EXHIBIT 10.7
AMENDMENT NO. 2 AND WAIVER
AMENDMENT NO. 2 AND WAIVER (this "Amendment"), dated as of
April 14, 2000, between ThermoView Industries Inc. ("Company")
and GE Capital Equity Investments, Inc. ("GE Capital").
W I T N E S S E T H:
WHEREAS, Company and GE Capital are parties to that certain
Securities Purchase Agreement, dated as of July 8, 1999 (as from
time to time amended, restated, supplemented or otherwise
modified, the "Purchase Agreement", and unless the context
otherwise requires or unless otherwise defined herein,
capitalized terms used herein shall have the meanings assigned to
them in the Purchase Agreement); and
WHEREAS, Company issued Warrant No. 4 dated July 8, 1999 to
GE Capital (the "Warrant"); and
WHEREAS, Company has requested an amendment and/or waiver
of, and GE Capital has agreed to amend and/or waive, certain
provisions of the Purchase Agreement and the Warrant, on the
terms and subject to the conditions as hereinafter set forth;
NOW, THEREFORE, in consideration of the premises and mutual
covenants contained herein, the parties hereto agree as follows:
SECTION 1. AMENDMENTS TO THE PURCHASE AGREEMENT. Effective
as of the Effective Date (as defined herein), the Purchase
Agreement is amended as follows:
1.1 By amending and restating the definition of "Qualified
IPO" in its entirety as follows:
'"Qualified IPO" shall mean a sale of Common Stock
pursuant to an initial public offering of Common Stock on
Form S-1 (or any equivalent general registration form) under
the Securities Act (i) at a price not less than $5.50 per
share of Common Stock, (ii) in which the aggregate proceeds
(before expenses and underwriting discounts) to Company
shall not be less than $6,902,500 and (iii) following which
the Common Stock will be listed on the American Stock
Exchange.'
1.2 By amending and restating Sections 5.1(b)(i) and (ii)
of the Purchase Agreement in their entirety as follows:
'"(i) Monthly Information. Commencing with the month
ending March 31, 2000, Company will deliver to Purchaser as
soon as practicable after the end of each month, but in any
event within 30 days thereafter: (A) an unaudited
consolidated balance sheet of Company and its Subsidiaries,
if any, at the end of such month; (B)
unaudited consolidated statements of income, retained
earnings and cash flows of Company and its Subsidiaries, if
any, for such month and for the portion of such year ending
with such month; (C) an acquisition pipeline report; (D)
projected consolidated cash flow statements of each of
Company and its Subsidiaries, including summary details of
cash disbursements, for the immediately succeeding calendar
month; (E) an Earn-Out forecast which shall detail all
anticipated payments for all Earn-Outs; and (F) a
certificate ("Compliance Certificate") signed by the Chief
Executive Officer or Chief Financial Officer of Company,
certifying that such officer has reviewed the relevant terms
of this Agreement and the other Transaction Documents, has
made, or caused to be made under his or her supervision, an
adequate review of the transactions and condition of each of
Company and its Subsidiaries during such period and as at
the date of such signing, and that such review has not
disclosed the existence, during such period or as at the
date of such signing, of any Event of Default, or if so,
specifying the nature and period of existence thereof and
what action Company or any of its Subsidiaries has taken or
is taking or proposes to take with respect thereto together
with a certification that, as applicable, Company and its
Subsidiaries as at the end of such month, if applicable,
was, or was not, in compliance with the financial covenants
set forth in Section 5.1(h) of this Agreement, and a
schedule disclosing the calculations forming the basis for
such certification.
(ii) Quarterly Information. Company will deliver to
Purchaser as soon as practicable after the end of each of
the first three quarterly fiscal periods in each Fiscal Year
of Company, but in any event within 45 days thereafter, (A)
an unaudited consolidated balance sheet of Company and its
Subsidiaries, if any, as at the end of such quarter; (B)
unaudited consolidated statements of income, retained
earnings and cash flows of Company and its Subsidiaries, if
any, 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 in comparative form in each
case the projected consolidated figures for such period and
the actual consolidated figures for the comparable period of
the prior Fiscal Year. Such statements shall be (1) prepared
in accordance with GAAP consistently applied, (2) in
reasonable detail, (3) certified by the principal financial
or accounting officer of Company and (4) accompanied by a
Compliance Certificate or other statement in reasonable
detail, certified by the Chief Executive Officer or Chief
Financial Officer of Company showing the calculations used
in determining compliance with each of the financial
covenants set forth in Sections 5.1(h) and 5.2(i); and (C)
the pro forma financial reports of Company and its
Subsidiaries for such quarter."
1.3 By amending and restating Sections 5.1(h)(i) and (ii)
in their entirety as follows:
"(i) Funded Debt to Modified EBITDA. The ratio,
calculated as of the end of each fiscal quarter of Company
and its Subsidiaries beginning March 31, 2000 (each a
"Calculation Date"), of the
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consolidated (and combined, if applicable) Funded Debt of
Company and its Subsidiaries as of each Calculation Date
divided by the consolidated (and combined, if applicable)
Modified EBITDA for Company and its Subsidiaries for the
four (4) fiscal quarters of Company and its Subsidiaries
immediately preceding the applicable Calculation Date shall
not be greater than 10.00 to 1.00 as of the Calculation Date
occurring on March 31, 2000, and thereafter until, but not
including, the Calculation Date occurring on June 30, 2000;
7.50 to 1.00 as of the Calculation Date occurring on June
30, 2000, and thereafter until, but not including, the
Calculation Date occurring on September 30, 2000; 5.25 to
1.00 as of the Calculation Date occurring on September 30,
2000, and thereafter until, but not including, the
Calculation Date occurring on December 31, 2000, and 4.25 to
1.00 as of the Calculation Date occurring on December 31,
2000, and as of all Calculation Dates thereafter.
For purposes of this financial covenant, the following
terms shall have the following meaning:
(A) "Base Earnings" shall mean the consolidated
(and combined, if applicable) sum of all earnings
before interest, taxes, depreciation and amortization
less any extraordinary gain, plus expenses, calculated
and estimated by Company and its Subsidiaries in a
manner and amount acceptable to Purchaser in each case,
incurred by Company and its Subsidiaries, if and to the
extent applicable, that reasonably are expected no
longer to be incurred because of operating efficiencies
realized as a result of and following each such entity
having become a Subsidiary of Company ("Non-Recurring
Expenses"), and before giving effect to "corporate
income" (e.g., interest income and similar revenues
generated by cash on hand) of Company and its
Subsidiaries and corporate overhead incurred by Company
and its subsidiaries during the period of calculation.
(B) "EBITDA" shall mean the sum of (i) Base
Earnings of Company and its Subsidiaries plus (ii) an
amount equal to all non-cash charges to income incurred
by Company and its Subsidiaries on or before the date
of this Agreement in respect of stock options
heretofore issued by Company and its Subsidiaries
("Stock Option Charges"), not to exceed (a) $6,120,000
for the Calculation Date occurring on September 30,
1999, until (but not including) the Calculation Date
occurring on December 31, 1999, (b) $620,000 for the
Calculation Date occurring on December 31, 1999, until
(but not including) the Calculation Date occurring on
March 31, 2000 and (c) $0.00 for all Calculation Dates
occurring on and after March 31, 2000.
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(C) "Funded Debt" shall mean the consolidated
(and combined, if applicable) sum of borrowings
pursuant to the PNC Loan Agreement, plus current (i.e.
less than or equal to one (1) year) and non-current
maturities of long term Indebtedness of each of Company
and its Subsidiaries (including but not limited to any
obligations of any of Company or its Subsidiaries that
are determined based on the future performance of any
acquired entity ("Earn-Outs") to any other person or
entity). For purposes of this calculation, Funded Debt
shall be deemed to include, at all times, the actual
principal amount of any Senior Debt and Indebtedness
under this Agreement and the Note, in each case due and
owing without regard to any carrying value thereof
shown on the books and records of Company and its
Subsidiaries.
(D) "Modified EBITDA" is defined as the EBITDA of
Company and its Subsidiaries for which the Funded Debt
to Modified EBITDA financial covenant is being
calculated, except without giving effect to the EBITDA
of any of Company or its Subsidiaries (each an
"Unaudited Subsidiary") for which the Purchaser has not
received both (x) audited financial statements in form
and detail acceptable to the Purchaser, as well as (y)
other due diligence information concerning such of
Company or its Subsidiaries as Purchaser may request,
in form and substance acceptable to the Purchaser plus
fifty percent (50%) of the EBITDA of each Unaudited
Subsidiary.
(ii) Fixed Charge Coverage Ratio. The ratio as of each
Calculation Date of the consolidated (and combined, if
applicable) Modified EBITDA less the amount of any Earn-Outs
(as that term is defined herein) not financed with the
proceeds of loans or other borrowings from any person or
entity ("Unfinanced Earn-Outs"), cash taxes ("Cash Taxes")
and Capital Expenditures of Company and its Subsidiaries not
financed with the proceeds of loans or other borrowings from
any person or entity ("Unfinanced Capital Expenditures"),
which Unfinanced Earn-Outs, Cash Taxes and Unfinanced
Capital Expenditures were incurred during the immediately
preceding four (4) fiscal quarters of Company and its
Subsidiaries divided by the sum of consolidated (and
combined, if applicable) current maturities of Funded Debt
for Company and its Subsidiaries plus any and all dividends
paid or accrued by Company and its Subsidiaries plus all
Fixed Charges paid or accrued by Company and its
Subsidiaries, shall not be less than .70 to 1.00 as of the
Calculation Date occurring on March 31, 2000, and thereafter
until, but not including, the Calculation Date occurring on
June 30, 2000; and .75 to 1.00 as of the Calculation Date
occurring on June 30,
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2000, and thereafter until, but not including, the
Calculation Date occurring on September 30, 2000; and 1.10
to 1.00 as of the Calculation Date occurring on September
30, 2000, and thereafter until, but not including, the
Calculation Date occurring on December 31, 2000; and 1.20 to
1.00 as of the Calculation Date occurring on December 31,
2000, and as of all Calculation Dates thereafter."
1.4 By adding the following new clause (iv) to Section
5.1(h):
"(iv) Senior Debt to EBITDA. The ratio as of each
Calculation Date of the sum of consolidated (and combined,
if applicable) PNC Senior Debt and other Senior Debt as of
each Calculation Date divided by the consolidated (and
combined, if applicable) EBITDA for Company and its
Subsidiaries for the four (4) fiscal quarters of Company and
its Subsidiaries immediately preceding the applicable
Calculation Date shall not be greater than 4.60 to 1.00 as
of the Calculation Date occurring on March 31, 2000, and
thereafter until, but not including, the Calculation Date
occurring on June 30, 2000; 4.50 to 1.00 as of the
Calculation Date occurring on June 30, 2000, and thereafter
until, but not including, the Calculation Date occurring on
September 30, 2000; and 3.50 to 1.00 as of the Calculation
Date occurring on September 30, 2000, and as of all
Calculation Dates thereafter."
1.5 By deleting the reference in Section 5.1(k) each
reference to "September 30, 1999" and substituting therefor "June
30, 2000" in each case.
SECTION 2. WAIVER OF CERTAIN PROVISIONS. (a) Effective as of
the Effective Date, GE Capital hereby grants a waiver of
Company's and its Subsidiaries' non-compliance with:
(i) the covenants contained in Section 5.1(b)(ii) of
the Purchase Agreement and Section 13.2 of the Warrant and of the
Events of Default that would otherwise result from a violation of
those sections solely for the Fiscal Year ended December 31,
1999; provided, however, that Company shall deliver to GE Capital
such financial documents as soon as practicable after the filing
with SEC of its Form 10-K Annual Report for the Fiscal Year ended
December 31, 1999;
(ii) the financial covenants contained in the Sections
5.1(h)(i) and (ii) of the Purchase Agreement and of the Events of
Default that would otherwise result from a violation of those
sections, solely for the period from November 10, 1999 to March
30, 2000; and
(iii) the covenants contained in Section 5.1(k) of the
Purchase Agreement and of the Events of Default that would
otherwise result from a violation of that section, solely for the
period from September 30, 1999, to March 30, 2000.
(b) Effective as of the Effective Date, GE Capital hereby
waives, solely in respect of the issuance by Company of the Stock
as set forth on Schedule A hereto, of the applicability of
Articles IV and XVII of the Warrant and any other similar anti-
dilution provisions in the Loan Documents; provided, however,
that this waiver shall not be applicable to any shares of
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Stock issued in respect of any purchase, redemption or other
retirement of Company's 12% Cumulative Series D Preferred Stock.
(c) Company agrees that it will, and will cause its
Subsidiaries to, hereafter comply fully with the provisions
waived pursuant to this Section 2, as amended, and all other
provisions of the Purchase Agreement and the other Loan
Documents, which remain in full force and effect
SECTION 3. CONDITIONS PRECEDENT TO THE EFFECTIVENESS OF THIS
AMENDMENT. Except as otherwise expressly provided herein, this
Amendment shall be effective as of March 31, 2000 (such date is
referred to herein as the "Effective Date")so long as each of the
following conditions shall have been satisfied or provided for in
a manner satisfactory to GE Capital or waived by GE Capital on or
prior to April 14, 2000:
(a) This Amendment shall have been fully executed and
delivered by each of the parties hereto.
(b) Each of the Subsidiaries of Company party to the
Guaranty shall have executed and delivered the consent included
in the signature pages hereto.
(c) The Fifth Amendment to Loan Agreement and Amendment to
Note among Company, each of its Subsidiaries listed therein and
PNC Bank, National Association ("PNC Bank"), shall have been
executed and delivered by each of the parties thereto (the "Fifth
Amendment") in form and substance satisfactory to GE Capital.
(d) The Guaranty Agreement (as defined in the Fifth
Amendment) shall have been executed and delivered by each of
Xxxxxxx X. Xxxxxxxx, Xxxxxx X. Xxxxxxxx, Xxxxxxx X. Xxxxxx and
Xxxxxxx X. Xxxxxxx, III (each an "Individual Guarantor") in form
and substance satisfactory to GE Capital.
(e) Each Individual Guarantor shall have executed and
delivered the consent included in the signature pages hereto.
(f) Each of Xxxxx X. Xxxxxxxx, Xxxxxx Xxxx, Xxxxxx X.
Xxxxxx, Xxxxxxx X. Xxxxx and Xxxxxxx X. Xxxxxx shall have
executed and delivered an Agreement, dated as of the date hereof,
in respect of Earn-Out of such Person in form and substance
satisfactory to GE Capital.
(g) Each of Xxxxx Xxxxxxx Strategic Growth Fund, Ltd. and
Xxxxx Xxxxxxx Strategic Growth Fund, L.P. shall have executed and
delivered a Waiver, Consent and Covenant in form and substance
satisfactory to GE Capital.
(h) Company shall have obtained, and delivered to GE
Capital a copy of, each consent required in connection with this
Amendment and the Fifth Amendment.
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SECTION 4. EFFECT ON PURCHASE AGREEMENT.
(a) On and after the Effective Date, each reference in the
Purchase Agreement to "this Agreement", "herein", "hereof",
"hereunder" or words of similar import, shall mean and be a
reference to the Purchase Agreement as amended hereby.
(b) Except as specifically amended above in connection
herewith, the Purchase Agreement shall remain in full force and
effect and is hereby ratified and confirmed.
(c) The execution, delivery and effectiveness of this
Amendment shall not, except as expressly provided herein, operate
as a waiver of any right, power or remedy of GE Capital under any
of the Loan Documents or constitute a waiver of any provision of
any of the Loan Documents.
SECTION 5. GOVERNING LAW. THIS AMENDMENT AND THE OBLIGATIONS
ARISING HEREUNDER SHALL BE GOVERNED BY, AND CONSTRUED AND
ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
SECTION 6. SECTION TITLES. Section titles contained in this
Amendment are and shall be without substantive meaning or content
of any kind whatsoever and are not a part of the agreement
between the parties hereto.
SECTION 7. COUNTERPARTS. This Amendment may be executed in
any number of separate counterparts, each of which shall
collectively and separately constitute one agreement.
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IN WITNESS WHEREOF, this Amendment has been duly executed as
of the date first written above.
THERMOVIEW INDUSTRIES, INC.
By: /s/ Xxxxxx X. Xxxxxxxx
-------------------------------
Xxxxxx X. Xxxxxxxx, President
GE CAPITAL EQUITY INVESTMENTS, INC.
By: /s/ Xxxx Xxxxxxxxxx
--------------------------------
Duly Authorized signatory
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CONSENT OF THE GUARANTORS
The Subsidiaries of Company hereby (i) acknowledge receipt
of a copy of this Amendment and (ii) agree that the terms and
provisions thereof shall not affect in any way the obligations
and liabilities of such Subsidiaries under the Guaranty or any of
the other Loan Documents, all of which obligations and
liabilities shall remain in full force and effect and each of
which are hereby reaffirmed.
AMERICAN HOME DEVELOPERS CO., INC.,
a California corporation
By: /s/ Xxxxxx X. Xxxxxxxx
--------------------------------
Xxxxxx X. Xxxxxxxx, President
FIVE STAR BUILDERS, INC., a
California corporation, successor
in interest to American Home
Remodeling
By: /s/ Xxxxxx X. Xxxxxxxx
--------------------------------
Xxxxxx X. Xxxxxxxx, President
KEY HOME CREDIT, INC.,
a Delaware corporation
By: /s/ Leigh Xxx Xxxxxx
--------------------------------
Leigh Xxx Xxxxxx, President
KEY HOME MORTGAGE, INC.,
a Delaware corporation
By: /s/ Xxxxxx X. Xxxxxxxx
--------------------------------
Xxxxxx X. Xxxxxxxx, President
XXXXXXXX SIDING AND WINDOW, INC.,
a North Dakota business corporation
By: /s/ Xxxxxx X. Xxxxxxxx
--------------------------------
Xxxxxx X. Xxxxxxxx, President
PRIMAX WINDOW CO.,
a Kentucky corporation
By: /s/ Xxxxxx X. Xxxxxxxx
--------------------------------
Xxxxxx X. Xxxxxxxx, President
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PRECISION WINDOW MFG., INC.,
a Missouri corporation
By: /s/ Xxxxxx X. Xxxxxxxx
--------------------------------
Xxxxxx X. Xxxxxxxx, President
ROLOX, INC. a Kansas corporation
By: /s/ Xxxxxx X. Xxxxxxxx
--------------------------------
Xxxxxx X. Xxxxxxxx, President
TD WINDOWS, INC.
a Kentucky corporation
By: /s/ Xxxxxx X. Xxxxxxxx
--------------------------------
Xxxxxx X. Xxxxxxxx, President
THERMAL LINE WINDOWS, INC.
a North Dakota corporation,
formerly known as Ice Inc.,
successor in interest to Blizzard
Enterprises, Inc. and Thermal Line
Windows, LLP
By: /s/ Xxxxxx X. Xxxxxxxx
--------------------------------
Xxxxxx X. Xxxxxxxx, President
THERMOVIEW OF MISSOURI, INC.,
a Missouri corporation
By: /s/ Xxxxxx X. Xxxxxxxx
--------------------------------
Xxxxxx X. Xxxxxxxx, President
THERMO-TILT WINDOW COMPANY,
a Delaware corporation
By: /s/ Xxxxxx X. Xxxxxxxx
--------------------------------
Xxxxxx X. Xxxxxxxx, President
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XXXXXX CONSTRUCTION, INC.,
a Missouri corporation
By: /s/ Xxxxxx X. Xxxxxxxx
-------------------------------
Xxxxxx X. Xxxxxxxx, President
THERMO-SHIELD OF AMERICA (ARIZONA),
INC., an Arizona corporation
By: /s/ Xxxxxx X. Xxxxxxxx
-------------------------------
Xxxxxx X. Xxxxxxxx, President
THERMO-SHIELD OF AMERICA
(MICHIGAN), INC., a Michigan
corporation
By: /s/ Xxxxxx X. Xxxxxxxx
--------------------------------
Xxxxxx X. Xxxxxxxx, President
THERMO-SHIELD COMPANY, LLC,
an Illinois limited liability
company
By: /s/ Xxxxxx X. Xxxxxxxx
--------------------------------
Xxxxxx X. Xxxxxxxx,
Manager and President
THERMO-SHIELD OF AMERICA
(WISCONSIN), LLC, a Wisconsin
limited liability company
By: /s/ Xxxxxx X. Xxxxxxxx
--------------------------------
Xxxxxx X. Xxxxxxxx,
Manager and President
THERMOVIEW ADVERTISING GROUP, INC.,
a Delaware corporation
By: /s/ Xxxxxxxx X. Xxxxxxx
--------------------------------
Xxxxxxxx X. Xxxxxxx, Secretary
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CONSENT OF INDIVIDUAL GUARANTORS
Notwithstanding the provisions of that certain Subordination
and Intercreditor Agreement, dated July 8, 1999, among PNC Bank,
Company and GE Capital, if any amounts have become payable or
have been paid by any Individual Guarantor under the Guaranty
Agreement, each Individual Guarantor agrees that the rights of
such Individual Guarantor, in respect of such monies, to seek to
enforce repayment, obtain the benefit of any security or exercise
any other rights or legal remedies of any kind which may accrue
to such Individual Guarantor against the Company or any of its
Subsidiaries, whether by way of subrogation, offset, counterclaim
or otherwise, in respect of the amount so payable or so paid (or
in respect of any monies for the time being due to such Guarantor
from Company or any of its Subsidiaries) shall be pari passu with
the rights of GE Capital in respect of the Obligations and any
collateral security therefor or securing the reimbursement rights
of such Individual Guarantor if and for so long as any
Obligations shall be outstanding.
/s/ Xxxxxxx X. Xxxxxxxx
---------------------------------
Xxxxxxx X. Xxxxxxxx
/s/ Xxxxxx X. Xxxxxxxx
---------------------------------
Xxxxxx X. Xxxxxxxx
/s/ Xxxxxxx X. Xxxxxx
---------------------------------
Xxxxxxx X. Xxxxxx
/s/ Xxxxxxx X. Xxxxxxx, III
---------------------------------
Xxxxxxx X. Xxxxxxx, III
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