrees to be bound by
the provisions of this Section 9.
9.1. RESTRICTIVE LEGEND.
(a) Except as otherwise provided in this Section 9, each
certificate for Warrant Stock initially issued upon the exercise of this
Warrant, and each certificate for Warrant Stock issued to any subsequent
transferee of any such certificate, shall be stamped or otherwise
imprinted with a legend in substantially the following form:
"The shares represented by this certificate
have not been registered under the Securities Act of
1933, as amended, or any applicable state securities
laws, and are subject to the conditions specified in
a certain Warrant dated July 8, 1999, originally
issued by THERMOVIEW INDUSTRIES, INC. No transfer
of the shares represented by this certificate shall
be valid or effective until such conditions have
been fulfilled. A copy of the form of said Warrant
is on file with the Secretary of THERMOVIEW
INDUSTRIES, INC. The holder of this certificate, by
acceptance of this certificate, agrees to be bound
by the provisions of such Warrant."
(b) Except as otherwise provided in this Section 9, each
Warrant shall be stamped or otherwise imprinted with a legend in
substantially the following form:
17
"This Warrant and the securities represented
hereby have not been registered under the Securities
Act of 1933, as amended (the "Act"), or any
applicable state securities laws, and may not be
transferred in violation of the Act or such laws,
the rules and regulations under the Act or the
provisions of this Warrant."
9.2. NOTICE OF PROPOSED TRANSFERS; REQUESTS FOR REGISTRATION. Prior
to or promptly following any Transfer of any Warrants or any shares of
Restricted Common Stock, the holder of such Warrants or Restricted Common
Stock shall give written notice (a "Transfer Notice") to Company of such
Transfer. Each certificate, if any, evidencing such shares of Restricted
Common Stock issued upon such Transfer shall bear the restrictive legend set
forth in Section 9.1(a), and each Warrant issued upon such Transfer shall
bear the restrictive legend set forth in Section 9.1(b), unless in the
written opinion of counsel to such holder issued to Company which is
reasonably acceptable to Company such legend is not required in order to
ensure compliance with the Securities Act.
The holders of Warrants and Warrant Stock shall have the right
to request registration of such Warrant Stock pursuant to Sections 9.3 and
9.4.
9.3. REQUIRED REGISTRATION. After receipt of a written request from
the holders of Warrants and/or Warrant Stock representing at least an
aggregate of 30% of the total of (i) all shares of Warrant Stock then subject
to purchase upon exercise of all Warrants and (ii) all shares of Warrant
Stock then outstanding, and which are Restricted Common Stock requesting that
Company effect the registration of Warrant Stock issuable upon the exercise
of such holder's Warrants or of any of such holder's Warrant Stock under the
Securities Act and specifying the intended method or methods of disposition
thereof, Company shall promptly notify the remaining holders of Warrants and
Warrant Stock in writing of the receipt of such request and each such holder,
in lieu of exercising its rights under Section 9.4, may elect (by written
notice sent to Company within ten Business Days from the date of such
holder's receipt of the aforementioned Company's notice) to have its shares
of Warrant Stock included in such registration thereof pursuant to this
Section 9.3; PROVIDED, HOWEVER, that Company shall not include for
registration shares of Common Stock issued or issuable upon conversion of the
Series C Convertible Preferred Stock in any Registration Statement requested
to be filed by any holder of this Warrant. Thereupon Company shall, as
expeditiously as is possible, use its best efforts to effect the registration
under the Securities Act of all shares of Warrant Stock which Company has
been so requested to register by such holders for sale, all to the extent
required to permit the disposition (in accordance with the intended method or
methods thereof, as aforesaid) of the Warrant Stock so registered; PROVIDED,
HOWEVER, that Company shall not be required to effect more than two
registrations of any Warrant Stock pursuant to this Section 9.3, unless
Company shall be eligible to file a registration statement on Form S-3 (or
other comparable short form) under the Securities Act, in which event there
shall be no limit on the number of such registrations pursuant to this
Section 9.3. If any Person (other than a holder of a Warrant and/or Warrant
Stock) shall request that shares of Common Stock of such Person be included
on any Registration Statement filed pursuant
18
to this Section 9.3, then such Person shall be subject to pro rata reduction
as set forth in the second sentence of the second paragraph of Section 9.4.
9.4. INCIDENTAL REGISTRATION. If Company at any time proposes to
file on its behalf and/or on behalf of any of its security holders (the
"demanding security holders") a Registration Statement under the Securities
Act on any form (other than the initial Registration Statement (and any
amendments thereto) filed on behalf of the holders of the Series C
Convertible Preferred Stock or a Registration Statement on Form S-4 or S-8 or
any successor form for securities to be offered in a transaction of the type
referred to in Rule 145 under the Securities Act or to employees of Company
pursuant to any employee benefit plan, respectively) for the general
registration of securities to be sold for cash with respect to its Common
Stock or any other class of equity security (as defined in Section 3(a)(11)
of the Exchange Act) of Company, it will give written notice to all holders
of Warrants or Warrant Stock at least 30 days before the initial filing with
the Commission of such Registration Statement, which notice shall set forth
the intended method of disposition of the securities proposed to be
registered by Company. The notice shall offer to include in such filing the
aggregate number of shares of Warrant Stock, and the number of shares of
Common Stock for which this Warrant is exercisable, as such holders may
request.
Each holder of any such Warrants or any such Warrant Stock
desiring to have Warrant Stock registered under this Section 9.4 shall advise
Company in writing within 15 days after the date of receipt of such offer
from Company, setting forth the amount of such Warrant Stock for which
registration is requested. Company shall thereupon include in such filing
the number of shares of Warrant Stock for which registration is so requested,
subject to the next sentence, and shall use its best efforts to effect
registration under the Securities Act of such shares. If the managing
underwriter of a proposed public offering shall advise Company in writing
that, in its opinion, the distribution of the Warrant Stock requested to be
included in the registration concurrently with the securities being
registered by Company or such demanding security holder would materially and
adversely affect the distribution of such securities by Company or such
demanding security holder, then all selling security holders (other than (i)
any demanding security holder who initially requested such registration and
(ii) any security holders whose registration rights granted prior to the date
hereof do not provide for such pro rata reduction) shall reduce the amount of
securities each intended to distribute through such offering on a pro rata
basis; PROVIDED, HOWEVER, that Company shall use its best efforts to cause
the security holders referred to in clause (ii) above to agree to such pro
rata reduction. Except as otherwise provided in Section 9.6, all expenses of
such registration shall be borne by Company.
9.5. REGISTRATION PROCEDURES. If Company is required by the
provisions of this Section 9 to use its best efforts to effect the
registration of any of its securities under the Securities Act, Company will,
as expeditiously as possible:
(a) prepare and file with the Commission a Registration
Statement with respect to such securities and use its best efforts to
cause such Registration
19
Statement to become and remain effective for a period of time required
for the disposition of such securities by the holders thereof, but not
to exceed 180 days;
(b) prepare and file with the Commission such amendments and
supplements to such Registration Statement and the prospectus used in
connection therewith as may be necessary to keep such Registration
Statement effective and to comply with the provisions of the Securities
Act with respect to the sale or other disposition of all securities
covered by such Registration Statement until the earlier of such time as
all of such securities have been disposed of in a public offering or the
expiration of 180 days;
(c) furnish to such selling security holders such number of
copies of a summary prospectus or other prospectus, including a
preliminary prospectus, in conformity with the requirements of the
Securities Act, and such other documents, as such selling security
holders may reasonably request;
(d) use its best efforts to register or qualify the securities
covered by such Registration Statement under such other securities or
blue sky laws of such jurisdictions within the United States and Puerto
Rico as each holder of such securities shall request (PROVIDED, HOWEVER,
that Company shall not be obligated to qualify as a foreign corporation
to do business under the laws of any jurisdiction in which it is not then
qualified or to file any general consent to service or process), and do
such other reasonable acts and things as may be required of it to enable
such holder to consummate the disposition in such jurisdiction of the
securities covered by such Registration Statement;
(e) at the request of any holder requesting registration of
Warrant Stock pursuant to Section 9.3, on the date that such shares of
Warrant Stock are delivered to the underwriters for sale pursuant to such
registration or, if such Warrant Stock is not being sold through
underwriters, on the date that the Registration Statement with respect to
such shares of Warrant Stock becomes effective, (1) furnish an opinion,
dated such date, of the independent counsel representing Company for the
purposes of such registration, addressed to the underwriters, if any, and
if such Warrant Stock is not being sold through underwriters, then to the
holders making such request, in customary form and covering matters of
the type customarily covered in such legal opinions; and (2) furnish a
comfort letter dated such date, from the independent certified public
accountants of Company, addressed to the underwriters, if any, and if
such Warrant Stock is not being sold through underwriters, then use its
best efforts to furnish such comfort letter to the holder making such
request and, if such accountants refuse to deliver such letter to such
holder, then to Company in a customary form and covering matters of the
type customarily covered by such comfort letters as the underwriters or
such holders shall reasonably request. Such opinion of counsel shall
additionally cover such other legal matters with respect to the
registration in respect of which such opinion is being given as such
holders holding a majority of the Warrant Stock being so registered may
reasonably request. Such letter from the independent certified public
accountants shall
20
additionally cover such other financial matters (including information
as to the period ending not more than five Business Days prior to the
date of such letter) with respect to the registration in respect of
which such letter is being given as the holders holding a majority of
the Warrant Stock being so registered may reasonably request;
(f) enter into customary agreements (including an underwriting
agreement in customary form) and take such other actions as are
reasonably required in order to expedite or facilitate the disposition of
such securities; and
(g) otherwise use its best efforts to comply with all
applicable rules and regulations of the Commission, and make available to
its security holders, as soon as reasonably practicable, but not later
than 18 months after the effective date of the Registration Statement,
an earnings statement covering the period of at least 12 months beginning
with the first full month after the effective date of such Registration
Statement, which earnings statements shall satisfy the provisions of
Section 11(a) of the Securities Act.
It shall be a condition precedent to the obligation of Company
to take any action pursuant to this Section 9 in respect of the securities
which are to be registered at the request of any holder of Warrants or
Warrant Stock that such holder shall furnish to Company such information
regarding the securities held by such holder and the intended method of
disposition thereof as Company shall reasonably request and as shall be
required in connection with the action taken by Company.
9.6. EXPENSES. All expenses incurred in complying with Section 9,
including, without limitation, all registration and filing fees (including
all expenses incident to filing with the NASD), printing expenses, fees and
disbursements of counsel for Company, the reasonable fees and expenses of one
counsel for the selling security holders (selected by those holding a
majority of the shares being registered), expenses of any special audits
incident to or required by any such registration and expenses of complying
with the securities or blue sky laws of any jurisdictions pursuant to Section
9.5(d), shall be paid by Company, except that
(a) all such expenses in connection with any amendment or
supplement to the Registration Statement or prospectus filed more than
180 days after the effective date of such Registration Statement because
any holder of Warrant Stock has not effected the disposition of the
securities requested to be registered shall be paid by such holder; and
(b) Company shall not be liable for any fees, discounts or
commissions to any underwriter or any fees or disbursements of counsel
for any underwriter in respect of the securities sold by such holder of
Warrant Stock.
9.7. INDEMNIFICATION AND CONTRIBUTION.
(a) In the event of any registration of any of the Warrant
Stock under the Securities Act pursuant to this Section 9, Company shall
indemnify and hold
21
harmless the holder of such Warrant Stock, such holder's directors and
officers, and each other Person (including each underwriter) who
participated in the offering of such Warrant Stock and each other Person,
if any, who controls such holder or such participating Person within the
meaning of the Securities Act, against any losses, claims, damages or
liabilities, joint or several, to which such holder or any such director
or officer or participating Person or controlling Person may become
subject under the Securities Act or any other statute or at common
law, insofar as such losses, claims, damages or liabilities (or actions
in respect thereof) arise out of or are based upon (i) any alleged untrue
statement of any material fact contained, on the effective date thereof,
in any Registration Statement under which such securities were
registered under the Securities Act, any preliminary prospectus or
final prospectus contained therein, or any amendment or supplement
thereto, or (ii) any alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein
not misleading, and shall reimburse such holder or such director, officer
or participating Person or controlling Person for any legal or any other
expenses reasonably incurred by such holder or such director, officer or
participating Person or controlling Person in connection with
investigating or defending any such loss, claim, damage, liability or
action; PROVIDED, HOWEVER, that Company shall not be liable in any such
case to the extent that any such loss, claim, damage or liability arises
out of or is based upon any alleged untrue statement or alleged omission
made in such Registration Statement, preliminary prospectus, prospectus
or amendment or supplement in reliance upon and in conformity with
written information furnished to Company by such holder specifically for
use therein or (in the case of any registration pursuant to Section 9.3)
so furnished for such purposes by any underwriter. Such indemnity shall
remain in full force and effect regardless of any investigation made by
or on behalf of such holder or such director, officer or participating
Person or controlling Person, and shall survive the transfer of such
securities by such holder.
(b) Each holder of any Warrant Stock, by acceptance thereof,
agrees to indemnify and hold harmless Company, its directors and officers
and each other Person, if any, who controls Company within the meaning of
the Securities Act against any losses, claims, damages or liabilities,
joint or several, to which Company or any such director or officer or any
such Person may become subject under the Securities Act or any other
statute or at common law, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based
upon information in writing provided to Company by such holder of such
Warrant Stock specifically for use in the following documents and
contained, on the effective date thereof, in any Registration Statement
under which securities were registered under the Securities Act at the
request of such holder, any preliminary prospectus or final prospectus
contained therein, or any amendment or supplement thereto, but in an
amount not to exceed the net proceeds received by such holder in the
offering.
(c) If the indemnification provided for in this Section 9 from
the indemnifying party is unavailable to an indemnified party hereunder
in respect of
22
any losses, claims, damages, liabilities or expenses referred to therein,
then the indemnifying party, in lieu of indemnifying such indemnified
party, shall contribute to the amount paid or payable by such
indemnified party as a result of such losses, claims, damages,
liabilities or expenses in such proportion as is appropriate to reflect
the relative fault of the indemnifying party and indemnified parties in
connection with the actions which resulted in such losses, claims,
damages, liabilities or expenses, as well as any other relevant equitable
considerations. The relative fault of such indemnifying party and
indemnified parties shall be determined by reference to, among other
things, whether any action in question, including any untrue or alleged
untrue statement of a material fact or omission or alleged omission to
state a material fact, has been made by, or relates to information
supplied by, such indemnifying party or indemnified parties, and the
parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such action. The amount paid or
payable by a party as a result of the losses, claims, damages,
liabilities and expenses referred to above shall be deemed to include any
legal or other fees or expenses reasonably incurred by such party in
connection with any investigation or proceeding. The liability of any
holder of Warrant Stock hereunder shall not exceed the net proceeds
received by it in the offering.
The parties hereto agree that it would not be just and
equitable if contribution pursuant to this Section 9.7(c) were determined by
pro rata allocation or by any other method of allocation which does not take
account of the equitable considerations referred to in the immediately
preceding paragraph. No Person guilty of fraudulent misrepresentation (within
the meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any Person who was not guilty of such fraudulent
misrepresentation.
9.8. TERMINATION OF RESTRICTIONS. Notwithstanding the foregoing
provisions of Section 9, the restrictions imposed by this Section upon the
transferability of the Warrants, the Warrant Stock and the Restricted Common
Stock (or Common Stock issuable upon the exercise of the Warrants) and the
legend requirements of Section 9.1 shall terminate as to any particular
Warrant or share of Warrant Stock or Restricted Common Stock (or Common Stock
issuable upon the exercise of the Warrants) (i) when and so long as such
security shall have been effectively registered under the Securities Act and
disposed of pursuant thereto or (ii) when Company shall have received an
opinion of counsel reasonably satisfactory to it that such shares may be
transferred without registration thereof under the Securities Act. Whenever
the restrictions imposed by Section 9 shall terminate as to this Warrant, as
hereinabove provided, the Holder hereof shall be entitled to receive from
Company, at the expense of Company, a new Warrant bearing the following
legend in place of the restrictive legend set forth hereon:
"THE RESTRICTIONS ON TRANSFERABILITY OF THE
WITHIN WARRANT CONTAINED IN SECTION 9 HEREOF
TERMINATED ON __________, AND ARE OF NO FURTHER
FORCE AND EFFECT."
23
All Warrants issued upon registration of transfer, division or combination
of, or in substitution for, any Warrant or Warrants entitled to bear such
legend shall have a similar legend endorsed thereon. Whenever the
restrictions imposed by this Section shall terminate as to any share of
Restricted Common Stock, as hereinabove provided, the holder thereof shall be
entitled to receive from Company, at Company's expense, a new certificate
representing such Common Stock not bearing the restrictive legend set forth
in Section 9.1(a).
9.9. LISTING ON SECURITIES EXCHANGE. If Company shall list any
shares of Common Stock on any securities exchange, it will, at its expense,
list thereon, maintain and, when necessary, increase such listing of, all
shares of Common Stock issued or, to the extent permissible under the
applicable securities exchange rules, issuable upon the exercise of this
Warrant so long as any shares of Common Stock shall be so listed during any
such Exercise Period.
9.10. CERTAIN LIMITATIONS ON REGISTRATION RIGHTS. Notwithstanding
the other provisions of Section 9:
(i) Company shall not be obligated to register the Warrant
Stock of any holder if, in the opinion of counsel to Company reasonably
satisfactory to the holder and its counsel (or, if the holder has engaged
an investment banking firm, to such investment banking firm and its
counsel), the sale or other disposition of such holder's Warrant Stock,
in the manner proposed by such holder (or by such investment banking
firm), may be effected without registering such Warrant Stock under the
Securities Act; and
(ii) Company shall not be obligated to register the Warrant
Stock of any holder pursuant to Section 9.3, if Company has had a
registration statement, under which such holder had a right to have its
Warrant Stock included pursuant to Sections 9.3 or 9.4, declared
effective within six months prior to the date of the request pursuant to
Section 9.3.
9.11. SELECTION OF MANAGING UNDERWRITERS. The managing underwriter
or underwriters for any offering of Warrant Stock to be registered pursuant
to Section 9.3 shall be selected by the holders of a majority of the shares
being so registered (other than any shares being registered pursuant to
Section 9.4) and shall be reasonably acceptable to Company.
10. SUPPLYING INFORMATION
Company shall cooperate with each Holder of a Warrant and each
holder of Restricted Common Stock in supplying such information as may be
reasonably necessary for such holder to complete and file any information
reporting forms presently or hereafter required by the Commission as a
condition to the availability of an exemption from the Securities Act for the
sale of any Warrant or Restricted Common Stock.
24
11. LOSS OR MUTILATION
Upon receipt by Company from any Holder of evidence reasonably
satisfactory to it of the ownership of and the loss, theft, destruction or
mutilation of this Warrant and indemnity reasonably satisfactory to it (it
being understood that the written agreement of GE Capital shall be sufficient
indemnity), and in case of mutilation upon surrender and cancellation hereof,
Company will execute and deliver in lieu hereof a new Warrant of like tenor
to such Holder; PROVIDED, in the case of mutilation, no indemnity shall be
required if this Warrant in identifiable form is surrendered to Company for
cancellation.
12. OFFICE OF COMPANY
As long as any of the Warrants remain outstanding, Company
shall maintain an office or agency (which may be the principal executive
offices of Company) where the Warrants may be presented for exercise,
registration of transfer, division or combination as provided in this Warrant.
13. FINANCIAL AND BUSINESS INFORMATION
13.1. QUARTERLY INFORMATION. Company will deliver to each Holder, as
soon as practicable after the end of each of the first three quarters of
Company, and in any event within 45 days thereafter, one copy of an unaudited
consolidated balance sheet of Company and its subsidiaries as at the close of
such quarter, and the related unaudited consolidated statements of income and
cash flows of Company for such quarter and, in the case of the second and
third quarters, for the portion of the fiscal year ending with such quarter,
setting forth for each quarter in comparative form the figures for the
corresponding periods in the previous fiscal year. Such financial statements
shall be prepared by Company in accordance with GAAP and accompanied by the
certification of Company's chief executive officer or chief financial officer
that such financial statements are complete and correct and present fairly
the consolidated financial position, results of operations and cash flows of
Company and its subsidiaries as at the end of such quarter and for such
year-to-date period, as the case may be.
13.2. ANNUAL INFORMATION. Company will deliver to each Holder as
soon as practicable after the end of each fiscal year of Company, and in any
event within 90 days thereafter, one copy of:
(i) an audited consolidated balance sheet of Company and its
subsidiaries as at the end of such year, and
(ii) audited consolidated statements of income, retained
earnings and cash flows of Company and its subsidiaries for such year;
setting forth in each case in comparative form the figures for the
corresponding periods in the previous fiscal year, all prepared in accordance
with GAAP, and which audited financial statements shall be accompanied by (i)
an opinion thereon of the independent certified public accountants regularly
retained by Company, or any other "Big 5"
25
accounting firm (or any successor thereto) selected by Company and (ii) a
report of such independent certified public accountants confirming any
adjustment made pursuant to Section 4 during such year.
13.3. FILINGS. Company will file on or before the required date all
regular or periodic reports (pursuant to the Exchange Act) with the
Commission and will deliver to Holder promptly upon their becoming available
one copy of each report, notice or proxy statement sent by Company to its
stockholders generally, and of each regular or periodic report (pursuant to
the Exchange Act) and any Registration Statement, prospectus or written
communication (other than transmittal letters) (pursuant to the Securities
Act), filed by Company with (i) the Commission or (ii) any securities
exchange on which shares of Common Stock are listed.
14. [INTENTIONALLY OMITTED].
15. [INTENTIONALL OMITTED].
16. LIMITATION OF LIABILITY
No provision hereof, in the absence of affirmative action by
Holder to purchase shares of Common Stock, and no enumeration herein of the
rights or privileges of Holder hereof, shall give rise to any liability of
such Holder for the purchase price of any Common Stock or as a stockholder of
Company, whether such liability is asserted by Company or by creditors of
Company.
17. RIGHT OF FIRST REFUSAL FOR NEW SECURITIES
(a) Company hereby grants to Holder a right of first refusal
to purchase shares of any New Securities (as defined below) which Company
may, from time to time, propose to sell and issue, which right of first
refusal shall survive for a period of, and be applicable to New
Securities issued within, three years after the date hereof. Such right
of first refusal shall allow Holder to purchase a pro rata portion of the
New Securities proposed to be issued, determined with reference to the
aggregate number of outstanding shares of Common Stock (determined on an
as if exercised basis) held by such Holder or its permitted transferees
before the proposed issuance of New Securities. In the event any Holder
does not purchase any or all of its pro rata portion of New Securities,
the other Holders shall have the right to purchase such unpurchased New
Securities. The right of first refusal granted hereunder shall terminate
if unexercised within 10 Business Days after receipt of the notice
described in Section 17(c) hereof. Holders may reallocate their right of
first refusal among themselves.
(b) "New Securities" shall mean any authorized but unissued
shares, and any treasury shares, of capital stock of Company and all
rights, options or warrants to purchase capital stock, and securities of
any type whatsoever that are, or may become, convertible into capital
stock; PROVIDED, HOWEVER, that the term "New Securities" does not include
(i) securities issued pursuant to the acquisition
26
of another corporation by Company by merger, purchase of all or
substantially all of the assets or other reorganization whereby Company
shall become the owner of more than 50% of the voting power of such
corporation; (ii) shares of Common Stock issued in connection with any
stock split or stock dividend of Company; (iii) shares of Common Stock
issued pursuant to any public offering and sale of equity securities of
Company pursuant to an effective registration statement under the
Securities Act; and (iv) Permitted Issuances.
(c) If Company proposes to issue New Securities, it shall give
Holder written notice thereof, describing the New Securities, the number
thereof to be issued, the purchase price therefor and the terms upon
which Company proposes to issue the same. Holder shall have 10 Business
Days from the date such notice is given to determine whether to purchase
all or any portion of such Holder's pro rata share of such New Securities
for the purchase price and upon the terms specified in the notice by
giving written notice to Company and stating therein the number of New
Securities to be purchased.
(d) If Holder has not elected to purchase all of the New
Securities proposed to be issued (within the time period for notifying
Company set forth above), then Company shall have 60 calendar days in
which to complete the proposed issuance of the portion of the New
Securities not purchased by Holder at a price not less than that
contained in the notice previously given to Holder and on terms and
conditions not more favorable to the third party than those contained in
such notice. If, at the end of such 60-calendar day period, Company has
not completed such issuance of New Securities, Company shall no longer be
permitted to issue such New Securities pursuant to this Section 17
without again fully complying with all of the provisions of this Section
17.
18. MISCELLANEOUS
18.1. NONWAIVER AND EXPENSES. No course of dealing or any delay or
failure to exercise any right hereunder on the part of Holder shall operate
as a waiver of such right or otherwise prejudice Holder's rights, powers or
remedies. If Company fails to make, when due, any payments provided for
hereunder, or fails to comply with any other provision of this Warrant,
Company shall pay to Holder such amounts as shall be sufficient to cover any
costs and expenses including, but not limited to, reasonable attorneys' fees,
including those of appellate proceedings, incurred by Holder in collecting
any amounts due pursuant hereto or in otherwise enforcing any of its rights,
powers or remedies hereunder.
18.2. NOTICE GENERALLY. Any notice, demand, request, consent,
approval, declaration, delivery or other communication hereunder to be made
pursuant to the provisions of this Warrant shall be sufficiently given or
made if in writing and either delivered in person with receipt acknowledged
or sent by registered or certified mail, return receipt requested, postage
prepaid, or by telecopy and confirmed by telecopy answerback, addressed as
follows:
27
(a) If to any Holder or holder of Warrant Stock, at its last
known address appearing on the books of Company maintained for such
purpose.
(b) If to Company at
ThermoView Industries, Inc.
0000 Xxxx Xxxx
Xxxxxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxxxx, Chief Executive Officer
Telecopy Number: (000) 000-0000
with a copy to:
Xxxxxx & Xxxxxxxx
000 Xxxx Xxxxxx Xxxxxx
Xxxxx 0000
Xxxxxxxxxx, Xxxxxxxx 00000
Attention: Xxxx X. Xxxxxxxxxx, Xx. (Xxxx)
Telecopy Number: (000) 000-0000
or at such other address as may be substituted by notice given as herein
provided. The giving of any notice required hereunder may be waived in
writing by the party entitled to receive such notice. Every notice, demand,
request, consent, approval, declaration, delivery or other communication
hereunder shall be deemed to have been duly given or served on the date on
which personally delivered, with receipt acknowledged, telecopied and
confirmed by telecopy answerback, or three (3) Business Days after the same
shall have been deposited in the United States mail. Failure or delay in
delivering copies of any notice, demand, request, approval, declaration,
delivery or other communication to the person designated above to receive a
copy shall in no way adversely affect the effectiveness of such notice,
demand, request, approval, declaration, delivery or other communication.
18.3. INDEMNIFICATION. Company agrees to indemnify and hold harmless
Holder from and against any liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, claims, costs, attorneys' fees,
expenses and disbursements of any kind which may be imposed upon, incurred by
or asserted against Holder in any manner relating to or arising out of (i)
Holder's exercise of this Warrant and/or ownership of any shares of Warrant
Stock issued in consequence thereof or (ii) any litigation to which Holder is
made a party in its capacity as a stockholder of Company; PROVIDED, HOWEVER,
that Company will not be liable hereunder to the extent that any liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, claims,
costs, attorneys' fees, expenses or disbursements are found in a final
non-appealable judgment by a court to have resulted from Holder's gross
negligence, bad faith or willful misconduct in its capacity as a stockholder
or warrantholder of Company.
18.4. REMEDIES. Each holder of Warrant and Warrant Stock, in
addition to being entitled to exercise all rights granted by law, including
recovery of damages, will
28
be entitled to specific performance of its rights under Section 9 of this
Warrant. Company agrees that monetary damages would not be adequate
compensation for any loss incurred by reason of a breach by it of the
provisions of Section 9 of this Warrant and hereby agrees to waive the
defense in any action for specific performance that a remedy at law would be
adequate.
18.5. SUCCESSORS AND ASSIGNS. Subject to the provisions of Sections
3.1 and 9, this Warrant and the rights evidenced hereby shall inure to the
benefit of and be binding upon the successors of Company and the successors
and assigns of Holder. The provisions of this Warrant are intended to be for
the benefit of all Holders from time to time of this Warrant and, with
respect to Section 9 hereof, holders of Warrant Stock, and shall be
enforceable by any such Holder or holder of Warrant Stock.
18.6. AMENDMENT. This Warrant and all other Warrants may be modified
or amended or the provisions hereof waived with the written consent of
Company and the Majority Holders, PROVIDED that no such Warrant may be
modified or amended to reduce the number of shares of Common Stock for which
such Warrant is exercisable or to increase the price at which such shares may
be purchased upon exercise of such Warrant (before giving effect to any
adjustment as provided therein) without the prior written consent of the
Holder thereof.
18.7. SEVERABILITY. Wherever possible, each provision of this
Warrant shall be interpreted in such manner as to be effective and valid
under applicable law, but if any provision of this Warrant shall be
prohibited by or invalid under applicable law, such provision shall be
ineffective to the extent of such prohibition or invalidity, without
invalidating the remainder of such provision or the remaining provisions of
this Warrant.
18.8. HEADINGS. The headings used in this Warrant are for the
convenience of reference only and shall not, for any purpose, be deemed a
part of this Warrant.
18.9. GOVERNING LAW. This Warrant shall be governed by the laws of
the State of New York, without regard to the provisions thereof relating to
conflict of laws.
18.10. WAIVER OF JURY TRIAL. Company hereby waives all right to trial
by jury in any action or proceeding to enforce or defend any rights under
this Warrant.
29
IN WITNESS WHEREOF, Company has caused this Warrant to be duly
executed by its duly authorized officer.
Dated: July 8, 1999
THERMOVIEW INDUSTRIES, INC.
By: /s/ Xxxxxx X. Xxxxxxxx
-------------------------------
Name: Xxxxxx X. Xxxxxxxx
Title: President
30
EXHIBIT A
SUBSCRIPTION FORM
[To be executed only upon exercise of Warrant]
The undersigned registered owner of this Warrant irrevocably
exercises this Warrant for the purchase of ______ Shares of Common Stock of
THERMOVIEW INDUSTRIES, INC. and herewith makes payment therefor, all at the
price and on the terms and conditions specified in this Warrant and requests
that certificates for the shares of Common Stock hereby purchased (and any
securities or other property issuable upon such exercise) be issued in the
name of and delivered to _____________ whose address is _________________
and, if such shares of Common Stock shall not include all of the shares of
Common Stock issuable as provided in this Warrant, that a new Warrant of like
tenor and date for the balance of the shares of Common Stock issuable
hereunder be delivered to the undersigned.
---------------------------------------
(Name of Registered Owner)
---------------------------------------
(Signature of Registered Owner)
---------------------------------------
(Street Address)
---------------------------------------
(City) (State) (Zip Code)
NOTICE: The signature on this subscription must correspond with the name
as written upon the face of the within Warrant in every
particular, without alteration or enlargement or any change
whatsoever.
EXHIBIT B
ASSIGNMENT FORM
FOR VALUE RECEIVED the undersigned registered owner of this
Warrant hereby sells, assigns and transfers unto the Assignee named below all
of the rights of the undersigned under this Warrant, with respect to the
number of shares of Common Stock set forth below:
NAME AND ADDRESS OF ASSIGNEE NO. OF SHARES OF
COMMON STOCK
and does hereby irrevocably constitute and appoint __________________________
attorney-in-fact to register such transfer on the books of THERMOVIEW
INDUSTRIES, INC. maintained for the purpose, with full power of substitution
in the premises.
Dated: Print Name:
------------------ -------------------------
Signature:
--------------------------
Witness:
----------------------------
NOTICE: The signature on this subscription must correspond with the name
as written upon the face of the within Warrant in every
particular, without alteration or enlargement or any change
whatsoever.
