AGREEMENT
THIS AGREEMENT is made and entered into as of the 14th day of April
2000, by and between THERMOVIEW INDUSTRIES, INC., a Delaware corporation
("ThermoView") and XXXXXX X. XXXX ("Xxxx").
PRELIMINARY STATEMENTS
As of August 14, 1998, ThermoView acquired all of the outstanding
shares of capital stock of Ice, Inc., a North Dakota corporation and Blizzard
Enterprises, Inc., a Minnesota corporation, pursuant to a certain Stock Purchase
Agreement (the "Stock Agreement") among ThermoView, Xxxxx X. Xxxxxxxx and Xxxx.
Under the terms of the Stock Agreement, Xxxx is entitled to receive
post-closing earn-out payments (the "Earn-out Payments"), if earned, on December
31, 1998, 1999 and 2000. As of December 31, 1999, ThermoView owed Xxxx payments
of cash and ThermoView common stock, par value $.001 (the "Common Stock"), equal
to approximately $484,588.00 (the "Year Two Earn-out Payment") under the terms
of the Stock Agreement pursuant to the earn-out provision.
ThermoView has issued 60,574 shares of Common Stock to Xxxx in full
satisfaction of the Common Stock portion of the Year Two Earn-out Payment.
ThermoView desires to make the remainder of the Year Two Earn-out
Payment in ThermoView 12% Cumulative Series D Preferred Stock with a stated
value of $5.00 (the "Preferred Stock") in lieu of cash and Xxxx desires to
accept the Preferred Stock in consideration of the remainder of the Year Two
Earn-out Payment. The terms and conditions of the Preferred Stock are further
described in the Certificate of Designation, attached hereto as EXHIBIT A and
incorporated herein by reference (the "Certificate").
NOW, THEREFORE, in consideration of these preliminary statements and
the mutual promises contained herein, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereby agree as follows:
1. STOCK ISSUANCE. In exchange for any and all amounts due to Xxxx by ThermoView
pursuant to the Year Two Earn-out Payment under the Stock Agreement, ThermoView
hereby transfers to Xxxx and Xxxx hereby agrees to accept 49,735 shares of
Preferred Stock. The delivery of the Preferred Stock to Xxxx shall occur with
fifteen (15) business days of the execution of this Agreement.
2. FULL SATISFACTION. Xxxx hereby acknowledges that his receipt of the 60,574
shares of Common Stock and the 49,735 shares of Preferred Stock is in full and
complete satisfaction of the obligation owed to Xxxx by ThermoView for the Year
Two Earn-out Payment.
3. NO AMENDMENT OR TERMINATION. Nothing contained in this Agreement shall amend
or terminate any obligations of ThermoView to make any and all other Earn-out
Payments, if earned, under the terms of the Stock Agreement.
4. XXXX'X REPRESENTATIONS AND WARRANTIES. Xxxx hereby represents and warrants to
ThermoView as follows:
(a) INVESTMENT INTENT. Xxxx is acquiring the Preferred Stock for his own
account and not with a present view to or for distributing or reselling the
Preferred Stock in violation of the Securities Act of 1933, as amended (the
"Securities Act"). Xxxx agrees that such shares of Preferred Stock may not
be sold, transferred, offered for sale, pledged, hypothecated or otherwise
disposed of without registration under the Securities Act, except pursuant
to an exemption available under the Securities Act. Xxxx will not sell,
offer to sell or solicit offers to buy any of the shares of Preferred Stock
in violation of the Securities Act or any securities act of any state. Xxxx
understands that the shares of Preferred Stock have not been registered
under federal or any state securities laws.
(b) XXXX'X STATUS. Xxxx is (i) an "accredited investor" as defined in Rule 501
of the Securities Act and (ii) has such knowledge, sophistication and
experience in business and financial matters so as to be capable of
evaluating the merits and risks of the prospective investment in the
Preferred Stock.
(c) RELIANCE. Xxxx understands and acknowledges that (i) the Preferred Stock is
being offered and sold to Xxxx without registration under the Securities
Act in a private placement that is exempt from the registration provisions
of the Securities Act under Section 4(2) of the Securities Act or
Regulation D promulgated thereunder or other applicable federal and state
securities laws and (ii) the availability of such exemptions depends in
part on, and ThermoView will rely upon the accuracy and truthfulness of,
the representations set forth in this Section 4 and Xxxx consents to such
reliance.
(d) INFORMATION. Xxxx and his advisors, if any, have been furnished with all
materials relating to the business, finances and operations of ThermoView
and materials relating to the offer and sale of the Preferred Stock,
including the Certificate, which have been requested by Xxxx or his
advisors. Xxxx and his advisors, if any, have been afforded the opportunity
to ask questions of ThermoView. Xxxx acknowledges receipt of the ThermoView
prospectus dated December 2, 1999 (the "Prospectus") and that ThermoView
will deliver a copy of its most recent Form 10-K filing with the Securities
and Exchange Commission as soon as it becomes publicly available. Xxxx
understands that his investment in the Preferred Stock involves a
significant degree of risk, some of which risks associated with the
investment in the Preferred Stock are set forth in EXHIBIT B, attached
hereto and incorporated herein by reference, and in the Prospectus.
5. MISCELLANEOUS.
(a) NOTICES. All notices, requests, consents and other communications hereunder
shall be in writing, shall be addressed to the receiving party's address
set forth below or to such other address as a party may designate by notice
hereunder, and shall be either (i) delivered by hand, (ii) made by telex,
telecopy or facsimile transmission, (iii) sent by overnight courier, or
(iv) sent by certified mail, return receipt requested, postage prepaid.
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If to ThermoView:
ThermoView Industries, Inc.
0000 Xxxx Xxxx
Xxxxxxxxxx, Xxxxxxxx 00000
Attn: Xxxxxx X. Xxxxxxxx, President
Fax No. (000) 000-0000
With a copy to:
Xxxxxx & Xxxxxxxx
000 Xxxx Xxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxxxx, Xxxxxxxx 00000
Attn: Xxxx X. Xxxxxxxxxx, Xx., Esq.
Fax No. (000) 000-0000
If to Xxxx:
Xxxxxx X. Xxxx
00000 Xxxxxxxxxx Xxxx.
Xxxxxxxxxxx, Xxxxxxxxx 00000
Fax No. (000) 000-0000
All notices, requests, consents and other communications hereunder shall be
deemed to have been received either (i) if by hand, at the time of the
delivery thereof to the receiving party at the address of such party set
forth above, (ii) if made by telecopy or facsimile transmission, at the
time that receipt thereof has been acknowledged by electronic confirmation
or otherwise, (iii) if sent by overnight courier, on the next business day
following the day such notice is delivered to the courier service, or (iv)
if sent by certified mail, on the fifth business day following the day such
mailing is made.
(b) ENTIRE AGREEMENT. This Agreement embodies the entire agreement and
understanding between the parties hereto with respect to the Year Two
Earn-out Payment and supersedes all prior oral or written agreements and
understandings relating to the Year Two Earn-out Payment. No statement,
representation, warranty, covenant or agreement of any kind not expressly
set forth in this Agreement shall affect, or be used to interpret, change
or restrict, the express terms and provisions of this Agreement.
(c) MODIFICATIONS AND AMENDMENTS. The terms and provisions of this Agreement
may be modified or amended only by written agreement executed by all
parties hereto.
(d) BENEFIT. This Agreement shall be binding on the parties hereto and shall
inure to the benefit of the parties hereto and the respective successors
and permitted assigns of each party hereto. Nothing in this Agreement shall
be construed to create any rights or obligations except among the parties
hereto, and no person or entity shall be regarded as a third-party
beneficiary of this Agreement.
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(e) GOVERNING LAW. This Agreement and the rights and obligations of the parties
hereunder shall be construed in accordance with and governed by the law of
the Commonwealth of Kentucky, without giving effect to the conflict of law
principles thereof.
(f) SEVERABILITY. In the event that any court of competent jurisdiction shall
determine that any provision, or any portion thereof, contained in this
Agreement shall be unreasonable or unenforceable in any respect, then such
provision shall be deemed limited to the extent that such court deems it
reasonable and enforceable, and as so limited shall remain in full force
and effect. In the event that such court shall deem any such provision, or
portion thereof, wholly unenforceable, the remaining provisions of this
Agreement shall nevertheless remain in full force and effect.
(g) HEADINGS AND CAPTIONS. The headings and captions of the various
subdivisions of this Agreement are for convenience of reference only and
shall in no way modify, or affect the meaning or construction of any of the
terms or provisions hereof.
(h) COUNTERPARTS. This Agreement may be executed in one or more counterparts,
and by different parties hereto on separate counterparts, each of which
shall be deemed an original, but all of which together shall constitute one
and the same instrument.
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IN WITNESS WHEREOF, ThermoView has caused this Agreement to be executed
by its duly authorized officer and Xxxx has executed this Agreement all as of
the date first above written.
THERMOVIEW INDUSTRIES, INC.
By: /s/ Illegible
Title: President
/s/ Xxxxxx X. Xxxx
XXXXXX X. XXXX
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EXHIBIT A
CERTIFICATE OF DESIGNATION
CERTIFICATE OF THE VOTING POWERS, DESIGNATIONS, PREFERENCES
AND RELATIVE, PARTICIPATING, OPTIONAL OR OTHER
SPECIAL RIGHTS, AND QUALIFICATIONS, LIMITATIONS OR
RESTRICTIONS THEREOF, OF 12% SERIES D CUMULATIVE
PREFERRED STOCK
OF
THERMOVIEW INDUSTRIES, INC.
PURSUANT TO SECTION 151 OF THE GENERAL CORPORATION LAW
OF THE STATE OF DELAWARE
Pursuant to Section 141(f) of the General Corporation Law of the State
of Delaware (the "DGCL"), the Board of Directors of ThermoView Industries, Inc.,
a Delaware corporation (the "Company"), hereby unanimously consents to, adopts
and ratifies the following resolution:
RESOLVED, that pursuant to the authority expressly granted to and
vested in the Board of Directors of the Company by the provisions of
Section 4.2 of Article IV of the Restated Certificate of Incorporation
of the Company (the "Restated Certificate of Incorporation"), and
Section 151(g) of the DGCL, such Board of Directors hereby creates,
from the 50,000,000 authorized shares of Preferred Stock, par value
$.001 per share (the "Preferred Stock"), of the Company authorized to
be issued pursuant to the Restated Certificate of Incorporation, a
series of Preferred Stock, and hereby fixes by this certificate of
designation (this "Certificate of Designation") the voting powers,
designations, preferences and relative, participating, optional or
other special rights, and qualifications, limitations or restrictions
thereof, of the shares of such series as follows:
The series of Preferred Stock hereby established shall consist
of 1,500,000 shares designated as "12% Cumulative Series D
Preferred Stock" (hereinafter called the "Series D Preferred
Stock"), which shall have a stated value of $5.00 per share.
The relative rights, preferences and limitations of such
series shall be as follows:
12% CUMULATIVE SERIES D PREFERRED STOCK
(1) RANKING. The Series D Preferred Stock will, with respect to payment
of dividends and amounts upon liquidation, dissolution or winding up, rank (i)
senior to the Common Stock of the Company, $.001 par value (the "Common Stock")
and to shares of all other series of Preferred Stock issued by the Company the
terms of which specifically provide that the capital stock of such series rank
junior to such Series D Preferred Stock with respect to dividend rights or
distributions upon dissolution of the Company ("Junior Stock"); (ii) on a parity
with (a) all shares of the Company's 6.6% Cumulative Convertible Series C
Preferred Stock and (b) the shares of all capital stock issued by the Company
whether or not the dividend rates, dividend payment dates, or redemption or
liquidation prices per share thereof shall be different from those of the Series
D Preferred Stock, if the holders of stock of such class or series shall be
entitled by the terms thereof to the receipt of dividends or of amounts
distributable upon liquidation, dissolution or winding up, as the case may be,
in proportion to their respective dividend rates or liquidation prices, without
preference or priority of one over the other as between the holders of such
stock and the holders of shares of Series D Preferred Stock (collectively (a)
and (b) being "Parity Stock"); and (iii) junior to all capital stock issued by
the Company the terms of which specifically provide that the shares rank senior
to the Series D Preferred Stock with respect to dividends and distributions upon
dissolution of the Company ("Senior Stock").
(2) DIVIDENDS.
(a) Holders of shares of Series D Preferred Stock will be
entitled to receive, when, as and if declared by the Board of Directors of the
Company and only with the consent of PNC Bank, N.A. or any successor lender
thereto, out of funds of the Company legally available for payment, subject to
the prior and superior rights of Senior Stock, but PARI PASSU with Parity Stock,
and in preference to Junior Stock, cumulative cash dividends at the rate per
annum of $0.60 per share of Series D Preferred Stock. Dividends on the Series D
Preferred Stock will be payable quarterly in arrears on the last calendar day of
April, July, October and January of each year, commencing July 31, 2000 (and in
the case of any accumulated and unpaid dividends not paid on the corresponding
dividend payment date, at such additional times and for such interim periods, if
any, as determined by the Board of Directors). Each such dividend will be
payable to holders of record as they appear on the stock records of the Company
at the close of business on such record dates, not more than 60 days nor less
than 10 days preceding the payment dates thereof, as shall be fixed by the Board
of Directors of the Company. Dividends will accrue from the date of the original
issuance of the Series D Preferred Stock. Dividends will be cumulative from such
date, whether or not in any dividend period or periods there shall be funds of
the Company legally available for the payment of such dividends. Accumulations
of dividends on shares of Series D Preferred Stock will not bear interest.
Dividends payable on the Series D Preferred Stock for any period greater or less
than a full dividend period will be computed on the basis of actual days.
Dividends payable on the Series D Preferred Stock for each full dividend period
will be computed by dividing the annual dividend rate by four.
(b) Except as provided in the next sentence, no dividend will
be declared or paid on any Parity Stock unless full cumulative dividends have
been declared and paid or are contemporaneously declared and funds sufficient
for payment set aside on the Series D Preferred Stock for all prior dividend
periods. If accrued dividends on the Series D Preferred Stock for all prior
periods have not been paid in full, then any dividends declared on the Series D
Preferred Stock for any dividend period and on any Parity Stock will be declared
ratably in proportion to accumulated and unpaid dividends on the Series D
Preferred Stock and such Parity Stock.
(c) So long as the shares of the Series D Preferred Stock
shall be outstanding, unless (i) full cumulative dividends shall have been paid
or declared and set apart for payment on all outstanding shares of the Series D
Preferred Stock and any Parity Stock, (ii) sufficient funds have been paid or
set apart for the payment of the dividend for the current dividend period with
respect to the Series D Preferred Stock and any Parity Stock and (iii) the
Company is not in default or in arrears with respect to the mandatory or
optional redemption or mandatory repurchase or other mandatory retirement of, or
with respect to any sinking or other analogous fund for, the Series D Preferred
Stock or any Parity Stock, the Company may not declare any dividends on any
Junior Stock, or make any payment on account of, or set apart money for, the
purchase, redemption or other retirement of, or for a sinking or other analogous
fund for, any shares of Junior Stock or make any distribution in respect
thereof, whether in cash or property or in obligations or stock of the Company,
other than (x) Junior Stock which is neither convertible into, nor exchangeable
or exercisable for, any securities of the Company other than Junior Stock, or
(y) Common Stock acquired in connection with the cashless exercise of options
under employee incentive or benefit plans of the Company or any subsidiary or
any other redemption or purchase or other acquisition of Common Stock made in
the ordinary course of business, which has been approved by the Board of
Directors of the Company, for the purpose of any employee incentive or benefit
plan of the Company. The limitations in this paragraph do not restrict the
Company's ability to take the actions in this paragraph with respect to any
Parity Stock. As used in this subparagraph (c), the term "dividend" with respect
to Junior Stock does not include dividends payable solely in shares of Junior
Stock on Junior Stock, or in options, warrants on rights to holders of Junior
Stock to subscribe for or purchase any Junior Stock.
(3) REDEMPTION.
(a) The shares of Series D Preferred Stock will be redeemable
at the option of the Company in whole or in part, for cash or for such number of
shares of Common Stock as equals the Liquidation Preference (defined hereinafter
in paragraph (4)) of the Series D Preferred Stock to be redeemed (without regard
to accumulated and unpaid dividends) as of the opening of business on the date
set for such redemption. In order to exercise its redemption option, the Company
must notify the holders of record of its Series D Preferred Stock in writing
(the "Conditions Satisfaction Notice") prior to the opening of business on the
second trading day after the conditions in the preceding sentences have, from
time to time, been satisfied.
(b) Notice of redemption (the "Redemption Notice") will be
given by mail to the holders of the Series D Preferred Stock not less than 30
nor more than 60 days prior to the date selected by the Company to redeem the
Series D Preferred Stock. The Redemption Notice shall be deemed to have been
given when deposited in the United States mail, first-class mail, postage
prepaid, whether or not such notice is actually received. The Company's right to
exercise its redemption option will not be affected by changes in the closing
price of the
Common Stock following such 30-day period. If fewer than all of the shares of
Series D Preferred Stock are to be redeemed, the shares to be redeemed shall be
selected by lot or pro rata or in some other equitable manner determined by the
Board of Directors of the Company; provided, however, that the Company shall not
be required to effect the redemption in any manner that results in additional
fractional shares being outstanding. If full cumulative dividends on the
outstanding shares of Series D Preferred Stock shall not have been paid or
declared and set apart for payment for all regular dividend payment dates to and
including the last dividend payment date prior to the date fixed for redemption,
the Corporation shall not call for redemption any shares of Series D Preferred
Stock unless all such shares then outstanding are called for simultaneous
redemption.
(c) On the redemption date, the Company must pay, in cash, on
each share of Series D Preferred Stock to be redeemed any accumulated and unpaid
dividends through the redemption date. In the case of a redemption date falling
after a dividend payment record date and prior to the related payment date, the
holders of the Series D Preferred Stock at the close of business on such record
date will be entitled to receive the dividend payable on such shares on the
corresponding dividend payment date, notwithstanding the redemption of such
shares following such dividend payment record date. Except as provided for in
the preceding sentence, no payment or allowance will be made for accumulated and
unpaid dividends on any shares of Series D Preferred Stock called for redemption
or on the shares of Common Stock issuable upon such redemption.
(d) On and after the date fixed for redemption, provided that
the Company has made available at the office of its registrar and transfer agent
a sufficient number of shares of Common Stock and an amount of cash to effect
the redemption, dividends will cease to accrue on the Series D Preferred Stock
called for redemption (except that, in the case of a redemption date after a
dividend payment record date and prior to the related dividend payment date,
holders of Series D Preferred Stock on the dividend payment record date will be
entitled on such dividend payment date to receive the dividend payable on such
shares), such shares shall be cancelled and shall no longer be deemed to be
outstanding and all rights of the holders of such shares of Series D Preferred
Stock shall cease except the right to receive the shares of Common Stock upon
such redemption and any cash payable upon such redemption, without interest from
the date of such redemption. Such cancelled shares shall be restored to the
status of authorized but unissued shares of Preferred Stock, without designation
as to series, and may thereafter be issued but not as shares of Series D
Preferred Stock. At the close of business on the redemption date upon surrender
in accordance with such notice of the certificates representing any such shares
(properly endorsed or assigned for transfer, if the Board of Directors of the
Company shall so require and the notice shall so state), each holder of Series D
Preferred Stock (unless the Company defaults in the delivery of the shares of
Common Stock or cash) will be, without any further action, deemed a holder of
the number of shares of Common Stock for which such Series D Preferred Stock is
redeemable.
(e) Fractional shares of Common Stock are not to be issued
upon redemption of the Series D Preferred Stock, but, in lieu thereof, the
Company will pay a cash adjustment based on the current market price of the
Common Stock on the day prior to the redemption date. If fewer than all the
shares represented by any such certificate are redeemed, a new certificate shall
be issued representing the unredeemed shares of Series D Preferred Stock without
cost to the holder thereof.
(f) Any shares or cash set aside by the Company pursuant to
subparagraph (e) and unclaimed at the end of three years from the date fixed for
redemption shall revert to the Company.
(g) Subject to applicable law and the limitation on purchases
when dividends on the Series D Preferred Stock are in arrears, the Company may,
at any time and from time to time, purchase any shares of the Series D Preferred
Stock by tender or by private agreement.
(4) LIQUIDATION PREFERENCE.
(a) The holders of shares of Series D Preferred Stock will be
entitled to receive in the event of any liquidation, dissolution or winding up
of the Company, whether voluntary or involuntary, $5.00 per share of Series D
Preferred Stock (the "Liquidation Preference"), plus an amount per share of
Series D Preferred Stock equal to all dividends (whether or not earned or
declared) accumulated and unpaid thereon to the date of final distribution to
such holders, and no more. If, upon any liquidation, dissolution or winding up
of the Company, the assets of the Company, or proceeds thereof, distributable
among the holders of the Series D Preferred Stock are insufficient to pay in
full the liquidation preference with respect to the Series D Preferred Stock and
any other Parity Stock, then such assets, or the proceeds thereof, will be
distributed among the holders of Series D Preferred Stock and any such Parity
Stock ratably in accordance with the respective amounts which would be payable
on such Series D Preferred Stock and any such Parity Stock if all amounts
payable thereon were paid in full.
(b) Neither a consolidation or merger of the Company with or
into another corporation, nor a sale, lease or transfer of all or substantially
all of the Company's assets will be considered a liquidation, dissolution or
winding up, voluntary or involuntary, of the Company.
(5) VOTING RIGHTS. Except as may be required by applicable law from
time to time, the holders of shares of Series D Preferred Stock will have no
voting rights.
(6) SINKING FUND. The Series D Preferred Stock shall not be entitled to
any mandatory redemption or prepayment (except on liquidation, dissolution or
winding up of the affairs of the Company) or to the benefit of any sinking fund.
WITNESS THE SIGNATURE of the undersigned who is the Chairman of the
Board and Chief Executive Officer of ThermoView Industries, Inc. as of this ____
day of April 2000.
------------------------------
Xxxxxxx X. Xxxxxxxx
EXHIBIT B
RISK FACTORS
PRIOR TO MAKING AN INVESTMENT DECISION, A PROSPECTIVE PURCHASER OF THE
12% CUMULATIVE SERIES D PREFERRED STOCK OFFERED HEREBY SHOULD EVALUATE THE
FOLLOWING RISK FACTORS INCLUDING THOSE IN THE THERMOVIEW PROSPECTUS, DATED
DECEMBER 2, 1999.
SERIES D PREFERRED STOCK
There can be no assurance that ThermoView's continuing losses or
consolidated earnings, if ever, in the future will be sufficient to cover its
combined fixed charges and dividends on (i) the 12% Series D Cumulative
Preferred Stock alone, or (ii) its 9.6% Series C Convertible Preferred Stock and
the Series D Preferred Stock.
ABSENCE OF TRADING MARKET FOR SERIES D PREFERRED STOCK
There is no public market for the Series C Preferred Stock and Series D
Preferred Stock and ThermoView does not anticipate that any public market will
develop in the future. However, the Series C Preferred Stock is convertible into
Common Stock at a conversion price, subject to adjustment in certain
circumstances of $15.00 per share of Common Stock (initially equivalent to a
conversion rate of 66 2/3 shares of stock per share of Series C Preferred
Stock). The Series D Preferred Stock has no such conversion feature. The
ThermoView Common Stock trades on the American Stock Exchange, so a public
market does exist for the Common Stock. Without the ability to convert the
Series D Preferred Stock into Common Stock or have a market available to sell
the Series D Preferred Stock, the holders of the Series D Preferred Stock may
not be able to liquidate their investment at any time.
RESTRICTION OF PAYMENT OF CASH DIVIDENDS ON SERIES D PREFERRED STOCK
Pursuant to ThermoView's current line of credit with its principal
secured lender and documentation related to financings with other parties, it
may not pay dividends on its Common Stock until all obligations thereunder have
been paid in full and on the Series D Preferred Stock until satisfaction of all
covenants under the line of credit and other financings. ThermoView cannot
provide any assurance that it will be able to satisfy these covenants so as to
pay quarterly the dividends due on the Series D Preferred Stock. Considering
that ThermoView has in the past received waivers from its lenders for
non-compliance with its covenants, a history exists that non-compliance with its
loan or other covenants may occur in the future. Accordingly, it is possible
that ThermoView may not be able to pay any dividends due on its Series D
Preferred Stock.
LITIGATION
On March 3, 2000, Pro Futures Bridge Capital Fund, L.P. and Pro Futures
Bridge Capital Fund, L.P. filed an action titled PRO FUTURES BRIDGE CAPITAL
FUND, L.P. V. THERMOVIEW INDUSTRIES, INC., ET AL., Civil Action No. 00CV0559
(Colo. Dist. Ct., March 3, 2000) alleging breach of
contract, common law fraud, fraudulent misstatements and omissions in connection
with the sale of securities, negligent misrepresentations and breach of
fiduciary duty. These claims are in connection with (i) the mandatory conversion
of the ThermoView 10% Series A Convertible Preferred Stock, held by the two
funds, into ThermoView Common Stock upon completion of the ThermoView public
offering in December 1999, and (ii) purchases by the two funds of ThermoView
Common Stock from ThermoView stockholders. The funds are seeking (a) rescission
of their purchases of the Series A Preferred Stock in the amount of $3,250,000
plus interest and (b) unspecified damages in connection with their purchases of
the ThermoView Common Stock. Although ThermoView believes that the claims are
without merit and intends to vigorously defend the suit, an adverse outcome in
this action could have a material adverse effect on the financial position or
results of operations of ThermoView.
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