<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON APRIL 18, 1997
REGISTRATION NO. 333-
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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NORTEK, INC.
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C> <C>
DELAWARE 3634 05-0314991
(State or other jurisdiction (Primary standard (I.R.S. Employer
of incorporation or industrial classification code Identification Number)
organization) number)
</TABLE>
50 KENNEDY PLAZA
PROVIDENCE, RHODE ISLAND 02903
(401) 751-1600
(Address, including zip code and telephone number
including area code of registrant's principal executive offices)
KEVIN W. DONNELLY
VICE PRESIDENT
AND GENERAL COUNSEL
NORTEK, INC.
50 KENNEDY PLAZA
PROVIDENCE, RHODE ISLAND 02903
(401) 751-1600
(Name, address, including zip code, and telephone
number, including area code, of agent for service)
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PLEASE SEND COPIES OF ALL COMMUNICATIONS TO:
JOHN B. AYER, ESQ.
ROPES & GRAY
ONE INTERNATIONAL PLACE
BOSTON, MASSACHUSETTS 02110
(617) 951-7000
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon
as practicable after the effectiveness of the Registration Statement. If the
only securities being registered on this form are being offered in connection
with the formation of a holding company and there is compliance with General
Instruction G, check the following box. [ ]
CALCULATION OF REGISTRATION FEE
<TABLE>
<S> <C> <C> <C> <C>
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TITLE OF EACH CLASS AMOUNT PROPOSED PROPOSED MAXIMUM AMOUNT OF
OF SECURITIES TO BE TO BE MAXIMUM OFFERING AGGREGATE REGISTRATION
REGISTERED REGISTERED PRICE PER UNIT OFFERING PRICE FEE
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9 1/4% Series B Senior
Notes due 2007...... $175,000,000 99.422% $173,988,500 $52,723.79
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</TABLE>
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE SECURITIES AND EXCHANGE COMMISSION, ACTING
PURSUANT TO SAID SECTION 8(A), MAY DETERMINE.
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INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR
MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT
BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR
THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE
SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE
UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS
OF ANY SUCH STATE.
PROSPECTUS SUBJECT TO COMPLETION DATED APRIL 18, 1997
NORTEK, INC.
OFFER TO EXCHANGE
9 1/4% SERIES B SENIOR NOTES DUE MARCH 15, 2007
FOR AN EQUAL PRINCIPAL AMOUNT OF
9 1/4% SERIES A SENIOR NOTES DUE MARCH 15, 2007
THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M.,
NEW YORK CITY TIME ON , 1997, UNLESS EXTENDED
---------------------
Nortek, Inc., a Delaware corporation ("Nortek" or the "Company"), hereby
offers (the "Exchange Offer"), upon the terms and subject to the conditions set
forth in this Prospectus and the accompanying letter of transmittal (the "Letter
of Transmittal"), to exchange an aggregate principal amount of up to
$175,000,000 of its 9 1/4% Series B Senior Notes due 2007 (the "Exchange Notes")
of the Company for a like principal amount of the issued and outstanding 9 1/4%
Series A Senior Notes due 2007 (the "Original Notes" and together with the
Exchange Notes, the "Notes") from the holders (the "Holders") thereof. The form
and terms of the Exchange Notes are identical in all material respects to the
form and terms of the Original Notes except that the Exchange Notes will not
contain terms with respect to transfer restrictions (other than those that might
be imposed by state securities laws) or, except in limited circumstances,
provide for the payment of Liquidated Damages (as defined).
The Original Notes are and the Exchange Notes will be senior unsecured
obligations of the Company and will rank pari passu in right of payment with all
existing and future senior unsecured indebtedness of the Company and senior in
right of payment to all existing and future subordinated indebtedness of the
Company. The Exchange Notes will be effectively subordinated to all existing and
future secured indebtedness of the Company, to the extent of the value of the
assets securing such indebtedness, and to all existing and future indebtedness
and other obligations of the Company's subsidiaries. At December 31, 1996, after
giving effect to the issuance and sale of the Original Notes (the "Offering")
and the application of the net proceeds therefrom, the Exchange Notes would have
been effectively subordinated to approximately $172.6 million of indebtedness
for borrowed money, trade payables and accrued liabilities of the Company's
subsidiaries. See "Description of Notes -- General." Subject to certain
restrictions, the Indenture pursuant to which the Original Notes were issued and
the Exchange Notes will be issued, permits the Company and its subsidiaries to
incur additional indebtedness, including indebtedness which may be secured.
Interest on the Exchange Notes will be payable semi-annually on March 15 and
September 15 of each year, commencing September 15, 1997. The Exchange Notes
will mature on March 15, 2007. The Exchange Notes will be redeemable at the
option of the Company, in whole or in part, at any time and from time to time on
or after March 15, 2002 at the redemption prices set forth herein, together with
accrued and unpaid interest, if any, to the date of redemption. Upon a Change of
Control (as defined), holders of the Exchange Notes will have the right, subject
to certain exceptions, restrictions and conditions, to require the Company to
purchase all or any of their Notes at 101% of the principal amount thereof, plus
accrued and unpaid interest, if any, to the date of purchase. See "Description
of Notes."
The Exchange Notes are being offered hereunder in order to satisfy certain
obligations of the Company contained in the Registration Rights Agreement, dated
March 17, 1997, among the Company and the other signataries thereto (the
"Registration Rights Agreement"). The Company believes that based on
interpretations by the staff of the Securities and Exchange Commission (the
"Commission"), Exchange Notes issued pursuant to the Exchange Offer in exchange
for Original Notes may be offered for resale, resold and otherwise transferred
by each Holder thereof (other than (i) a broker-dealer who purchased Original
Notes directly from the Company or any of its "affiliates" within the meaning of
Rule 405 under the Securities Act of 1933, as amended (the "Securities Act") for
resale pursuant to Rule 144A or any other available exemption under the
Securities Act or (ii) a person that is such an "affiliate" of the Company)
without compliance with the registration and prospectus delivery provisions of
the Securities Act, provided that such Exchange Notes are acquired in the
ordinary course of such Holder's business and such Holder is not participating,
and has no arrangement with any such person to participate, in the distribution
of the Exchange Notes.
Each broker-dealer participating in the Exchange Offer (a "Participating
Broker-Dealer") that receives Exchange Notes for its own account pursuant to the
Exchange Offer must acknowledge that it will deliver a prospectus in connection
with any resale of such Exchange Notes. The Letter of Transmittal states that by
so acknowledging and by delivering a prospectus, a Participating Broker-Dealer
will not be deemed to admit that it is an "underwriter" within the meaning of
the Securities Act. This Prospectus, as it may be amended or supplemented from
time to time, may be used by a Participating Broker-Dealer in connection with
resales of Exchange Notes received in exchange for Original Notes where such
Original Notes were acquired by such broker-dealer as a result of market-making
activities or other trading activities. The Company has agreed that, for a
period of 180 days after the Expiration Date (as defined), it will make this
Prospectus and any amendment or supplement to this Prospectus available to any
Participating Broker-Dealer for use in connection with any such resale. See
"Plan of Distribution."
The Company will not receive any proceeds from the Exchange Offer and will
pay the expenses incident to the Exchange Offer. Tenders of Original Notes may
be withdrawn at any time prior to the Expiration Date. In the event the Company
terminates the Exchange Offer and does not accept for exchange any Original
Notes, the Company will promptly return the Original Notes to the Holders
thereof. See "The Exchange Offer."
---------------------
SEE "RISK FACTORS" BEGINNING ON PAGE 12 FOR A DISCUSSION OF CERTAIN FACTORS THAT
SHOULD BE CONSIDERED BY PROSPECTIVE INVESTORS IN EVALUATING THE EXCHANGE OFFER
AND AN INVESTMENT IN THE NOTES.
---------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
---------------------
THE DATE OF THIS PROSPECTUS IS , 1997.
<PAGE> 3
The Exchange Offer is not being made to, nor will the Company accept
surrenders for Exchange Notes from, Holders of Original Notes in any
jurisdiction in which the Exchange Offer or the acceptance thereof would not be
in compliance with the Securities or Blue Sky Laws for such jurisdiction.
The Exchange Notes will be available initially only in book-entry form. The
Company expects that the Exchange Notes issued pursuant to this Exchange Offer
will be issued in the form of one or more Global Notes (as defined), which will
be deposited with, or on behalf of, The Depository Trust Company (the
"Depositary") and registered in its name or in the name of Cede & Co., its
nominee. Beneficial interests in the Global Note representing the Exchange Notes
will be shown on, and transfers thereof will be effected through, records
maintained by the Depositary and its participants. After the initial issuance of
the Global Note, Exchange Notes in certificated form will be issued in exchange
for the Global Note only on the terms set forth in the Indenture (as defined).
See "Description of Notes -- Book-Entry; Delivery and Form."
Prior to the Exchange Offer, there has been no public market for the
Original Notes or Exchange Notes. To the extent that Original Notes are tendered
and accepted in the Exchange Offer, a Holder's ability to sell untendered
Original Notes could be adversely affected. If a market for the Exchange Notes
should develop, the Exchange Notes could trade at a premium or discount from
their principal amount. The Company does not currently intend to list the
Exchange Notes on any securities exchange or to seek approval for quotation
through any automated quotation system.
The Company has been advised by Bear, Stearns & Co., Inc., Wasserstein
Perrella Securities Inc. and BT Securities Corporation, the initial purchasers
(the "Initial Purchasers") of the Original Notes, that, following completion of
the Exchange Offer, they intend to make a market in the Exchange Notes; however,
such entities are under no obligation to do so and any market activities with
respect to the Exchange Notes may be discontinued at any time.
Pursuant to the Indenture (as defined), so long as any of the Notes are
outstanding, whether or not the Company is subject to the reporting requirements
of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), the Company will furnish to all holders of the Notes (i)
all quarterly and annual financial information that would be required to be
contained in a filing with the Commission on Forms 10-Q and 10-K if the Company
were required to file such Forms, including a "Management's Discussion and
Analysis of Financial Condition and Results of Operation" that describes the
financial condition and results of operations of the Company and its
subsidiaries and, with respect to annual information only, a report thereon by
the Company's independent certified public accountants and (ii) all reports that
would be required to be filed with the Commission on Form 8-K if the Company
were required to file such reports. The Company will also file a copy of all
such information with the Commission for public availability (unless the
Commission will not accept such filing) and make such information available to
investors or prospective investors of the Notes who request it in writing.
2
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INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The Company hereby incorporates by reference into this Prospectus the
following documents or information previously filed with the Commission:
(a) the Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 1996 (the "Form 10-K");
(b) each of the Company's Current Report on Form 8-K dated March 5,
1997 and March 12, 1997 (collectively, the "Form 8-Ks"); and
(c) all documents filed by the Company pursuant to Section 13(a),
13(c), 14 or 15(d) of the Exchange Act of 1934, as amended (the "Exchange
Act") after the date of this Prospectus and prior to the termination of the
offering made hereby.
Any statement contained herein or in any documents incorporated or deemed
to be incorporated by reference herein shall be deemed to be modified or
superseded for the purpose of this Prospectus to the extent that a subsequent
statement contained herein or in any subsequently filed document which also is
or is deemed to be incorporated by reference herein modifies or supersedes such
statement. Any such statement so modified or superseded shall not be deemed,
except as so modified or superseded, to constitute a part of this Prospectus.
THIS PROSPECTUS INCORPORATES DOCUMENTS BY REFERENCE WHICH ARE NOT PRESENTED
HEREIN OR DELIVERED HEREWITH. THESE DOCUMENTS ARE AVAILABLE WITHOUT CHARGE UPON
WRITTEN OR ORAL REQUEST FROM ALMON C. HALL, VICE PRESIDENT, CONTROLLER AND CHIEF
ACCOUNTING OFFICER AT THE COMPANY'S PRINCIPAL EXECUTIVE OFFICES LOCATED AT 50
KENNEDY PLAZA, PROVIDENCE, RHODE ISLAND 02903 TELEPHONE NUMBER (401) 751-1600.
IN ORDER TO ENSURE TIMELY DELIVERY OF SUCH DOCUMENTS, ANY REQUEST SHOULD BE MADE
BY .
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Exchange
Act, and in accordance therewith files reports, proxy statements and other
information with the Commission. All reports, proxy statements and other
information filed by the Company with the Commission can be inspected and copied
at the Public Reference Section of the Commission at Room 1024, 450 Fifth
Street, N.W., Washington, D.C. 20549 and at the regional offices of the
Commission located at 7 World Trade Center, 13th Floor, Suite 1300, New York,
New York 10048 and Citicorp Center, 500 West Madison Street, Suite 400, Chicago,
Illinois 60661. Copies of such material can also be obtained at prescribed rates
by writing to the Public Reference Section of the Commission at 450 Fifth
Street, N.W., Washington, D.C. 20549. Such material may also be accessed
electronically by means of the Commission's home page on the Internet at
http://www.sec.gov. In addition, such reports, proxy statements and other
information concerning the Company can be inspected at the office of the New
York Stock Exchange, 20 Broad Street, New York, New York 10005.
A Registration Statement on Form S-4, including amendments thereto,
relating to the Exchange Notes offered hereby has been filed by the Company with
the Commission. This Prospectus does not contain all of the information set
forth in the Registration Statement and the exhibits and schedules thereto.
Statements contained in this Prospectus as to the contents of any contract or
other document referred to are not necessarily complete and in each instance
reference is made to the copy of such contract or other documents filed as an
exhibit to the Registration Statement, each such statement being qualified in
all respects by such reference. For further information with respect to the
Company and the Exchange Notes offered hereby, reference is made to such
Registration Statement, exhibits and schedules. A copy of the Registration
Statement and the exhibits and schedules thereto may be inspected or obtained in
the same manner set forth in the immediately preceding paragraph for the
reports, proxy statements and other information referred therein.
3
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PROSPECTUS SUMMARY
The following summary is qualified in its entirety by, and should be read
in conjunction with, the detailed information and financial data, including the
Consolidated Financial Statements and Notes thereto, appearing elsewhere or
incorporated by reference in this Prospectus.
THE COMPANY
The Company is a diversified manufacturer of residential and commercial
building products, operating within three principal product groups: the
Residential Building Products Group; the Air Conditioning and Heating Products
Group; and the Plumbing Products Group. Through these product groups, the
Company manufactures and sells, primarily in the United States, Canada and
Europe, a wide variety of products for the residential and commercial
construction, manufactured housing, and do-it-yourself and professional
remodeling and renovation markets. The Company's net sales and EBITDA from
operations for the fiscal year ended December 31, 1996 were $969.8 million and
$82.6 million, respectively.
RESIDENTIAL BUILDING PRODUCTS GROUP
The Residential Building Products Group manufactures and distributes
built-in products primarily for the residential new construction, do-it-yourself
and professional remodeling and renovation markets. The principal products sold
by the Group are kitchen range hoods, bath fans, combination units (fan, heater
and light combinations) and bath cabinets. The Group is the largest supplier in
the United States and Canada of range hoods, bath fans and combination units,
indoor air quality products such as continuous-ventilation systems and
energy-recovery ventilators and one of the leading suppliers in Western Europe,
South America and the Middle East of luxury "Eurostyle" range hoods. Products
are sold under the Broan(R), Nautilus(R), Venmar(R), Flair, vanEE(R),
Rangaire(R) and Best(R) brand names, among others, to distributors and dealers
of electrical and lighting products, kitchen and bath dealers, retail home
centers and OEMs (original equipment manufacturers). Customers for the Group's
products include residential and electrical contractors, professional remodelers
and do-it-yourself homeowners. Other products sold by this Group include, among
others, wireless security products, garage door openers, built-in home intercoms
and entertainment systems, home automation systems, door chimes, paddle fans,
central vacuum systems and fluorescent lighting fixtures.
In the fourth quarter of 1995, the Company, through its subsidiaries,
completed the acquisition of the assets, subject to certain liabilities, of
Rangaire Company, all the capital stock of Best S.p.A. and related entities and
all the capital stock of Venmar Ventilation Inc. See the Consolidated Financial
Statements and Notes thereto included in the Form 10-K incorporated herein by
reference.
AIR CONDITIONING AND HEATING PRODUCTS GROUP
The Air Conditioning and Heating Products Group manufactures and sells
heating, ventilating and central air conditioning ("HVAC") systems for
custom-designed commercial applications and for manufactured and site-built
residential housing. The Group's commercial products consist of HVAC systems
which are custom-designed to meet customer specifications for commercial
offices, manufacturing and educational facilities, hospitals, retail stores and
governmental buildings. Such systems are primarily designed to operate on
building rooftops (including large self-contained walk-in-units) or on
individual floors within a building, and range from 40 to 600 tons of cooling
capacity. The Group markets its commercial products under the Governair(R),
Mammoth(R) and Temtrol(TM) brand names. For manufactured and site-built
residential housing, the Group's products include central air conditioners, heat
pumps, furnaces and a wide range of accessories marketed under the
Intertherm(R), Softheat(R), Miller(R), Elect-Air(R) and Powermiser(R) brand
names. Residential central air conditioning products range from 1.5 to 5 tons of
cooling capacity and furnaces range from 45,000 BTU's to 144,000 BTU's of
heating capacity. The Group's residential products also include portable and
permanent electric baseboard heating products.
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PLUMBING PRODUCTS GROUP
The Plumbing Products Group manufactures and sells vitreous china bathroom
fixtures (including lavatories, toilet bowls, flush tanks, bidets and urinals),
gelcoat and acrylic bathtubs, shower stalls and whirlpools, brass and die cast
faucets and shower doors, and also markets stainless steel and enameled steel
tubs and sinks. In addition to its standard product offerings, the Group also
sells designer bathroom fixtures, 1.6 gallon water-efficient toilets, pressure
balance tub-shower fittings and a variety of products that are accessible to
physically-challenged individuals. Products are sold under the URC(TM) and
Universal-Rundle(R) brand names principally to wholesale plumbing distributors
and retail home centers. End customers of the Group's products are generally
home builders, do-it-yourself or buy-it-yourself homeowners, remodeling
contractors and commercial builders.
The Company is a Delaware corporation incorporated in 1986. Its executive
offices are located at 50 Kennedy Plaza, Providence, Rhode Island 02903-2360,
telephone number: (401) 751-1600.
THE EXCHANGE OFFER
The Exchange Offer relates to the exchange of up to $175 million aggregate
principal amount of Exchange Notes for an equal aggregate principal amount of
Original Notes. The Exchange Notes will be obligations of the Company entitled
to the benefits of the Indenture relating to the Notes. The form and terms of
the Exchange Notes are the same as the form and terms of the Original Notes
except that the Exchange Notes have been registered under the Securities Act,
and hence are not entitled to the benefits of certain registration rights (the
"Registration Rights") granted under the Registration Rights Agreement (as
defined).
Registration Rights
Agreement.................. The Company and the Initial Purchasers entered into
the Registration Rights Agreement which grants the
holders of the Original Notes certain exchange and
registration rights. The Exchange Offer made hereby
is intended to satisfy such exchange rights. See
"The Exchange Offer -- Registration Rights;
Liquidated Damages."
The Exchange Offer......... $1,000 principal amount of Exchange Notes will be
issued in exchange for each $1,000 principal amount
of Original Notes validly tendered pursuant to the
Exchange Offer. As of the date hereof, $175 million
in aggregate principal amount of Original Notes are
outstanding. The Company will issue the Exchange
Notes to tendering holders of Original Notes on or
promptly after the Expiration Date.
Resale of the Exchange
Notes...................... Based on an interpretation by the staff of the
Commission set forth in no-action letters issued to
third parties, the Company believes that Exchange
Notes issued pursuant to the Exchange Offer in
exchange for Original Notes may be offered for
resale, resold and otherwise transferred by any
holder thereof (other than (i) a broker-dealer who
purchased such Original Notes directly from the
Company or any of its "affiliates" within the
meaning of Rule 405 under the Securities Act for
resale pursuant to Rule 144A or any other available
exemption under the Securities Act or (ii) a person
that is such an "affiliate" of the Company) without
compliance with the registration and prospectus
delivery provisions of the Securities Act, provided
that the holder is acquiring the Exchange Notes in
its ordinary course of business and is not
participating, and has no arrangement or
understanding with any person to participate, in
the distribution of the Exchange Notes. Holders of
Original Notes wishing to accept an Exchange Offer
must represent to the Company that such conditions
have been met. In the event that the Company's
belief is inaccurate, holders of Exchange Notes who
transfer Exchange Notes in violation of the
prospectus delivery provisions of the
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Securities Act and without an exemption from
registration thereunder may incur liability under
the Securities Act. The Company does not assume or
indemnify holders against such liability.
A Participating Broker-Dealer that receives
Exchange Notes in exchange for Original Notes held
for its own account, as a result of market-making
activities or other trading activities, must
acknowledge that it will deliver a prospectus in
connection with any resale of such Exchange Notes.
Although such Participating Broker-Dealer may be an
"underwriter" within the meaning of the Securities
Act, the Letter of Transmittal states that by so
acknowledging and by delivering a prospectus, such
Participating Broker-Dealer will not be deemed to
admit that it is an "underwriter" within the
meaning of the Securities Act. This Prospectus, as
it may be amended or supplemented from time to
time, may be used by a Participating Broker-Dealer
in connection with resales of Exchange Notes
received in exchange for Original Notes. The
Company has agreed that, for a period of 180 days
after the Expiration Date, it will make this
Prospectus and any amendment or supplement to this
Prospectus available to any Participating
Broker-Dealer for use in connection with any such
resales. See "Plan of Distribution."
The Exchange Offer is not being made to, nor will
the Company accept surrenders for exchange from,
holders of Original Notes in any jurisdiction in
which this Exchange Offer or the acceptance thereof
would not be in compliance with the securities or
blue sky laws of such jurisdiction.
Expiration Date............ 5:00 p.m., New York City time, on ,
1997, unless the Exchange Offer is extended by the
Company in its sole discretion, in which case the
term "Expiration Date" means the latest date and
time to which the Exchange Offer is extended. See
"The Exchange Offer -- Expiration Dates;
Extensions; Amendments."
Conditions to the Exchange
Offer.................... The Exchange Offer is subject to certain customary
conditions, which may be waived by the Company. See
"The Exchange Offer -- Conditions of the Exchange
Offer."
Procedures for Tendering
Original Notes........... Each holder of Original Notes wishing to accept the
Exchange Offer must complete, sign and date the
accompanying Letter of Transmittal, or a facsimile
thereof, in accordance with the instructions
contained herein and therein, and mail or otherwise
deliver such Letter of Transmittal, or such
facsimile, together with the Original Notes and any
other required documentation to the Exchange Agent
(as defined) at the address set forth herein. By
executing a Letter of Transmittal, each holder will
represent to the Company that, among other things,
(i) the Exchange Notes acquired pursuant to the
Exchange Offer are being obtained in the ordinary
course of business of the person receiving such
Exchange Notes, whether or not such person is the
holder, (ii) neither the holder nor any such other
person has any arrangement or understanding with
any person to participate in the distribution of
such Exchange Notes and that such holder is not
engaged in, and does not intend to engage in, a
distribution of Exchange Notes, and (iii) that
neither the holder nor any such other person is an
"affiliate," as defined in Rule 405 under the
Securities Act,
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6
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of the Company. See "The Exchange
Offer -- Procedures for Tendering."
Special Procedures for
Beneficial Holders......... Any beneficial owner whose Original Notes are
registered in the name of a broker, dealer,
commercial bank, trust company or other nominee and
who wishes to tender in the Exchange Offer should
contact such registered holder promptly and
instruct such registered holder to tender on such
beneficial owner's behalf. A form of Instruction to
Registered Holder from Beneficial Owner is included
with the applicable Letter of Transmittal enclosed
with this Prospectus for the convenience of such
beneficial owners. See "The Exchange
Offer -- Procedures for Tendering."
Guaranteed Delivery
Procedures................. Holders of Original Notes who wish to tender their
Original Notes and whose Original Notes are not
immediately available or who cannot deliver their
Original Notes, the Letter of Transmittal, as the
case may be, or any other documents required by
such Letter of Transmittal to the Exchange Agent
(as defined) (or comply with the procedures for
book-entry transfer) prior to the Expiration Date
must tender their Original Notes according to the
guaranteed delivery procedures set forth in "The
Exchange Offer -- Guaranteed Delivery Procedures."
Untendered Notes........... Following the consummation of the Exchange Offer,
Holders of Original Notes eligible to participate
but who do not tender their Original Notes will not
have any further exchange rights, and such Original
Notes will continue to be subject to certain
restrictions on transfer. Accordingly, the
liquidity of the market for such Original Notes
could be adversely affected by the Exchange Offer.
Consequences of Failure to
Exchange................. The Original Notes that are not exchanged pursuant
to the Exchange Offer will remain restricted
securities. Accordingly, such Original Notes may be
resold only (i) to the Company, (ii) pursuant to
Rule 144A or Rule 144 under the Securities Act or
pursuant to some other exemption under the
Securities Act, (iii) outside the United States to
a foreign person pursuant to the requirements of
Rule 904 under the Securities Act, or (iv) pursuant
to an effective registration statement under the
Securities Act. See "The Exchange Offer --
Consequences of Failure to Exchange."
Shelf Registration
Statement.................. In the event that any changes in law or the
applicable interpretations of the staff of the
Commission do not permit the Company to effect the
Exchange Offer, or upon the request of a Holder of
Transfer Restricted Securities (as defined) under
certain circumstances or if the Exchange Offer is
not for any other reason consummated within 165
days of the date on which the Original Notes were
issued, the Company has agreed pursuant to the
Registration Rights Agreement to register the
Original Notes issued by it on a shelf registration
statement (the "Shelf Registration Statement") and
use its best efforts to cause it to be declared
effective by the Commission. The Company has agreed
to use its reasonable best efforts to maintain the
effectiveness of the Shelf Registration Statement
for the earlier of (i) two years or (ii) the date
on
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<PAGE> 9
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which the securities covered by the Shelf
Registration Statement have been sold or cease to
be outstanding.
Withdrawal Rights.......... Tenders may be withdrawn at any time prior to 5:00
p.m., New York City time, on the Expiration Date.
See "The Exchange Offer -- Withdrawal of Tenders."
Acceptance of Original
Notes and Delivery of
Exchange Notes........... Subject to certain conditions, the Company will
accept for exchange any and all Original Notes
which are properly tendered in the Exchange Offer
prior to 5:00 p.m., New York City time, on the
Expiration Date. The Exchange Notes issued pursuant
to the Exchange Offer will be delivered promptly
following the Expiration Date. See "The Exchange
Offer -- Terms of the Exchange Offer."
Federal Tax
Consideration.............. The exchange pursuant to the Exchange Offer will
generally not be a taxable event for federal income
tax purposes. See "Certain Federal Tax
Considerations."
Use of Proceeds............ There will be no cash proceeds to the Company from
the exchange pursuant to the Exchange Offer.
Exchange Agent............. Street Bank and Trust Company.
THE EXCHANGE NOTES
General.................... The form and terms of the Exchange Notes are the
same as the form and terms of the respective
Original Notes except that (i) the Exchange Notes
bear a Series B designation, (ii) the Exchange
Notes have been registered under the Securities Act
and, therefore, will generally not bear legends
restricting the transfer thereof (other than those
that might be imposed by state securities laws) and
(iii) the Exchange Notes will not provide for the
payment of Liquidated Damages. The Exchange Notes
will evidence the same debt as the Original Notes
and will be entitled to the benefits of the
Indenture. As used herein, the term "Notes" refers
collectively to the Exchange Notes and the Original
Notes.
Securities Offered......... $175,000,000 aggregate principal amount of 9 1/4%
Series B Senior Notes due 2007.
Interest Rate and Payment
Dates.................... Interest on the Exchange Notes will accrue at the
rate of 9 1/4% per annum, payable semi-annually in
arrears on March 15 and September 15 of each year,
commencing September 15, 1997.
Maturity................... March 15, 2007.
Redemption................. The Exchange Notes may be redeemed at the Company's
option, in whole or in part, at any time and from
time to time, on and after March 15, 2002,
initially at 104.625% of principal amount and
thereafter at prices declining to 100% from and
after March 15, 2005, plus accrued and unpaid
interest, if any, to the date of redemption. See
"Description of Notes -- Optional Redemption."
Change of Control.......... Upon a Change of Control (as defined), holders of
the Exchange Notes will have the right, subject to
certain restrictions and conditions, to require the
Company to purchase all or any part of their
Exchange Notes
- -------------------------------------------------------------------------------
8
<PAGE> 10
- -------------------------------------------------------------------------------
at 101% of the principal amount thereof, plus
accrued and unpaid interest, if any (the "Change of
Control Payment"), to the date of purchase. If a
Change of Control were to occur, there can be no
assurance that the Company would have sufficient
funds to make the Change of Control Payment with
respect to all Notes tendered by holders thereof.
In addition, the Company's ability to make such
payment may be limited by the terms of borrowing
and other agreements applicable to the Company or
its subsidiaries. See "Description of
Notes -- Change of Control" and "Description of
Other Obligations."
Ranking.................... The Exchange Notes will be senior unsecured
obligations of the Company and will rank pari passu
in right of payment with all existing and future
senior unsecured indebtedness of the Company and
senior in right of payment to all existing and
future subordinated indebtedness of the Company.
The Exchange Notes will be effectively subordinated
to all existing and future secured indebtedness of
the Company, to the extent of the value of the
assets securing such indebtedness, and to all
existing and future indebtedness and other
obligations of the Company's subsidiaries. Subject
to certain restrictions, the indenture pursuant to
which the Exchange Notes will be issued (the
"Indenture") permits the Company and its
subsidiaries to incur additional indebtedness,
including senior indebtedness which may be secured,
and other liabilities. At December 31, 1996, after
giving effect to the issuance and sale of the
Original Notes and the application of the net
proceeds therefrom, the Exchange Notes would have
been effectively subordinated to approximately
$172.6 million of indebtedness for borrowed money,
trade payables and accrued liabilities of the
Company's subsidiaries. See "Description of
Notes -- General."
Certain Covenants.......... The Indenture contains certain covenants that limit
the ability of the Company and its Restricted
Subsidiaries (as defined) to, among other things,
pay dividends, repurchase capital stock or make
certain other Restricted Payments (as defined),
incur additional Indebtedness (as defined), issue
preferred stock of Restricted Subsidiaries, make
certain Investments (as defined) and consummate
certain mergers, consolidations or sales of assets.
Upon certain Asset Sales (as defined), the Company
will be required in certain circumstances to offer
to apply certain proceeds thereof to purchase the
Notes. See "Description of Notes -- Certain
Covenants."
RISK FACTORS
Prospective purchasers of the Exchange Notes should consider carefully all
of the information included in this Prospectus and, in particular, should
evaluate the specific factors set forth under "Risk Factors."
- -------------------------------------------------------------------------------
9
<PAGE> 11
SUMMARY CONSOLIDATED FINANCIAL DATA
The following summary consolidated financial data for the five years ended
December 31, 1996 has been derived from the Company's Consolidated Financial
Statements and should be read in conjunction with the Consolidated Financial
Statements and the Notes thereto and the information contained in "Management's
Discussion and Analysis of Financial Condition and Results of Operations" in the
Form 10-K incorporated herein by reference. The Adjusted Consolidated Statement
of Operations Data and adjusted Other Consolidated Data for the year ended
December 31, 1996 give effect to the Offering, the refinancing of approximately
$47.2 million of outstanding indebtedness of the Company's subsidiaries in
connection therewith (the "Refinancing") and the purchase by the Company of the
Company's Common and Special Common Stock for the period from January 1, 1996 to
March 29, 1997 (the "Company Stock Purchases") as if such transactions had
occurred on January 1, 1996. The Consolidated Balance Sheet Data as adjusted
give effect to the Offering, the Refinancing and the Company Stock Purchases as
if such transactions had occurred on December 31, 1996.
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
--------------------------------------------------
1992 1993 1994 1995 1996
------ ------ ------ ------ ------
(DOLLARS IN MILLIONS EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C>
CONSOLIDATED STATEMENT OF OPERATIONS DATA(1):
Net sales..................................... $800.0 $744.1 $737.2 $776.2 $969.8
Operating earnings............................ 20.4 30.3 50.0 41.1 60.1
Interest expense, net......................... (24.8) (23.3) (20.9) (18.8) (24.8)
Earnings (loss) from continuing
operations(2)............................... (21.0) (12.6) 17.2 15.0 22.0
Earnings (loss) per share from continuing
operations.................................. (1.67) (1.00) 1.34 1.19 2.05
ADJUSTED CONSOLIDATED STATEMENT OF OPERATIONS
DATA(6):
Interest expense, net......................... (31.3)
Earnings from continuing operations........... 17.5
Earnings per share from continuing
operations.................................. 1.78
OTHER CONSOLIDATED DATA(6):
Capital expenditures.......................... 8.8 10.8 19.4 17.3 22.2
Ratio of earnings to fixed charges(3)......... 2.0x 1.9x 2.1x
Adjusted ratio of earnings to fixed
charges(3).................................. 1.7x
EBITDA from operations(4)..................... $ 42.5 $ 49.6 $ 66.7 $ 59.0 $ 82.6
Ratio of EBITDA from operations to interest
expense, net................................ 1.7x 2.1x 3.2x 3.1x 3.3x
Adjusted ratio of EBITDA from operations to
interest expense, net(4).................... 2.6x
</TABLE>
<TABLE>
<CAPTION>
AS OF DECEMBER 31, 1996
-------------------------
ACTUAL AS ADJUSTED(6)
------ --------------
<S> <C> <C>
CONSOLIDATED BALANCE SHEET DATA:
Cash, cash equivalents and marketable securities(5).................. $ 97.8 $213.1
Working capital...................................................... 143.5 291.7
Total assets......................................................... 609.1 729.4
Total debt........................................................... 280.5 407.3
Stockholders' investment............................................. 118.8 112.3
</TABLE>
- ---------------
(1) Acquisitions have been accounted for under the purchase accounting method
and dispositions have been accounted for as described in Note 2 of Notes to
Consolidated Financial Statements contained in the Form 10-K incorporated
herein by reference and in note (2) below.
(2) On January 2, 1992, the Company's subsidiary, Dixieline Products, Inc.
("Dixieline"), sold the assets of L.J. Smith, Inc. and recognized a pre-tax
gain on the sale of approximately $8.0 million. On October 2, 1992, the
Company sold its wholly-owned subsidiary Bend Millwork Systems, Inc.
("Bend") and recognized a pre-tax loss in 1992 of $22.5 million. In the
third quarter of 1993, the Company provided a
10
<PAGE> 12
pre-tax valuation reserve of approximately $20.3 million to reduce the
Company's net investment in Dixieline to estimated net realizable value. On
March 31, 1994, the Company sold all the capital stock of Dixieline for
approximately $18.8 million in cash and $6.0 million in preferred stock of
the purchaser. No additional loss in 1994 was incurred in connection with
this sale. In January 1995, the Company paid approximately $1.8 million as a
final purchase price adjustment related to the sale of Bend and recorded a
charge to pre-tax earnings in the fourth quarter of 1994.
(3) For purposes of calculating this ratio, "earnings" consist of earnings from
continuing operations before provision for income taxes and fixed charges.
"Fixed charges" consist of interest expense and the estimated interest
portion of rental payments on operating leases. Such earnings were
insufficient to cover fixed charges by $18.0 million and $11.6 million for
the years ended December 31, 1992 and 1993, respectively.
(4) "EBITDA from operations" is the earnings (loss) from continuing operations
before income taxes plus depreciation, amortization and interest expense,
and excludes interest and dividend income, net gain on investment and
marketable securities and loss on business sold. EBITDA from operations
differs from Consolidated Cash Flow as defined in the Indenture. See
"Description of Notes -- Certain Definitions." EBITDA from operations should
not be considered as an alternative to net earnings as a measure of the
Company's operating results or to cash flows as a measure of liquidity.
EBITDA from operations principally differs from net increase (decrease) in
unrestricted cash and cash equivalents shown on the Consolidated Statement
of Cash Flows of the Company, prepared in accordance with generally accepted
accounting principles, in that EBITDA from operations does not reflect
capital expenditures, borrowings, principal and interest payments under debt
and capital lease obligations, income tax payments and cash flows from other
operating, investing and financing activities.
(5) Includes $5.7 million of restricted investments and marketable securities at
December 31, 1996 (actual and as adjusted). See the Consolidated Financial
Statements included in the Form 10-K incorporated herein by reference.
(6) The Adjusted Consolidated Statement of Operations Data and adjusted Other
Consolidated Data for the year ended December 31, 1996 give effect to the
Offering, the Refinancing and the Company Stock Purchases as if such
transactions had occurred on January 1, 1996. The Consolidated Balance Sheet
Data as adjusted give effect to the Offering, the Refinancing and the
Company Stock Purchases as if such transactions had occurred on December 31,
1996. A reconciliation from actual to as adjusted amounts is as follows
(dollars in millions, except per share amounts):
<TABLE>
<CAPTION>
COMPANY 1996
1996 OFFERING AND STOCK AS
ACTUAL REFINANCING SUBTOTAL PURCHASE ADJUSTED
------ ------------ -------- -------- --------
<S> <C> <C> <C> <C> <C>
ADJUSTED CONSOLIDATED STATEMENT OF
OPERATIONS DATA:
Interest Expenses, net................ $(24.8) $ (5.6) $(30.4) $ (0.9) $(31.3)
Earnings from continuing operations... 22.0 (3.9) 18.1 (0.6) 17.5
Earnings per share from continuing
operations.......................... 2.05 (0.36) 1.69 0.09 1.78
OTHER CONSOLIDATED DATA:
Adjusted ratio of EBITDA from
operations to interest expense,
net................................. 3.3x (0.6)x 2.7x (0.1)x 2.6x
</TABLE>
<TABLE>
<CAPTION>
DECEMBER 31, COMPANY DECEMBER 31,
1995 OFFERING AND STOCK 1996 AS
ACTUAL REFINANCING SUBTOTAL PURCHASE ADJUSTED
------------ ------------ -------- -------- ------------
<S> <C> <C> <C> <C> <C>
CONSOLIDATED BALANCE SHEET DATA:
Cash, cash equivalents and marketable
securities.......................... $ 97.8 $121.8 $219.6 $ (6.5) $213.1
Working Capital....................... 143.5 154.7 298.2 (6.5) 291.7
Total Assets.......................... 609.1 126.8 735.9 (6.5) 729.4
Total Debt............................ 280.5 126.8 407.3 -- 407.3
Stockholders Investment............... 118.8 -- 118.8 (6.5) 112.3
</TABLE>
11
<PAGE> 13
RISK FACTORS
Prospective purchasers of the Exchange Notes should carefully review and
consider, among other things, the factors set forth below, as well as the other
information included or incorporated by reference in this Prospectus, before
making an investment in the Exchange Notes.
SUBSTANTIAL LEVERAGE
The Company has a substantial amount of debt. At December 31, 1996, the
Company had approximately $280.5 million of consolidated debt. After giving
effect to the Offering, the Refinancing and the Company Stock Purchases as of
December 31, 1996, the Company would have had approximately $407.3 million of
consolidated debt. At December 31, 1996, the Company's debt to equity ratio was
2.4 to 1 and after giving effect to the Offering, the Refinancing and the
Company Stock Purchases as of December 31, 1996, the Company's debt to equity
ratio would have been 3.6 to 1. See "Capitalization" and "Description of Other
Obligations."
The degree to which the Company is leveraged could have important
consequences to holders of the Exchange Notes, including the following: (i) the
Company's ability to obtain additional financing in the future for refinancing
indebtedness, acquisitions, working capital, capital expenditures or other
purposes may be impaired, (ii) funds available to the Company for its operations
and general corporate purposes or for capital expenditures will be reduced as a
result of the dedication of a substantial portion of the Company's consolidated
cash flow from operations to the payment of the principal and interest on its
indebtedness, (iii) the Company may be more highly leveraged than certain of its
competitors, which may place it at a competitive disadvantage, (iv) the
agreements governing the Company's and its subsidiaries' long-term indebtedness
(including indebtedness under the Company's 9 7/8% Senior Subordinated Notes due
2004 (the "9 7/8% Notes") and the Exchange Notes) and bank loans contain certain
restrictive financial and operating covenants, including, in the case of certain
indebtedness of subsidiaries, certain covenants that restrict the ability of the
Company's subsidiaries to pay dividends or make other distributions to the
Company (see "Description of Other Obligations"), (v) an event of default (not
cured or waived) under financial and operating covenants contained in the
Company's or its subsidiaries' debt instruments, including the Indenture, could
occur and have a material adverse effect on the Company, (vi) certain of the
borrowings under debt agreements of the Company's subsidiaries have floating
rates of interest, which causes the Company and its subsidiaries to be
vulnerable to increases in interest rates and (vii) the Company's substantial
degree of leverage could make it more vulnerable to a downturn in general
economic conditions.
The terms of the Indenture allow for the incurrence of additional
Indebtedness (as defined). Except as set forth below, the incurrence of
additional Indebtedness is limited by certain conditions, including compliance
with a Consolidated Cash Flow Coverage Ratio (as defined) of 2 to 1, pro forma
for the additional Indebtedness. As of December 31, 1996, after giving effect to
the Offering and the Refinancing, the Company could have incurred approximately
$360.7 million of additional Indebtedness based on compliance with the
Consolidated Cash Flow Coverage Ratio. In addition, the Company and its
Restricted Subsidiaries (as defined) may incur specified levels of additional
Indebtedness without regard to compliance with the Consolidated Cash Flow
Coverage Ratio or any other financial ratio or covenant in the Indenture. The
Indenture places no restriction on the incurrence of Indebtedness by any of the
Company's Unrestricted Subsidiaries (as defined). See "Description of Notes." In
the event the Company or its subsidiaries were to incur additional Indebtedness,
whether for acquisitions, investment in its business or other general corporate
purposes, the Company's leverage could increase, which in turn could make it
more susceptible to the factors described above.
The ability of the Company and its subsidiaries to make principal and
interest payments under long-term indebtedness (including the Notes) and bank
loans will be dependent upon their future performance, which is subject to
financial, economic and other factors affecting the Company and its
subsidiaries, some of which are beyond their control. There can be no assurance
that the current level of operating results of the Company and its subsidiaries
will continue or improve. The Company believes that it will need to access the
capital markets in the future in order to provide the funds necessary to repay a
significant portion of its indebtedness. There can be no assurance that any such
refinancing will be possible or that any additional financing can be obtained,
12
<PAGE> 14
particularly in view of the Company's anticipated high levels of debt and the
debt incurrence restrictions under its existing debt agreements, including the
Indenture. If no such refinancing or additional financing were available, the
Company and/or its subsidiaries could default on their respective debt
obligations. In such case, virtually all other debt of the Company and its
subsidiaries, including payments to be made under the Notes, could become
immediately due and payable.
SECURED INDEBTEDNESS
The Indenture will permit the Company to incur certain indebtedness secured
by a lien on assets of the Company (including indebtedness which may be incurred
under the Company Credit Facility (as defined)). The Exchange Notes are
unsecured and will be effectively subordinated to all existing and future
secured indebtedness of the Company to the extent of the value of the assets
securing such indebtedness. Accordingly, if an event of default occurs under any
agreement or instrument governing secured indebtedness of the Company, the
lenders thereunder will have a prior right to the assets of the Company securing
such indebtedness and may foreclose upon such collateral to the exclusion of the
holders of the Exchange Notes. In such event, such assets would first be used to
repay in full outstanding amounts under indebtedness secured thereby, resulting
in all or a portion of the Company's assets being unavailable to satisfy the
claims of the holders of Exchange Notes and holders of other unsecured
indebtedness. See "Description of Notes -- Certain Covenants."
STRUCTURAL SUBORDINATION
The Exchange Notes will be obligations of the Company exclusively. Because
the operations of the Company are conducted entirely through subsidiaries, the
Company's cash flow and its ability to service debt, including the Exchange
Notes, are dependent upon the cash flow of its subsidiaries and the payment of
funds by those subsidiaries in the forms of loans, dividends or otherwise. The
subsidiaries, however, are legally distinct from the Company and have no
obligation, contingent or otherwise (except to the extent described below with
respect to the requirement to provide guaranties in certain circumstances), to
pay amounts due pursuant to the Exchange Notes or to make any funds available
for such payments.
Certain agreements governing the Company's subsidiaries restrict the
ability of the subsidiaries to pay dividends or make other distributions to the
Company. See "Description of Other Obligations."
In addition, while substantially all of the Company's subsidiaries are
currently wholly owned directly or indirectly by the Company, the ability of the
Company to cause any less than wholly owned subsidiary to pay dividends or make
other distributions to the Company may be limited by reason of contractual
restrictions or the need to consider the interests of the other owners of such
subsidiary. For example, a pro rata amount of any dividend distribution would in
most cases be required to be paid to the other owners of such subsidiary (and
thereby be subject to, and potentially prohibited by, the Limitations on
Restricted Payments covenant of the Indenture and similar covenants in other
agreements or instruments applicable to the Company, including without
limitation the indenture governing the 9 7/8% Notes). In addition, the terms of
any loan from any such less than wholly owned subsidiary to the Company may only
be able to be made, if at all, on terms less favorable to the Company than in
the case of a loan from a wholly owned subsidiary.
Except to the extent that the Company may itself be a trade creditor with
recognized claims against its subsidiaries, claims of creditors of such
subsidiaries, including trade creditors, will have effective priority with
respect to the assets and earnings of such subsidiaries over the claims of
creditors of the Company, including holders of the Exchange Notes. At December
31, 1996, after giving effect to the Offering and the Refinancing, the Exchange
Notes would have been effectively subordinated to approximately $172.6 million
of indebtedness for borrowed money, trade payables and accrued liabilities of
the Company's subsidiaries. See "Description of Notes -- General."
The Indenture provides that in the event any of the Company's subsidiaries
guarantees or otherwise becomes liable for the payment of any Indebtedness of
the Company (other than Indebtedness under the Company Credit Facility) such
subsidiary shall also guarantee the payment of the Exchange Notes. This
provision of the Indenture ceases to have effect in certain circumstances. In
the event any subsidiary provides
13
<PAGE> 15
such a guaranty, the guaranty may, under certain circumstances, be subject to
avoidance or subordination under fraudulent conveyance laws or the preference
provisions of federal or state bankruptcy law. See "Description of Notes Certain
Covenants -- Limitation on Guaranties by Subsidiaries."
REPURCHASE OF NOTES UPON CHANGE OF CONTROL
Upon the occurrence of a Change of Control, the Company will be required to
make an offer to repurchase the Notes at a price equal to 101% of the principal
amount thereof, plus accrued and unpaid interest, if any, to the date of
repurchase. Certain events involving a Change of Control could result in
acceleration of, or similar repurchase obligations with respect to, indebtedness
outstanding under the Company Credit Facility, the 9 7/8% Notes or other
indebtedness of the Company or its subsidiaries that may be incurred in the
future. There can be no assurance that the Company will have sufficient
resources to repurchase the Notes, including the Exchange Notes, in the event it
becomes obligated to do so, particularly in the event of acceleration of, or the
need to comply with repurchase obligations with respect to, other indebtedness.
The failure to repurchase all of the tendered Notes in the event of a Change of
Control constitutes an event of default under the Indenture which may result in
the acceleration of the maturity of the Notes. The Change of Control repurchase
provisions may be deemed to have anti-takeover effects and may delay, defer or
prevent a merger, tender offer or other takeover attempt. See "Description of
Notes -- Change of Control", "-- Certain Covenants" and "-- Events of Default
and Remedies."
SENSITIVITY TO ECONOMIC CYCLES; AVAILABILITY AND PRICING OF RAW MATERIALS
A significant percentage of the Company's sales of residential and
commercial building products is attributable to new residential and
nonresidential construction, which are affected by such cyclical factors as
interest rates, inflation, consumer spending habits and employment. This
exposure to cyclicality in the new construction market is partially mitigated by
the Company's increasing emphasis on the repair and replacement markets, which
are typically less cyclical. In addition, the Company is dependent upon raw
materials (including, among others, steel, copper, packaging material, plastics,
resins and aluminum) and components purchased from third parties. Accordingly,
the Company's results of operations and financial condition have in the past
been, and may again in the future be, adversely affected by increases in raw
material or component costs or their lack of availability.
COMPETITION
Substantially all of the markets in which the Company participates are
highly competitive with respect to product quality, price, design innovations,
distribution, service, warranties, reliability, efficiency and financing terms.
Certain of the Company's competitors have greater financial and marketing
resources and brand awareness than the Company. Competitive factors could
require price reductions or increased spending on product development, marketing
and sales that would adversely affect the Company's operating results.
LACK OF PUBLIC MARKET
There is no existing public market for the Original Notes or the Exchange
Notes and the Company does not intend to list the Exchange Notes on any national
securities exchange or to seek the admission thereof to trading in the National
Association of Securities Dealers Automated Quotation System. The Initial
Purchasers have advised the Company that they currently intend to make a market
in the Notes but are not obligated to do so and may discontinue such market
making at any time without notice. In addition, such market making activity will
be subject to the limits imposed by the Securities Act and the Exchange Act and
may be limited during the Exchange Offer and the pendency of the Shelf
Registration Statement. Accordingly, no assurance can be given that an active
market will develop for any of the Exchange Notes or as to the liquidity of the
trading market for any of the Exchange Notes. If a trading market does not
develop or is not maintained, holders of the Exchange Notes may experience
difficulty in reselling such Exchange Notes or may be unable to sell them at
all. If a market for the Exchange Notes develops, any such market may be
discontinued at any time. If a trading market develops for the Exchange Notes,
future trading prices of such Exchange Notes will depend on many factors,
including, among other things, prevailing interest rates, the
14
<PAGE> 16
Company's results of operations and the market for similar securities. Depending
on prevailing interest rates, the market for similar securities and other
factors, including the financial condition of the Company, the Exchange Notes
may trade at a discount from their principal amount.
---------------------
This Prospectus includes "forward-looking statements" within the meaning of
Section 27A of the Securities Act and Section 21E of the Exchange Act. All
statements other than statements of historical facts constitute forward-looking
statements. Such forward-looking statements are subject to certain risks and
uncertainties, over which the Company has no control, which could cause actual
results to differ materially from those projected. Cautionary statements
describing these risks and uncertainties include those disclosed under the
caption "Risk Factors" and elsewhere in this Prospectus and the documents
incorporated herein by reference. All subsequent written and oral
forward-looking statements attributable to the Company or persons acting on its
behalf are expressly qualified in their entirety by such cautionary statements.
Readers are cautioned not to place undue reliance on forward-looking statements,
including statements made in this Prospectus or the documents incorporated
herein by reference, which speak only as of the date made (including the date of
any incorporated document in the case of any forward-looking statement contained
therein), and the Company undertakes no obligation to republish revised
forward-looking statements to reflect events or circumstances after the date
originally made or to reflect the occurrence of unanticipated events. Readers
are also urged to carefully review and consider the various disclosures made by
the Company in the Company's periodic reports filed with the Commission.
15
<PAGE> 17
CAPITALIZATION
The following table sets forth the short-term debt and capitalization of
the Company at December 31, 1996 and as adjusted to reflect the Offering, the
Refinancing and the Company Stock Purchases:
<TABLE>
<CAPTION>
ACTUAL AS ADJUSTED(3)
------ --------------
(DOLLARS IN MILLIONS)
<S> <C> <C>
Short-term debt:
Short-term borrowings........................................ $ 25.3 $ --
Current maturities of long-term debt......................... 11.2 3.6
------ ------
Total short-term debt................................ $ 36.5 $ 3.6
====== ======
Long-term debt:
Notes, mortgage notes and other.............................. $ 26.9 $ 12.6
9 1/4% Series B Senior Notes due 2007........................ -- 174.0
9 7/8% Senior Subordinated Notes due 2004.................... 217.1 217.1
------ ------
Total long-term debt(1).............................. 244.0 403.7
------ ------
Stockholders' investment(2):
Preference stock, $1.00 par value; 7,000,000 authorized...... -- --
Common stock, $1.00 par value; 40,000,000 shares authorized;
15,965,585 shares issued.................................. 15.9 15.9
Special common stock, $1.00 par value; 5,000,000 shares
authorized; 784,169 shares issued......................... .8 .8
Additional paid-in capital................................... 135.0 135.0
Retained earnings............................................ 37.8 37.8
Cumulative translation, pension and other adjustments........ (3.2) (3.2)
Less: Treasury stock, at cost, 6,599,645 actual and 6,872,470
as adjusted common shares and 276,910 actual and 284,985
as adjusted special common shares......................... (67.5) (74.0)
------ ------
Total stockholders' investment....................... 118.8 112.3
------ ------
Total capitalization................................. $362.8 $516.0
====== ======
</TABLE>
- ---------------
(1) Long-term debt is net of $2.3 million (actual) and $3.3 million (as
adjusted) of unamortized debt discount.
(2) Excludes (i) 1,428,869 shares of common stock, $1.00 par value (the "Common
Stock") at December 31, 1996 which have been reserved for issuance pursuant
to options and the conversion of the Company's special common stock, $1.00
par value (the "Special Common Stock"), (ii) 281,000 shares of Special
Common Stock at December 31, 1996 which have been reserved for issuance
pursuant to options and (iii) 98,732 shares of Series A Participating
Preference Stock (the "Preference Stock") which may be issuable upon
exercise of rights under the Rights Agreement, as amended and restated as of
April 1, 1996, between the Company and State Street Bank and Trust Company.
(3) See note (6) to the Summary Consolidated Financial Data on page 11 of this
Prospectus for a reconciliation from actual to as adjusted amounts.
16
<PAGE> 18
DESCRIPTION OF NOTES
GENERAL
The Original Notes were issued and the Exchange Notes will be issued
pursuant to an indenture (the "Indenture") dated as of March 17, 1997 between
the Company and State Street Bank and Trust Company, a Massachusetts banking
corporation, as trustee (the "Trustee"). The terms of the Exchange Notes include
those stated in the Indenture and those made part of the Indenture by reference
to the Trust Indenture Act of 1939, as amended (the "Trust Indenture Act"), as
in effect on the date of the Indenture. The Notes are subject to all such terms,
and holders of the Notes are referred to the Indenture and the Trust Indenture
Act for a statement thereof. The following summary of certain provisions of the
Indenture, the Notes and the Registration Rights Agreement does not purport to
be complete and is qualified in its entirety by reference to the Indenture,
including the definitions included in the Indenture of certain terms used below.
Copies of the Indenture and the Registration Rights Agreement are exhibits to
the Registration Statement of which this Prospectus is a part and are publicly
available as set forth above under "-- Available Information." The definitions
of certain terms used in the following summary are set forth below under
"-- Certain Definitions."
The form and terms of the Exchange Notes are the same as the form and terms
of the Original Notes (which they replace) except that (i) the Exchange Notes
bear a Series B designation, (ii) the Exchange Notes have been registered under
the Securities Act and, therefore, will not bear legends restricting the
transfer thereof (except as may be required under the state securities laws) and
(iii) the holders of Exchange Notes will generally not be entitled to certain
rights under the Registration Rights Agreement, including the provisions
providing for Liquidated Damages in certain circumstances relating to the timing
of the Exchange Offer, which rights will terminate when the Exchange Offer is
consummated. See "The Exchange Offer -- Registration Rights; Liquidated
Damages."
The Notes will be unsecured senior obligations of the Company limited to
$175,000,000 aggregate principal amount. The Notes will rank senior in right of
payment to all existing and future subordinated Indebtedness of the Company,
including the 9 7/8% Notes, and pari passu in right of payment with all existing
and future senior unsecured Indebtedness of the Company. The Notes will be
effectively subordinated to all existing and future secured Indebtedness of the
Company, including secured Indebtedness pursuant to the Company Credit Facility,
to the extent of the value of the assets securing such Indebtedness, and the
Notes will be structurally subordinated to all Indebtedness and other
obligations (including trade payables) of the Company's Subsidiaries. At
December 31, 1996, after giving effect to the Offering and the Refinancing, the
Notes would have been effectively subordinated to approximately $172.6 million
of indebtedness for borrowed money, trade payables and accrued liabilities of
the Company's Subsidiaries.
Although the Indenture contains certain covenants and provisions that
afford certain protections to holders of the Notes (the "Holders"), such
covenants and provisions would not necessarily afford the Holders of the Notes
protection in the event of a highly leveraged transaction involving the Company,
including a leveraged transaction initiated or supported by the Company, the
management of the Company or any affiliate of either party. See "-- Certain
Covenants" below.
PRINCIPAL, MATURITY AND INTEREST
The Notes are limited in aggregate principal amount to $175,000,000 and
will mature on March 15, 2007. Interest on the Notes will accrue at the rate of
9 1/4% per annum and will be payable semi-annually on each March 15 and
September 15 commencing on September 15, 1997, to Holders on the immediately
preceding March 1 or September 1, whether or not a business day. Interest on the
Notes will accrue from the most recent date to which interest has been paid or,
if no interest has been paid, from the date of issuance of the Original Notes
and will continue to accrue after the occurrence of an event of default
described in clause (5) or (6) of the first paragraph under "-- Events of
Default and Remedies." Interest will be computed on the basis of a 360-day year
comprised of twelve 30-day months.
Principal of, premium, if any, interest on, and Liquidated Damages, if any,
with respect to the Notes will be payable by wire transfer of immediately
available funds to the holder of the Global Notes; provided, that
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<PAGE> 19
payments of interest and Liquidated Damages, if any, may be made at the office
or agency of the Company maintained for such purpose or, at the option of the
Company, by check mailed to the Holders at their respective addresses set forth
in the register of Holders. Unless otherwise designated by the Company, the
Company's office or agency in New York will be the office of the Trustee
maintained for such purpose. The Notes will be issued only in registered form,
without coupons, in denominations of $1,000 and integral multiples thereof. The
Trustee is Paying Agent and Registrar under the Indenture. The Company may act
as Paying Agent or Registrar under the Indenture, and the Company may change the
Paying Agent or Registrar without notice to the Holders.
OPTIONAL REDEMPTION
The Notes will be redeemable by the Company, in whole or in part, on or
after March 15, 2002 at the following redemption prices (expressed as a
percentage of the principal amount) if redeemed during the 12-month period
beginning March 15 of the years indicated below, in each case, together with
accrued and unpaid interest and Liquidated Damages, if any, to the redemption
date:
<TABLE>
<CAPTION>
YEAR PERCENTAGE
--------------------------------------------------------------- ----------
<S> <C>
2002........................................................... 104.625%
2003........................................................... 103.083%
2004........................................................... 101.542%
2005 and thereafter............................................ 100.000%
</TABLE>
Notice of the redemption must be mailed by first class mail at least 30 but
not more than 60 days before the redemption date to each Holder to be redeemed
at such Holder's registered address. If any Note is to be redeemed in part only,
the notice of redemption relating to that Note will state the principal amount
thereof to be redeemed and a new Note in principal amount equal to the
unredeemed portion will be issued in the name of the Holder upon cancellation of
the original Note. On and after the redemption date, interest ceases to accrue
on Notes or portions of Notes called for redemption, unless the Company shall
default in the payment of the redemption price. If less than all the outstanding
Notes are to be redeemed at any time, selection of the Notes for redemption will
be made by the Trustee by lot or, if such method is prohibited by the rules of
any stock exchange on which the Notes are then listed, any other method the
Trustee considers reasonable, provided that Notes shall be redeemed in principal
amounts of $1,000 or integral multiples thereof.
MANDATORY REDEMPTION
The Company is not required to make mandatory redemption or sinking fund
payments with respect to the Notes. However, as described below, the Company may
be obligated, under certain circumstances, to make an offer to purchase (i) all
outstanding Notes at a redemption price of 101% of the principal amount thereof,
plus accrued and unpaid interest and Liquidated Damages, if any, to the date of
purchase, upon a Change of Control; and (ii) outstanding Notes with a portion of
the Excess Proceeds of Asset Sales at a redemption price of 100% of the
principal amount thereof, plus accrued and unpaid interest and Liquidated
Damages, if any, to the date of purchase. See "-- Change of Control" and
"-- Certain Covenants -- Limitation on Use of Proceeds from Asset Sales."
CHANGE OF CONTROL
Upon the occurrence of a Change of Control, each Holder will have the right
to require the repurchase of all or any part of such Holder's Notes pursuant to
the offer described below (the "Change of Control Offer") at a purchase price
equal to 101% of the aggregate principal amount thereof plus accrued and unpaid
interest and Liquidated Damages, if any, to the date of purchase (the "Change of
Control Payment").
Immediately following any Change of Control, the Company is required to
mail a notice to the Trustee and to each Holder stating: (i) that the Change of
Control Offer is being made pursuant to the Repurchase Upon Change of Control
covenant of the Indenture and that all Notes tendered will be accepted for
payment; (ii) the amount of the Change of Control Payment and the purchase date
(the "Change of Control Payment
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<PAGE> 20
Date"), which may not be earlier than 30 days nor later than 60 days from the
date such notice is mailed; (iii) that any Note not tendered will continue to
accrue interest; (iv) that, unless the Company defaults in the payment thereof,
all Notes accepted for payment pursuant to the Change of Control Offer will
cease to accrue interest on and after the Change of Control Payment Date; (v)
that Holders electing to have any Notes purchased pursuant to a Change of
Control Offer will be required to surrender the Notes to be purchased to the
Paying Agent at the address specified in the notice prior to the close of
business on the third business day preceding the Change of Control Payment Date;
(vi) that Holders will be entitled to withdraw Notes they have tendered on the
terms and conditions set forth in such notice; and (vii) that Holders whose
Notes are being purchased only in part will be issued new Notes (or book-entry
notation made with respect thereto) equal in principal amount to the unpurchased
portion of the Notes tendered; provided that the portion of each Note purchased
and each such new Note issued (or book-entry notation, if applicable) shall be
in a principal amount of $1,000 or an integral multiple thereof.
On the Change of Control Payment Date, the Company will, to the extent
lawful, (i) accept for payment all Notes or portions thereof tendered pursuant
to the Change of Control Offer and not withdrawn, (ii) deposit with the Paying
Agent an amount sufficient to pay the Change of Control Payment in respect of
all Notes or portions thereof so tendered and not withdrawn, and (iii) deliver
or cause to be delivered to the Trustee all Notes so tendered and not withdrawn
together with an Officers' Certificate specifying the Notes or portions thereof
tendered to the Company. The Paying Agent will promptly mail to each Holder of
Notes so tendered and not withdrawn the Change of Control Payment in respect of
such Notes, and the Trustee will promptly authenticate and mail to such Holder a
new Note (or cause to be transferred by book entry) equal in principal amount to
any unpurchased portion of the Notes surrendered; provided that each such new
Note shall be in a principal amount of $1,000 or an integral multiple thereof.
The Company will publicly announce the results of the Change of Control Offer on
or as soon as practicable after the Change of Control Payment Date.
The Company will comply with the requirements of Rule 14e-1 under the
Exchange Act, and any other securities laws and regulations thereunder to the
extent such laws and regulations are applicable in connection with the
repurchase of Notes triggered by a Change of Control.
A "Change of Control" will be deemed to have occurred at such time as any
of the following events occur: (i) there is consummated any consolidation or
merger of the Company with or into another corporation, or all or substantially
all of the assets of the Company are sold, leased or otherwise transferred or
conveyed to another Person (other than pursuant to a bona fide pledge of assets
to secure Indebtedness made in accordance with the Indenture), and the holders
of the Company's common stock outstanding immediately prior to such
consolidation, merger, sale, lease or other transfer or conveyance or one or
more Exempt Persons do not hold, directly or indirectly, at least a majority of
the common stock of the continuing or surviving corporation immediately after
such consolidation or merger or at least a majority of the Equity Interests of
such Person; (ii) there is filed a report on Schedule 13D or 14D-1 (or any
successor schedule, form or report) pursuant to the Exchange Act disclosing that
any person (defined, solely for the purposes of the Change of Control provision,
as the term "person" is used in Section 13(d)(3) or Section 14(d)(2) of the
Exchange Act or any successor provision to either of the foregoing) has become
the beneficial owner (as the term "beneficial owner" is defined under Rule 13d-3
or any successor rule or regulation promulgated under the Exchange Act) of 50%
or more of the combined voting power of all the Company's then outstanding
securities entitled to vote generally for the election of directors; provided,
however, that a person shall not be deemed to be the beneficial owner of, or to
own beneficially, (A) any securities tendered pursuant to a tender or exchange
offer made by or on behalf of such person or any of such person's Affiliates or
associates until such tendered securities are accepted for purchase or exchange
thereunder, or (B) any securities if such beneficial ownership (1) arises solely
as a result of a revocable proxy delivered in response to a proxy or consent
solicitation made pursuant to the applicable rules and regulations under the
Exchange Act, and (2) is not also then reportable on Schedule 13D (or any
successor schedule) under the Exchange Act; or (iii) during any consecutive
two-year period, individuals who at the beginning of such period constituted the
Board of Directors of the Company (together with any new directors whose
election by such Board of Directors or whose nomination for election by the
stockholders of the Company was approved by a vote of 66 2/3% of the directors
then still in office who were either directors at the beginning of such period
or whose election or nomination for election was
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<PAGE> 21
previously so approved) cease for any reason to constitute a majority of the
Board of Directors of the Company then in office.
Notwithstanding the foregoing, a Change of Control shall not be deemed to
have occurred under clause (ii) of the immediately preceding paragraph solely by
virtue of the Company, any Subsidiary of the Company, any employee stock
ownership plan or any other employee benefit plan of the Company or any such
Subsidiary, any other person holding securities of the Company for or pursuant
to the terms of any such employee benefit plan, or any Exempt Person, filing or
becoming obligated to file a report on Schedule 13D or Schedule 14D-1 (or any
successor schedule, form or report) under the Exchange Act disclosing beneficial
ownership by it of securities of the Company, whether in excess of 50% of the
combined voting power of the Company's then outstanding securities entitled to
vote generally for the election of directors or otherwise.
The Change of Control purchase feature may in certain circumstances make
more difficult or discourage a takeover of the Company and, thus, the removal of
the incumbent management. Although the Company has from time to time received
and considered proposals which might involve a Change of Control, the Change of
Control purchase feature was not adopted as a result of management's knowledge
of any specific effort to accumulate shares of Common Stock or to obtain control
of the Company by means of a merger, tender offer, solicitation or otherwise, or
part of a plan by management to adopt a series of antitakeover provisions.
Instead, the Change of Control purchase feature is a standard term contained in
other similar debt offerings and the terms of such feature result from
negotiations between the Company and the Initial Purchasers.
If a Change of Control were to occur, there can be no assurance that the
Company would have sufficient funds to make the Change of Control Payment in
respect of all Notes tendered by Holders thereof. In addition, the Company's
ability to make such payment may be limited by the terms of its then-existing
borrowings and other agreements applicable to the Company or its Subsidiaries.
Certain existing agreements applicable to certain of the Company's Subsidiaries
restrict the ability of these Subsidiaries to make distributions to the Company.
See "Description of Other Obligations."
Neither the Board of Directors of the Company nor the Trustee may waive the
Change of Control repurchase feature of the Indenture.
One of the events that constitutes a Change of Control under the Indenture
is a sale, lease or other transfer or conveyance of all or substantially all of
the assets of the Company. There is no precise established definition under
applicable law of the term "substantially all" and, accordingly, if the Company
were to engage in transactions in which it disposed of less than all of its
assets, a question could arise as to whether such disposition was of
"substantially all" of its assets and whether because of such disposition the
Company was required to repurchase the Notes as a result of a Change of Control.
CERTAIN COVENANTS
Limitation on Restricted Payments. The Company shall not, and shall not
permit any of its Restricted Subsidiaries to, directly or indirectly: (i)
declare or pay any dividend on, or make any distribution in respect of the
Company's or any such Restricted Subsidiary's Capital Stock or other Equity
Interests, except to the extent any such dividend or other distribution is (a)
actually received by the Company or a Restricted Subsidiary thereof or (b)
payable solely in shares of Capital Stock or other Equity Interests (other than
Redeemable Stock or Capital Stock convertible into any security other than such
Capital Stock) of the Company or such Restricted Subsidiary, as the case may be;
(ii) purchase, redeem or otherwise acquire or retire for value any Capital Stock
or other Equity Interests of the Company or any of its Restricted Subsidiaries
(other than Capital Stock or other Equity Interests held by the Company or any
Wholly-Owned Subsidiary of the Company that is a Restricted Subsidiary); (iii)
prepay, repay, purchase, repurchase, redeem, defease or otherwise acquire or
retire for value, prior to a scheduled repayment date, scheduled mandatory
sinking fund payment date or maturity date any Indebtedness of the Company that
is subordinate in right of payment to the Notes (other than in connection with
any refinancing of such Indebtedness permitted by the Indenture); or (iv) make
any Investment other than Permitted Investments (each such action described in
any of clauses (i) through (iv) above being referred to as a "Restricted
Payment"), if, at the time of such Restricted Payment, (1) a Default or Event of
Default shall have occurred and be continuing
20
<PAGE> 22
or shall occur as a consequence thereof; (2) such Restricted Payment, together
with the aggregate amount of all other Restricted Payments declared or made on
or after the issue date of the Original Notes (including, without duplication,
Restricted Payments described in the next succeeding paragraph), exceeds the sum
of (A) 50% of the cumulative Consolidated Net Income of the Company for the
period commencing on January 1, 1997 through the last day of the fiscal quarter
immediately preceding the date of such proposed Restricted Payment (provided
that if the amount of such cumulative Consolidated Net Income divided by the
number of full fiscal quarters of the Company in the applicable period exceeds
$5,250,000, then such amount shall equal (i) 50% of the product of $5,250,000
multiplied by the number of full fiscal quarters in such period plus (ii) 75% of
the amount in excess of the product of $5,250,000 multiplied by the number of
full fiscal quarters in such period) (or, if the cumulative Consolidated Net
Income of the Company shall be a deficit, minus 100% of such deficit); (B) the
aggregate net cash proceeds, and the Fair Market Value of any property other
than cash, if any, received by the Company (other than from a Restricted
Subsidiary of the Company) from the issuance and sale of either Capital Stock of
the Company (other than Redeemable Stock or any Capital Stock convertible into
any security other than such Capital Stock) or Indebtedness that is convertible
into Capital Stock of the Company (other than Redeemable Stock or any Capital
Stock convertible into any security other than such Capital Stock), to the
extent such Indebtedness is actually converted into such Capital Stock; (C) an
amount equal to any cash and the Fair Market Value (at the time of receipt) of
other assets received by the Company or any of its Restricted Subsidiaries after
the date of the issuance of the Original Notes as a dividend or other
distribution from any Unrestricted Subsidiary; (D) the Fair Market Value of any
Investment held by either the Company or any Restricted Subsidiary of the
Company in any Unrestricted Subsidiary at the time such Unrestricted Subsidiary
is redesignated as a Restricted Subsidiary in accordance with the provisions of
the Indenture; and (E) $35,000,000; or (3) the Company could not incur at least
$1.00 of additional Indebtedness pursuant to the first paragraph of the
Limitation on Additional Indebtedness covenant.
The foregoing provisions shall not prohibit, so long as no Default or Event
of Default shall have occurred and be continuing or shall occur as a consequence
thereof, (i) the payment of any dividend within 60 days after the date of
declaration thereof, if at such date of declaration such payment would have
complied with the provisions of the Indenture; (ii) the declaration and payment
by a Restricted Subsidiary of the Company which is required to file periodic
reports under Section 13 or 15(d) of the Exchange Act (a "Reporting Subsidiary")
of dividends on its common stock to all holders of such common stock on a pro
rata basis out of funds legally available for the payment of dividends, provided
that the amount of such dividends in any fiscal year of such Reporting
Subsidiary shall not exceed 25% of the Consolidated Net Income of such Reporting
Subsidiary for the immediately preceding fiscal year; (iii) the purchase,
redemption, acquisition, cancellation or other retirement for value of shares of
Capital Stock of the Company, options to purchase such shares or related stock
appreciation rights or similar securities held by current or former officers,
employees or directors (or their estates or beneficiaries under their estates)
of the Company or any Restricted Subsidiary; provided that the aggregate
consideration paid for such purchase, redemption, cancellation or other
retirement after the date hereof does not exceed $2,500,000 in the aggregate in
any fiscal year of the Company; (iv) the prepayment, repayment, purchase,
repurchase, redemption, defeasance or other acquisition or retirement for value
of any or all of the 9 7/8% Notes at any time within one year of the scheduled
maturity date thereof; and (v) the redemption, repurchase, defeasance or other
acquisition or retirement for value of Indebtedness of the Company that is
subordinated in right of payment to the Notes in exchange for, or out of the
proceeds of a substantially concurrent offering of, shares of Capital Stock of
the Company.
Limitation on Additional Indebtedness. The Company shall not, and shall
not permit any of its Restricted Subsidiaries to, directly or indirectly,
create, incur, issue, assume, guarantee or otherwise become directly or
indirectly liable with respect to (each, an "incurrence") any Indebtedness,
including, without limitation, Acquired Indebtedness; provided, however, that
the Company may incur Indebtedness if (i) no Default or Event of Default shall
have occurred and be continuing at the time or after giving effect to the
incurrence of such Indebtedness and (ii) the Consolidated Cash Flow Coverage
Ratio of the Company for the four full fiscal quarters ending immediately prior
to the date of the incurrence of such additional Indebtedness is at least 2.0 to
1.0.
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<PAGE> 23
The foregoing limitations shall not apply, without duplication, to:
(i) Existing Indebtedness;
(ii) Indebtedness of (a) the Company represented by the Notes and the
Indenture or (b) any Subsidiary Guarantor under any Subsidiary Guaranty;
(iii) Indebtedness of the Company and its Restricted Subsidiaries
under the Company Credit Facility; provided, that the aggregate principal
amount of Indebtedness (including the available undrawn amount of any
letters of credit issued thereunder) so incurred on any date, together with
all other Indebtedness incurred pursuant to this clause (iii) and
outstanding on such date, shall not exceed the greater of (a) $75,000,000
and (b) the sum of 85% of Eligible Receivables of the Company and its
Subsidiaries, plus 65% of Eligible Inventory of the Company and its
Subsidiaries;
(iv) Indebtedness of (a) Broan Limited and any Canadian Subsidiaries
which are Restricted Subsidiaries under the Broan Limited Credit Facility;
provided that (1) the aggregate outstanding principal amount (including the
available undrawn amount of any letters of credit issued thereunder) so
incurred on any date, together with all other Indebtedness incurred
pursuant to this clause (iv) and outstanding on such date, shall not exceed
the greater of (x) $30,000,000 (Canadian) and (y) the sum of 85% of
Eligible Receivables of Broan Limited and the Canadian Subsidiaries which
are Restricted Subsidiaries plus 65% of Eligible Inventory of Broan Limited
and the Canadian Subsidiaries which are Restricted Subsidiaries (but
without duplication of any such Eligible Receivables or Eligible Inventory
of Broan Limited and the Canadian Subsidiaries used as a basis to incur
Indebtedness pursuant to clause (iii) above) and (2) such Indebtedness
shall be secured only by Liens on assets of Broan Limited and the Canadian
Subsidiaries which are Restricted Subsidiaries, and (b) the Company under
its limited guaranty of not more than $20,000,000 (Canadian) of the
Indebtedness of Broan Limited and the Canadian Subsidiaries which are
Restricted Subsidiaries under the Broan Limited Credit Facility;
(v) Indebtedness of Universal-Rundle Corporation for facility
expansion or improvement or joint venture investment purposes not exceeding
at any time $6,000,000 in aggregate outstanding principal amount and, if
secured, secured only by Liens on assets of Universal-Rundle Corporation or
the applicable joint venture;
(vi) Indebtedness of the Company to any of its Wholly-Owned
Subsidiaries that is a Restricted Subsidiary, provided that such
Indebtedness is contractually subordinated in right of payment to the
Notes, or Indebtedness of any Subsidiary of the Company that is a
Restricted Subsidiary to the Company or to any other Wholly-Owned
Subsidiary of the Company that is a Restricted Subsidiary, provided that if
the Company or any of its Restricted Subsidiaries incurs Indebtedness to a
Wholly-Owned Subsidiary of the Company that is a Restricted Subsidiary
which, at any time after such incurrence, ceases to be a Wholly-Owned
Subsidiary, then all such Indebtedness in excess of the amount of Allowable
Subsidiary Loans shall be deemed to have been incurred at the time such
former Wholly-Owned Subsidiary ceases to be a Wholly-Owned Subsidiary of
the Company;
(vii) Indebtedness of a Restricted Subsidiary under a guaranty of
Indebtedness of the Company (other than the Notes) which causes such
Restricted Subsidiary to become a Subsidiary Guarantor pursuant to the
provisions of the Limitation on Guaranties by Subsidiaries covenant;
(viii) Indebtedness of the Company and its Restricted Subsidiaries
under Interest Rate Agreements, Currency Agreements and Commodity
Agreements, provided that (a) in the case of Interest Rate Agreements, such
Interest Rate Agreements relate to Indebtedness permitted to be incurred
under the Indenture and the notional principal amount of the obligations of
the Company and its Restricted Subsidiaries under such Interest Rate
Agreements does not exceed the principal amount of such Indebtedness, and
(b) in the case of Currency Agreements that relate to other Indebtedness,
such Currency Agreements do not increase the Indebtedness of the Company
and its Restricted Subsidiaries outstanding at any time other than as a
result of fluctuations in foreign currency exchange rates or by reason of
fees, indemnities and compensation payable thereunder;
22
<PAGE> 24
(ix) Indebtedness of the Company and its Restricted Subsidiaries
incurred in the ordinary course of business under guaranties of
Indebtedness of suppliers, licensees, franchisees or customers;
(x) Indebtedness incurred by the Company and its Restricted
Subsidiaries consisting of Purchase Money Obligations and Capital Lease
Obligations not exceeding at any time $30,000,000 in aggregate outstanding
principal amount;
(xi) Acquired Indebtedness incurred by a Restricted Subsidiary of the
Company to the extent such Indebtedness could have been incurred by the
Company under the limitations set forth in the preceding paragraph of this
Limitation on Additional Indebtedness covenant, after giving pro forma
effect to the acquisition of such Restricted Subsidiary by the Company;
(xii) Indebtedness of any Restricted Subsidiary existing at the time
of the designation of such Subsidiary as a Restricted Subsidiary in
accordance with the terms of the Indenture if immediately prior to such
designation such Subsidiary was an Unrestricted Subsidiary, provided that,
after giving pro forma effect to such designation, such Indebtedness could
have been incurred by the Company under the limitations set forth in the
preceding paragraph of this Limitation on Additional Indebtedness covenant
(assuming for purposes of this clause (xii) only that the Consolidated Cash
Flow Coverage Ratio set forth in such paragraph were 2.25 to 1.0); and
provided further that, none of the Company or any of its other Restricted
Subsidiaries shall provide credit support of any kind (including any
undertaking, agreement or instrument that would constitute Indebtedness),
or otherwise be at any time, directly or indirectly liable (as a guarantor
or otherwise), for such existing Indebtedness, except to the extent the
Company or any of its Restricted Subsidiaries could become so liable in
accordance with the provisions of this Limitation on Additional
Indebtedness covenant (other than solely in accordance with clause (vi)
above or this clause (xii)).
(xiii) Indebtedness of the Company and its Restricted Subsidiaries in
respect of performance bonds, bankers' acceptances, letters of credit,
short-term overdraft facilities and surety or appeal bonds incurred or
provided in the ordinary course of business;
(xiv) Indebtedness of (a) Nortek (UK) Limited and its Subsidiaries
arising out of advances on exports, advances on imports, advances on trade
receivables, factoring of receivables and similar transactions in the
ordinary course of business and, if secured, secured only by Liens on
assets of Nortek (UK) Limited and its Subsidiaries and (b) the Company
under its limited guaranty of not more than $10,000,000 of any such
Indebtedness of Nortek (UK) Limited and its Subsidiaries;
(xv) other Indebtedness of the Company and its Restricted Subsidiaries
not to exceed at any time $25,000,000 in aggregate outstanding principal
amount;
(xvi) Liens permitted under the Limitation on Liens covenant; and
(xvii) Indebtedness ("Refinancing Indebtedness") created, incurred,
issued, assumed or guaranteed in exchange for, or the proceeds of which are
used to extend, refinance, renew, replace, substitute or refund
("refinance"), Indebtedness described in the preceding paragraph or
referred to in clauses (i) through (xv) above; provided, however, that (a)
the principal amount of such Refinancing Indebtedness (or if such
Refinancing Indebtedness is issued at a price less than the principal
amount thereof, the original issue amount of such Refinancing
Indebtedness), together with the principal amount of any remaining
Indebtedness under the agreement or instrument governing the Indebtedness
being refinanced, shall not exceed (1) in the case of Refinancing
Indebtedness incurred to refinance Indebtedness permitted to be incurred
under any of clauses (iii) through (v) and (xv) above, an amount which,
when added to all other Indebtedness outstanding under such clause, shall
not exceed the aggregate amount of Indebtedness permitted to be incurred
under such clause, and (2) in the case of Refinancing Indebtedness incurred
to refinance Indebtedness permitted to be incurred under any of clauses
(i), (ii) and (vi) through (xiii) above, the aggregate amount of such
Indebtedness outstanding at the time of such refinancing, in each case,
after giving effect to any mandatory reductions in principal or other
repayments required under the agreement or instrument governing such
Indebtedness; (b) such Refinancing Indebtedness shall be subordinated in
right of payment to the Notes at least to the same
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<PAGE> 25
extent as the Indebtedness to be refinanced; (c) such Refinancing
Indebtedness shall have an Average Life and Stated Maturity equal to, or
greater than, the Average Life and Stated Maturity of the Indebtedness to
be refinanced at the time of such incurrence; (d) the proceeds of such
Refinancing Indebtedness, if incurred by a Restricted Subsidiary of the
Company, shall not be used to refinance Indebtedness of the Company or
another Subsidiary of the Company; and (e) the incurrence of any such
Refinancing Indebtedness is substantially simultaneous with the refinancing
of the Indebtedness to be refinanced.
For purposes of this Limitation on Additional Indebtedness covenant, the
accretion of original issue discount on Indebtedness shall not be deemed to be
an incurrence of Indebtedness.
Limitation on Sale or Issuance of Preferred Stock of Restricted
Subsidiaries. The Company shall not (i) permit any of its Restricted
Subsidiaries to issue or sell to any Person except the Company or a Wholly-Owned
Subsidiary of the Company that is a Restricted Subsidiary any preferred stock of
any Restricted Subsidiary, or (ii) sell or otherwise convey or dispose of, or
permit any of its Wholly-Owned Subsidiaries that is a Restricted Subsidiary to
sell or otherwise convey or dispose of, any such preferred stock so issued or
sold to the Company or any of its Wholly-Owned Subsidiaries that is a Restricted
Subsidiary (except to the issuer thereof, the Company or any of its other
Wholly-Owned Subsidiaries that is a Restricted Subsidiary).
Limitation on Liens. The Company shall not, and shall not permit any
Restricted Subsidiary to, directly or indirectly, create, incur, assume or
suffer to exist any Lien on any Principal Property or on any shares of Capital
Stock of any Restricted Subsidiary of the Company held by the Company or any
other Restricted Subsidiary of the Company or on any Indebtedness owed by any
Restricted Subsidiary to the Company or any other Restricted Subsidiary of the
Company. The foregoing limitation does not apply to (i) Liens securing
obligations under the Notes, (ii) Liens securing obligations under the Company
Credit Facility (but such Liens shall not secure Indebtedness in excess of the
amount of Indebtedness then permitted to be incurred under clause (iii) of the
second paragraph of the Limitation on Additional Indebtedness covenant plus the
amount of any Indebtedness then outstanding pursuant to such clause (iii));
(iii) other Liens existing on the Closing Date; (iv) Liens with respect to the
assets of a Restricted Subsidiary granted by such Restricted Subsidiary to the
Company or a Restricted Subsidiary that is a Wholly-Owned Subsidiary of the
Company to secure Indebtedness owing to the Company or such Wholly-Owned
Subsidiary by such Restricted Subsidiary; (v) Liens permitted by clauses (iv),
(v), (x), (xiii) and (xiv) of the Limitation on Additional Indebtedness
covenant; (vi) Liens granted in connection with the extension, renewal or
refinancing, in whole or in part, of any Indebtedness under the Notes or
described in clause (iii) above; provided that (1) such new Indebtedness is
permitted to be incurred under the Limitation on Additional Indebtedness
covenant and (2) the amount of Indebtedness secured by such Lien is not
increased thereby; and provided, further, that the extension, renewal or
refinancing of Indebtedness of the Company may not be secured by Liens on assets
of any Restricted Subsidiary other than to the extent the Indebtedness being
extended, renewed or refinanced was at any time previously secured by Liens on
assets of such Restricted Subsidiary; and (vii) Permitted Liens.
Limitation on Certain Restrictions Affecting Subsidiaries. The Company
shall not, and shall not permit any of its Restricted Subsidiaries to, directly
or indirectly, create or enter into or otherwise cause or permit to exist or
become effective any agreement with any Person that would cause any consensual
encumbrance or restriction on the ability of any such Restricted Subsidiary to
(i) pay dividends or make any other distributions on its Capital Stock or any
other interest or participation in, or measured by, its profits, owned by the
Company or any of its Restricted Subsidiaries, (ii) pay or repay any
Indebtedness owed to the Company or any of its Restricted Subsidiaries which
owns Equity Interests in such Restricted Subsidiary, (iii) make loans or
advances to the Company or any of its Restricted Subsidiaries which owns Equity
Interests in such Restricted Subsidiary, (iv) transfer any of its properties or
assets to the Company or any of its Restricted Subsidiaries which owns Equity
Interests in such Restricted Subsidiary or (v) guarantee any Indebtedness of the
Company or any other Restricted Subsidiary of the Company except, in each case,
for such encumbrances or restrictions existing under or by reason of (a)
applicable law, (b) the Indenture, (c) customary nonassignment provisions of any
lease governing a leasehold interest of the Company or any of its Restricted
Subsidiaries, (d) any instrument governing Indebtedness of a Person acquired by
the Company or any of its Restricted Subsidiaries at the time of such
acquisition, which encumbrance or restriction is not applicable to
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any Person, or the properties or assets of any Person, other than the Person so
acquired, (e) agreements existing as of the issue date of the Original Notes,
(f) the Company Credit Facility, (g) the Broan Limited Credit Facility, (h) any
other agreement pursuant to which any Restricted Subsidiary of the Company
incurs Indebtedness in accordance with the Limitation on Additional Indebtedness
covenant and (i) any agreement effecting a refinancing of Indebtedness issued
pursuant to any agreement or instrument referred to in clause (d), (e), (f), (g)
or (h) above, provided that the terms and conditions of any such encumbrances
and restrictions are not materially less favorable to the Holders than those
under the agreement or instrument evidencing the Indebtedness being refinanced.
The foregoing shall not restrict the ability of any Restricted Subsidiary
of the Company to grant any Lien to the extent otherwise permitted in the
Indenture.
Repurchase upon Change of Control. See "-- Change of Control" above.
Limitation on Use of Proceeds from Asset Sales. The Company shall not, and
shall not permit any of its Restricted Subsidiaries to, directly or indirectly,
consummate any Asset Sale unless (i) the Company or such Restricted Subsidiary,
as the case may be, receives consideration at the time of any such Asset Sale
having a value (including the Fair Market Value of any non-cash consideration)
at least equal to the Fair Market Value of the securities or assets being sold
or otherwise disposed of, and (ii) at least 75% of the consideration from such
Asset Sale is received in the form of cash, Cash Equivalents (together with
cash, "Cash Proceeds") or indebtedness for borrowed money of the Company or such
Restricted Subsidiary that is assumed by the transferee of any such assets or
any such indebtedness of any Restricted Subsidiary of the Company whose stock is
purchased by the transferee. Any Net Cash Proceeds (a) in excess of the amount
of cash applied by the Company or any Restricted Subsidiary of the Company
during the period beginning 12 months prior to the date of the Asset Sale (but
not prior to the issue date of the Original Notes) and ending 12 months after
the date of such Asset Sale to purchase any business that is, or any properties
and assets used primarily in, the same or a related business as those owned and
operated by the Company and its Subsidiaries as of the issue date of the
Original Notes or at the date of such Asset Sale and (b) not applied within 12
months after the date of the Asset Sale to reduce Indebtedness of the Company
(other than Indebtedness which is subordinated by its terms to the Notes) or any
Restricted Subsidiary shall be deemed to be "Excess Proceeds." When the
aggregate amount of Excess Proceeds exceeds $15,000,000, the Company shall make
an offer (the "Excess Proceeds Offer") to apply the Excess Proceeds to purchase
the Notes. The Excess Proceeds Offer must be in cash in an amount equal to 100%
of the principal amount plus accrued and unpaid interest, if any, thereon and
Liquidated Damages, if any, to the date fixed for the closing of such offer,
substantially in accordance with the procedures for a Change of Control Offer
described in the Repurchase upon Change of Control covenant. To the extent that
the aggregate amount of Notes tendered pursuant to the Excess Proceeds Offer is
less than the Excess Proceeds, the Company may use the remaining Excess Proceeds
for general corporate purposes and such amounts shall no longer be deemed Excess
Proceeds. If the aggregate principal amount of Notes surrendered by Holders
exceeds the amount of Excess Proceeds, the Trustee shall select the Notes to be
purchased on a pro rata basis, subject to the limitation on the authorized
denominations of the Notes.
The Company will comply with the requirements of Rule 14e-1 under the
Exchange Act and any other securities laws and regulations thereunder to the
extent such laws are applicable in connection with the repurchase of Notes
pursuant to an Excess Proceeds Offer.
Limitation on Transactions with Affiliates. Except as otherwise permitted
by the Indenture, neither the Company nor any of its Restricted Subsidiaries
shall make any Investment, loan, advance, guaranty or capital contribution to,
or for the benefit of, or sell, lease or otherwise transfer or dispose of any of
its properties or assets to, or for the benefit of, or purchase or lease any
property or assets from, or enter into or amend any contract, agreement or
understanding with, or for the benefit of, any Affiliate of the Company or any
of its Restricted Subsidiaries, unless (i) such transaction or series of
transactions is in the best interests of the Company or such Restricted
Subsidiary based on all relevant facts and circumstances; (ii) such transaction
or series of transactions is fair to the Company or such Restricted Subsidiary
and on terms that are no less favorable to the Company or such Restricted
Subsidiary, as the case may be, than those that could have been
25
<PAGE> 27
obtained in a comparable transaction on an arms' length basis from a Person that
is not an Affiliate of the Company or any of its Restricted Subsidiaries; and
(iii) (a) with respect to a transaction or series of related transactions
involving aggregate payments in excess of $2,500,000, the Board of Directors and
a majority of the Disinterested Directors shall approve such transaction or
series of transactions by a Board Resolution evidencing their determination that
such transaction or series of transactions complies with clauses (i) and (ii)
above, and (b) with respect to a transaction or series of transactions involving
aggregate payments equal to or greater than $10,000,000, the Company receives a
written opinion from a nationally recognized investment bank or valuation firm
or, with respect to a transaction requiring the valuation of real property, a
nationally recognized real estate appraisal firm, that such transaction or
series of transactions is fair to the Company from a financial point of view.
Certain transactions subject to this covenant, such as the repurchase of Capital
Stock from, or an Investment in, an Affiliate of the Company or any of its
Restricted Subsidiaries may also be subject to the Limitation on Restricted
Payments covenant.
The foregoing limitation shall not apply to: (i) any payment of money or
issuance of securities by the Company or any Restricted Subsidiary of the
Company pursuant to employment agreements or arrangements and employee benefit
plans, including reimbursement or advancement of out-of-pocket expenses and
directors' and officers' liability insurance; (ii) reasonable and customary
payments and other benefits (including indemnification) provided to directors
for service on the Board of Directors of the Company or any of its Restricted
Subsidiaries and reimbursement of expenses related thereto; or (iii)
transactions between the Company and any Restricted Subsidiary of the Company,
or between one Restricted Subsidiary of the Company and another Restricted
Subsidiary of the Company, provided that not more than 20% of such Restricted
Subsidiary is owned by any Affiliate of the Company or any of Restricted
Subsidiaries (other than the Company or a Wholly-Owned Subsidiary of the
Company).
Limitation on Guaranties by Subsidiaries. The Company shall not permit any
Restricted Subsidiary of the Company, directly or indirectly, to assume,
guarantee or in any other manner become liable with respect to any Indebtedness
of the Company or any Subsidiary Guarantor (other than the Notes), unless (a)
such liability is in respect of the Company Credit Facility or (b) such
Restricted Subsidiary is a Subsidiary Guarantor or simultaneously executes and
delivers (i) to the Company and the Trustee a supplemental indenture to the
Indenture providing for a Subsidiary Guaranty of the Notes by such Restricted
Subsidiary and any other Subsidiary Guarantors having such terms as are set
forth in an exhibit to the Indenture and (ii) to the Trustee a Subsidiary
Guaranty. Notwithstanding the foregoing, in the event that a Subsidiary
Guarantor is released from all obligations which pursuant to the first sentence
of this paragraph obligate it to become a Subsidiary Guarantor, such Subsidiary
Guarantor shall be deemed automatically and unconditionally released from all
obligations under its Subsidiary Guaranty without any further action required on
the part of the Trustee or any Holder. In addition, (i) upon the designation of
any Subsidiary Guarantor as an Unrestricted Subsidiary in compliance with the
terms of the Indenture or (ii) upon any sale or disposition (by merger or
otherwise) of any Subsidiary Guarantor by the Company or a Restricted Subsidiary
of the Company to any Person that is not an Affiliate of the Company or any of
its Restricted Subsidiaries which is otherwise in compliance with the terms of
the Indenture, such Subsidiary Guarantor will be deemed to be released from all
obligations under its Subsidiary Guaranty.
No Lien on the properties or assets of any Restricted Subsidiary of the
Company permitted by the Limitation on Liens covenant shall constitute a
guaranty of the payment of any Indebtedness of the Company for purposes of this
Limitation on Guaranties by Subsidiaries covenant.
The provisions of this Limitation on Guaranties by Subsidiaries covenant
shall cease to have further force and effect (and if there then exists any
Subsidiary Guarantor, such Subsidiary Guarantor will be deemed to be released
from all obligations under its Subsidiary Guaranty) at such time as the similar
covenant in the indenture governing the Company's 9 7/8% Notes shall cease to
have further force and effect (whether by reason of amendment, redemption or
repayment of such Indebtedness or otherwise), provided, however, that if the
instrument or other agreement governing any Indebtedness incurred to refinance
the 9 7/8% Notes includes such a similar covenant, the provisions of this
Limitation on Guaranties by Subsidiaries covenant shall continue in full force
and effect for so long as such similar covenant remains in force and effect.
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Payments for Consents. Neither the Company nor any of its Subsidiaries
shall, directly or indirectly, pay or cause to be paid any consideration whether
by way of interest, fee or otherwise, to any Holder of any Notes for or as an
inducement to any consent, waiver or amendment of any of the terms or provisions
of the Indenture or the Notes unless such consideration is offered to be paid or
agreed to be paid to all Holders of the Notes which so consent, waive or agree
to amend in the time frame set forth in solicitation documents relating to such
consent, waiver or agreement.
Provision of Reports. The Indenture provides that whether or not required
by the rules and regulations of the Commission, so long as any Notes are
outstanding, the Company will furnish to the Holders of Notes (i) all quarterly
and annual financial information that would be required to be contained in a
filing with the Commission on Forms 10-Q and 10-K if the Company were required
to file such Forms, including a "Management's Discussion and Analysis of
Financial Condition and Results of Operations" that describes the financial
condition and results of operations of the Company and its Subsidiaries and,
with respect to the annual information only, a report thereon by the Company's
independent certified public accountants and (ii) all reports that would be
required to be filed with the Commission on Form 8-K if the Company were
required to file such reports. In addition, whether or not required by the rules
and regulations of the Commission, the Company will file a copy of all such
information with the Commission for public availability (unless the Commission
will not accept such a filing) and make such information available to investors
or prospective investors who request it in writing.
MERGER, CONSOLIDATION OR TRANSFER OF ASSETS
The Company shall not consolidate with, merge with or into, or transfer all
or substantially all of its assets (as an entirety or substantially as an
entirety in one transaction or a series of related transactions) to, any Person
or permit any Person to merge with or into it, or permit any of its Subsidiaries
to enter into any such transaction or transactions if such transaction or
transactions in the aggregate would result in a transfer of all or substantially
all of the assets of the Company and its Subsidiaries on a consolidated basis,
unless: (1) the Company shall be the continuing Person, or the Person, if other
than the Company, formed by such consolidation or into which the Company is
merged or to which the properties and assets of the Company or of the Company
and its Subsidiaries on a consolidated basis, substantially as an entirety, are
transferred shall be a corporation organized and existing under the laws of the
United States or any state thereof or the District of Columbia and shall
expressly assume, by an indenture supplemental to the Indenture, executed and
delivered to the Trustee, in form satisfactory to the Trustee, all the
obligations of the Company under the Notes and the Indenture, and the Indenture
remains in full force and effect; (2) immediately before and immediately after
giving effect to such transaction, no Event of Default and no Default shall have
occurred and be continuing; (3) the Person which is formed by or survives such
consolidation or merger or to which such assets are transferred (the "surviving
entity"), after giving pro forma effect to such transaction, could incur $1.00
of additional Indebtedness under the first paragraph of the Limitation on
Additional Indebtedness covenant; (4) immediately after giving effect to such
transaction on a pro forma basis the Consolidated Net Worth of the surviving
entity shall be equal to or greater than the Consolidated Net Worth of the
Company immediately before such transaction; and (5) each Subsidiary Guarantor,
if any, unless it is the other party to the applicable transaction described
above or its Subsidiary Guaranty, after giving effect to such transaction, is to
be released in accordance with the terms hereof and of such Subsidiary Guaranty,
shall have confirmed by supplemental indenture that its Subsidiary Guaranty
shall apply to the obligations of the Company or the surviving entity under the
Indenture.
In connection with any such consolidation, merger or transfer, the Company
shall deliver, or cause to be delivered, to the Trustee, in form and substance
reasonably satisfactory to the Trustee, an Officers' Certificate and an opinion
of counsel, each stating that such consolidation, merger or transfer and the
supplemental indenture in respect thereto comply with the Indenture and that all
conditions precedent therein provided for relating to such transactions have
been complied with.
Upon any consolidation or merger, or any transfer of all or substantially
all of the assets of the Company and its Subsidiaries on a consolidated basis,
in accordance with the second preceding paragraph, the successor Person formed
by such consolidation or into which the Company is merged or the successor
Person to which
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such transfer is made shall succeed to, and be substituted for, and may exercise
every right and power of, the Company under the Indenture with the same effect
as if such successor Person had been named as the Company in the Indenture, and
when a successor Person assumes all the obligations of its predecessor under the
Indenture or the Notes, the predecessor shall be released from those
obligations; provided, however, that in the case of a transfer by lease, the
predecessor shall not be released from the payment of principal of, premium, if
any, interest and Liquidated Damages, if any, on the Notes.
With respect to the transfer of all or substantially all of the assets of
the Company or of the assets of the Company and its Subsidiaries on a
consolidated basis, there is no precise established definition of the term
"substantially all" under applicable law. Accordingly, if the Company were to
engage in transactions in which it disposed of less than all of its assets or
the Company or a Subsidiary of the Company were to engage in transactions in
which less than all of the assets of the Company and its Subsidiaries on a
consolidated basis were disposed of, a question could arise as to whether such
disposition was of "substantially all" of the assets of the Company or of the
Company and its Subsidiaries on a consolidated basis, as the case may be, and,
therefore, whether the transaction was subject to the foregoing provisions of
the Indenture.
EVENTS OF DEFAULT AND REMEDIES
The Indenture provides that each of the following constitutes an "Event of
Default": (1) the Company defaults in the payment, when due and payable, of (i)
interest on and Liquidated Damages, if any, with respect to any Note and the
default continues for a period of 30 days, or (ii) principal of or premium, if
any, on any Notes when the same becomes due and payable at maturity, by
acceleration, on the Redemption Date, on the Change of Control Payment Date, on
any payment date respecting an Excess Proceeds Offer or otherwise; (2) the
Company fails to comply with any of the provisions set forth under "Merger,
Consolidation or Transfer of Assets" above; (3) the Company fails to comply with
any of its covenants or agreements in the Notes or the Indenture (other than
those referred to in clause (1) or (2) above), or any Subsidiary Guarantor fails
to comply with any of its covenants or agreements in the Indenture or its
Subsidiary Guaranty, and in either case such failure continues for the period
and after receipt by the Company of the notice specified below; (4) default
under any mortgage, indenture or instrument under which there may be issued or
by which there may be secured or evidenced any indebtedness for money borrowed
by the Company or any of its Restricted Subsidiaries (or the payment of which is
guaranteed by the Company or any of its Restricted Subsidiaries), whether such
indebtedness or guaranty is now existing or hereafter created, if such default
shall constitute a failure to pay any portion of the principal of such
indebtedness when due and payable or if as a result of such default the maturity
of such indebtedness has been accelerated prior to its stated maturity and, in
either case, the principal amount of such indebtedness, together with the
principal amount of any other such indebtedness for money borrowed which has not
been paid when due and payable or the maturity of which has been accelerated as
a result of such default, aggregates $15,000,000 or more; (5) the Company or any
of its Significant Subsidiaries that is a Restricted Subsidiary (or any group of
Restricted Subsidiaries that, taken together, would constitute a Significant
Subsidiary) pursuant to or within the meaning of any bankruptcy law: (A)
commences a voluntary case or proceeding; (B) consents to the entry of an order
for relief against it in an involuntary case or proceeding; (C) consents to the
appointment of a custodian of it or for all or substantially all of its
property; (D) makes a general assignment for the benefit of its creditors; or
(E) admits in writing its inability to pay its debts generally as they become
due; (6) a court of competent jurisdiction enters an order or decree under any
bankruptcy law that: (A) is for relief against the Company or any of its
Significant Subsidiaries that is a Restricted Subsidiary (or any group of
Restricted Subsidiaries that, taken together, would constitute a Significant
Subsidiary) in an involuntary case or proceeding; (B) appoints a custodian of
the Company or any of its Significant Subsidiaries that is a Restricted
Subsidiary (or any group of Restricted Subsidiaries that, taken together, would
constitute a Significant Subsidiary) for all or substantially all of its
properties; (C) orders the liquidation of the Company or any of its Significant
Subsidiaries that is a Restricted Subsidiary (or any group of Restricted
Subsidiaries that, taken together, would constitute a Significant Subsidiary)
and (D) remains unstayed and in effect for 60 days; (7) final judgments for the
payment of money which in the aggregate exceed $15,000,000 shall be rendered
against the Company or any of its Restricted Subsidiaries by a court and shall
remain unstayed or undischarged for a period of 60 days; or (8) any Subsidiary
Guaranty ceases to be in full force and effect or is declared null and void, or
any Subsidiary
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Guarantor denies that it has any further liability under any Subsidiary Guaranty
or gives notice to such effect (in each case other than by reason of the
termination of the Indenture or the release of such Subsidiary Guaranty in
accordance with the terms of the Indenture and such Subsidiary Guaranty) and
such condition shall have continued for the period and after receipt by the
Company of the notice specified below.
A Default under clause (3) or (8) above is not an Event of Default until
the Trustee notifies the Company, or the Holders of at least 25% in aggregate
principal amount of the Notes at the time outstanding notify the Company and the
Trustee, of the Default and the Company does not cure such Default within 30
days after receipt of such notice. Any such notice must specify the Default,
demand that it be remedied and state that such notice is a "Notice of Default."
In the case of any Event of Default (other than as a result of the failure
to comply with the Repurchase upon Change of Control covenant) occurring by
reason of any willful action (or inaction) taken (or not taken) by or on behalf
of the Company with the intention of avoiding payment of the premium which the
Company would have to pay if the Company then had elected to redeem the Notes,
an equivalent premium shall also become and be immediately due and payable to
the extent permitted by law, anything in the Indenture or in the Notes contained
to the contrary notwithstanding.
In the case of an Event of Default as a result of a failure to comply with
the Repurchase upon Change of Control covenant occurring by reason of any
willful action (or inaction) taken (or not taken) by or on behalf of the Company
with the intention of avoiding payment of the premium which the Company would
have to pay pursuant to the Repurchase upon Change of Control covenant, such
premium shall also become and be immediately due and payable at such time as the
principal and interest on the Notes become due and payable pursuant to the
acceleration provisions of the Indenture to the extent permitted by law,
anything in the Indenture or in the Notes contained to the contrary
notwithstanding.
If any Event of Default (other than an Event of Default specified in clause
(5) or (6) above) occurs and is continuing, the Trustee or the Holders of at
least 25% of the principal amount of the Notes then outstanding, by written
notice to the Company (and to the Trustee if such notice is given by such
Holders), may, and such Trustee at the request of such Holders shall, declare
all unpaid principal of, premium, if any, and accrued interest on and Liquidated
Damages, if any, with respect to the Notes to be due and payable immediately. If
an Event of Default specified in clause (5) or (6) above occurs, all unpaid
principal of, premium, if any, and accrued interest on and Liquidated Damages,
if any, with respect to the Notes then outstanding shall ipso facto become and
be immediately due and payable without declaration or other act on the part of
the Trustee or any Holder. The Holders of at least a majority in principal
amount of the Notes then outstanding by written notice to the Trustee may
rescind an acceleration and its consequences (except an acceleration due to
default in payment of principal of, premium, if any, and accrued interest on and
Liquidated Damages, if any, with respect to, the Notes) if all existing Events
of Default have been cured or waived except non-payment of principal of,
premium, if any, and accrued interest on and Liquidated Damages, if any, with
respect to, the Notes that have become due solely because of the acceleration.
Subject to certain restrictions set forth in the Indenture, the Holders of at
least a majority in principal amount of the outstanding Notes by notice to the
Trustee may waive an existing Default or Event of Default and its consequences,
except a default in the payment of principal of, premium, if any, or interest on
and Liquidated Damages, if any, with respect to any Note or a Default under a
provision which requires consent of all Holders to amend. When a Default or
Event of Default is waived, it is cured and ceases. A Holder of Notes may not
pursue any remedy with respect to the Indenture or the Notes unless: (i) the
Holder gives to the Trustee written notice that an Event of Default is
continuing; (ii) the Holders of at least 25% in aggregate principal amount of
any Notes outstanding make a written request to the Trustee to pursue the
remedy; (iii) such Holder or Holders offer to the Trustee reasonable indemnity
or security against any loss, liability or expense satisfactory to the Trustee;
(iv) the Trustee does not comply with the request within 30 days after receipt
of the request and the offer of indemnity or security; and (v) during such
30-day period the Holders of a majority in aggregate principal amount of the
outstanding Notes do not give the Trustee a direction which is inconsistent with
the request.
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DISCHARGE OF THE INDENTURE AND THE NOTES
If, at any time prior to the Stated Maturity of the Notes or the date of
redemption of all outstanding Notes, the Company irrevocably deposits with the
Trustee money and/or direct non-callable obligations of, or non-callable
obligations guaranteed by, the United States of America for the payment of which
guarantee or obligation the full faith and credit of the United States is
pledged, maturing as to principal and interest in such amounts and at such times
as are sufficient, without consideration of any reinvestment of such interest,
to pay principal of, premium, if any, and accrued interest on and Liquidated
Damages, if any, with respect to, the outstanding Notes (other than replaced
Notes) to maturity or redemption, as the case may be, in accordance with the
terms of the Indenture and the Notes, the Indenture and each Subsidiary
Guaranty, if any, shall cease to be of further effect as to all outstanding
Notes (except, among other things, as to (i) remaining rights of registration of
transfer and substitution and exchange of the Notes, (ii) rights of Holders to
receive payment of principal of, premium, if any, and accrued interest on and
Liquidated Damages, if any, with respect to the Notes, and (iii) the rights,
obligation and immunities of the Trustee).
TRANSFER AND EXCHANGE
A Holder may transfer or exchange Notes in accordance with the Indenture.
The Registrar may require a Holder, among other things, to furnish appropriate
endorsements and transfer documents, and to pay any taxes and fees required by
law or permitted by the Indenture. The Registrar is not required to transfer or
exchange any Note selected for redemption. Also, the Registrar is not required
to transfer or exchange any Note for a period of 15 days before a selection of
Notes to be redeemed.
The registered Holder of a Note will be treated as the owner of it for all
purposes.
AMENDMENT, SUPPLEMENT AND WAIVER
Subject to certain exceptions, with the written consent of the Holders of
at least a majority in aggregate principal amount of the Notes then outstanding,
the Company and the Trustee may amend the Indenture or the Notes, or may waive
compliance by the Company or any Subsidiary Guarantor with any provision of the
Indenture, the Notes or such Subsidiary Guarantor's Subsidiary Guaranty.
However, without the consent of each Holder affected, a waiver or an amendment
to the Indenture or the Notes may not: (i) reduce the percentage of principal
amount of the Notes whose Holders must consent to an amendment or waiver; (ii)
make any change to the Stated Maturity of the principal of, premium, if any, or
any interest on or Liquidated Damages, if any, with respect to, the Notes or any
Redemption Price thereof, or impair the right to institute suit for the
enforcement of any such payment or make any Note payable in money or securities
other than that stated in the Note; (iii) waive a default in the payment of the
principal of, premium, if any, or interest on and Liquidated Damages, if any,
with respect to, any Note; (iv) make any change in the provisions of the
Repurchase upon Change of Control covenant or the Limitation on Use of Proceeds
of Asset Sales covenant; (v) release any Subsidiary Guarantor from any of its
obligations under its Subsidiary Guaranty or the Indenture other than in
compliance with the terms of the Indenture and such Subsidiary Guaranty; or (vi)
make any change in the amendment provisions of the Indenture.
Notwithstanding the foregoing, without the consent of any Holder, the
Company and the Trustee may amend or supplement the Indenture or the Notes (i)
to cure any ambiguity, defect or inconsistency; (ii) to comply with the
provisions described under "Merger, Consolidation or Transfer of Assets"; (iii)
to provide for uncertificated Notes in addition to or in place of certificated
Notes so long as such uncertificated Notes are in registered form for purposes
of the Internal Revenue Code of 1986, as amended; (iv) to make any other change
that does not adversely affect the rights of any Holder; (v) to comply with any
requirement of the Commission in connection with the qualification of the
Indenture under the Trust Indenture Act; or (vi) to add any Subsidiary of the
Company as a Subsidiary Guarantor.
CONCERNING THE TRUSTEE
State Street Bank and Trust Company is the Trustee under the Indenture and
has been appointed by the Company as Registrar and Paying Agent with respect to
the Notes.
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The Indenture contains certain limitations on the rights of the Trustee,
should it become a creditor of the Company, to obtain payment of claims in
certain cases, or to realize certain property received in respect of any such
claim as security or otherwise. The Trustee will be permitted to engage in other
transactions; however, if it acquires any conflicting interest it must eliminate
such conflict within 90 days, or apply to the Commission for permission to
continue or resign.
The Holders of not less than a majority in principal amount of the then
outstanding Notes will have the right to direct the time, method and place of
conducting any proceeding for exercising any remedy available to the Trustee,
subject to certain exceptions. The Indenture provides that in case an Event of
Default shall occur and be continuing (and shall not be cured), the Trustee will
be required, in the exercise of its power, to use the degree of care and skill
of a prudent person in the conduct of his own affairs. Subject to such
provisions, the Trustee will be under no obligation to exercise any of its
rights or powers under the Indenture at the request of any Holders of Notes,
unless they shall have offered to the Trustee reasonable security or indemnity
satisfactory to it against any loss, liability or expense.
CERTAIN DEFINITIONS
Set forth below are certain defined terms used in the Indenture. Reference
is made to the Indenture for full disclosure of all such terms, as well as any
other capitalized terms used herein for which no definition is provided.
"Acquired Indebtedness" means, with respect to any Person, Indebtedness of
such Person (i) assumed in connection with an acquisition of assets or
properties from such Person or (ii) existing at the time such Person becomes a
Restricted Subsidiary of any other Person provided such Person was not
immediately prior thereto an Unrestricted Subsidiary (in each case other than
any Indebtedness incurred in connection with, or in contemplation of, such
acquisition or such Person becoming such a Restricted Subsidiary).
"Affiliate" means, with respect to any Person, any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. A Person shall be deemed to "control"
(including the correlative meanings, the terms "controlling", "controlled by"
and "under common control with") another Person if the controlling Person
possesses, directly or indirectly, the power to direct or cause the direction of
the management or policies of the controlled Person, whether through ownership
of voting securities, by agreement or otherwise.
"Allowable Subsidiary Loans" means Indebtedness of the Company to a
Restricted Subsidiary not to exceed the Net Cash Proceeds received by the
Company as a result of such Restricted Subsidiary becoming less than a
Wholly-Owned Subsidiary through the sale of Equity Interests in compliance with
the terms of the Indenture, provided that (i) all such Allowable Subsidiary
Loans are contractually subordinated in right of payment to the Notes and (ii)
the total amount of all Allowable Subsidiary Loans at any time outstanding does
not exceed $35,000,000.
"Asset Sale" means, with respect to any Person, the sale, lease, conveyance
or other transfer or disposition by such Person of any of its assets or
properties (including by way of a sale-and-leaseback and including the sale,
issuance or other transfer of any of the Capital Stock of any Subsidiary of such
Person), in a single transaction or through a series of related transactions,
for aggregate consideration received by such Person or a Subsidiary of such
Person (but if such Person is the Company or any Restricted Subsidiary, only if
such Subsidiary is a Restricted Subsidiary), net of out-of-pocket costs relating
thereto (including, without limitation, legal, accounting and investment banking
fees and sales commissions), in excess of $5,000,000. For purposes of this
definition, consideration shall include, without limitation, any indebtedness
for borrowed money of such Person or such Subsidiary that is assumed by the
transferee of any assets or any such indebtedness of any Subsidiary of such
Person whose stock is purchased by the transferee. Notwithstanding anything to
the contrary in the foregoing provisions of this definition, the term "Asset
Sale", with respect to any Person, shall not include (i) the sale, lease or
other transfer or disposition of assets acquired and held for resale in the
ordinary course of business; (ii) the sale, lease or other transfer or
disposition of assets in accordance with the provisions described under "Merger,
Consolidation or Transfer of Assets"; (iii) the sale, lease or other transfer or
disposition of damaged, worn out or obsolete property in the ordinary course of
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business or other property no longer necessary for the proper conduct of the
business of such Person or its Subsidiaries; (iv) the abandonment of assets or
properties which are no longer useful in the business of such Person or its
Subsidiaries and is not readily saleable; (v) the granting of any Lien permitted
under the Limitation on Liens covenant (and any foreclosure or other sale under
any such Lien, except to the extent there are surplus proceeds from such
foreclosure); (vi) any sale, lease, assignment or other disposition by such
Person or its Subsidiaries if such Person has outstanding senior debt securities
all of which are rated BBB- or higher by S&P and have not been placed on credit
watch by S&P for a possible downgrade or are rated Baa3 or higher by Moody's and
have not been placed on credit watch by Moody's for a possible downgrade; or
(vii) the sale or other transfer or disposition of receivables in connection
with an asset securitization transaction by such Person or its Subsidiaries.
"Average Life" means, as of the date of determination, with respect to any
debt security, the quotient obtained by dividing (i) the sum of the products of
the number of years from the date of determination to the date of each
successive scheduled principal payment (assuming the exercise by the obligor of
such debt security of all unconditional (other than as to the giving of notice)
extension options of each such scheduled payment date) of such debt security
multiplied by the amount of such principal payment by (ii) the sum of all such
principal payments.
"Broan Limited Credit Facility" means a credit facility between Broan
Limited or any of the Canadian Subsidiaries, and one or more banks or other
institutional lenders, as the same may be amended, extended, amended and
restated, supplemented or otherwise modified or replaced from time to time.
"Canadian Subsidiary" means any Subsidiary of Broan Limited and any
Subsidiary of the Company whose headquarters is located in Canada.
"Capital Lease Obligations" means, with respect to any Person, all
obligations under leases of property by such Person as lessee which would be
capitalized on a balance sheet of such Person prepared in accordance with GAAP,
and for purposes of the Indenture the amount of such obligations at any time
shall be the aggregate capitalized amount thereof at such time, as determined in
accordance with GAAP.
"Capital Stock" means any and all shares, interests, participations, rights
or other equivalents (however designated) of corporate stock (including common
or preferred stock) or partnership interests.
"Cash Equivalents" means (i) any evidence of Indebtedness, maturing not
more than 365 days after the date of acquisition, issued or fully guaranteed or
insured by the United States of America, or an instrumentality or agency thereof
(provided that the full faith and credit of the United States of America is
pledged in support thereof), (ii) any certificate of deposit, overnight bank
deposit or bankers' acceptance, maturing not more than 365 days after the date
of acquisition, issued by, or time deposit of, a commercial banking institution
having unsecured long-term debt (or whose holding company has unsecured
long-term debt) rated, at the time as of which any Investment therein is made,
BBB-- or better by S&P or Moody's or the equivalent of such rating by a
successor rating agency, (iii) commercial paper, maturing not more than 90 days
after the date of acquisition, issued by a corporation (other than an Affiliate
or Subsidiary of the Company) organized and existing under the laws of the
United States of America or any State thereof or the District of Columbia which
is rated, at the time as of which any Investment therein is made, P-1 or better
by Moody's or A-1 or better by S&P, or the equivalent of such rating by a
successor rating agency, (iv) Investments in mutual funds, money market funds,
investment pools and other savings vehicles, substantially all of the assets of
which are invested in Investments described in clause (i), (ii) or (iii) above,
and (v) in the case of Broan Limited and the Canadian Subsidiaries, (a) any
evidence of Indebtedness, maturing not more than 365 days after the date of
acquisition, issued or fully guaranteed or insured by Canada or any
instrumentality or agency thereof (provided that the full faith and credit of
Canada is pledged in support thereof), (b) any certificate of deposit, overnight
bank deposit or bankers' acceptance, maturing not more than 365 days after the
date of acquisition, issued by, or time deposit of, a commercial banking
institution having unsecured long-term debt (or whose holding company has
unsecured long-term debt) rated, at the time as of which any Investment therein
is made, A or better by Dominion Bond Rating Services or the equivalent of such
rating by a successor rating agency and (c) commercial paper, maturing not more
than 90 days after the date of acquisition, issued by a corporation (other than
an Affiliate or Subsidiary of the
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Company) organized and existing under the laws of Canada or any province thereof
which is rated, at the time as of which any Investment therein is made, R-1 or
better by Dominion Bond Rating Services or the equivalent of such rating by a
successor rating agency.
"Commodity Agreement" means any agreement or arrangement designed to
protect the Company or any of its Restricted Subsidiaries against fluctuations
in the prices of commodities used by the Company or any of its Subsidiaries in
the ordinary course of business.
"Company Credit Facility" means one or more credit facilities between the
Company or any of its Subsidiaries and one or more banks or other institutional
lenders, as the same may be amended, extended, amended and restated,
supplemented or otherwise modified or replaced from time to time, specifically
designated in each such credit facility as a "Company Credit Facility." All
Company Credit Facilities are referred to collectively in the Indenture as the
"Company Credit Facility."
"Consolidated Amortization Expense" means, with respect to any Person for
any period, the amortization expense of such Person and its Subsidiaries (or if
such Person is the Company, the amortization expense of the Company and its
Restricted Subsidiaries), determined on a consolidated basis for such period in
accordance with GAAP, excluding any amortization expense included in
Consolidated Interest Expense.
"Consolidated Cash Flow" means, with respect to any Person for any period,
the sum of, without duplication, (i) Consolidated Net Income of such Person for
such period, (ii) Consolidated Interest Expense of such Person for such period,
(iii) Consolidated Income Tax Expense of such Person for such period, (iv)
Consolidated Depreciation Expense of such Person for such period, (v)
Consolidated Amortization Expense of such Person for such period, and (vi) the
amount, not to exceed 10% of Consolidated Cash Flow of such Person for such
period (which amount shall be excluded in determining such Consolidated Cash
Flow), by which (A) other non-cash items of expense that reduce Consolidated Net
Income of such Person for such period exceed (B) other non-cash items of expense
that increase Consolidated Net Income of such Person for such period.
"Consolidated Cash Flow Coverage Ratio" means, with respect to any Person
for any period, the ratio of Consolidated Cash Flow of such Person for such
period to Consolidated Interest Expense of such Person for such period;
provided, however, that, Consolidated Cash Flow and Consolidated Interest
Expense shall be calculated on a pro forma basis after giving effect, as if
occurring at the beginning of such period, to (i) the incurrence of Indebtedness
giving rise to the need to calculate the Consolidated Cash Flow Coverage Ratio
and the retirement of any Indebtedness refinanced with the proceeds of such
Indebtedness, (ii) the incurrence, during such period or since the last day of
such period, of any Indebtedness (other than Indebtedness incurred for working
capital purposes), and the retirement of any Indebtedness refinanced with the
proceeds of such Indebtedness, (iii) the acquisition by such Person (directly or
through a Restricted Subsidiary of such Person if such Person is the Company and
directly or through a Subsidiary of such Person if such Person is not the
Company) of any company or business during such period or since the last day of
such period and (iv) the sale or other disposition of assets or properties
outside the ordinary course of business by such Person (directly or through a
Restricted Subsidiary of such Person if such Person is the Company and directly
or through a Subsidiary of such Person if such Person is not the Company) and
the actual application of the proceeds therefrom during such period or since the
last day of such period.
"Consolidated Depreciation Expense" means, with respect to any Person for
any period, the depreciation and depletion expense of such Person and its
Subsidiaries (or if such Person is the Company, the depreciation and depletion
expense of the Company and its Restricted Subsidiaries), determined on a
consolidated basis for such period in accordance with GAAP.
"Consolidated Income Tax Expense" means, with respect to any Person for any
period, the provision for federal, state, local and foreign income taxes
(including franchise, net worth or similar taxes) of such Person and its
Subsidiaries (or if such Person is the Company, the provision for such taxes of
the Company and its Restricted Subsidiaries) for such period, determined on a
consolidated basis in accordance with GAAP.
"Consolidated Interest Expense" means, with respect to any Person for any
period, without duplication, the sum of (i) the interest expense of such Person
and its Subsidiaries (or if such Person is the Company, the
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interest expense of the Company and its Restricted Subsidiaries) for such
period, determined on a consolidated basis in accordance with GAAP, including,
without limitation, all original issue discount and other interest portion of
any deferred payment Indebtedness and all commissions, discounts and other fees
and charges owed with respect to letters of credit and bankers' acceptance
financing less any interest income included in Consolidated Net Income for such
period, but excluding any deferred financing fees otherwise includible in
Consolidated Interest Expense for such period; (ii) the interest component of
Capital Lease Obligations paid, accrued and/or scheduled to be paid or accrued
by such Person and its Subsidiaries (or if such Person is the Company, such
interest expense paid, accrued and/or scheduled to be paid or accrued by the
Company and its Restricted Subsidiaries) during such period as determined on a
consolidated basis in accordance with GAAP; and (iii) all cash dividends or
other distributions declared or paid on any Capital Stock (other than common
stock or preferred stock that is not Redeemable Stock or, with respect to the
Company, Special Common Stock) of such Person and its Subsidiaries (or if such
Person is the Company, all such dividends or other distributions declared or
paid on any such Capital Stock of the Company and its Restricted Subsidiaries)
for such period as determined on a consolidated basis in accordance with GAAP;
provided, however, that any Indebtedness bearing a floating rate of interest
shall be computed as if the rate in effect on the date of computation had been
the applicable rate for the entire period.
"Consolidated Net Income" means, with respect to any Person for any period,
the aggregate net income (or loss) of such Person and its Subsidiaries (or if
such Person is the Company, the aggregate net income (loss) of the Company and
its Restricted Subsidiaries) for such period, before discontinued operations,
extraordinary items and the cumulative effect of a change in accounting
principles, determined on a consolidated basis in accordance with GAAP, provided
that there shall also be excluded from Consolidated Net Income (but only to the
extent included in calculating such Consolidated Net Income): (i) any net gains
or losses in respect of dispositions of assets other than in the ordinary course
of business; (ii) any gains from currency exchange transactions not in the
ordinary course of business consistent with past practice; (iii) any gains or
losses realized from the termination of any employee pension benefit plan; (iv)
any gains or losses realized upon the refinancing of any Indebtedness of such
Person or any of its Subsidiaries (or if such Person is the Company, any gains
or losses realized upon the refinancing of any Indebtedness of Company and its
Restricted Subsidiaries); (v) any gains or losses arising from the destruction
of property or assets due to fire or other casualty; (vi) any gains or losses
from the revaluation of property or assets; (vii) the net income (or loss) of
any Person that is not a Subsidiary of such first Person (or that is not a
Restricted Subsidiary if such first Person is the Company) except to the extent
of cash dividends or distributions paid to such first Person by such other
Person in such period; (viii) the net income (or loss) of any Subsidiary of such
first Person except to the extent of the interest of such Person in such
Subsidiary; (ix) the net income (or loss) of any Subsidiary of such Person that
is subject to any restriction or limitation on the payment of dividends and
other distributions (including loans or advances) by operation of the terms of
its charter or by agreement, instrument, judgment, decree, order or governmental
regulation applicable to such Subsidiary to the extent of such restriction or
limitation in such period; and (x) the excess of (a) the consolidated
compensation expense recorded by the Company in the computation of net earnings
of the Company in respect of shares of Capital Stock (other than Redeemable
Stock) or other Equity Interests awarded, pursuant to a plan or other
arrangement approved by the Board of Directors of the Company (or of a Reporting
Subsidiary, if applicable), to or for the benefit of any employee, officer or
director of the Company or any of its Subsidiaries or to or by any employee
stock ownership plan or similar trust for the benefit of any such employee,
officer or director, over (b) the amount of consolidated income tax benefit
recorded by the Company in connection with such consolidated compensation
expense of the Company.
"Consolidated Net Worth" means, with respect to any Person at any date of
determination, the sum of the Capital Stock, additional paid-in capital and
cumulative translation, pension and other adjustment account plus retained
earnings (or minus accumulated deficit), excluding amounts attributable to
Redeemable Stock, any Capital Stock convertible into Indebtedness, or Treasury
Stock, of such Person and its Restricted Subsidiaries, determined on a
consolidated basis in accordance with GAAP.
"Currency Agreement" means any foreign exchange contract, currency swap
agreement or other similar agreement or arrangement entered into in the ordinary
course of business and designed to protect the
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Company or any of its Restricted Subsidiaries against fluctuations in currency
values to or under which the Company or any of its Restricted Subsidiaries is a
party or a beneficiary on the issue date of the Original Notes or becomes a
party or a beneficiary thereafter.
"Default" means any event which is, or after notice or passage of time or
both would be, an Event of Default.
"Disinterested Director" means, with respect to any transaction or series
of transactions in respect of which the Board of Directors of the Company is
required to deliver a Board Resolution under the Indenture, a member of such
Board of Directors who does not have any material direct or indirect financial
interest in or with respect to such transaction or series of transactions.
"Eligible Inventory" means, with respect to any Person, the finished goods,
raw materials and work-in-process of such Person less any applicable reserves,
each of the foregoing determined on the FIFO method of accounting in accordance
with GAAP.
"Eligible Receivables" means, with respect to any Person, the trade
receivables of such Person less the allowance for doubtful accounts, each of the
foregoing determined in accordance with GAAP.
"Equity Interests" means Capital Stock, warrants, options or other rights
to acquire Capital Stock (but excluding any debt security which is convertible
into, or exchangeable for, Capital Stock).
"Exchange Notes" means the Company's 9 1/4% Series B Senior Notes due March
15, 2007 issued in exchange for an Original Note pursuant to the Exchange Offer.
"Exchange Offer" means the offer by the Company to the Holders of all
outstanding Transfer Restricted Securities to exchange all such outstanding
Restricted Securities held by such Holders for the Company's 9 1/4% Senior
Series B Notes due March 15, 2007, in an aggregate principal amount equal to the
aggregate principal amount of the Transfer Restricted Securities tendered in
such exchange offer by such Holders.
"Exchange Offer Registration Statement" means the registration statement
under the Securities Act relating to the Exchange Offer, including the related
prospectus.
"Exempt Person" means (i) Richard L. Bready, (ii) any Person which is an
Affiliate of Richard L. Bready, and (iii) any other Affiliate of such Person so
long as such Person is an Affiliate of Richard L. Bready.
"Existing Indebtedness" means Indebtedness of the Company and its
Restricted Subsidiaries, in existence on the issue date of the Original Notes.
"Existing Investments" means (i) Investments of the Company and its
Restricted Subsidiaries, in existence on the issue date of the Original Notes
and (ii) Investments to be made pursuant to commitments authorized by the Board
of Directors of the Company prior to the issue date of the Original Notes (a) in
Ecological Engineering Associates, L.P. in an amount not to exceed $3.0 million
(including such Investments made prior to the issue date of the Original Notes)
and (b) in or related to a joint venture involving Universal-Rundle Corporation
in an amount not to exceed $10.0 million.
"Fair Market Value" means, with respect to any asset, the price which could
be negotiated in an arm's-length free market transaction, for cash, between a
willing seller and a willing buyer, neither of which is under pressure or
compulsion to complete the transaction; provided, however, that the Fair Market
Value of any asset or assets of the Company or any of its Subsidiaries shall be
determined by the Board of Directors of the Company or, if such subsidiary is a
Reporting Subsidiary, of such Reporting Subsidiary, acting in good faith, and
evidenced by a Board Resolution of the Company or such Reporting Subsidiary, as
the case may be, delivered to the Trustee.
"GAAP" means generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board or in such other statements by such
other entity as approved by a significant segment of the accounting profession,
from time to time; provided, however, that with respect to the obligations of
the Company described under "Certain Covenants" and "Merger,
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Consolidation or Transfer of Assets" and the definitions used therein, GAAP
shall be determined on the basis of such principles as in effect on the issue
date of the Original Notes.
"Indebtedness" means, with respect to any Person, without duplication, any
indebtedness, contingent or otherwise, (i) with respect to borrowed money
(whether or not the recourse of the lender is to the whole of the assets of such
Person or only to a portion thereof), or evidenced by bonds, notes, debentures
or similar instruments or consisting of reimbursement obligations with respect
to letters of credit, or (ii) representing the deferred and unpaid balance of
the purchase price of any property excluding any such balance that constitutes a
trade payable or an accrued liability, in each case arising in the ordinary
course of business, if and to the extent any of the foregoing indebtedness would
appear as a liability upon a balance sheet of such Person prepared on a
consolidated basis in accordance with GAAP, and shall also include, to the
extent not otherwise included, (a) any Capital Lease Obligations, (b) the
maximum fixed repurchase price of any Redeemable Stock, (c) indebtedness secured
by a Lien to which the property or assets owned or held by such Person is
subject, whether or not the obligations secured thereby shall have been assumed,
(d) guaranties of items that would be included within this definition to the
extent of such guaranties, and (e) net liabilities in respect of Commodity
Agreements, Currency Agreements and Interest Rate Agreements. For purposes of
the immediately preceding sentence, the maximum fixed repurchase price of any
Redeemable Stock which does not have a fixed repurchase price shall be
calculated in accordance with the terms of such Redeemable Stock as if such
Redeemable Stock were repurchased on any date on which Indebtedness shall be
required to be determined pursuant to the Indenture, provided that if such
Redeemable Stock is not then permitted to be repurchased, the repurchase price
shall be the book value of such Redeemable Stock. The amount of Indebtedness of
any Person at any date shall be without duplication (y) the outstanding balance
at such date of all unconditional obligations as described above and the maximum
liability of any such contingent obligations at such date and (z) in the case of
Indebtedness of others secured by a Lien to which the property or assets owned
or held by such Person is subject, the lesser of the Fair Market Value at such
date of any property or asset subject to a Lien securing the Indebtedness of
others or the amount of the Indebtedness secured. The amount of any Indebtedness
issued at a discount shall be equal to the gross proceeds of such issuance (and
not the face amount of any bond, note, debenture or similar instrument
representing such Indebtedness).
"Interest Rate Agreement" means any interest rate protection agreement,
interest rate future agreement, interest rate option agreement, interest rate
swap agreement, interest rate cap agreement, interest rate collar agreement,
interest rate hedge agreement, or other similar agreement or arrangement entered
into in the ordinary course of business and designed to protect the Company or
any of its Restricted Subsidiaries against fluctuations in interest rates to or
under which the Company or any of its Restricted Subsidiaries is a party or a
beneficiary thereof.
"Investment" means, with respect to any Person, (i) any direct or indirect
loan or other extension of credit (other than extensions of trade credit by such
Person on commercially reasonable terms and relating to the sale of property or
services in the ordinary course of business) or capital contribution (by means
of any transfer of cash or other property to others or any payment for property
or services for the account or use of others) to any other Person, or (ii) any
purchase or acquisition by such Person of any Capital Stock, bonds, notes,
debentures or other securities or evidences of Indebtedness issued by any other
Person.
"Lien" means any mortgage, lien, pledge, charge, security interest or
encumbrance of any kind, whether or not filed, recorded or otherwise perfected
under applicable law (including any conditional sale or other title retention
agreement, any lease intended as security, any option or other agreement to sell
or give any security interest and any filing of or other agreement to give any
financing statement under the Uniform Commercial Code (or equivalent statutes)
of any jurisdiction other than a financing statement covering leased goods under
a lease not intended as security).
"Liquidated Damages" means all liquidated damages then owing pursuant to
the Registration Rights Agreement. The holders of Exchange Notes will generally
not be entitled to certain rights under the Registration Rights Agreement,
including the provisions providing for Liquidated Damages in certain
circumstances relating to the timing of the Exchange Offer, which rights will
terminate when the Exchange Offer is consummated. See "Exchange
Offer -- Registration Rights; Liquidated Damages."
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"Net Cash Proceeds" means the aggregate Cash Proceeds received by the
Company or any of its Restricted Subsidiaries in respect of any Asset Sale, net
of the out-of-pocket costs relating to such Asset Sale (including, without
limitation, legal, accounting and investment banking fees and sales commissions)
and any relocation expenses and severance and shutdown costs incurred as a
result thereof, and all federal, state, provincial, foreign and local taxes
required to be accrued as a liability under GAAP as a consequence of such Asset
Sale, amounts required to be applied to the repayment of Indebtedness secured by
a Lien on the asset or assets which are the subject of such Asset Sale and any
reasonable reserve in accordance with GAAP for adjustments in respect of the
sale price of such asset or assets.
"Non-Recourse Debt" means Indebtedness (i) as to which neither the Company
or any of its Restricted Subsidiaries (a) provides credit support of any kind
(including any undertaking, agreement or instrument that would constitute
Indebtedness), (b) is directly or indirectly liable (as a guarantor or
otherwise), or (c) constitutes the lender; (ii) no default with respect to which
(including any rights that the holders thereof may have to take enforcement
action against an Unrestricted Subsidiary) would permit (upon notice, lapse of
time or both) any holder of any other Indebtedness of the Company or any of its
Restricted Subsidiaries to declare a default on such other Indebtedness or cause
the payment thereof to be accelerated or payable prior to its stated maturity;
and (iii) as to which the lenders have been notified in writing that they will
not have any recourse to the stock or assets of the Company or any of its
Restricted Subsidiaries.
"Notes" means the Original Notes and the Exchange Notes.
"Officers' Certificate" means, with respect to any Person, a certificate
signed by the Chief Executive Officer or President and the Chief Financial
Officer or chief accounting officer of such Person.
"Original Notes" means the Company's 9 1/4% Series A Senior Notes due March
15, 2007 issued under the Indenture prior to the issuance of Exchange Notes.
"Permitted Investments" means any of the following: (i) Cash Equivalents;
(ii) Existing Investments; (iii) Investments by the Company or a Restricted
Subsidiary of the Company in any Subsidiary of the Company that is a Restricted
Subsidiary or any other Person that concurrently with the making of such
Investment becomes a Subsidiary of the Company that is a Restricted Subsidiary;
(iv) guaranties by Restricted Subsidiaries of the Company permitted under the
Limitation on Additional Indebtedness covenant and the Limitation on Guaranties
by Subsidiaries covenant; (v) Indebtedness of the Company to any Restricted
Subsidiary of the Company, provided that such Indebtedness is contractually
subordinated in right of payment to the Notes; (vi) Investments by the Company
or any of its Restricted Subsidiaries in debt securities or debt instruments
having maturities of 10 years or less and (A) issued or fully guaranteed or
insured by the United States of America, or an instrumentality or agency thereof
(provided that the full faith and credit of the United States of America is
pledged in support thereof) or (B) with a rating of BBB- or better by S&P or
Baa-3 or better by Moody's or the equivalent of such rating by a successor
rating agency; (vii) any Investment by Broan Limited and or any Canadian
Subsidiary in debt securities or debt instruments having maturities of 10 years
or less and issued or fully guaranteed or insured by Canada or an
instrumentality or agency thereof or rated, at the time of such Investment, BBB-
or better by Dominion Bond Rating Services or the equivalent of such rating by a
successor rating agency, so long as the aggregate amount of all such Investments
by Broan Limited and any Canadian Subsidiaries that are Restricted Subsidiaries
does not exceed $15,000,000 at any one time outstanding; (viii) loans and
advances to officers and directors of the Company or any Restricted Subsidiary
of the Company made in the ordinary course of business or pursuant to any
employee benefit plan, up to $5,000,000 in the aggregate at any one time
outstanding; (ix) loans and advances to vendors, suppliers and contractors of
the Company or any Restricted Subsidiary of the Company and made in the ordinary
course of business; (x) the receipt by the Company or its Restricted
Subsidiaries of consideration other than Cash Proceeds in any Asset Sale made in
compliance with the terms of the Indenture; (xi) so long as no Default or Event
of Default shall have occurred and be continuing, other Investments made after
the issue date of the Original Notes not exceeding in the aggregate at any time
outstanding (A) $40,000,000, if at the time of the making of such Investment the
Notes are not rated BB+ or better by S&P or Bal or better by Moody's, or (B)
$50,000,000, if at the time of the making of such Investment the Notes are rated
BB+ or better by S&P or Bal or better by Moody's; (xii) any Lien permitted
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under the Limitation on Liens covenant; and (xiii) Investments by Restricted
Subsidiaries of the Company not exceeding in the aggregate $10,000,000 at any
one time outstanding in Cash Equivalents described in clause (ii) of the
definition of such term in the Indenture, provided that for purposes of this
clause (xiii) an instrument referred to in such clause (ii) may be issued by any
commercial banking institution having capital and surplus of not less than
$100,000,000.
"Permitted Liens" means (i) Liens for taxes, assessments, governmental
charges or claims that are not yet due or are being contested in good faith by
appropriate legal proceedings, provided that any reserve or other appropriate
provision, if any, as shall be required in conformity with GAAP shall have been
made therefor; (ii) statutory Liens of landlords and carriers, warehousemen,
mechanics, suppliers, materialmen, repairmen or other similar Liens arising in
the ordinary course of business and with respect to amounts not yet delinquent
or being contested in good faith by appropriate legal proceedings, provided that
any reserve or other appropriate provision, if any, as shall be required in
conformity with GAAP shall have been made therefor; (iii) Liens incurred or
deposits made in the ordinary course of business in connection with workers'
compensation, unemployment insurance or other types of social security; (iv)
Liens incurred or deposits made to secure the performance of tenders, bids,
leases, statutory or regulatory obligations, bankers' acceptances, surety and
appeal bonds, government contracts, performance and return-of-money bonds and
other obligations of a similar nature incurred in the ordinary course of
business (exclusive of obligations for the payment of borrowed money); (v)
easements, rights-of-way, municipal and zoning ordinances and similar charges,
encumbrances, title defects or other irregularities that do not materially
interfere with the ordinary course of business of the Company or any of its
Subsidiaries, taken as a whole; (vi) Liens securing Purchase Money Obligations
permitted to be incurred by the provisions of the Indenture; (vii) leases or
subleases or licenses or sublicenses granted to others in the ordinary course of
business of the Company or any of its Restricted Subsidiaries, taken as a whole;
(viii) Liens encumbering property or assets under construction arising from
progress or partial payments by a customer of the Company or any of its
Restricted Subsidiaries relating to such property or assets; (ix) any interest
or title of a lessor in the property subject to any Capital Lease Obligation;
(x) Liens arising from filing Uniform Commercial Code financing statements
regarding leases; (xi) Liens on property of, or on shares of stock or
Indebtedness of, any corporation existing at the time such corporation becomes,
or becomes a part of, any Restricted Subsidiary; (xii) Liens in favor of the
Company or any Subsidiary; (xiii) Liens securing any real property or other
assets of the Company or any Restricted Subsidiary of the Company in favor of
the United States of America or any State, or any department, agency,
instrumentality or political subdivision thereof, in connection with the
financing of industrial revenue bond facilities or of any equipment or other
property designed primarily for the purpose of air or water pollution control;
provided that any such Lien on such facilities, equipment or other property
shall not apply to any other assets of the Company or such Restricted Subsidiary
of the Company; (xiv) Liens arising from the rendering of a final judgment or
order against the Company or any Restricted Subsidiary of the Company that does
not give rise to an Event of Default; (xv) Liens securing reimbursement
obligations with respect to letters of credit that encumber documents and other
property relating to such letters of credit and the products and proceeds
thereof; (xvi) Liens in favor of customs and revenue authorities arising as a
matter of law to secure payment of customs duties in connection with the
importation of goods; (xvii) Liens encumbering customary initial deposits and
margin deposits, and other Liens that are either within the general parameters
customary in the industry and incurred in the ordinary course of business or
otherwise permitted under the terms of the Company Credit Facility, in each case
securing Indebtedness under Commodity Agreements, Interest Rate Agreements and
Currency Agreements; and (xviii) Liens arising out of conditional sale, title
retention, consignment or similar arrangements for the sale of goods entered
into by the Company or any of its Restricted Subsidiaries in the ordinary course
of business in accordance with the past practices of the Company and its
Restricted Subsidiaries prior to the Closing Date.
"Person" means any individual, corporation, partnership, joint venture,
incorporated or unincorporated association, joint-stock company, trust,
unincorporated organization or government or other agency or political
subdivision thereof or other entity of any kind.
"Principal Property" means any manufacturing or processing plant, warehouse
or other building used by the Company or any Restricted Subsidiary, other than a
plant, warehouse or other building that, in the good
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faith opinion of the Board of Directors as reflected in a Board Resolution, is
not of material importance as of the date such Board Resolution is adopted to
the businesses conducted by the Company and its Subsidiaries, on a consolidated
basis, or conducted by any Significant Subsidiary of the Company.
"Purchase Money Obligations" means any Indebtedness of the Company or any
of its Restricted Subsidiaries incurred to finance the acquisition or
construction of any property or business (including Indebtedness incurred within
one year following such acquisition or construction), including Indebtedness of
a Person existing at the time such Person becomes a Restricted Subsidiary of the
Company or assumed by the Company or a Restricted Subsidiary of the Company in
connection with the acquisition of assets from such Person; provided, however,
that (i) any Lien on such Indebtedness shall not extend to any property other
than the property so acquired or constructed and (ii) at no time shall the
aggregate principal amount of outstanding Indebtedness secured thereby be
increased.
"Redeemable Stock" means any Equity Interest which, by its terms (or by the
terms of any security into which it is convertible or for which it is
exchangeable before the Stated Maturity of the Notes), or upon the happening of
any event, matures or is mandatorily redeemable, in whole or in part, prior to
the Stated Maturity of the Notes.
"Restricted Subsidiary" means (i) any Subsidiary of the Company in
existence on the date of the Indenture, unless such Subsidiary shall have been
designated as an Unrestricted Subsidiary by resolution of the Board of Directors
of the Company as provided in and in compliance with the definition of
"Unrestricted Subsidiary", (ii) any Subsidiary of the Company (other than a
Subsidiary that is also a Subsidiary of an Unrestricted Subsidiary) organized or
acquired after the date of the Indenture, unless such Subsidiary shall have been
designated as an Unrestricted Subsidiary by resolution of the Board of Directors
of the Company as provided in and in compliance with the definition of
"Unrestricted Subsidiary" and (iii) any Unrestricted Subsidiary which is
designated as a Restricted Subsidiary by the Board of Directors of the Company;
provided that, immediately after giving effect to the designation referred to in
clause (iii), no Default or Event of Default shall have occurred and be
continuing and the Company could incur at least $1.00 of additional Indebtedness
under the first paragraph under the Limitation on Additional Indebtedness
covenant. The Company shall evidence any such designation to the Trustee by
promptly filing with the Trustee an Officers' Certificate certifying that such
designation has been made and stating that such designation complies with the
requirements of the immediately preceding sentence.
"Shelf Registration Statement" means a "shelf" registration statement of
the Company pursuant to the provisions of Section 2(b) of the Registration
Rights Agreement which covers all of the Registrable Securities (as defined in
the Registration Rights Agreement), on an appropriate form under Rule 415 under
the Act or any similar rule that may be adopted by the SEC, and all amendments
and supplements to such registration statement, including post-effective
amendments, in each case including a Prospectus contained therein, all exhibits
thereto and all material incorporated by reference therein.
"Significant Subsidiary" means any Subsidiary that would be a "significant
subsidiary" as defined in Rule 1-02 of Regulation S-X promulgated by the
Commission, as such regulation is in effect on the date of the Indenture.
"Stated Maturity" means, with respect to any security or Indebtedness, the
date specified therein as the fixed date on which the principal of such security
or Indebtedness is due and payable, including pursuant to any mandatory
redemption provision (but excluding any provision providing for the repurchase
of such security or Indebtedness at the option of the holder thereof upon the
happening of any contingency).
"Subsidiary" of any Person means any corporation, partnership, association
or other business entity of which more than 50% of the total voting power of
shares of Capital Stock entitled (without regard to the occurrence of any
contingency) to vote in the election of directors or, in the case of a Person
which is not a corporation, the members of the appropriate governing board or
other group is at the time owned or controlled, directly or indirectly, by such
Person or one or more of the other Subsidiaries of such Person or a combination
thereof.
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<PAGE> 41
"Subsidiary Guarantor" means, with respect to any Subsidiary Guaranty, the
issuer of such Subsidiary Guaranty, so long as such Subsidiary Guaranty remains
outstanding.
"Subsidiary Guaranty" means any guaranty of the Notes pursuant to a
supplemental indenture executed and delivered pursuant to the Limitation on
Guaranties by Subsidiaries covenant, including as the context may require either
or both of the guaranty of the Notes set forth as an exhibit to the Indenture
upon the execution and delivery by a Subsidiary Guarantor of such supplemental
indenture and any separate guaranty of the Notes or confirmation of guaranty
executed and delivered by such Subsidiary Guarantor pursuant to such
supplemental indenture.
"TIA" means the Trust Indenture Act of 1939 as amended and as in effect on
the date of this Indenture; provided, however, that in the event the TIA is
amended after such date, TIA means, to the extent required by any such
amendment, the TIA as so amended.
"Transfer Restricted Securities" means each Original Note until (i) the
date on which such Original Note has been exchanged by a Person other than a
broker-dealer for an Exchange Note in the Exchange Offer, (ii) following the
exchange by a broker-dealer in the Exchange Offer of an Original Note for an
Exchange Note, the date on which such Exchange Note is sold to a purchaser who
receives from such broker-dealer on or prior to the date of such sale a copy of
the prospectus contained in the Exchange Offer Registration Statement, (iii) the
date on which such Original Note has been effectively registered under the
Securities Act and disposed of in accordance with the Shelf Registration
Statement or (iv) the date on which such Original Note is distributed to the
public pursuant to Rule 144 under the Securities Act.
"Trustee" means the party named as the "Trustee" in the first paragraph of
the Indenture until a successor replaces it pursuant to the applicable
provisions of the Indenture and, thereafter, shall mean such successor.
"Unrestricted Subsidiary" means, until such time as any of the following
shall be designated as a Restricted Subsidiary of the Company by the Board of
Directors of the Company as provided in and in compliance with the definition of
"Restricted Subsidiary," (i) any Subsidiary of the Company or of a Restricted
Subsidiary organized or acquired after the date of the Indenture that is
designated concurrently with its organization or acquisition as an Unrestricted
Subsidiary by resolution of the Board of Directors of the Company, (ii) any
Subsidiary of any Unrestricted Subsidiary, and (iii) any Restricted Subsidiary
of the Company that is designated as an Unrestricted Subsidiary by resolution of
the Board of Directors of the Company, provided that, (a) immediately after
giving effect to such designation, no Default or Event of Default shall have
occurred and be continuing, (b) any such designation shall be deemed the making
of a Restricted Payment at the time of such designation in an amount equal to
the Fair Market Value of the Investment in such Subsidiary and shall be subject
to the restrictions contained in the "Limitation on Restricted Payments"
covenant, and (c) such Subsidiary or any of its Subsidiaries does not own any
Capital Stock or Indebtedness of, or own or hold any Lien on any property of,
the Company or any other Restricted Subsidiary of the Company that is not a
Subsidiary of the Subsidiary to be so designated. A Person may be designated as
an Unrestricted Subsidiary only if and for so long as such Person (i) has no
Indebtedness other than Non-Recourse Debt; (ii) is a Person with respect to
which neither the Company nor any of its Restricted Subsidiaries has any direct
or indirect obligation (a) to subscribe for additional Equity Interests or (b)
to make any payment to maintain or preserve such Person's financial condition or
to cause such Person to achieve any specified levels of operating results,
except to the extent any such direct or indirect obligation would then be
permitted in accordance with the Limitation on Restricted Payments covenant; and
(iii) has not guaranteed or otherwise directly or indirectly provided credit
support for any Indebtedness of the Company or any of its Restricted
Subsidiaries. The Company shall evidence any designation pursuant to clause (i)
or (iii) of the first sentence hereof to the Trustee by filing with the Trustee
within 45 days of such designation an Officers' Certificate certifying that such
designation has been made.
"Wholly-Owned Subsidiary" of any Person means any Subsidiary of such Person
to the extent the entire voting share capital of such Subsidiary is owned by
such Person (either directly or indirectly through Wholly-Owned Subsidiaries).
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BOOK-ENTRY, DELIVERY AND FORM
The certificates representing Exchange Notes will be issued in fully
registered form, without coupon. Except as described below, the Exchange Notes
will be deposited with, or on behalf of, the Depositary and registered in the
name of Cede & Co., as nominee of the Depositary (such nominee being referred to
herein as the "Global Note Holder") in the form of one or more Global Notes (the
"Global Notes") or will remain in the custody of the Trustee.
Exchange Notes that are issued as described below under "-- Certificated
Securities" will be issued in registered form (the "Certificated Securities").
Upon the transfer of Certificated Securities, such Certificated Securities may,
unless the Global Notes have previously been exchanged for Certificated
Securities, be exchanged for an interest in a Global Note representing the
principal amount of Notes being transferred.
The Depositary is a limited-purpose trust company which was created to hold
securities for its participating organizations (collectively, the "Participants"
or the "Depositary's Participants") and to facilitate the clearance and
settlement of transactions in such securities between Participants through
electronic book-entry changes in accounts of its Participants. The Depositary's
Participants include securities brokers and dealers (including the Initial
Purchasers), banks and trust companies, clearing corporations and certain other
organizations. Access to the Depositary's system is also available to other
entities such as banks, brokers, dealers and trust companies (collectively, the
"Indirect Participants" or the "Depositary's Indirect Participants") that clear
through or maintain a custodial relationship with a Participant, either directly
or indirectly. Persons who are not Participants may beneficially own securities
held by or on behalf of the Depositary only through the Depositary's
Participants or the Depositary's Indirect Participants.
The Company expects that pursuant to procedures established by the
Depositary (i) upon deposit of the Global Notes, the Depositary will credit the
accounts of Participants designated by the Initial Purchasers with portions of
the principal amount of the Global Notes and (ii) ownership of the Exchange
Notes evidenced by the Global Notes will be shown on, and the transfer of
ownership thereof will be effected only through, records maintained by the
Depositary (with respect to the interests of the Depositary's Participants), the
Depositary's Participants and the Depositary's Indirect Participants.
Prospective purchasers are advised that the laws of some states require that
certain Persons take physical delivery in definitive form of securities that
they own. Consequently, the ability to transfer Exchange Notes evidenced by the
Global Notes will be limited to such extent.
So long as the Global Note Holder is the registered owner of any Exchange
Notes, the Global Note Holder will be considered the sole owner or holder of
such Exchange Notes outstanding under the Indenture. Beneficial owners of
Exchange Notes evidenced by the Global Note will not be considered the owners or
Holders thereof under the Indenture for any purpose, including with respect to
the giving of any directions, instructions or approvals to the Trustee
thereunder. The ability of a Person having a beneficial interest in Exchange
Notes represented by a Global Note to pledge such interest to Persons or
entities that do not participate in the Depositary's system or to otherwise take
actions in respect of such interest may be affected by the lack of physical
certificate evidencing such interest.
Neither the Company nor the Trustee will have any responsibility or
liability for any aspect of the records relating to or payments made on account
of Exchange Notes by the Depositary, or for maintaining, supervising or
reviewing any records of the Depositary relating to such Exchange Notes.
Payments in respect of the principal of, premium, if any, and Liquidated
Damages, if any, with respect to, any Notes registered in the name of a Global
Note Holder on the applicable record date will be payable by the Trustee to or
at the direction of such Global Note Holder in its capacity as the registered
holder under the Indenture. Under the terms of the Indenture, the Company and
the Trustee may treat the Persons in whose names the Notes, including the Global
Notes, are registered as the owners thereof for the purpose of receiving such
payments and for any and all other purposes whatsoever. Consequently, neither
the Company nor the Trustee has or will have any responsibility or liability for
the payment of such amounts to beneficial owners of Notes (including principal,
premium, if any, interest and Liquidated Damages, if any).
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The Company believes, however, that it is currently the policy of the
Depositary to immediately credit the accounts of the relevant Participants with
such payment, in amounts proportionate to their respective holdings in principal
amount of beneficial interests in the relevant security as shown on the records
of the Depositary. Payments by the Depositary's Participants and the
Depositary's Indirect Participants to the beneficial owners of Exchange Notes
will be governed by standing instructions and customary practice and will be the
responsibility of the Depositary's Participants or the Depositary's Indirect
Participants.
CERTIFICATED SECURITIES
Subject to certain conditions, any Person having a beneficial interest in a
Global Note may, upon request to the Company or the Trustee, exchange such
beneficial interest for Exchange Notes in the form of Certificated Securities.
Upon any such issuance, the Trustee is required to register such Exchange Notes
in the name of, and cause the same to be delivered to, such Person or Persons.
In addition, if (i) the Company notifies the Trustee in writing that the
Depositary is no longer willing or able to act as a depositary and the Company
is unable to appoint a qualified successor within 90 days or (ii) the Company,
at its option, notifies the Trustee in writing that it elects to cause the
issuance of Exchange Notes in the form of Certificated Securities under the
Indenture, then, upon surrender by the relevant Global Note Holder of its Global
Note, Exchange Notes in such form will be issued to each Person that the
Depositary identifies as the beneficial owner of the related Exchange Notes.
Neither the Company nor the Trustee shall be liable for any delay by the
Depositary in identifying the beneficial owners of the related Exchange Notes
and each such Person may conclusively rely on, and shall be protected in relying
on, instructions from the Depositary for all purposes (including with respect to
the registration and delivery, and the respective principal amounts, of the
Notes to be issued).
SAME-DAY SETTLEMENT AND PAYMENT
The Indenture requires that payments in respect of the Exchange Notes
(including principal, premium, if any, interest, if any) be made by wire
transfer of immediately available funds to the accounts specified by the Global
Note Holder. Secondary trading in long-term notes and debentures of corporate
issuers is generally settled in clearing-house or next-day funds. In contrast,
the Notes have been designated as eligible for trading in the PORTAL market and
are expected to trade in the Depositary's Next-Day Funds Settlement System, and
any permitted secondary market trading activity in the Notes will therefore be
required by the Depositary to be settled in immediately available funds. The
Company expects that secondary trading in the Certificated Notes also will be
settled in immediately available funds.
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THE EXCHANGE OFFER
REGISTRATION RIGHTS; LIQUIDATED DAMAGES
The Company and the Initial Purchasers entered into the Registration Rights
Agreement on March 17, 1997 (the "Closing Date"). Pursuant to the Registration
Rights Agreement, the Company agreed to use its best efforts to cause to be
filed with the Commission the Exchange Offer Registration Statement, of which
this Prospectus forms a part, on the appropriate form under the Securities Act
with respect to an offer to exchange the Original Notes for Exchange Notes. The
Exchange Notes will be substantially identical to the Original Notes, except
that the Exchange Notes will not contain terms with respect to transfer
restrictions (other than those that might be imposed by state securities laws)
or, except as arising out of the obligations set forth in the next sentence,
provide for the payment of Liquidated Damages. In the event that (i) the Company
is not permitted to commence or accept tenders pursuant to the Exchange Offer
because the Exchange Offer is not permitted by applicable law or Commission
policy, (ii) any Holder of Transfer Restricted Securities notifies the Company
within 20 business days after the consummation of the Exchange Offer that (a) it
is prohibited by law or Commission policy from participating in the Exchange
Offer or (b) that it may not resell the Exchange Notes acquired by it in the
Exchange Offer to the public without delivering a prospectus and the prospectus
contained in the Exchange Offer Registration Statement is not appropriate or
available for such resales or (c) that it is a broker-dealer and owns Original
Notes acquired directly from the Company or an Affiliate of the Company, the
Company will file with the Commission a Shelf Registration Statement (as defined
above under "Description of Notes -- Certain Definitions") to cover resales of
the Original Notes by the Holders thereof who satisfy certain conditions
relating to the provision of information in connection with the Shelf
Registration Statement. The Company will use its best efforts to cause the
applicable registration statement to be declared effective as promptly as
possible by the Commission. For purposes of the foregoing, "Transfer Restricted
Securities" means each Original Note until (i) the date on which such Original
Note has been exchanged by a Person other than a broker-dealer for an Exchange
Note in the Exchange Offer, (ii) following the exchange by a Participating
Broker-Dealer in the Exchange Offer of an Original Note for an Exchange Note,
the date on which such Exchange Note is sold to a purchaser who receives from
such Participating Broker-Dealer on or prior to the date of such sale a copy of
the prospectus contained in the Exchange Offer Registration Statement, (iii) the
date on which such Original Note has been effectively registered under the
Securities Act and disposed of in accordance with the Shelf Registration
Statement or (iv) the date on which such Original Note is distributed to the
public pursuant to Rule 144 under the Securities Act.
This Prospectus covers the offer and sale of the Exchange Notes pursuant to
the Exchange Offer made hereby and the resale of Exchange Notes received in the
Exchange Offer by any Participating Broker-Dealer who holds Original Notes
(other than Original Notes acquired directly from the Company or one of its
affiliates).
Under existing interpretations by the staff of the Commission, the Exchange
Notes would, in general, be freely transferable after the Exchange Offer without
further registration under the Securities Act; provided, that Participating
Broker-Dealers receiving Exchange Notes in the Exchange Offer will have a
prospectus delivery requirement with respect to the resales of Exchange Notes.
The Commission has taken the position that such Participating Broker-Dealers may
fulfill their prospectus delivery requirements with respect to the Exchange
Notes (other than a resale of an unsold allotment from the original sale of
Original Notes) with the prospectus contained in the Exchange Offer Registration
Statement. The Company has agreed, for a period of 180 days after consummation
of the Exchange Offer, to make available a prospectus meeting the requirements
of the Securities Act to any Participating Broker-Dealer for use in connection
with any resale of any Exchange Notes acquired.
Each Holder (other than certain specified holders) who wishes to exchange
such Original Notes for Exchange Notes in the Exchange Offer will be required to
make certain representations, including representations that (i) any Exchange
Notes to be received by it will be acquired in the ordinary course of its
business, (ii) at the time of the commencement of the Exchange Offer, it had no
arrangement with any Person
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to participate in the distribution (within the meaning of the Securities Act) of
the Exchange Notes and (ii) is not an "affiliate," as defined in Rule 405 of the
Securities Act, of the Company.
The Registration Rights Agreement provides that, to the extent not
prohibited by any applicable law or applicable interpretation of the staff of
the Commission, (i) the Company will use its best efforts to cause to be filed
with the Commission an Exchange Offer Registration Statement on or prior to 45
days after the Closing Date, (ii) the Company will use its best efforts to have
such Exchange Offer Registration Statement declared effective under the
Securities Act by the Commission on or prior to 120 days after the Closing Date,
(iii) the Company will use its best efforts to cause the Exchange Offer to be
consummated on or prior to 45 days after the date on which the Exchange Offer
Registration Statement was declared effective under the Securities Act by the
Commission and (iv) if obligated to cause to be filed with the Commission the
Shelf Registration Statement, the Company will cause to be filed with the
Commission a Shelf Registration Statement on or prior to 45 days after such
filing obligation arises and use its best efforts to cause the Shelf
Registration Statement to be declared effective by the Commission on or prior to
90 days after such obligation arises; provided, that if the Company has not
consummated the Exchange Offer within 165 days of the Closing Date, then the
Company will cause to be filed with the Commission a Shelf Registration
Statement on or prior to the 210th day after the Closing Date. The Company shall
use its reasonable best efforts to keep such Shelf Registration Statement
continuously effective, supplemented and amended until the second anniversary of
the Closing Date or such shorter period that will terminate when all the
securities covered by the Shelf Registration Statement have been sold pursuant
to the Shelf Registration Statement. If (a) the Company fails to file any
Registration Statement required by the Registration Rights Agreement on or prior
to the date specified for such filing, (b) any such Registration Statement is
not declared effective by the Commission on or prior to the date specified for
such effectiveness (the "Effectiveness Target Date"), (c) the Company fails to
consummate the Exchange Offer on or prior to 45 days after the Effectiveness
Target Date with respect to the Exchange Offer Registration Statement, or (d)
the Shelf Registration Statement or the Exchange Offer Registration Statement is
declared effective but thereafter ceases to be effective or usable during the
periods specified in the Registration Rights Agreement (each such event referred
to in clauses (a) through (d) above a "Registration Default"), then the Company
will be required to pay Liquidated Damages to each Holder affected by such
Registration Default on each interest payment date. Liquidated Damages shall
accrue from and after the date of each Registration Default, and shall continue
to accrue thereafter until such Registration Default has been cured or waived as
set forth in the Registration Rights Agreement, at a rate equal to 0.50% per
annum of the principal amount of Notes during the first 90-day period
immediately following the occurrence of such Registration Default, which rate
shall increase by an additional 0.50% per annum during each subsequent 90-day
period up to a maximum rate equal to 2.0% per annum.
The summary herein of certain provisions of the Registration Rights
Agreement does not purport to be complete and is subject to, and is qualified in
its entirety by reference to, all the provisions of the Registration Rights
Agreement, a copy of which is filed as an exhibit to this Exchange Offer
Registration Statement. See "Available Information."
Except as set forth above, after consummation of the Exchange Offer,
holders of Original Notes have no registration or exchange rights under the
Registration Rights Agreement. See "-- Consequences of Failure to Exchange," and
"-- Resales of Exchange Notes; Plan of Distribution."
CONSEQUENCES OF FAILURE TO EXCHANGE
The Original Notes which are not exchanged for Exchange Notes pursuant to
an Exchange Offer and are not included in a resale prospectus will remain
restricted securities. Accordingly, such Original Notes may be offered, sold or
otherwise transferred prior to the date which is two years after the later of
the date of original issue and the last date that the Company or any affiliate
of the Company was the owner of such securities (or any predecessor thereto)
(the "Resale Restriction Termination Date") only (a) to the Company (b) pursuant
to a registration statement which has been declared effective under the
Securities Act, (c) for so long as the Original Notes are eligible for resale
pursuant to Rule 144A, to a person the owner reasonably believes is a qualified
institutional buyer that purchases for its own account or for the account of a
qualified institutional buyer to whom notice is given that the transfer is being
made in reliance on Rule 144A, (d) to an "accredited
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<PAGE> 46
investor" within the meaning of subparagraph (1), (2), (3) or (7) of paragraph
(a) of Rule 501 under the Securities Act that is purchasing for his own account
or for the account of such an "accredited investor" in each case in a minimum of
Original Notes with a purchase price of $500,000 or (c) pursuant to any other
available exemption from the registration requirements of the Securities Act,
subject in each of the foregoing cases to any requirement of law that the
disposition of its property or the property of such investor account or accounts
be at all times within its or their control. The foregoing restrictions on
resale will not apply subsequent to the Resale Restriction Termination Date. If
any resale or other transfer of the Original Notes is proposed to be made
pursuant to clause (d) above prior to the Resale Restriction Termination Date,
the transferor shall deliver a letter from the transferee to the Company and the
Trustee, which shall provide, among other things, that the transferee is an
"accredited investor" within the meaning of subparagraph (1), (2), (3) or (7) of
paragraph (a) of Rule 501 under the Securities Act and that it is acquiring such
Securities for investment purposes and not for distribution in violation of the
Securities Act. Prior to any offer, sale or other transfer of Original Notes
prior to the Resale Restriction Termination Date pursuant to clauses (d) or (e)
above, the issuer and the Trustee may require the delivery of an opinion of
counsel, certifications and/or other information satisfactory to each of them.
TERMS OF THE EXCHANGE OFFER
Upon the terms and subject to the conditions set forth in this Prospectus
and in the accompanying Letter of Transmittal, the Company will accept all
Original Notes properly tendered and not withdrawn prior to the applicable
Expiration Date. The Company will issue $1,000 principal amount of Exchange
Notes in exchange for each $1,000 principal amount of outstanding Original Notes
accepted in the Exchange Offer. Holders may tender some or all of their Original
Notes pursuant to the Exchange Offer. However, Original Notes may be tendered
only in integral multiples of $1,000 principal amount at final maturity.
The forms and terms of the Exchange Notes are the same as the form and
terms of the Original Notes, except that (i) the Exchange Notes bear a Series B
designation, (ii) the Exchange Notes have been registered under the Securities
Act and therefore will generally not bear legends restricting their transfer
(except as may be required under state securities laws) pursuant to the
Securities Act, and (iii) the holders of Exchange Notes will generally not be
entitled to rights under the Registration Rights Agreement including the
provisions providing for liquidated damages, in certain circumstances relating
to the timing of the Exchange Offer, which rights will terminate when the
Exchange Offer is consummated. The Exchange Notes will evidence the same debt as
the Original Notes (which they replace), and will be issued under, and be
entitled to the benefits of, the Indenture.
Solely for reasons of administration (and for no other purpose) the Company
has fixed the close of business on , 1997 as the record date for the
Exchange Offer for purpose of determining the persons to whom this Prospectus
and the Letter of Transmittal will be mailed initially. Only a registered holder
of Original Notes (or such holder's legal representative or attorney-in-fact) as
reflected on the records of the trustee under the governing indenture may
participate in the Exchange Offer. There will be no fixed record date for
determining registered holders of the Original Notes entitled to participate in
the relevant Exchange Offer.
Holders of the Original Notes do not have any appraisal or dissenters'
rights under the General Corporation Law of Delaware or under the Indenture in
connection with the Exchange Offer. The Company intends to conduct the Exchange
Offer in accordance with the applicable requirements of the Exchange Act and the
rules and regulations of the Commission thereunder.
The Company shall be deemed to have accepted validly tendered Original
Notes when, as and if the Company has given oral or written notice thereof to
the Exchange Agent. The Exchange Agent will act as agent for the tendering
holders of Original Notes for the purpose of receiving Exchange Notes.
If any tendered Original Notes are not accepted for exchange because of an
invalid tender, the occurrence of certain other events set forth herein or
otherwise, certificates for any such unaccepted Original Notes will be returned,
without expenses, to the tendering holder thereof as promptly as practicable
after the Expiration Date.
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<PAGE> 47
Holders of Original Notes who tender in the Exchange Offer will not be
required to pay brokerage commissions or fees or, subject to the instructions in
the Letter of Transmittal, transfer taxes with respect to the exchange of
Original Notes pursuant to the Exchange Offer. The Company will pay all charges
and expenses, other than certain applicable taxes, in connection with the
Exchange Offer. See "--Fees and Expenses."
EXPIRATION DATES; EXTENSIONS; AMENDMENTS
The term "Expiration Date" shall mean 5:00 p.m. New York City time on
, 1997 unless the Company, in its sole discretion, extends the
Exchange Offer, in which case the term "Expiration Date" shall mean the latest
date to which the Exchange Offer is extended.
In order to extend the Expiration Date, the Company will notify the
Exchange Agent of any extension by oral or written notice and will make a public
announcement thereof, prior to 9:00 a.m., New York City time, on the next
business day after the previously scheduled Expiration Date.
The Company reserves the right in its sole discretion (i) to delay
acceptance of any Original Notes, (ii) to extend the Exchange Offer (iii) if the
condition set forth below under "-- Conditions of the Exchange Offer" shall not
have been satisfied, to terminate the Exchange Offer by giving oral or written
notice of such delay, extension or termination to the Exchange Agent, or (iv) to
amend the terms of the Exchange Offer in any manner. Any such delay in
acceptance, extension, termination or amendment will be followed as promptly as
practicable by a public announcement thereof. If the Exchange Offer is amended
in a manner determined by the Company to constitute a material change, the
Company will promptly disclose such amendment by means of a prospectus
supplement that will be distributed to the registered holders of the Original
Notes and the Exchange Offer will be extended for a period of five to ten
business days, as required by law, depending upon the significance of the
amendment and the manner of disclosure to the registered holders, if the
Exchange Offer would otherwise expire during such five to ten business day
period.
Without limiting the manner in which the Company may choose to make public
announcements of any delay in acceptance, extension, termination or amendment of
the Exchange Offer, the Company shall have no obligation to publish, advertise,
or otherwise communicate any such public announcement, other than by making a
timely release to the Dow Jones News Service.
PROCEDURES FOR TENDERING
Only a registered holder of Original Notes may tender such Original Notes
in the Exchange Offer. To tender in the Exchange Offer, a holder must complete,
sign and date the Letter of Transmittal, have the signatures thereon guaranteed
if required by the Letter of Transmittal, and mail or otherwise deliver such
Letter of Transmittal to the Exchange Agent at the address set forth below prior
to 5:00 p.m., New York City time, on the Expiration Date. In addition, either
(i) certificates for such Original Notes must be received by the Exchange Agent
along with the Letter of Transmittal, or (ii) a timely confirmation of a
book-entry transfer (a "Book-Entry Confirmation") of such Original Notes, if
such procedure is available, into the Exchange Agent's account at The Depository
Trust Company (the "Book-Entry Transfer Facility") pursuant to the procedure for
book-entry transfer described below, must be received by the Exchange Agent
prior to the applicable Expiration Date, or (iii) the holder must comply with
the guaranteed delivery procedures described below. To be tendered effectively,
the Letter of Transmittal and all other required documents must be received by
the Exchange Agent at the address set forth below under "-- Exchange Agent"
prior to the applicable Expiration Date.
The tender by a holder of Original Notes will constitute an agreement
between such holder and the Company in accordance with the terms and subject to
the conditions set forth herein and in the Letter of Transmittal.
THE METHOD OF DELIVERY OF THE ORIGINAL NOTES AND THE APPLICABLE LETTER OF
TRANSMITTAL AND ALL OTHER REQUIRED DOCUMENTS TO THE EXCHANGE AGENT IS AT THE
ELECTION AND RISK OF THE HOLDER. INSTEAD OF DELIV-
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<PAGE> 48
ERY BY MAIL, IT IS RECOMMENDED THAT HOLDERS USE AN OVERNIGHT OR HAND DELIVERY
SERVICE. IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO ASSURE DELIVERY TO
THE EXCHANGE AGENT BEFORE THE APPLICABLE EXPIRATION DATE. NO LETTER OF
TRANSMITTAL OR ORIGINAL NOTES SHOULD BE SENT TO THE COMPANY. HOLDERS MAY REQUEST
THEIR RESPECTIVE BROKERS, DEALERS, COMMERCIAL BANKS, TRUST COMPANIES OR NOMINEES
TO EFFECT THE ABOVE TRANSACTIONS FOR SUCH HOLDERS.
Any beneficial owner whose Original Notes are registered in the name of a
broker, dealer, commercial bank, trust company or other nominee and who wishes
to tender should contact such registered holder promptly and instruct such
registered holder to tender on his behalf. If such beneficial owner wishes to
tender on his own behalf, such beneficial owner must, prior to completing and
executing the Letter of Transmittal and delivering his Original Notes, either
make appropriate arrangements to register ownership of the Original Notes in
such owner's name or obtain a properly completed bond power from the registered
holder. The transfer of record ownership may take considerable time.
Signatures on a Letter of Transmittal or a notice of withdrawal, as the
case may be, must be guaranteed by an Eligible Institution (as defined) unless
the Original Notes tendered pursuant thereto are tendered (i) by a registered
owner who has not completed the box entitled "Special Issuance Instructions" or
"Special Delivery Instructions" on the Letter of Transmittal or (ii) for the
account of an Eligible Institution. In the event that signatures on a Letter of
Transmittal or a notice of withdrawal, as the case may be, are required to be
guaranteed, such guarantee must be by a participant in a recognized signature
guarantee medallion program within the meaning of Rule 17Ad-15 under the
Exchange Act (an "Eligible Institution").
If a Letter of Transmittal is signed by a person other than the registered
owner of any Original Notes listed therein, such Original Notes must be endorsed
or accompanied by properly completed bond powers, signed by such registered
owner as such registered owner's name appears on the Original Notes, with
signature guaranteed by an Eligible Institution.
If the Letter of Transmittal or any Original Notes or bond powers are
signed by trustees, executors, administrators, guardians, attorneys-in-fact,
officers of corporations or others acting in a fiduciary or representative
capacity, such persons should so indicate when signing, and evidence
satisfactory to the Company, as applicable, of their authority to so act must be
submitted with the Letter of Transmittal designated for such Original Notes.
All questions as to the validity, form, eligibility (including time of
receipt), acceptance and withdrawal of the tendered Original Notes will be
determined by the Company in its sole discretion, which determination will be
final and binding. The Company reserves the absolute right to reject any and all
Original Notes not properly tendered or any Original Notes the Company's
acceptance of which would, in the opinion of counsel for the Company, be
unlawful. The Company also reserves the absolute right to waive any defects,
irregularities or conditions of tender as to particular Original Notes. The
Company's interpretation of the terms and conditions of the Exchange Offer
(including the instructions in the Letter of Transmittal) will be final and
binding on all parties. Unless waived, any defects or irregularities in
connection with tenders of Original Notes must be cured within such time as the
Company shall determine. Neither the Company, the Exchange Agent nor any other
person shall be under any duty to give notification of defects or irregularities
with respect to tenders of Original Notes nor shall any of them incur any
liability for failure to give such notification. Tenders of Original Notes will
not be deemed to have been made until such irregularities have been cured or
waived. Any Original Notes received by the Exchange Agent that are not properly
tendered and as to which the defects or irregularities have not been cured or
waived will be returned without cost by the Exchange Agent to the tendering
holder of such Original Notes (or, in the case of Original Notes tendered by
book-entry transfer into the Exchange Agent's account at the Book-Entry Transfer
Facility pursuant to the book-entry transfer procedures described below, such
unaccepted or non-exchanged Original Notes will be credited to an account
maintained with such Book-Entry Transfer Facility), unless otherwise provided in
the Letter of Transmittal, as soon as practicable following the Expiration Date.
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<PAGE> 49
By tendering Original Notes in the Exchange Offer, each registered holder
will represent to the issuer of such Original Notes that, among other things,
(i) the Exchange Notes to be acquired by the holder and any beneficial owner(s)
of such Original Notes ("Beneficial Owner(s)") in connection with the Exchange
Offer are being acquired by the holder and any Beneficial Owner(s) in the
ordinary course of business of the holder and any Beneficial Owner(s), (ii) the
holder and each Beneficial Owner are not participating, do not intend to
participate, and have no arrangement or understanding with any person to
participate, in a distribution of the Exchange Notes, (iii) the holder and each
Beneficial Owner acknowledge and agree that (x) any person participating in an
Exchange Offer for the purpose of distributing the Exchange Notes must comply
with the registration and prospectus delivery requirements of the Securities Act
in connection with a secondary resale transaction with respect to the Exchange
Notes acquired by such person and cannot rely on the position of the Staff of
the Commission set forth in no-action letters that are discussed herein under
"-- Resales of the Exchange Notes", and (y) any Participating Broker-Dealer that
receives Exchange Notes for its own account in exchange for Original Notes
pursuant to an Exchange Offer must deliver a prospectus in connection with any
resale of such Exchange Notes, but by so acknowledging, the holder shall not be
deemed to admit that, by delivering a prospectus, it is an "underwriter" within
the meaning of the Securities Act, (iv) neither the holder nor any Beneficial
Owner is an "affiliate," as defined under Rule 405 of the Securities Act, of the
Company except as otherwise disclosed to the Company in writing, and (v) the
holder and each Beneficial Owner understands that a secondary resale transaction
described in clause (iii) above should be covered by an effective registration
statement containing the selling securityholder information required by Item 507
of Regulation S-K of the Commission.
BOOK-ENTRY TRANSFER
The Exchange Agent will make a request to establish an account with respect
to the Original Notes at the Book-Entry Transfer Facility, for purposes of the
Exchange Offer, within two business days after the date of this Prospectus, and
any financial institution that is a participant in the Book-Entry Transfer
Facility's system may make book-entry delivery of Original Notes by causing the
Book-Entry Transfer Facility to transfer such Original Notes into the Exchange
Agent's account at the Book-Entry Transfer Facility in accordance with such
Book-Entry Transfer Facility's procedures for transfer. However, although
delivery of Original Notes may be effected through book-entry transfer at the
Book-Entry Transfer Facility, the applicable Letter of Transmittal, with any
required signature guarantees and any other documents, must be transmitted to
and received by the Exchange Agent at the address set forth below under
"-- Exchange Agent" on or prior to the applicable Expiration Date or the
guaranteed delivery procedures described below must be complied with.
GUARANTEED DELIVERY PROCEDURES
Holders who wish to tender their Original Notes and (i) whose Original
Notes are not immediately available, or (ii) who cannot deliver their Original
Notes, the Letter of Transmittal or any other required documents to the Exchange
Agent prior to the applicable Expiration Date, may effect a tender if:
(a) The tender is made through an Eligible Institution;
(b) Prior to the applicable Expiration Date, the Exchange Agent
receives from such Eligible Institution a properly completed and duly
executed Notice of Guaranteed Delivery (by facsimile transmission, mail or
hand delivery) setting forth the name and address of the holder of the
Original Notes, the certificate number or numbers of such Original Notes
and the principal amount of Original Notes tendered, stating that the
tender is being made thereby, and guaranteeing that, within five business
days after the applicable Expiration Date, the applicable Letter of
Transmittal (or facsimile thereof), together with the certificate(s)
representing the Original Notes to be tendered in proper form for transfer
and any other documents required by the applicable Letter of Transmittal,
will be deposited by the Eligible Institution with the Exchange Agent; and
(c) Such properly completed and executed Letter of Transmittal (or
facsimile thereof), together with the certificate(s) representing all
tendered Original Notes in proper form for transfer (or confirmation of a
book-entry transfer into the Exchange Agent's account at DTC of Original
Notes
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<PAGE> 50
delivered electronically) and all other documents required by the Letter of
Transmittal are received by the Exchange Agent within five business days
after the applicable Expiration Date.
WITHDRAWAL OF TENDERS
Except as otherwise provided herein, tenders of Original Notes pursuant to
an Exchange Offer, unless theretofore accepted for exchange as provided in the
Exchange Offer, may be withdrawn at any time prior to 5:00 p.m., New York City
time, on the business day prior to the Expiration Date.
To be effective, a written or facsimile transmission notice of withdrawal
must be received by the Exchange Agent at its address set forth herein to 5:00
p.m., New York City time, on the business day prior to the Expiration Date. Any
such notice of withdrawal must (i) specify the name of the person having
deposited the Original Notes to be withdrawn (the "Depositor"), (ii) identify
the Original Notes to be withdrawn (including the certificate number or numbers
and aggregate principal amount of such Original Notes), and (iii) be signed by
the holder in the same manner as the original signature on the applicable Letter
of Transmittal (including any required signature guarantees). All questions as
to the validity, form and eligibility (including time of receipt) for such
withdrawal notices will be determined by the Company, whose determination shall
be final and binding on all parties.
Any Original Notes so withdrawn will be deemed not to have been validly
tendered for purposes of the Exchange Offer and no Exchange Notes will be issued
with respect thereto unless the Original Notes so withdrawn are validly
retendered. Properly withdrawn Original Notes may be retendered by following one
of the procedures described above under "-- Procedures for Tendering" at any
time prior to the applicable Expiration Date.
Any Original Notes which have been tendered but which are not accepted for
exchange due to the rejection of the tender due to uncured defects or the prior
termination of the applicable Exchange Offer, or which have been validly
withdrawn, will be returned to the holder thereof (unless otherwise provided in
the Letter of Transmittal), as soon as practicable following the applicable
Expiration Date or, if so requested in the notice of withdrawal, promptly after
receipt by the issuer of the Original Notes of notice of withdrawal without cost
to such holder.
CONDITIONS OF THE EXCHANGE OFFER
The Exchange Offer is subject to the condition that the Exchange Offer, or
the making of any exchange by a holder, does not violate applicable law or any
applicable interpretation of the staff of the Commission. If there has been a
change in commission policy such that in the reasonable opinion of Counsel to
the Company there is a substantial question whether the Exchange Offer is
permitted by applicable federal law, the Company has agreed to seek a no-action
letter or other favorable decision from the Commission allowing the Company to
consummate the Exchange Offer.
If the Company determines in its reasonable discretion, that the Exchange
Offer is not permitted by applicable federal law, it may terminate the Exchange
Offer. In connection therewith, the Company may (i) refuse to accept any
Original Notes and return any Original Notes that have been tendered by the
holders thereof, (ii) extend the Exchange Offer and retain all Original Notes
tendered prior to the Expiration of the Exchange Offer, subject to the rights of
such holders of tendered Original Notes to withdraw their tendered Original
Notes, or (iii) waive such termination event with respect to the Exchange Offer
and accept all properly tendered Original Notes that have not been withdrawn. If
such waiver constitutes a material change in the Exchange Offer, the Company
will disclose such change by means of a supplement to this Prospectus that will
be distributed to each registered holder of Original Notes, and the Company will
extend the Exchange Offer for a period of five to ten business days, depending
upon the significance of the waiver and the manner of disclosure to the
registered holders of the Original Notes, if the Exchange Offer would otherwise
expire during such period.
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<PAGE> 51
EXCHANGE AGENT
State Street Bank and Trust Company has been appointed as "Exchange Agent"
for the Exchange Offer. Questions and requests for assistance and requests for
additional copies of this Prospectus or of the Letter of Transmittal and other
documents should be directed to the Exchange Agent addressed as follows:
<TABLE>
<S> <C> <C>
BY EXPRESS: BY MAIL: BY HAND:
(insured or registered
recommended)
State Street Bank & Trust State Street Bank & Trust State Street Bank & Trust
Company Company Company
Corporate Trust Department Corporate Trust Department Corporate Trust Department
Two International Place Two International Place Two International Place
Boston, MA 02210 Boston, MA 02210 Boston, MA 02210
Attn: Lena Altomare Attn: Lena Altomare Attn: Lena Altomare
</TABLE>
FACSIMILE:
(617)664-5371
FOR INFORMATION:
(617)664-5607
FEES AND EXPENSES
The expenses of soliciting tenders pursuant to the Exchange Offer will be
borne by the Company. The principal solicitation is being made by mail.
Additional solicitations may be made by officers and regular employees of the
Company and its affiliates in person, by telegraph or telephone.
The Company will not make any payments to brokers, dealers or other persons
soliciting acceptances of the Exchange Offer. The Company, however, will pay the
Exchange Agent reasonable and customary fees for its services and will reimburse
the Exchange Agent for its reasonable out-of-pocket expenses in connection
therewith. The Company may also pay brokerage houses and other custodians,
nominees and fiduciaries the reasonable out-of-pocket expenses incurred by them
in forwarding copies of this Prospectus, Letters of Transmittal and related
documents to the beneficial owners of the Original Notes and in handling or
forwarding tenders for exchange.
The expenses to be incurred in connection with the Exchange Offer,
including fees and expenses of the Exchange Agent and Trustee, accounting and
legal fees and printing costs, will be paid by the Company and are estimated to
be approximately $100,000.
The tendering holder will pay all transfer taxes, if any, applicable to the
exchange of Original Notes pursuant to the Exchange Offer.
ACCOUNTING TREATMENT
The terms of the Original Notes are not expected to be materially different
from those of the Exchange Notes. Accordingly, no gain or loss for accounting
purposes will be recognized. The expenses of the Exchange Offer will be
amortized over the term of the Exchange Notes.
RESALE OF THE EXCHANGE NOTES; PLAN OF DISTRIBUTION
Based on no-action letters issued by the staff of the Commission to third
parties, the Company believes that the Exchange Notes issued pursuant to the
Exchange Offer in exchange for Original Notes may be offered for resale, resold
and otherwise transferred by any holder thereof (other than (i) a broker-dealer
who purchased such Original Notes directly from the Company or an "affiliate" of
the Company within the meaning of Rule 405 under the Securities Act to resell
pursuant to Rule 144A or any other available exemption under the Securities Act
or (ii) a person that is such an affiliate) without compliance with the
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<PAGE> 52
registration and prospectus delivery requirements of the Securities Act,
provided that the holder is acquiring the Exchange Notes in its ordinary course
of business and is not participating, and has no arrangement or understanding
with any person to participate, in the distribution of the Exchange Notes.
Holders of Original Notes wishing to accept the Exchange Offer must represent to
the Company that such conditions have been met. In the event that the Company's
belief is inaccurate, holders of Exchange Notes who transfer Exchange Notes in
violation of the prospectus delivery provisions of the Securities Act and
without an exemption from registration thereunder may incur liability under the
Securities Act. The Company does not assume or indemnify holders against such
liability.
Each affiliate of the Company must acknowledge that such person will comply
with the registration and prospectus delivery requirements of the Securities Act
to the extent applicable. Each Participating Broker-Dealer that receives
Exchange Notes in exchange for Original Notes held for its own account, as a
result of market-making or other trading activities, must acknowledge that it
will deliver a prospectus in connection with any resale of such Exchange Notes.
Although a Participating Broker-Dealer may be an "underwriter" within the
meaning of the Securities Act, the Letter of Transmittal states that by so
acknowledging and by delivering a prospectus, such Participating Broker-Dealer
will not be deemed to admit that it is an "underwriter" within the meaning of
the Securities Act. This Prospectus, as it may be amended or supplemented from
time to time, may be used by such Participating Broker-Dealer in connection with
resales of Exchange Notes received in exchange for Original Notes. The Company
has agreed that, for a period of 180 days after the Expiration Date, it will
make this Prospectus and any amendment or supplement to this Prospectus
available to any such Participating Broker-Dealer for use in connection with any
such resale.
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DESCRIPTION OF OTHER OBLIGATIONS
In February 1994, the Company issued $218,500,000 of the 9 7/8% Notes. The
indenture governing the 9 7/8% Notes (the "9 7/8% Indenture") restricts, among
other things, the payment of cash dividends, repurchase of the Company's capital
stock and the making of certain other restricted payments, the incurrence of
additional indebtedness, the making of certain investments, mergers,
consolidations and sale of assets (all as defined in the 9 7/8% Indenture). Upon
certain asset sales (as defined in the 9 7/8% Indenture), the Company will be
required to offer to purchase, at 100% principal amount plus accrued interest to
the date of purchase, the 9 7/8% Notes in a principal amount equal to any net
cash proceeds (as defined in the 9 7/8% Indenture) that are not invested in
properties and assets used primarily in the same or related business to those
owned and operated by the Company at the issue date of the 9 7/8% Notes or at
the date of such asset sale and such net cash proceeds were not applied to
permanently reduce Senior Indebtedness (as defined in the 9 7/8% Indenture). The
9 7/8% Notes are redeemable at the option of the Company, in whole or in part,
at any time and from time to time, at 104.214% on March 1, 1999, declining to
100% on March 1, 2002 and thereafter. The payment of the principal of, premium,
if any, and interest on the 9 7/8% Notes is subordinated in right of payment to
the prior payment of all Senior Indebtedness (as defined in the 9 7/8%
Indenture).
The Company's Canadian subsidiary Broan Limited, has a $14.7 million
secured line of credit (based on exchange rates in effect on December 31, 1996).
After giving effect to the consummation of the Offering and the Refinancing,
there will be no outstanding borrowings under this line of credit. The line of
credit contains a covenant prohibiting net aggregate dividends or other
distributions to the Company from Broan Limited in excess of $10.8 million. As
of December 31, 1996, $8.8 million in dividends or other distributions could
have been made to the Company by Broan Limited under this covenant.
For additional information regarding the obligations described above, see
Note 5 of Notes to Consolidated Financial Statements of the Company included in
the Form 10-K incorporated by reference herein.
CERTAIN FEDERAL TAX CONSIDERATIONS
The following is a general discussion of the material United States federal
income tax consequences of the receipt, ownership and disposition of the
Exchange Notes to United States Holders (as defined below) and Foreign Holders
(as defined below). This discussion is based on currently existing provisions of
the Internal Revenue Code of 1986, as amended (the "Code"), existing and
proposed Treasury regulations promulgated thereunder, and administrative and
judicial interpretations thereof, all as in effect or proposed on the date
hereof and all of which are subject to change, possibly with retroactive effect,
or to different interpretations. This discussion does not address the tax
consequences to subsequent purchasers of Exchange Notes and is limited to
Holders who hold the Exchange Notes as capital assets, within the meaning of
Section 1221 of the Code. This discussion also does not address the tax
consequences to nonresident aliens or foreign corporations that are subject to
United States federal income tax on a net basis on income realized with respect
to an Exchange Note because such income is effectively connected with the
conduct of a U.S. trade or business. Such Holders are generally taxed in a
similar manner to United States Holders; however, certain special rules apply.
Moreover, this discussion is for general information only and does not address
all of the tax consequences that may be relevant to particular Holders in light
of their personal circumstances or to certain types of Holders (such as certain
financial institutions, insurance companies, tax-exempt entities, dealers in
securities or persons who have hedged a risk of ownership of a Note).
No ruling from the Internal Revenue Service ("IRS") will be requested with
respect to any of the matters discussed herein. There can be no assurance that
the IRS will not take a different position concerning the tax consequences of
the receipt, ownership, or disposition of the Notes, or that any such position
would be sustained. BECAUSE INDIVIDUAL CIRCUMSTANCES MAY DIFFER, EACH
PROSPECTIVE HOLDER OF EXCHANGE NOTES IS STRONGLY URGED TO CONSULT HIS OR HER OWN
TAX ADVISOR WITH RESPECT TO HIS OR HER PARTICULAR SITUATION, AND AS TO ANY
FEDERAL, FOREIGN, STATE, LOCAL OR OTHER TAX CONSIDERATIONS (INCLUDING ANY
POSSIBLE CHANGES IN TAX LAW OR INTERPRETATIONS THEREOF) AFFECTING THE RECEIPT,
HOLDING, AND DISPOSITION OF THE EXCHANGE NOTES.
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<PAGE> 54
TAX CONSEQUENCES TO UNITED STATES HOLDERS
As used herein, the term "United States Holder" means a holder of Exchange
Notes, that is, for United States federal income tax purposes, (a) a citizen or
resident of the United States, (b) treated as a domestic corporation or domestic
partnership, or (c) an estate or trust other than a "foreign estate" or "foreign
trust" as defined in section 7701(a)(31) of the Code.
Exchange of Original Notes for Exchange Notes. The exchange by a United
States Holder of an Original Note for an Exchange Note pursuant to the Exchange
Offer will not constitute a taxable exchange of the Original Note if the
economic terms of the Exchange Note (including the interest rate) are identical
to the economic terms of the Original Note. Under the Section 1001 Regulations
relating to modifications and exchanges of debt instruments, with certain
exceptions, an alteration of a legal right or obligation that occurs by
operation of the terms of a debt instrument is not a modification of the debt
instrument and thus does not result in a taxable exchange. Therefore, even if
Liquidated Damages were payable with respect to the Original Notes but not with
respect to the Exchange Notes as a result of a Registration Default as described
under "The Exchange Offer -- Registration Rights; Liquidated Damages", the
exchange of an Original Note for an Exchange Note would not be treated as a
taxable exchange because such Liquidated Damages payments would occur pursuant
to the original terms of the Original Note. Accordingly, the Company intends to
take the position that in the circumstances described in the preceding sentence,
the exchange will not constitute a taxable exchange of the Original Notes.
Interest on Exchange Notes. Interest on the Exchange Notes generally will
be includible in the income of a United States Holder as ordinary income at the
time such interest is received or accrued, in accordance with such Holder's
method of accounting for United States federal income tax purposes. Since the
Original Notes were issued with original issue discount ("OID") that was less
than 1/4 of 1 percent of the stated redemption price at maturity, multiplied by
the number of complete years to maturity, the Original Notes qualified for the
de minimis exception from the imputed OID interest rules and, therefore, so will
the Exchange Notes.
Sale, Exchange, Redemption or Retirement. Upon the sale, exchange,
redemption, retirement or other disposition of an Exchange Note, a United States
Holder will generally recognize taxable gain or loss equal to the difference
between the amount realized on the sale, exchange, redemption or retirement and
such Holder's adjusted tax basis in the Exchange Note. A United States Holder's
adjusted tax basis in an Exchange Note generally will equal the cost of the
Original Note to such Holder. Gain or loss recognized on the disposition of an
Exchange Note generally will be capital gain or loss and will be long-term
capital gain or loss if, at the time of such disposition, the Exchange Note has
been held for more than one year.
Backup Withholding. Certain Holders of Exchange Notes may be subject to
backup withholding at the rate of 31% with respect to interest and cash received
in certain circumstances upon the disposition of such Exchange Notes. Generally,
backup withholding will be applied only if the Holder fails to furnish to the
Company its taxpayer identification number (social security or employer
identification number) in the prescribed manner, to certify that such Holder is
not subject to backup withholding, or to otherwise comply with the applicable
requirements of the backup withholding rules. Any amounts withheld under the
backup withholding rules will be allowed as a credit or refund against a United
States Holder's United States federal income tax liability, provided that such
United States Holder furnished the required information to the IRS. Certain
Holders (including, among others, corporations) are not subject to the backup
withholding requirements.
UNITED STATES FEDERAL TAXATION OF FOREIGN HOLDERS
This section discusses special rules to a Holder of Exchange Notes that is
a Foreign Holder. For purposes of this discussion, a "Foreign Holder" means a
Holder that is not a United States Holder.
Interest on Exchange Notes. In general, interest received by any Foreign
Holder will not be subject to United States federal withholding tax, provided
that (a) such interest is effectively connected with the conduct by the Holder
of a trade or business within the United States and the Company or its paying
agent receives a properly completed Form 4224 in advance of the payments, (b)(i)
the Holder does not actually or constructively own 10% or more of the total
combined voting power of all classes of stock of the Company
53
<PAGE> 55
entitled to vote, (ii) the Holder is not a "bank" within the meaning of Section
881(c)(3)(A) of the Code, (iii) the Holder is not a controlled foreign
corporation that is related to the Company actually or constructively through
stock ownership and (iv) either (x) the beneficial owner of the Note, under
penalties of perjury, provides the Company or its agent with the beneficial
owner's name and address and certifies that it is not a United States Holder on
IRS Form W-8 (or a suitable substitute form) or (y) a securities clearing
organization, bank or other financial institution that holds customers'
securities in the ordinary course of its trade or business (a "financial
institution") holds the Exchange Note and certifies to the Company or its agent
under penalties of perjury that such a Form W-8 (or a suitable substitute) has
been received by it from the beneficial owner of the Exchange Note or qualifying
intermediary and furnishes the payor a copy thereof or (c) the Foreign Holder is
entitled to the benefits of an income tax treaty under which the interest on the
Exchange Notes is exempt from United States withholding tax and the Foreign
Holder or such Holder's agent provides a properly executed IRS Form 1001 in the
name of the beneficial owner claiming the exemption. Payments of interest not
exempt from U.S. federal withholding tax as described above will be subject to
such withholding tax at a rate of 30% (subject to reduction under an applicable
income tax treaty). Interest payments made to a Foreign Holder that are
effectively connected with a United States trade or business conducted by such
Foreign Holder are subject to U.S. tax at the graduated rates applicable to U.S.
citizens, resident aliens and domestic corporations (an additional branch
profits tax may also apply to corporate Holders).
Gain on Disposition of Exchange Notes. A Foreign Holder generally will not
be subject to United States federal income tax or withholding tax with respect
to gain recognized on a disposition of the Exchange Notes, unless (i) in the
case of a Foreign Holder that is an individual, such Foreign Holder is present
in the United States for 183 or more days in the taxable year of the disposition
and certain other requirements are met, (ii) the Foreign Holder is an individual
who is a former citizen of the United States who lost such citizenship within
the preceding ten-year period (or former long-term permanent resident of the
United States who relinquished residency on or after February 6, 1995) whose
loss of citizenship or permanent residency had as one of its principal purposes
the avoidance of United States tax or (iii) such gain is effectively connected
with the conduct in the United States of a trade or business of the Foreign
Holder, or, if a treaty applies, the gain is attributable to a permanent
establishment in the United States (in either case, the branch profits tax also
may apply if the Foreign Holder is a corporation). If a Foreign Holder falls
under (i) above, the Holder generally will be subject to United States federal
income tax at a rate of 30% on the gain derived from the sale (or reduced treaty
rate) and may be subject to withholding in certain circumstances. If a Foreign
Holder falls within clause (ii) or (iii) above, the Holder will be taxed on the
net gain derived from the sale under the graduated United States federal income
tax rates that are applicable to U.S. citizens, resident aliens and domestic
corporations, as the case may be, and may be subject to withholding under
certain circumstances.
Information Reporting and Backup Withholding. Under current Treasury
regulations, backup withholding and information reporting on Form 1099 do not
apply to payments made by the Company or a paying agent to Foreign Holders if
the certification described under "-- Interest on Exchange Notes" is received,
provided that the payor does not have actual knowledge that the Holder is a
United States Holder. If any payments of principal and interest are made to the
beneficial owner of an Exchange Note outside the United States by or through the
foreign office of a foreign custodian, foreign nominee or other foreign agent of
such beneficial owner, or if the foreign office of a foreign "broker" (as
defined in applicable United States Treasury Department regulations) pays the
proceeds of the sale of an Exchange Note to the seller thereof, backup
withholding and information reporting will not apply. Information reporting
requirements (but not backup withholding) will apply, however, to payments by a
foreign office of a broker or custodian that is (a) a United States person, (b)
derives 50% or more of its gross income for certain periods from the conduct of
a trade or business in the United States, or (c) that is a "controlled foreign
corporation" (generally, a foreign corporation controlled by certain United
States shareholders) with respect to the United States, unless the broker or
custodian has documentary evidence in its records that the Holder is a Foreign
Holder and certain other conditions are met, or the Holder otherwise establishes
an exemption. Payment by a United States office of a broker or custodian is
subject to both backup withholding at a rate of 31% and information reporting
unless the Holder certifies under penalties of perjury that it is a Foreign
Holder, or otherwise establishes an exemption. A Foreign Holder may obtain a
refund of, or a credit against such Holder's U.S. federal income
54
<PAGE> 56
tax liability for, any amounts withheld under the backup withholding rules,
provided the required information is furnished to the IRS.
Proposed Regulations. The Internal Revenue Service released proposed
regulations on April 22, 1996 that would revise the procedures for withholding
tax on interest and the associated backup withholding and information reporting
rules described above. In particular, the regulations propose to modify the
requirements imposed on a Foreign Holder or certain intermediaries for
establishing the recipient's status as a Foreign Holder eligible for exemption
from withholding tax and backup withholding. The regulations are generally
proposed to be effective for payments of income made after December 31, 1997,
although the effective date could be extended under proposed transition rules in
particular circumstances. Foreign Holders should consult their tax advisors to
determine the effects of the potential application of the proposed regulations
to their particular circumstances.
55
<PAGE> 57
PLAN OF DISTRIBUTION
Each Participating Broker-Dealer that receives Exchange Notes for its own
account pursuant to the Exchange Offer must acknowledge that it will deliver a
prospectus in connection with any resale of such Exchange Notes. This
Prospectus, as it may be amended or supplemented from time to time, may be used
by a Participating Broker-Dealer in connection with resales of Exchange Notes
received in exchange for Original Notes where such Original Notes were acquired
as a result of market-making activities or other trading activities. The Company
has agreed that for a period of 180 days after the Expiration Date, it will make
this Prospectus, as amended or supplemented, available to any Participating
Broker-Dealer for use in connection with any such resales. In addition, until
, 1997, all dealers effecting transactions in the Exchange Notes may
be required to deliver a prospectus.
The Company will not receive any proceeds from any sale of Exchange Notes
by Participating Broker-Dealers. Exchange Notes received by Participating
Broker-Dealers for their own account pursuant to the Exchange Offer may be sold
from time to time in one or more transactions in the over-the-counter market, in
negotiated transactions, through the writing of options on the Exchange Notes or
a combination of such methods of resale, at market prices prevailing at the time
of resale, at prices related to such prevailing market prices or negotiated
prices. Any such resale may be made directly to purchasers or to or through
brokers or dealers who may receive compensation in the form of commissions or
concessions from any such Participating Broker-Dealer and/or the purchasers of
any such Exchange Notes. Any Participating Broker-Dealer that resells Exchange
Notes that were received by it for its own account pursuant to the Exchange
Offer and any broker or dealer that participates in a distribution of such
Exchange Notes may be deemed to be an "underwriter" within the meaning of the
Securities Act and any profit on any such resale of Exchange Notes and any
commission or concessions received by any such persons may be deemed to be
underwriting compensation under the Securities Act. The Letter of Transmittal
states that by acknowledging that it will deliver, and by delivering a
prospectus, a Participating Broker-Dealer will not be deemed to admit that it is
an "underwriter" within the meaning of the Securities Act.
For a period of 180 days from the date of the consummation of the Exchange
Offer, the Company will promptly send additional copies of this Prospectus and
any amendment or supplement to this Prospectus to any Participating
Broker-Dealer that requests such documents in the Letter of Transmittal.
LEGAL MATTERS
The legality of the Exchange Notes being offered hereby will be passed upon
for the Company by Ropes & Gray, Boston, Massachusetts.
EXPERTS
The audited consolidated financial statements and schedule incorporated by
reference in this Prospectus, and elsewhere in the Registration Statement of
which this Prospectus is a part, have been audited by Arthur Andersen LLP,
independent public accountants, as indicated in their report with respect
thereto and are included herein in reliance upon the authority of said firm as
experts in giving said reports.
56
<PAGE> 58
======================================================
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATION NOT IN THIS PROSPECTUS, AND, IF GIVEN OR MADE, SUCH INFORMATION
OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE
COMPANY. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL, OR A SOLICITATION
OF AN OFFER TO BUY, ANY SECURITIES OTHER THAN THE NOTES OFFERED HEREBY, NOR DOES
IT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY ANY OF THE
NOTES TO ANYONE OR BY ANYONE IN ANY JURISDICTION WHERE, OR TO ANY PERSON TO
WHOM, IT WOULD BE UNLAWFUL TO MAKE SUCH AN OFFER OR SOLICITATION. NEITHER THE
DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY
CIRCUMSTANCES, CREATE AN IMPLICATION THAT THERE HAS NOT BEEN A CHANGE IN THE
INFORMATION SET FORTH IN THIS PROSPECTUS OR IN THE AFFAIRS OF THE COMPANY SINCE
THE DATE HEREOF.
---------------------------
TABLE OF CONTENTS
---------------------------
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Incorporation of Certain Documents by
Reference........................... 3
Available Information................. 3
Prospectus Summary.................... 4
Risk Factors.......................... 12
Capitalization........................ 16
Description of Notes.................. 17
The Exchange Offer.................... 43
Description of Other Obligations...... 52
Certain Federal Tax Considerations.... 52
Plan of Distribution.................. 56
Legal Matters......................... 56
Experts............................... 56
</TABLE>
======================================================
======================================================
NORTEK, INC.
Exchange Offer
$175,000,000
9 1/4 Series B Senior Notes due 2007
------------------------
PROSPECTUS
------------------------
, 1997
======================================================
<PAGE> 59
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 145 of the Delaware General Corporation Law ("DGCL") provides that
a corporation may indemnify any person who was or is a party or is threatened to
be made a party to any threatened, pending or completed action, suit or
proceeding whether civil, criminal or investigative (other than an action by or
in the right of the corporation) by reason of the fact that he is or was a
director, officer, employee or agent of the corporation, or is or was serving at
the request of the corporation as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust or other enterprise,
against expenses (including attorneys' fees), judgments, fines and amounts paid
in settlement actually and reasonably incurred by him in connection with such
action, suit or proceeding if he acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of the
corporation, and, with respect to any criminal action or proceeding, had no
reasonable cause to believe his conduct was unlawful. Section 145 further
provides that a corporation similarly may indemnify any such person serving in
any such capacity who was or is a party or is threatened to be made a party to
any threatened, pending or completed action or suit by or in the right of the
corporation to procure a judgment in its favor, against expenses actually and
reasonably incurred in connection with the defense or settlement of such action
or suit if he acted in good faith and in a manner he reasonably believed to be
in or not opposed to the best interests of the corporation and except that no
indemnification shall be made in respect of any claim, issue or matter as to
which such person shall have been adjudged to be liable to the corporation
unless and only to the extent that the Delaware Court of Chancery or such other
court in which such action or suit was brought shall determine upon application
that, despite the adjudication of liability but in view of all the circumstances
of the case, such person is fairly and reasonably entitled to indemnity for such
expenses which the Court of Chancery or such other court shall deem proper.
Section 102(b)(7) of the DGCL permits a corporation to include in its
certificate of incorporation a provision eliminating or limiting the personal
liability of a director to the corporation or its stockholders for monetary
damages for breach of fiduciary duty as a director, provided that such provision
shall not eliminate or limit the liability of a director (i) for any breach of
the director's duty of loyalty to the corporation or its stockholders, (ii) for
acts or omissions not in good faith or which involve intentional misconduct or a
knowing violation of law, (iii) under Section 174 of the DGCL (relating to
unlawful payment of dividends and unlawful stock purchase and redemption) or
(iv) for any transaction from which the director derived an improper personal
benefit.
The Company's Certificate of Incorporation provides that its Directors
shall not be liable to the Registrant or its stockholders for monetary damages
for breach of fiduciary duty as a director except to the extent that exculpation
from liabilities is not permitted under the DGCL as in effect at the time such
liability is determined. The Company's By-Laws further provides that Registrant
shall indemnify its directors and officers to the fullest extent permitted by
the DGCL.
The directors and officers of the Company are covered under directors' and
officers' liability insurance policies maintained by the Company.
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a) Exhibits
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------- ------------------------------------------------------------------------------------
<S> <C> <C>
1 -- Purchase Agreement dated March 12, 1997 regarding the issuance and sale of the Notes
between Nortek and the Initial Purchasers.
4.2 -- Indenture dated as of March 17, 1997 between the Company, and State Street Bank and
Trust Company, as Trustee.
</TABLE>
II-1
<PAGE> 60
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------ ------------------------------------------------------------------------------------
<C> <S> <C>
4.3 -- Registration Rights Agreement dated as of March 17, 1997 between the Company and the
Initial Purchasers.
5 -- Opinion of Ropes & Gray regarding legality.
12 -- Schedule regarding computation of ratio of earnings to fixed charges.
23.1 -- Consent of Independent Public Accountants.
23.2 -- Consent of Ropes & Gray (included in Exhibit 5).
24 -- Powers of Attorney (included on signature page).
25 -- Statement of Eligibility of Trustee.
99.1 -- Form of Letter of Transmittal used in connection with the Exchange Offer.
99.2 -- Form of Notice of Guaranteed Delivery used in connection with The Exchange Offer.
</TABLE>
ITEM 22. UNDERTAKINGS
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
Registrant, pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Securities Act
of 1933 and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer of controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by any such director, officer or controlling person in
connection with the securities being registered, the Registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question of whether or not
such indemnification is against public policy as expressed in the Securities Act
of 1933 and will be governed by the final adjudication of such issue.
The undersigned registrant hereby undertakes to supply by means of a
post-effective amendment all information concerning a transaction, and the
company being acquired involved therein, that was not the subject of and
included in the registration statement when it became effective.
The undersigned registrant hereby undertakes to respond to requests for
information that is incorporated by reference into the prospectus pursuant to
Item 4, (10)(b), 11 or 13 of this form, within one business day of receipt of
such request, and to send the incorporated documents by first class mail or
other equally prompt means. This includes information contained in documents
filed subsequent to the effective date of the registration statement through the
date of responding to the request.
The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the registration statement. Notwithstanding the foregoing, any
increase or decrease in volume of securities offered (if the total
dollar value of securities offered would not exceed that which was
registered) and any deviation from the low or high and of the estimated
maximum offering range may be reflected in the form of prospectus filed
with the Commission pursuant to Rule 424(b) if, in the aggregate, the
changes in volume and price represent no more than 20 percent change in
the maximum aggregate offering price set forth in the "Calculation of
Registration Fee" table in the effective registration statement.
II-2
<PAGE> 61
(iii) To include any material information with respect to the plan
of distribution not previously disclosed in the registration statement
or any material change to such information in the registration
statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed
to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to Section 13(a) or 15(d) of the Securities
Exchange Act (and, where applicable, each filing of an employee benefit plan's
annual report pursuant to Section 15(d) of the Securities Exchange Act of 1934)
that is incorporated by reference in the registration statement shall be deemed
to be a new registration statement relating to the securities offered therein,
and the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
II-3
<PAGE> 62
SIGNATURES
Pursuant to the requirements of the Securities Act, the registrant has duly
caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Providence, State of
Rhode Island, on the 18th day of April, 1997.
NORTEK, INC.
By: /s/ RICHARD L. BREADY
------------------------------------
Name: Richard L. Bready
Title: Chairman, President and
Chief Executive Officer
POWER OF ATTORNEY
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities and on the dates indicated. Each person whose signature appears below
hereby authorizes Richard L. Bready, Almon C. Hall and Kevin W. Donnelly or any
of them, severally, with full power of substitution, to execute in the name and
on behalf of such person any amendment (including any post-effective amendment)
to this Registration Statement (or any other registration statement for the same
offering that is to be effective upon filing pursuant to Rule 462(b) under the
Securities Act) and to file the same, with exhibits thereto, and other documents
in connection therewith, making such changes in this Registration Statement as
the person(s) so acting deems appropriate, and appoints each of such persons,
each with full power of substitution, attorney-in-fact to sign any amendment
(including any post-effective amendment to this Registration Statement (or any
other registration statement for the same offering that is to be effective upon
filing pursuant to Rule 462(b) under the Securities Act) and to file the same,
with exhibits thereto, and other documents in connection therein.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- --------------------------------------------- ------------------------------ ---------------
<C> <S> <C>
/s/ RICHARD L. BREADY Chairman, President and Chief April 18, 1997
- --------------------------------------------- Executive Officer (Principal
Richard L. Bready Executive Officer)
/s/ ALMON C. HALL Vice President, Controller and April 18, 1997
- --------------------------------------------- Chief Accounting Officer
Almon C. Hall (Principal Accounting
Officer)
/s/ RICHARD J. HARRIS Vice President, Treasurer and April 18, 1997
- --------------------------------------------- Director (Principal
Richard J. Harris Financial Officer)
/s/ PHILLIP L. COHEN Director April 18, 1997
- ---------------------------------------------
Phillip L. Cohen
/s/ WILLIAM I. KELLY Director April 18, 1997
- ---------------------------------------------
William I. Kelly
/s/ J. PETER LYONS Director April 18, 1997
- ---------------------------------------------
J. Peter Lyons
</TABLE>
II-4
<PAGE> 63
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT PAGE
NUMBER DESCRIPTION NUMBER
- ------ ---------------------------------------------------------------------------- ------
<C> <S> <C> <C>
1 -- Purchase Agreement dated March 12, 1997 regarding the issuance and sale of
the Notes between Nortek and the Initial Purchasers.
4.2 -- Indenture dated as of March 17, 1997 between the Company, and State Street
Bank and Trust Company, as Trustee.
4.3 -- Registration Rights Agreement dated as of March 17, 1997 between the Company
and the Initial Purchasers.
5 -- Opinion of Ropes & Gray regarding legality.
12 -- Schedule regarding computation of ratio of earnings to fixed charges.
23.1 -- Consent of Independent Public Accountants.
23.2 -- Consent of Ropes & Gray (included in Exhibit 5).
24 -- Powers of Attorney (included on signature page).
25 -- Statement of Eligibility of Trustee.
99.1 -- Form of Letter of Transmittal used in connection with the Exchange Offer.
99.2 -- Form of Notice of Guaranteed Delivery used in connection with The Exchange
Offer.
</TABLE>
II-5
<PAGE> 1
================================================================================
Exhibit 1
NORTEK, INC.
$175,000,000
9 1/4 % Senior Notes due 2007
Purchase Agreement
March 12, 1997
BEAR, STEARNS & CO. INC.
WASSERSTEIN PERELLA SECURITIES, INC.
BT SECURITIES CORPORATION
================================================================================
<PAGE> 2
NORTEK, INC.
$175,000,000
9 1/4% Senior Notes due 2007
PURCHASE AGREEMENT
------------------
March 12, 1997
New York, New York
BEAR, STEARNS & CO. INC.
245 Park Avenue
New York, New York 10167
WASSERSTEIN PERELLA SECURITIES, INC.
31 West 52nd Street
New York, New York 10019
BT SECURITIES CORPORATION
130 Liberty Street, 30th Floor
New York, New York 10006
Ladies & Gentlemen:
Nortek, Inc., a Delaware corporation (the "COMPANY"), proposes to issue and
sell to Bear, Stearns & Co. Inc., Wasserstein Perella Securities, Inc. and BT
Securities Corporation (each, an "INITIAL PURCHASER", and collectively, the
"INITIAL PURCHASERS") $175,000,000 aggregate principal amount of its 9 1/4%
Senior Notes due 2007 (the "NOTES"), subject to the terms and conditions set
forth herein. The Notes will be issued pursuant to the provisions of an
indenture dated March 17, 1997 (the "INDENTURE"), among the Company and State
Street Bank and Trust Company, as trustee (the "TRUSTEE"). Capitalized terms
used herein and not otherwise defined shall have the meanings assigned to such
terms in the Indenture.
The Notes will be offered and sold to the Initial Purchasers without
registration under the Securities Act of 1933, as amended (the "Act"), in
reliance on an exemption from the registration requirements of the Act. In
connection with the sale of the Notes, the Company prepared a preliminary
offering memorandum dated March 5, 1997 (including all documents incorporated
therein by reference, the "PRELIMINARY OFFERING MEMORANDUM"), and a final
offering memorandum dated March 12, 1997 (including all documents incorporated
therein by reference, the "OFFERING MEMORANDUM"), each setting forth certain
information concerning the Company and the Notes. The Company hereby confirms
that it has authorized the use of the Preliminary Offering Memorandum and the
Offering Memorandum in connection with the offer and resale of the Notes by the
Initial Purchasers. Unless stated to the contrary, all references herein to the
Offering Memorandum are to the Offering Memorandum at the date hereof (including
any supplements or amendments).
<PAGE> 3
The Company understands that each of the Initial Purchasers proposes to make
offerings of the Notes only on the terms and in the manner set forth in the
Offering Memorandum and Sections 2 and 3 hereof, as soon as each such Initial
Purchaser deems advisable after this Agreement has been executed and delivered,
(i) to persons in the United States whom such Initial Purchaser reasonably
believes to be qualified institutional buyers ("QIBs") as defined in Rule 144A
under the Act, as such rule may be amended from time to time ("RULE 144A"), in
transactions meeting the requirements of Rule 144A, and/or (ii) to a limited
number of other institutional "Accredited investors" ("ACCREDITED INVESTORS") as
defined in Rule 501(a)(1), (2), (3) or (7) under Regulation D of the Act, in
private sales exempt from registration under the Act.
1. ISSUANCE OF SECURITIES. The Company proposes, upon the terms and subject
to the conditions set forth herein, to issue and sell to the Initial Purchasers
an aggregate of $175,000,000 principal amount of Notes. The Notes and the Series
B Notes (as defined below) issuable in exchange therefor are collectively
referred to herein as the "NOTES".
Upon original issuance thereof, and until such time as the same is no longer
required under the applicable requirements of the Act, the Notes (and all
securities issued in exchange therefor or in substitution thereof) shall bear
the following legend:
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT"), AND, ACCORDINGLY, MAY NOT BE OFFERED OR
SOLD TO, OR FOR THE ACCOUNT OR BENEFIT OF, ANY PERSON EXCEPT AS SET FORTH
IN THE FOLLOWING SENTENCE. BY ITS ACQUISITION HEREOF, THE HOLDER (1)
REPRESENTS THAT (A) IT IS A "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN
RULE 144A UNDER THE SECURITIES ACT), (B) IT IS AN "ACCREDITED INVESTOR" (AS
DEFINED IN RULE 501(a)(1), (2), (3) OR (7) UNDER THE SECURITIES ACT) WHO IS
AN INSTITUTION (AN "INSTITUTIONAL ACCREDITED INVESTOR"), OR (C) IT IS NOT A
U.S. PERSON AND IS ACQUIRING THIS NOTE IN AN OFFSHORE TRANSACTION IN
COMPLIANCE WITH RULE 904 UNDER THE SECURITIES ACT, (2) AGREES THAT IT WILL
NOT PRIOR TO THE DATE WHICH IS TWO YEARS AFTER THE LATER OF THE DATE OF
ORIGINAL ISSUANCE OF THIS NOTE AND THE LAST DATE ON WHICH THE COMPANY OR
ANY AFFILIATE OF THE COMPANY WAS THE OWNER OF THIS NOTE (THE "RESALE
RESTRICTION TERMINATION DATE") OFFER, SELL OR OTHERWISE TRANSFER THIS NOTE,
EXCEPT (A) TO THE COMPANY,(B) TO A PERSON WHOM THE SELLER REASONABLY
BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER PURCHASING FOR ITS OWN ACCOUNT
OR FOR THE ACCOUNT OF ANOTHER QUALIFIED INSTITUTIONAL BUYER IN COMPLIANCE
WITH THE RESALE PROVISIONS OF RULE 144A UNDER THE SECURITIES ACT, (c) TO
AN INSTITUTIONAL ACCREDITED INVESTOR THAT, PRIOR TO SUCH TRANSFER,
FURNISHES TO THE TRUSTEE A WRITTEN CERTIFICATION CONTAINING CERTAIN
REPRESENTATIONS AND AGREEMENTS RELATING TO THE RESTRICTIONS ON TRANSFER OF
THIS NOTE (THE FORM OF WHICH LETTER CAN BE OBTAINED FROM THE TRUSTEE), (D)
PURSUANT TO THE RESALE LIMITATIONS PROVIDED BY
2
<PAGE> 4
RULE 144 UNDER THE SECURITIES ACT (IF AVAILABLE), (E) PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT, (F) OUTSIDE THE
UNITED STATES TO A FOREIGN PERSON IN A TRANSACTION MEETING THE REQUIREMENTS
OF REGULATION S UNDER THE SECURITIES ACT OR (G) PURSUANT TO ANY OTHER
AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES
ACT (BASED UPON AN OPINION OF COUNSEL REASONABLY ACCEPTABLE TO THE COMPANY
IF THE COMPANY SO REQUESTS), SUBJECT IN EACH OF THE FOREGOING CASES TO ANY
REQUIREMENT OF LAW THAT THE DISPOSITION OF ITS PROPERTY OR THE PROPERTY OF
SUCH ACCOUNT BE AT ALL TIMES WITHIN ITS CONTROL AND TO COMPLIANCE WITH
APPLICABLE STATE SECURITIES LAWS AND (3) AGREES THAT IT WILL DELIVER TO
EACH PERSON TO WHOM THIS NOTE IS TRANSFERRED A NOTICE SUBSTANTIALLY TO THE
EFFECT OF THIS LEGEND. IF THE PROPOSED TRANSFEREE IS AN INSTITUTIONAL
ACCREDITED INVESTOR, THE HOLDER MUST, PRIOR TO SUCH TRANSFER, FURNISH TO
THE TRUSTEE AND THE COMPANY SUCH CERTIFICATIONS, LEGAL OPINIONS OR OTHER
INFORMATION AS EITHER OF THEM MAY REASONABLY REQUIRE TO CONFIRM THAT SUCH
TRANSFER IS BEING MADE PURSUANT TO AN EXEMPTION FROM, OR IN A TRANSACTION
NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT. THE
FOREGOING RESTRICTIONS ON RESALE WILL NOT APPLY SUBSEQUENT TO THE RESALE
RESTRICTION TERMINATION DATE.
2. OFFERING. The Notes will be offered and sold to the Initial Purchasers
pursuant to an exemption from the registration requirements under the Act.
Each of the Initial Purchasers has advised the Company that it proposes to
offer the Notes for resale (the "EXEMPT RESALES") on the terms and conditions
set forth in this Agreement and in the Offering Memorandum, as amended or
supplemented, solely to (i) persons whom such Initial Purchaser reasonably
believes to be QIBs, and (ii) a limited[ number of other institutional investors
whom such Initial Purchaser reasonably believes to be Accredited Investors that
are purchasing for their own accounts or for the account of an Accredited
Investor, for investment purposes only and not with a view to, or for offer or
sale in connection with, any distribution of the Notes in violation of the Act;
PROVIDED, HOWEVER, that with respect to clause (ii) each such Accredited
Investor shall be required to complete and deliver a purchaser letter,
substantially in the form of Annex A to the Offering Memorandum, to such Initial
Purchaser prior to the confirmation of any order. The Initial Purchasers will
offer the Notes to such Eligible Purchasers initially at a price equal to 100 %
of the principal amount thereof. Such price may be changed at any time without
notice.
The Initial Purchasers and other holders (including subsequent transferees)
of the Notes will have the registration rights set forth in a registration
rights agreement relating thereto (the "REGISTRATION RIGHTS AGREEMENT"), to be
dated the Closing Date and substantially in the form of EXHIBIT B hereto, for so
long as such Notes constitute "REGISTRABLE SECURITIES" (as defined in the
Registration Rights Agreement). Pursuant to the Registration Rights Agreement,
the Company will agree to file with the Securities and Exchange Commission (the
"COMMISSION"), under the circumstances set forth therein, (i) a registration
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<PAGE> 5
statement under the Act (the "EXCHANGE OFFER REGISTRATION STATEMENT") relating
to the 9 1/4% Senior Notes due 2007 (the "SERIES B NOTES") to be offered in
exchange for the Notes (the "EXCHANGE OFFER") and (ii) a shelf registration
statement pursuant to Rule 415 under the Act (the "SHELF REGISTRATION
STATEMENT") relating to resales by certain holders of the Notes, and, if
applicable, the Private Exchange Notes (as defined in the Registration Rights
Agreement) and to use its best efforts to cause such Registration Statements to
be declared effective and to consummate the Exchange Offer. This Agreement, the
Notes, the Series B Notes, the Private Exchange Notes, the Indenture and the
Registration Rights Agreement are hereinafter sometimes referred to collectively
as the "OPERATIVE DOCUMENTS."
3. PURCHASE, SALE AND DELIVERY. (a) On the basis of the representations,
warranties and covenants contained in this Agreement, and subject to the terms
and conditions set forth herein, the Company agrees to issue and sell to the
Initial Purchasers, and the Initial Purchasers agree to purchase from the
Company, $175,000,000 aggregate principal amount of Notes. The purchase price
for the Notes will be $967.97 per $1,000 principal amount of Notes.
(b) Delivery of the Notes shall be made, against payment of the purchase
price therefor, at the offices of Paul, Hastings, Janofsky & Walker LLP, 399
Park Avenue, New York, New York 10022 on Monday, March 17, 1997, at 10:00 a.m.,
New York City time, or such other location, date and time as the Initial
Purchasers and the Company shall agree (such date and time of delivery and
payment, the "CLOSING DATE").
(c) One or more of the Notes in definitive form, registered in the name of
Cede & Co., as nominee of The Depository Trust Company ("DTC"), having an
aggregate amount corresponding to the aggregate amount of the Notes sold
pursuant to Exempt Resales to QIBs and Accredited Investors (the "GLOBAL NOTE")
shall be delivered by the Company to the Initial Purchasers (or as the Initial
Purchasers direct), against payment by the Initial Purchasers of the purchase
price therefor, by wire transfer of same day funds, to an account designated by
the Company, provided that the Company shall give at least two business days'
prior written notice to the Initial Purchasers of the information required to
effect such wire transfer. The Global Note shall be made available to the
Initial Purchasers for inspection not later than 9:00 a.m., New York City time,
on the business day immediately preceding the Closing Date.
4. COVENANTS OF THE COMPANY. The Company covenants and agrees with each of
the Initial Purchasers as follows:
(a) To advise the Initial Purchasers promptly and, if requested by the
Initial Purchasers, confirm such advice in writing, (i) of the issuance by
any state securities commission of any stop order suspending the
qualification or exemption from qualification of any Notes-for offering or
sale in any jurisdiction, or the initiation of any proceeding for such
purpose by any state securities commission or other regulatory authority
and (ii) of the occurrence of any event that makes any statement of a
material fact made in the Offering Memorandum untrue or that requires the
making of any additions to or changes in the Offering Memorandum in order
to make the statements therein, in the light of the circumstances under
which they are made, not misleading. The Company shall use its best efforts
to prevent the issuance of any stop order or order suspending the
qualification or exemption of any Notes under any state securities or Blue
Sky laws and, if any such order is issued, to obtain the withdrawal or
lifting of such order at the earliest possible time.
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<PAGE> 6
(b) The Company will furnish to the Initial Purchasers, counsel for
the Initial Purchasers and those persons identified by the Initial
Purchasers to the Company, without charge, as many copies of the
Preliminary Offering Memorandum and the Offering Memorandum, and any
amendments or supplements thereto, as the Initial Purchasers and counsel
for the Initial Purchasers may reasonably request. The Company consents to
the use of the Preliminary Offering Memorandum and the Offering Memorandum,
and any amendments and supplements thereto by the Initial Purchasers in
connection with Exempt Resales.
(c) Before amending or supplementing the Preliminary Offering
Memorandum or the Offering Memorandum, to furnish to the Initial Purchasers
a copy of each such proposed amendment or supplement and not to make any
such proposed amendment or supplement to which the Initial Purchasers
reasonably object. The Company shall promptly prepare, upon the reasonable
request of the Initial Purchasers, any amendment or supplement to the
Preliminary Offering Memorandum or the Offering Memorandum that may be
necessary or advisable in connection with Exempt Resales.
(d) If, after the date hereof and prior to completion of any Exempt
Resale by the Initial Purchasers to purchasers who are not affiliated with
the Initial Purchasers, any event shall occur or condition shall exist as a
result of which, in the judgment of the Company or counsel for the Company
or counsel for the Initial Purchasers, it becomes necessary or advisable to
amend or supplement the Preliminary Offering Memorandum or Offering
Memorandum so that it does not include an untrue statement of a material
fact or omit to state a material fact necessary in order to make the
statements therein, in the light of the circumstances existing at the time
such Preliminary Offering Memorandum or Offering Memorandum is delivered to
a purchaser, not misleading, or if in the opinion of the Company or counsel
for the Company or counsel to the Initial Purchasers it is necessary or
advisable to amend or supplement the Preliminary Offering Memorandum or
Offering Memorandum to comply with applicable law, the Company will (i)
notify the Initial Purchasers, in writing, to suspend use of the
Preliminary Offering Memorandum or Offering Memorandum as promptly as
practicable, and (ii) promptly prepare, at its own expense, an appropriate
amendment or supplement to such Preliminary Offering Memorandum or Offering
Memorandum in accordance with Section 5(c) above, so that the statements
therein as so amended or supplemented will not include an untrue statement
of a material fact or omit to state a material fact necessary in order to
make the statements therein, in the light of the circumstances existing at
the time it is so delivered to a purchaser, not misleading, or so that such
Preliminary Offering Memorandum or Offering Memorandum will comply with
applicable law.
(e) To cooperate with the Initial Purchasers and counsel for the
Initial Purchasers in connection with the qualification or registration of
the Notes for the offering and sale under the securities or Blue Sky laws
of such states and other jurisdictions as the Initial Purchasers may
reasonably request and to continue such qualification in effect so long as
required for the Exempt Resales; PROVIDED, HOWEVER, that the Company shall
not be required in connection therewith to register or qualify as a foreign
corporation where it is not now so qualified or to take any action that
would subject it to service of process in suits or taxation, in each case,
other than as to matters and transactions relating to the Preliminary
Offering Memorandum, the Offering Memorandum or Exempt Resales, in any
jurisdiction where it is not now so subject. The Company shall promptly
advise the Initial Purchasers of the receipt of any notification with
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<PAGE> 7
respect to the suspension of the qualification or exemption from
qualification of the Notes for offering or sale in any jurisdiction or the
institution, or to the Company's knowledge the threat or contemplation of
any proceeding for such purpose.
(f) Whether or not the transactions contemplated by this Agreement are
consummated or this Agreement becomes effective or is terminated, the
Company will pay all costs, expenses, fees and taxes incident to the
performance of the obligations of the Company hereunder, including in
connection with: (i)the preparation, printing, filing and distribution of
the Preliminary Offering Memorandum and the Offering Memorandum (including,
without limitation, financial statements) and all amendments and
supplements thereto required pursuant hereto, (ii)the issuance, transfer
and delivery by the Company of the Notes to the Initial Purchasers, (iii)
the qualification or registration of the Notes for offer and sale under the
securities or Blue Sky laws of the several states (including, without
limitation, the cost of preparing, printing and mailing a preliminary and
final Blue Sky Memorandum and the reasonable fees and disbursements of
counsel for the Initial Purchasers relating thereto) and the expenses
related to all other agreements, memoranda, correspondence and all other
documents prepared and delivered in connection herewith and with the Exempt
Resales, (v) furnishing such copies of the Preliminary Offering Memorandum
and the Offering Memorandum, and all amendments and supplements thereto, as
may be requested for use in connection with Exempt Resales, (vi) the
preparation of certificates for the Notes (including, without limitation,
printing and engraving thereof), (vii) the fees, disbursements and expenses
of the Company's counsel and accountants, (viii) all expenses and listing
fees in connection with the application for quotation of the Notes in the
Private Offerings, Resales and Trading Through Automated Linkages
("PORTAL") market of the National Association of Securities Dealers, Inc.
("NASD"), (ix) all fees and expenses (including fees and expenses of
counsel) of the Company in connection with the approval of the Notes by DTC
for "book-entry" transfer, (x) rating the Notes by rating agencies, (xi)
the fees and expenses of the Trustee and its counsel, (xii) the performance
by the Company of its other obligations under this Agreement and the other
Operative Documents, and (xiii) "roadshow" travel and other expenses
incurred in connection with the marketing and sale of the Notes. Except as
provided in this Section 4(f) and Sections 6, 7 and 11(d) hereof, the
Initial Purchasers shall pay all of their own costs and expenses, including
the fees of counsel for the Initial Purchasers.
(g) The Company will use the proceeds from the sale of the Notes in
the manner specified in the Offering Memorandum under the caption "Use of
Proceeds."
(h) The Company will not voluntarily claim, and will resist actively
any attempts to claim, the benefit of any usury laws against the holders of
any Notes.
(i) None of the Company, its subsidiaries or affiliates (as defined
in Rule 501(b) under the Act) will sell, offer for sale or solicit offers
to buy or otherwise negotiate in respect of any security (as defined in the
Act) that could be integrated with the sale of the Notes in a manner that
would require the registration of the Notes under the Act or take any other
action that would result in the Exempt Resales not being exempt from
registration under the Act.
(j) The Company will for so long as any of the Notes remain
outstanding and during any period in which the Company is not subject to
Section 13 or 15(d) of the Securities Exchange
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<PAGE> 8
Act of 1934, as amended (the "EXCHANGE ACT"), and any holder of the Notes
is still relying on Rule 144A or another exemption from the registration
requirements of the Act, make available to any holder or beneficial owner
of Notes in connection with any sale thereof and any prospective purchaser
of such Notes from such holder or beneficial owner, the information
required by Rule 144A(d)(4) under the Act.
(k) The Company will cause the Exchange Offer to be made in the
appropriate form to permit registered Series B Notes to be offered in
exchange for the Notes and to comply with all applicable federal and state
securities laws in connection with the Exchange Offer.
(1) The Company will comply with all of the agreements set forth
herein and in the other Operative Documents and all agreements set forth in
the representation letters of the Company to DTC relating to the approval
of the Notes by DTC for "book-entry" transfer.
(m) The Company will use its best efforts to effect the inclusion of
the Notes in PORTAL and obtain approval of the Notes by DTC for
"book-entry" transfer.
(n) During a period of three years following the Closing Date, the
Company will deliver without charge to each Initial Purchaser, as it may
reasonably request, promptly upon their becoming available, copies of (i)
all reports or other publicly available information that the Company shall
mail or otherwise make available to its stockholders, and (ii) all reports,
financial statements and proxy or information statements filed by the
Company with the Commission or any national securities exchange and such
other publicly available information concerning the Company or any of its
subsidiaries, including without limitation, press releases.
(o) Prior to the Closing Date, the Company will furnish to the Initial
Purchasers, as soon as they have been prepared in the ordinary course by
the Company, copies of any unaudited interim financial statements for any
period subsequent to the periods covered by the financial statements
appearing in the Offering Memorandum.
(p) Neither the Company nor any of its subsidiaries will take,
directly or indirectly, any action designed to, or that might reasonably be
expected to, cause or result in stabilization or manipulation of the price
of any security of the Company in order to facilitate the sale or resale of
the Notes. Except as permitted by the Act, the Company will not distribute
any (i) preliminary offering memorandum, including, without limitation, the
Preliminary Offering Memorandum, (ii) offering memorandum, including,
without limitation, the Offering Memorandum or (iii) other offering
material in connection with the offering and sale of the Notes.
(q) Neither the Company nor any of its affiliates (as defined in Rule
501(b) under the Act) will solicit any offer to buy or offer or sell the
Notes or the Series B Notes by means of any form of general solicitation or
general advertising (as such terms are used in Regulation D under the Act),
or in any manner involving a public offering within the meaning of Section
4(2) of the Act prior to the effectiveness of a registration statement with
respect to the Notes or the Series B Notes, as applicable.
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<PAGE> 9
5. Representations and Warranties.
------------------------------
(a) The Company represents and warrants to, and agrees with, the
Initial Purchasers that:
(i) The Preliminary Offering Memorandum did not as of its date, and
the Offering Memorandum does not, and any supplement or amendment to the
Offering Memorandum will not, contain an untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading. No representation
and warranty is made in this subsection (i), however, with respect to any
information contained in or omitted from the Preliminary Offering
Memorandum or the Offering Memorandum or any amendment thereof or
supplement thereto in reliance upon and in conformity with information
furnished in writing to the Company by any Initial Purchaser relating to
such Initial Purchaser expressly for use in connection with the preparation
thereof.
(ii) No stop order preventing or suspending the use of the Preliminary
Offering Memorandum or the Offering Memorandum, or any amendment or
supplement thereto, or any order asserting that any of the transactions
contemplated by this Agreement are subject to the registration requirements
of the Act, has been issued, nor, to the best knowledge of the Company, is
threatened.
(iii) Arthur Andersen LLP, which has certified the financial
statements and supporting schedules included in the Offering Memorandum, is
an independent certified public accounting firm with regard to the Company
and its subsidiaries as required by the Act if the Offering were required
to be registered under the Act.
(iv) Subsequent to the respective dates as of which information is
given in the Offering Memorandum, except as set forth in the Offering
Memorandum, there has been no material adverse change, or any fact known to
the Company which could reasonably be expected to result in a material
adverse change, in the business, prospects, properties, assets, liabilities
(contingent or otherwise) earnings, operations, condition (financial or
otherwise) or results of operations of the Company and its subsidiaries
taken as a whole, whether or not arising from transactions in the ordinary
course of business or any loss of, or damage to, properties (whether or not
insured) which could reasonably be expected to affect materially and
adversely the business, prospects, properties, assets, liabilities
(contingent or otherwise), earnings, operations, condition (financial or
otherwise) or results of operations of the Company and its subsidiaries
taken as a whole. Since the date of the latest balance sheet presented in
the Offering Memorandum, except as expressly disclosed in the Offering
Memorandum or in any reports filed by the Company with the Commission
pursuant to the Exchange Act or in accordance with any plan contained in
any such report, neither the Company nor any of its subsidiaries has (i)
incurred or undertaken any liabilities or obligations, direct or
contingent, that are material to the Company and its subsidiaries taken as
a whole, (ii) entered into any material transaction not in the ordinary
course of business and consistent with past practice or (iii) declared or
paid any dividend or made any distribution on any shares of its capital
stock or redeemed, purchased or otherwise acquired or agreed to redeem,
purchase or otherwise acquire any shares of its capital stock.
8
<PAGE> 10
(v) The Company has the requisite corporate power and the authority to
enter into this Agreement and each of the other Operative Documents to
which it is a party, perform each of its obligations hereunder and
thereunder and to consummate the transactions contemplated hereby and
thereby including without limitation to issue, sell and deliver the Notes
to be sold by it hereunder. This Agreement and the transactions
contemplated herein have been duly and validly authorized by the Company
and this Agreement has been duly and validly executed and delivered by the
Company and is a valid and binding obligation of the Company, enforceable
against the Company in accordance with its terms, except (i) as the
enforceability thereof may be limited by bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium or other similar laws affecting the
enforcement of creditors rights generally and by general equitable
principles and (ii) to the extent that rights to indemnity and contribution
hereunder may be limited by federal or state securities laws or the public
policy underlying such laws.
(vi) The execution, delivery and performance of this Agreement and
each of the other Operative Documents by the Company and the consummation
by the Company of the transactions contemplated hereby and thereby
(including the issuance, sale and delivery of the Notes by the Company) do
not and will not (a) conflict with or result in a breach of any of the
terms and provisions of, or constitute a default (or an event which with
notice or lapse of time, or both, would constitute a default), give rise to
any right to accelerate the maturity or require the prepayment of any
obligation of the Company or any of its subsidiaries or require any
consent, or result in the creation or imposition of any lien, charge or
encumbrance upon any property or assets of the Company or its subsidiaries,
pursuant to the terms of any contract, lease, indenture, mortgage, deed of
trust, loan agreement, instrument, franchise, license, permit or other
agreement or document to which the Company or any of its subsidiaries is a
party or by which the Company or any of its subsidiaries or their
respective properties or assets may be bound, except for such conflicts,
breaches, defaults, liens, charges or encumbrances which would not
individually or in the aggregate have a material adverse effect on the
Company and its subsidiaries taken as a whole or prohibit or restrict the
consummation of the transactions contemplated hereby and thereby; (b)
violate or conflict with any provision of the certificate of incorporation
or by-laws (or equivalent instruments) of the Company or any of its
subsidiaries; or (c) violate or conflict with any judgment, decree, order,
statute, rule or regulation of any court or any public, governmental or
regulatory agency or body having jurisdiction over the Company or any of
its subsidiaries or any of their respective properties or assets except for
such violations or conflicts which would not individually or in the
aggregate have a material adverse effect on the Company and its
subsidiaries taken as a whole or prohibit or restrict the consummation of
the transactions contemplated hereby and thereby.
(vii) No consent, approval, authorization, order, registration,
filing, qualification, license or permit of or with any court or any
public, governmental or regulatory agency or body having jurisdiction over
the Company or any of its subsidiaries or any of their respective
properties or assets is required for the valid execution, delivery and
performance of this Agreement or any of the other Operative Documents and
the consummation by the Company of the transactions contemplated hereby and
thereby, including the issuance, sale and delivery of the Notes to be
issued, sold and delivered by the Company hereunder except such as have
been obtained and made (or, in the case of the Registration Rights
Agreement, will be obtained or
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<PAGE> 11
made) under the Act, the Trust Indenture Act of 1939, as amended (the
"TRUST INDENTURE ACT"), and state securities or Blue Sky laws and
regulations or such as may be required by the NASD.
(viii) All of the outstanding shares of capital stock of the Company
are duly and validly authorized and issued, fully paid and nonassessable,
were issued in compliance with all applicable federal and state securities
laws and were not issued in violation of any preemptive rights nor do any
such shares of capital stock have the benefit of any preemptive rights. The
Company had, at December 31, 1996, a duly authorized and outstanding
capitalization as set forth under the caption "Capitalization" in the
Offering Memorandum. On December 31, 1996, after giving pro forma effect to
the issuance and sale of the Notes pursuant hereto and the other
transactions referred to in the Offering Memorandum, the Company would have
had an authorized and outstanding capitalization as set forth in the
Offering Memorandum in the "As Adjusted" column under the caption
"Capitalization". No holder of any securities of the Company is entitled to
have such securities (other than the Notes, the Exchange Notes and the
Private Exchange Notes, if any) registered under any registration rights or
similar agreement.
(ix) The Company and each of its subsidiaries has been duly organized
and is validly existing as a corporation in good standing under the laws of
its jurisdiction of incorporation. The Company and each of its subsidiaries
is duly qualified and in good standing as a foreign corporation in each
jurisdiction in which the character or location of its properties (owned,
leased or licensed) or the nature or conduct of its business makes such
qualification necessary, except for those failures to be so qualified or in
good standing which could not, individually or the aggregate, have a
material adverse effect on the business, prospects, properties, assets,
liabilities (contingent or otherwise), earnings, operations, condition
(financial or otherwise) or results of operations of the Company and its
subsidiaries taken as a whole, and neither the Company nor any of its
subsidiaries has received any claim or notice from any official in any
jurisdiction that it is required to be qualified or licensed to do business
in any jurisdiction in which it is not so qualified or licensed. The
Company and each of its subsidiaries has all requisite power and authority,
and all necessary consents, approvals, authorizations, orders,
registrations, qualifications, licenses and permits of and from all public,
regulatory or governmental agencies and bodies, to own, lease and operate
its properties and conduct its business as now being conducted and as
described in the Offering Memorandum except for consents, approvals,
authorizations, orders, registrations, qualifications, licenses and permits
the failure to obtain which, individually or in the aggregate, would not
reasonably be expected to have a material adverse effect on the business,
prospects, properties, assets, liabilities (contingent or otherwise),
earnings, operations, condition (financial or otherwise) or results of
operations of the Company and its subsidiaries, and the Company has not
received any notice of any proceedings relating to the revocation or
modification of any thereof, nor is the Company aware of any basis
therefor, and no such consent, approval, authorization, order,
registration, qualification, franchise, license or permit contains a
materially burdensome restriction that is not adequately and accurately
disclosed in the Offering Memorandum.
(x) As of December 31, 1996 and as of the date hereof, all of the
outstanding shares of capital stock of each Significant Subsidiary (as
defined in Rule 1-02 of Regulation S-X promulgated by the Commission) of
the Company have been duly and validly issued, are fully paid and
non-assessable and were not issued in violation of preemptive rights,
repurchase rights
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<PAGE> 12
or rights of first refusal and are owned directly or indirectly by the
Company, free and clear of any lien, pledge, encumbrance, claim, security
interest, restriction on transfer, stockholders' agreement, voting trust or
other defect of title whatsoever. The Company owns no controlling interest
in any other corporation, partnership or other entity and does not directly
or indirectly own any shares of stock or any other securities of any
corporation or have any equity interest in any firm, partnership,
association or other entity, other than (a) minority investments in
marketable securities that may be made in the ordinary course of business
as a part of its investment of excess cash assets and (b) a 40% interest
held by the Company in Spalding Composites, Inc.
(xi) Except as described in the Offering Memorandum there is no
action, suit, investigation or proceeding, governmental or otherwise, to
which the Company or any of its subsidiaries is a party or to which any
property of the Company or any of its subsidiaries is subject or which is
pending or, to the best knowledge of the Company, threatened against the
Company or any of its subsidiaries which (i) could reasonably be expected
to have a material adverse effect on the Company or its business,
prospects, properties, assets, liabilities (contingent or otherwise),
earnings, operations, condition (financial or otherwise) or results of
operations or (ii) seeks to restrain, enjoin, prevent the consummation of,
or otherwise challenge the issuance of, the Notes or the execution and
delivery of this Agreement or any of the other transactions contemplated
hereby, or questions the legality or validity of any such transactions or
that seeks to recover damages or obtain other relief in connection with any
of such transactions.
(xii) Except as provided for in this Agreement, the Company has not
taken and will not take, directly or indirectly, any action designed to
cause or result in, or which constitutes or which might reasonably be
expected to constitute, the stabilization or manipulation of the price of
any security of the Company in order to facilitate the sale or resale of
the Notes or since the date of the Preliminary Offering Memorandum (A)
sold, bid for, purchased or paid any person any compensation for soliciting
purchases of the Notes (other than the Initial Purchasers) or (B) paid or
agreed to pay to any person any compensation for soliciting another to
purchase any other securities of the Company.
(xiii) The consolidated financial statements, including the notes
thereto, and supporting schedules included in the Offering Memorandum
comply as to form in all material respects with the requirements applicable
to a Report on Form 10-K under the Exchange Act and present fairly the
financial condition, results of operations, stockholders' investment and
cash flows and other information purported to be shown therein of the
Company and its subsidiaries at the dates and for the periods indicated'
and the supporting schedules included in the Offering Memorandum present
fairly the information required to be stated therein. Except as disclosed
in such financial statements, such consolidated financial statements have
been prepared in accordance with generally accepted accounting principles
consistently applied throughout the periods involved, and are in accordance
with the books and records of the Company and its subsidiaries in all
material respects. No other financial statements are required to be
included in the Offering Memorandum. The financial data set forth in the
Offering Memorandum under the captions "Summary Consolidated Financial
Information", "Capitalization", "Selected Consolidated Financial
Information" and "Management's Discussion and Analysis of Financial
Condition and Results of Operations" fairly present, on the basis stated in
the Offering Memorandum, the information set
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<PAGE> 13
forth therein and have been compiled on a basis consistent with that of the
audited financial statements included in the Offering Memorandum. All other
financial information and statistical data set forth in the Offering
Memorandum are, in all material respects, accurately presented and have
been prepared on an accounting basis consistent with the financial
statements included in the Offering Memorandum. The "as adjusted" financial
information included in the Offering Memorandum that gives effect to the
issuance of the Notes, the application of the net proceeds therefrom and
the other transactions and events specified therein has been properly
compiled on the basis of the assumptions set forth with respect thereto.
(xiv) Each of the Company and its subsidiaries has good and marketable
title to all the properties and assets reflected as owned in the financial
statements (or elsewhere) in the Offering Memorandum, subject to no lien,
mortgage, pledge, charge or encumbrance of any kind except (i) those, if
any, reflected in the financial statements, or (ii) those which are not
material in amount and do not adversely affect the use made and proposed to
be made of such property by the Company and its subsidiaries (except for
such uses the failure of which to be made would not reasonably be expected
to have a material adverse effect on the business, prospects, properties,
assets, liabilities (contingent or otherwise), earnings, operations,
condition (financial or otherwise) or results of operations of the Company
or its subsidiaries. Each of the Company and its subsidiaries holds its
leased properties under valid, subsisting and enforceable leases, with such
exceptions as are not, individually or in the aggregate, material and do
not, individually or in the aggregate, interfere with the use made or
proposed to be made of such properties by the Company or any of its
subsidiaries (except for such uses the failure of which to be made would
not reasonably be expected to have a material adverse effect on the
business, prospects, properties, assets, liabilities (contingent or
otherwise), earnings, operations, condition (financial or otherwise) or
results of operations of the Company or its subsidiaries. Except as
disclosed in the Offering Memorandum, the Company and each of its
subsidiaries owns or leases all such properties as are necessary to its
operations as now conducted or as proposed to be conducted (except for such
properties the failure to own or lease which would not reasonably be
expected to have a material adverse effect on the business, prospects,
properties, assets, liabilities (contingent or otherwise), earnings,
operations, condition (financial or otherwise) or results of operations of
the Company and its subsidiaries.
(xv) The Company is not, and upon consummation of the transactions
contemplated hereby will not be, subject to registration as an "investment
company" or an entity "controlled by" an "investment company" within the
meaning of Investment Company Act of 1940 and the rules and regulations
promulgated thereunder; the Company will conduct its business and financial
affairs in such a manner as to ensure that it will not become an
"investment company" or an entity "controlled" by an "investment company".
(xvi) The Company and each of its subsidiaries have (i) filed all
federal, state and local and foreign tax returns which are required to be
filed through the date hereof, and all such tax returns are true, complete
and accurate in all material respects, or (ii) received valid extensions
thereof and have paid all taxes shown on such returns and all assessments
received by them except where, in the case of state and local and foreign
tax returns, the failure to file in clause (i), or extend the due date of
or pay the same in clause (ii), in the aggregate, could not reasonably be
expected to have a material adverse effect on the business, prospects,
properties,
12
<PAGE> 14
assets, liabilities (contingent or otherwise), earnings, operations,
condition (financial or otherwise) or results of operations of the Company
and its subsidiaries' the Company has no knowledge of any tax deficiency
which has been or might be asserted against the Company or any of its
subsidiaries which could materially and adversely affect the business or
properties of the Company and its subsidiaries taken as a whole; to the
Company's best knowledge, all tax liabilities are adequately provided for
on the consolidated books of the Company.
(xvii) The Company and each of its subsidiaries own or possess
adequate licenses or other rights to use all patents, trademarks, service
marks, trade names, copyrights, technology and know-how necessary to
conduct the business now or proposed to be conducted by the Company and
each of its subsidiaries as described in the Offering Memorandum except for
those patents, trademarks, service marks, trade names, copyrights,
technology and know-how the failure to own or have the right to use would
not have a material adverse effect on the Company and its subsidiaries
taken as a whole, and, except as disclosed in the Offering Memorandum,
neither the Company nor any of its subsidiaries has received any notice of
infringement of or conflict with (or knows of such infringement of or
conflict with) rights of others with respect to any patents, trademarks,
service marks, trade names, copyrights or know-how except for conflicts
which would not reasonably be expected to have a material adverse effect on
the business, prospects, properties, assets, liabilities (contingent or
otherwise), earnings, operations, condition (financial or otherwise) or
results of operations of the Company and its subsidiaries; and to the best
knowledge of the Company, the Company and each of its subsidiaries do not
in the conduct of their business as now conducted or proposed to be
conducted, infringe or conflict with any such rights of any third party.
(xviii) There are no contracts, indentures, mortgages, loan
agreements, notes, leases or other agreements or instruments or other
documents (collectively, "DOCUMENTS") required to be described or referred
to in the Offering Memorandum other than those described or referred to
therein or in the Form 10-K of the Company for the year ended December 31,
1996 included as Annex B attached thereto and incorporated therein by
reference; all such descriptions are accurate in all material respects and
present fairly the information described therein. All such Documents to
which the Company is a party have been duly authorized, executed and
delivered by the Company, constitute valid and binding agreements of the
Company and are enforceable against the Company in accordance with the
terms thereof, except as the enforceability thereof may be limited by
bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium
or other similar laws affecting the enforcement of creditors' rights
generally and by general equitable principles.
(xix) There are no outstanding loans, advances (except normal
advances for business expenses in the ordinary course of business), or
guarantees of indebtedness by the Company or any of its subsidiaries to or
for the benefit of any of the officers or directors of the Company or any
of its subsidiaries or any of the members of the families of any of them,
except as adequately disclosed in the Offering Memorandum; all such
descriptions are accurate in all material respects and present fairly the
information required to be described in, or incorporated by reference in, a
Registration Statement on Form S-3.
13
<PAGE> 15
(xx) Each of the Company and its subsidiaries maintains a system of
internal accounting controls sufficient to provide reasonable assurances
that (A) transactions are executed in accordance with management's general
or specific authorizations; (B) transactions are recorded as necessary to
permit preparation of financial statements in conformity with generally
accepted accounting principles and to maintain accountability for assets;
(C) access to assets is permitted only in accordance with management's
general or specific authorization; and (D) the recorded accountability for
assets is compared with existing assets at reasonable intervals and
appropriate action is taken with respect to any differences.
(xxi) Neither the Company nor any of its subsidiaries is in violation
or breach of, or in default (nor has any event occurred which with notice,
or lapse of time, or both, would constitute a default) of any contract,
agreement, indenture, loan or other agreement, instrument, mortgage, note,
permit, lease, license, arrangement or understanding to which the Company
or any of its subsidiaries is a party or by which the Company, any of its
subsidiaries or any of their respective properties may be bound where such
default, either individually or together with all such other defaults,
could reasonably be expected to have a material adverse effect on the
business, prospects, properties, assets, liabilities (contingent or
otherwise), earnings, operations, or condition (financial or otherwise) or
results of operations of the Company or on the ability of the Company to
perform its obligations hereunder. Each such contract, agreement,
indenture, instrument, mortgage, note, permit, lease, license, arrangement
and understanding is in full force and effect and is the legal, valid, and
binding obligation of the Company or its subsidiaries, as the case may be,
and, to the Company's knowledge, the other parties thereto and is
enforceable against the Company or its subsidiaries, as the case may be,
and, to the Company's knowledge, against the other parties thereto in
accordance with its terms (except for such failures of enforceability which
would not reasonably be expected to have a material adverse effect on the
business, prospects, properties, assets, liabilities (contingent or
otherwise), earnings, operations, condition (financial or otherwise) or
results of operations of the Company and its subsidiaries. Each of the
Company and each of its subsidiaries enjoys peaceful and undisturbed
possession under all material leases and material licenses under which the
Company and its subsidiaries are operating except for disturbances which
would not, individually or in the aggregate reasonably be expected to have
a material adverse effect on the business, prospects, properties, assets,
liabilities (contingent or otherwise), earnings, operations, condition
(financial or otherwise) or results of operations of the Company and its
subsidiaries. Neither the Company nor any of its subsidiaries is in
violation or breach of, or in default with respect to, any term of its
respective articles of incorporation or bylaws. Neither the Company nor any
of its subsidiaries is in violation of, or in default with respect to, any
law, rule, regulation, order, judgment or decree, except such as are
described in the Offering Memorandum or such as, individually or in the
aggregate, could not reasonably be expected to have a material adverse
effect upon the business, prospects, properties, assets, liabilities
(contingent or otherwise), earnings, operations, condition (financial or
otherwise) or results of operations of the Company.
(xxii) Except as described in the Offering Memorandum, (i) no labor
dispute with the employees of the Company and any of its subsidiaries
exists or, to the best knowledge of the Company, is threatened and (ii) the
Company is not aware of any labor disturbance by the employees of any of
its significant manufacturers, suppliers, customers or contractors, that
could reasonably be expected in the case of both (i) and (ii) to have a
material adverse effect on the
14
<PAGE> 16
business, prospects, properties, assets, liabilities (contingent or
otherwise), earnings, operations, condition (financial or otherwise) or
results of operations of the Company.
(xxiii) Except as described in the Offering Memorandum, (i) the
Company is not a party to or bound by any stockholders agreements or voting
trusts with respect to any securities of the Company and (ii) there are no
contracts, agreements or understandings between the Company or any of its
subsidiaries and any person or entity granting such person or entity the
right to require the Company to file a registration statement under the Act
with respect to any securities of the Company owned or to be owned by such
person or entity or to require the Company to include such securities in
the securities to be registered in the Exchange Offer.
(xxiv) To the best knowledge of the Company, except as disclosed in
the Offering Memorandum, neither the Company nor any of its subsidiaries is
in violation of any federal or state law or regulation relating to
occupational safety and health or to the storage, handling or
transportation of hazardous or toxic materials, and the Company and each of
its subsidiaries have received all permits, licenses or other approvals
required under applicable federal and state occupational safety and health
and environmental laws and regulations to conduct their respective
businesses, and the Company and each of its subsidiaries is in compliance
with all terms and conditions of any such permits, licenses or approvals,
except any such violation of law or regulation, failure to receive required
permits, licenses or other approvals or failure to comply with the terms
and conditions of such permits, licenses or approvals which could not,
individually or together' with all such other violations or failures, have
a material adverse effect on the Company or its business, prospects,
properties, assets, liabilities (contingent or otherwise), earnings,
operations, condition (financial or otherwise) or results of operations.
(xxv) Neither the Company nor, to its knowledge, any director,
officer, agent, employee or other person associated with or acting on
behalf of the Company has used any corporate funds for unlawful
contributions, gifts, entertainment or other unlawful expenses relating to
political activity, made any unlawful payment to foreign or domestic
government officials or employees or to foreign or domestic political
parties or campaigns from corporate funds, made any bribe, rebate, payoff,
influence payment, kickback, or other unlawful payment or violated any
provision of the Foreign Corrupt Practices Act of 1977.
(xxvi) The Company has not incurred any liability for any fee,
commission or other compensation on account of the employment of a broker
or finder (other than the Initial Purchasers) in connection with the
transactions contemplated by the Operating Documents. Neither the Company
nor any of its directors, officers or controlling persons has since the
date of the Preliminary Offering Memorandum (a) sold, bid for, purchased or
paid to any person other than the Initial Purchasers any compensation for
soliciting purchases of, the Notes, the Exchange Notes, or the Private
Exchange Notes, if any, or (b) paid or agreed to pay to any person other
than the Initial Purchasers any compensation for soliciting another person
to purchase any other securities of the Company.
(xxvii) The Company, either directly or through one or more of its
subsidiaries, maintains reasonably adequate insurance with respect to its
business and properties and the business and properties of its
subsidiaries.
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<PAGE> 17
(xxviii) The Company has complied and will comply with all provisions
of Florida Statutes Section 517.075 (Chapter 92-198, Laws of Florida).
(xxix) When the Notes are issued and delivered pursuant to this
Agreement, no Note will be of the same class (within the meaning of Rule
144A under the Act) as securities of the Company or that are listed on a
national securities exchange registered under Section 6 of the Exchange Act
or that are quoted in a United States automated inter-dealer quotation
system. The Company has been advised that the Notes have been designated
PORTAL eligible securities in accordance with the rules and regulations of
the NASD.
(xxx) Each of the Operative Documents (other than the Notes, the
Exchange Notes and the Private Exchange Notes) has been duly and validly
authorized by the Company and, when duly executed and delivered by the
Company, will be the legal, valid and binding obligation of the Company,
enforceable against the Company in accordance with its terms, except as (i)
the enforceability thereof may be limited by applicable bankruptcy,
insolvency, fraudulent conveyance, reorganization or similar laws affecting
the rights of creditors generally and (ii) rights of acceleration and the
availability of equitable remedies may be limited by general principles of
equity. The Offering Memorandum contains an accurate summary in all
material respects of the terms of each of the Operative Documents.
(xxxi) The Notes have been duly and validly authorized by the
Company for issuance and sale to the Initial Purchasers pursuant to this
Agreement and, when issued and authenticated in accordance with the terms
of the Indenture and delivered against payment therefor in accordance with
the terms hereof and thereof, will be the legal, valid and binding
obligations of the Company, enforceable against the Company in accordance
with their terms and entitled to the benefits of the Indenture, except as
(i) the enforceability thereof may be limited by applicable bankruptcy,
insolvency, fraudulent conveyance, reorganization or similar laws affecting
the rights of creditors generally and (ii) rights of acceleration and the
availability of equitable remedies may be limited by general principles of
equity.
(xxxii) The Series B Notes and the Private Exchange Notes, if any,
have been duly and validly authorized for issuance by the Company and, when
issued and authenticated in accordance with the terms of the Exchange Offer
and the Indenture, will be the legal, valid and binding obligations of the
Company, enforceable against the Company in accordance with their terms and
entitled to the benefits of the Indenture, except as (i) the enforceability
thereof may be limited by applicable bankruptcy, insolvency, fraudulent
conveyance, reorganization or similar laws affecting the rights of
creditors generally and (ii) rights of acceleration and the availability of
equitable remedies may be limited by general principles of equity.
(xxxiii) No registration under the Act of the Notes is required for
the sale of the Notes to the Initial Purchasers as contemplated hereby or
for the Exempt Resales assuming (A) that the purchasers who buy the Notes
in the Exempt Resales are either QIBs or Accredited Investors and (B) the
accuracy of the representations of the Initial Purchasers regarding the
absence of general solicitation in connection with the sale of Notes to the
Initial Purchasers and Exempt Resales contained herein. No form of general
solicitation or general advertising (as those terms are used in Regulation
D under the Act) was used by the Company or any of its representatives
(other than
16
<PAGE> 18
the Initial Purchasers, as to which the Company makes no representation or
warranty) in connection with the offer and sale of any of the Notes in
connection with Exempt Resales, including, but not limited to, articles,
notices or other communications published in any newspaper, magazine, or
similar medium or broadcast over television or radio, or any seminar or
meeting whose attendees have been invited by any general solicitation or
general advertising. None of the Company, its subsidiaries or affiliates
(as defined in Rule 501(b) under the Act) has, directly or through any
agent, sold, offered for sale, solicited offers to buy or otherwise
negotiated in respect of any security that is or will be integrated with
the sale of the Notes in a manner that would require the registration of
the Notes under the Act.
(xxxiv) Set forth on EXHIBIT A hereto is a list of each funded
employee pension or benefit plan, as defined in Article 3, Section 2(A) of
ERISA and qualified under Section 401(a) of the Internal Revenue Code, with
respect to which the Company or any of its subsidiaries, or any corporation
considered an affiliate of any of them within the meaning of Section
407(d)(7) of ERISA, is a party in interest or disqualified person.
(xxxv) None of the execution, delivery and performance of this
Agreement, the issuance and sale of the Notes, the application of the
proceeds from the issuance and sale of the Notes and the consummation of
the transactions contemplated thereby as set forth in the Offering
Memorandum, will violate Regulations G, T, U or X promulgated by the Board
of Governors of the Federal Reserve System or analogous foreign laws and
regulations.
The Company acknowledges that the Initial Purchasers and, for purposes
of the opinions to be delivered to the Initial Purchasers pursuant to Section 8
hereof, counsel for the Company and counsel for the Initial Purchasers, will
rely upon the accuracy and truth of the foregoing representations and hereby
consent to such reliance.
(b) Each Initial Purchaser, severally and not jointly, represents,
warrants and covenants to the Company and agrees that:
(i) Such Initial Purchaser is a QIB, with such knowledge and
experience in financial and business matters as are necessary in order to
evaluate the merits and risks of an investment in the Notes.
(ii) Such Initial Purchaser (A) is not acquiring the Notes with a
view to any distribution thereof that would violate the Act or the
securities laws of any state of the United States or any other applicable
jurisdiction and (B) will be reoffering and reselling the Notes only to
QIBs in reliance on the exemption from the registration requirements of
the Act provided by Rule 144A and to Accredited Investors in a private
placement exempt from the registration requirements of the Act.
(iii) No form of general solicitation or general advertising has been
or will be used by such Initial Purchaser or any of its representatives in
connection with the offer and sale of any of the Notes, including, but not
limited to, articles, notices or other communications published in any
newspaper, magazine, or similar medium or broadcast over television or
radio, or any
17
<PAGE> 19
seminar or meeting whose attendees have been invited by any general
solicitation or general advertising.
(iv) Such Initial Purchaser agrees that, in connection with the Exempt
Resales, it will solicit offers to buy the Notes only from, and will offer
to sell the Notes only to, QIBs and Accredited Investors. Such Initial
Purchaser further agrees (A) that it will offer to sell the Notes only to,
and will solicit offers to buy the Notes only from (1) QIBs who in
purchasing such Notes will be deemed to have represented and agreed that
they are purchasing the Notes for their own accounts or accounts with
respect to which they exercise sole investment discretion and that they or
such accounts are QIBs and (2) Accredited Investors who make the
representations contained in, and execute and return to such Initial
Purchaser, a certificate in the form of ANNEX A attached to the Offering
Memorandum and (B) that, in the case of such QIBs and Accredited Investors,
acknowledges and agrees that such Notes will not have been registered under
the Act and may be resold, pledged or otherwise transferred only (1) to the
Company, (2) to a person whom the seller reasonably believes is a QIB
purchasing for its own account or for the account of another QIB in
compliance with the resale provisions of Rule 144A under the Act, (3) to an
institutional Accredited Investor that, prior to such transfer, furnishes
to the Trustee a written certification containing certain representations
and agreements relating to the restrictions on transfer of such Notes, (4)
pursuant to the resale limitations provided by Rule 144 under the Act, if
available, (5) pursuant to and effective registration statement under the
Act, (6) outside the United States to a foreign person in a transaction
meeting the requirements of Regulation S under the Act or (7) pursuant to
any other available exemption from the registration requirements of the
Act, and, in each case, in accordance with any applicable securities laws
of any state of the United States or any other applicable jurisdiction and
(c) that the holder will, and each subsequent holder is required to, notify
any purchaser of the security evidenced thereby of the resale restrictions
set forth in (B) above.
Each Initial Purchaser understands that the Company and, for purposes
of the opinions to be delivered to the Initial Purchasers pursuant to Section 8
hereof, counsel for the Company and counsel for the Initial Purchasers will rely
upon the accuracy and truth of the foregoing representations, and hereby
consents to such reliance.
6. Indemnification.
---------------
(a) The Company agrees to indemnify and hold harmless each Initial
Purchaser, its officers, directors, partners, employees, agents and counsel, and
each person, if any, who controls such Initial Purchaser within the meaning of
Section 15 of the Act or Section 20(a) of the Exchange Act, against any and all
losses, liabilities, claims, damages and expenses whatsoever (including but not
limited to attorneys' fees and any and all expenses whatsoever reasonably
incurred in investigating, preparing or defending against any litigation,
commenced or threatened, or any claim whatsoever, and any and all amounts paid
in settlement of any claim or litigation), joint or several, to which they or
any of them may become subject under the Act, the Exchange Act, any state
securities or Blue Sky law or otherwise, insofar as such losses, liabilities,
claims, damages, obligations, penalties, judgments, awards, costs, disbursements
or expenses (or actions in respect thereof) arise out of or are based upon any
untrue statement or alleged untrue statement of a material fact contained in the
Preliminary Offering Memorandum or the Offering Memorandum, or in any supplement
thereto or amendment thereof, or arise
18
<PAGE> 20
out of or are based upon the omission or alleged omission to state therein any
material fact required to be stated therein or necessary to make the statements
therein not misleading; PROVIDED, HOWEVER, that (i) the Company will not be
liable to an Initial Purchaser in any such case to the extent, but only to the
extent, that any such loss, liability, claim, damage, obligation, penalty,
judgment, award, cost, disbursement or expense arises out of or is based upon
any such untrue statement or alleged untrue statement or omission or alleged
omission made therein in reliance upon and in conformity with written
information furnished to the Company by or on behalf of such Initial Purchaser
expressly for use therein and (ii) the indemnity agreement contained in this
Section 6(a) with respect to any Preliminary Offering Memorandum (or the
Offering Memorandum) shall not inure to the benefit of an Initial Purchaser (or
to the benefit of any person controlling such Initial Purchaser) from whom the
person asserting any such losses, liabilities, claims, damages or expenses
purchased the Notes which is the subject thereof if at or prior to the written
confirmation of the sale of such Notes a copy of the Offering Memorandum (or the
Offering Memorandum as amended or supplemented) was not sent or delivered to
such person and the untrue statement or omission of a material fact contained in
such Preliminary Offering Memorandum (or the Offering Memorandum) was corrected
in the Offering Memorandum (or the Offering Memorandum as amended or
supplemented) and delivery of such Offering Memorandum (or the Offering
Memorandum as amended or supplemented) would have eliminated any such loss,
liability, claim, damage or expense unless the failure is the result of
non-compliance by the Company with Section 4(b) hereof; PROVIDED, HOWEVER, the
indemnity agreement in this Section 6(a) shall not apply to any portion of any
such loss, liability, claim, damage, obligation, penalty, judgment, award, cost,
disbursement or expense to the extent it is found in a final judgment by a court
of competent jurisdiction (not subject to further appeal) to have resulted
primarily and directly from the gross negligence or willful misconduct of such
Initial Purchaser. This indemnity agreement will be in addition to any liability
which the Company may otherwise have including, without limitation, under this
Agreement.
(b) Each Initial Purchaser agrees, severally and not jointly, to
indemnify and hold harmless the Company, each of the directors of the Company,
and each other person, if any, who controls the Company within the meaning of
Section 15 of the Act or Section 20(a) of the Exchange Act, against any losses,
liabilities, claims, damages and expenses whatsoever as incurred (including but
not limited to attorneys' fees and any and all expenses whatsoever incurred in
investigating, preparing or defending against any litigation, commenced or
threatened, or any claim whatsoever, and any and all amounts paid in settlement
of any claim or litigation), joint or several, to which they or any of them may
become subject under the Act, the Exchange Act or otherwise, insofar as such
losses, liabilities, claims, damages or expenses (or actions in respect thereof)
are based upon any untrue statement or alleged untrue statement of a material
fact contained in the Preliminary Offering Memorandum or the Offering Memorandum
or in any amendment thereof or supplement thereto, or arise out of or are based
upon the omission or alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein not misleading,
in each case to the extent, but only to the extent, that any such loss,
liability, claim, damage or expense arises out of or is based upon any such
untrue statement or alleged untrue statement or omission or alleged omission
made therein in reliance upon and in conformity with written information
furnished to the Company by or on behalf of such Initial Purchaser expressly for
use therein; PROVIDED, HOWEVER, that in no case shall any Initial Purchaser be
liable or responsible for any amount in excess of the discounts and commissions
applicable to the Notes purchased by such Initial Purchaser hereunder. This
indemnity will be in addition to any liability which the Initial Purchasers may
otherwise have including, without limitation, under this Agreement.
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<PAGE> 21
(c) Promptly after receipt by an indemnified party under subsection
(a) or (b) above of notice of the commencement of any action, such indemnified
party shall, if a claim in respect thereof is to be made against the
indemnifying party under such subsection, notify each party against whom
indemnification is to be sought in writing of the commencement thereof (but the
failure to so notify an indemnifying party shall not relieve it from any
liability which it may have under this Section 6 except to the extent the
indemnifying party is materially prejudiced by such failure). In case any such
action is brought against any indemnified party, and it notifies an indemnifying
party of the commencement thereof, the indemnifying party will be entitled to
participate therein, and to the extent it may elect by written notice delivered
to the indemnified party promptly after receiving the aforesaid notice from such
indemnified party, to assume the defense thereof with counsel reasonably
satisfactory to such indemnified party. Notwithstanding the foregoing, the
indemnified party or parties shall have the right to employ its or their own
counsel in any such case, but the fees and expenses of such counsel shall be at
the expense of such indemnified party or parties unless (i) the employment of
such counsel shall have been authorized in writing by one of the indemnifying
parties in connection with the defense of such action, (ii) the indemnifying
parties shall not have employed counsel to have charge of the defense of such
action within a reasonable time after notice of commencement of the action, or
(iii) such indemnified party or parties shall have reasonably concluded that
there may be defenses available to it or them which are different from or
additional to those available to one or all of the indemnifying parties (in
which case all indemnified parties having consistent interests, and such
different or additional defenses, shall be entitled to engage one additional
counsel in each jurisdiction to direct such different or additional defenses),
in any of which events such fees and expenses shall be borne by the indemnifying
parties. In no event will the indemnifying parties hereunder be responsible for
the fees and expenses of more than one such counsel (together with appropriate
local counsel). Anything in this subsection to the contrary notwithstanding, an
indemnifying party shall not be liable for any settlement of any claim or action
effected without its written consent; PROVIDED, HOWEVER, that such consent was
not unreasonably withheld.
7. CONTRIBUTION. In order to provide for contribution in circumstances in
which the indemnification provided for in Section 6 hereof is for any reason
unavailable from any indemnifying party or is insufficient to hold harmless a
party indemnified thereunder, then each indemnifying party shall contribute to
the aggregate losses, claims, damages, liabilities and expenses of the nature
contemplated by such indemnification provision (including without limitation any
investigation, legal and other expenses reasonably incurred in connection with,
and any amount paid in settlement of, any action, suit or proceeding or any
claims asserted, but after deducting in the case of losses, claims, damages,
liabilities and expenses suffered by the Company, any contribution received by
the Company from persons, other than the Initial Purchasers, who may also be
liable for contribution, including persons who control the Company within the
meaning of Section 15 of the Act or Section 20(a) of the Exchange Act, and
directors of the Company) as incurred to which the Company and the Initial
Purchasers may be subject, in such proportions as is appropriate to reflect the
relative benefits received by the Company, on the one hand, and the Initial
Purchasers, on the other hand, from the offering of the Notes or, if such
allocation is not permitted by applicable law, in such proportion as is
appropriate to reflect not only the relative benefits referred to above but also
the relative fault of the Company, on the one hand, and the Initial Purchasers,
on the other hand, in connection with the statements or omissions which resulted
in such losses, claims, damages, liabilities or expenses, as well as any other
relevant equitable considerations. The relative benefits received by the
Company, on the one hand, and the Initial Purchasers, on the other hand, shall
be deemed to be in the same proportion as (x) the total proceeds from the
offering (net of discounts and commissions but before deducting expenses)
received by the
20
<PAGE> 22
Company, and (y) the discounts and commissions received by the Initial
Purchasers, in each case as set forth in the table on the cover page of the
Offering Memorandum, bear to the aggregate offering price of the Notes. The
relative fault of the Company, on the one hand, and the Initial Purchasers, on
the other hand, shall be determined by reference to, among other things, whether
the untrue or alleged untrue statement of a material fact or the omission or
alleged omission to state a material fact relates to information supplied by the
Company or an Initial Purchaser and the parties' relative intent, knowledge,
access to information and opportunity to correct or prevent such statement or
omission. The Company and the Initial Purchasers agree that it would not be just
and equitable if contribution pursuant to this Section 7 were determined by pro
rata allocation or by any other method of allocation which does not take account
of the equitable considerations referred to above. Notwithstanding the
provisions of this Section 7, (i) in no case shall an Initial Purchaser be
liable or responsible for any contribution obligation in excess its proportional
share, based upon the proportion of the aggregate principal amount of Notes
purchased by it set forth opposite its name on Schedule I hereto, of the total
discounts and commissions set forth in the table on the cover page of the
Offering Memorandum, and (ii) no person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. For purposes of this Section 7, each person, if any, who
controls an Initial Purchaser within the meaning of Section 15 of the Act or
Section 20(a) of the Exchange Act shall have the same rights to contribution as
such Initial Purchaser controlled by it, and each person, if any, who controls
the Company within the meaning of Section 15 of the Act or Section 20(a) of the
Exchange Act, and each director of the Company shall have the same rights to
contribution as the Company, subject in each case to clauses (i) and (ii) of the
immediately preceding sentence. Any party entitled to contribution will,
promptly after receipt of notice of commencement of any action, suit or
proceeding against such party in respect of which a claim for contribution may
be made against another party or parties, notify each party or parties from whom
contribution may be sought, but the omission to so notify such party or parties
shall not relieve the party or parties from whom contribution may be sought from
any obligation it or they may have under this Section 7 (except to the extent
such party or parties from whom contribution may be sought is materially
prejudiced by such failure) or otherwise. No party shall be liable for
contribution with respect to any action or claim settled without consent;
PROVIDED, HOWEVER, that such consent was not unreasonably withheld.
8. CONDITIONS TO THE OBLIGATIONS OF THE INITIAL PURCHASERS. The
obligations of the Initial Purchasers to purchase and pay for the Notes, as
provided herein, shall be subject to the satisfaction of the following
conditions precedent:
(a) All of the representations and warranties of the Company contained
in this Agreement shall be true and correct in all material respects on the
date hereof and on the Closing Date with the same force and effect as if
made on and as of the date hereof and the Closing Date, respectively. The
Company shall have performed or complied in all material respects with all
of the agreements herein contained and required to be performed or complied
with by it at or prior to the Closing Date.
(b) The Offering Memorandum shall have been printed and copies
distributed to the Initial Purchasers on the day following the date of this
Agreement or at such later date and time as to which the Initial Purchasers
may agree, and no stop order suspending the qualification or exemption from
qualification of the Notes in any jurisdiction referred to in Section 4(e)
shall have
21
<PAGE> 23
been issued and no proceeding for that purpose shall have been commenced or
shall be pending or threatened.
(c) The Company shall not have sustained, (i) since the date of the
latest audited financial statements included in the Offering Memorandum,
any loss or interference with its business from fire, explosion, flood or
other calamity, whether or not covered by insurance, or from any labor
dispute or court or governmental action, order or decree otherwise than as
set forth or expressly contemplated in the Offering Memorandum which loss
or interference has had, or would reasonably be expected to have, a
materially adverse effect on the business, prospects, properties, assets,
liabilities (contingent or otherwise), earnings, operations, condition
(financial or otherwise) or results of operations of the Company and its
subsidiaries taken as a whole, and (ii) since the respective dates as of
which information is given in the Offering Memorandum, there shall not have
been any change in the capital stock (other than as disclosed in the
Offering Memorandum or in any reports filed by the Company with the
Commission pursuant to the Exchange Act or in accordance with any plan
contained in any such report), or in the long-term or short-term debt of
the Company or any material adverse change, or any development involving a
prospective material adverse change, in or affecting the general affairs,
management, financial position, stockholders' equity or results of
operations of the Company, otherwise than as set forth or expressly
contemplated in the Offering Memorandum, the effect of which, in any such
case described in clause (i) or (ii) of this Section 8(c), in the
reasonable judgment of the Initial Purchasers, makes it impracticable or
inadvisable to proceed with the Offering or the delivery of the Notes being
delivered on the Closing Date on the terms and in the manner contemplated
in the Offering Memorandum.
(d) The Initial Purchasers shall have received a certificate, dated
the Closing Date, signed by the Chief Executive Officer and President on
behalf of the Company, in form and substance satisfactory to the Initial
Purchasers, confirming, as of the Closing Date, the matters set forth in
paragraphs (a) and (b) of this Section 8 and that, as of the Closing Date,
the obligations of the Company to be performed hereunder on or prior
thereto have been duly performed and subsequent to the respective dates as
of which information is given in the Preliminary Offering Memorandum and
the Offering Memorandum, the Company and each of its subsidiaries have not
sustained any material loss or interference with their respective
businesses or properties from fire, flood, hurricane, accident or other
calamity, whether or not covered by insurance, or from any labor dispute or
any legal or governmental proceeding which had, or would reasonably be
expected to have, a material adverse effect on the business, prospects,
properties, assets, liabilities (contingent or otherwise), earnings,
operations, condition (financial or otherwise) or results of operations of
the Company anti its subsidiaries, and there has not been any material
adverse change, or any development involving a material adverse change, in
the business, prospects, properties, assets, liabilities (contingent or
otherwise), earnings, operations, condition (financial or otherwise) or
results of operations of the Company and its subsidiaries taken as a whole,
except in each case as described in or expressly contemplated by the
Offering Memorandum.
(e) The Initial Purchasers shall have received on the Closing Date an
opinion dated the Closing Date, in form and substance satisfactory to the
Initial Purchasers and counsel for the Initial Purchasers, of (i) Ropes &
Gray, counsel for the Company, to the effect set forth in
22
<PAGE> 24
EXHIBIT C-1 hereto, and (ii) the General Counsel of the Company, to the
effect set forth in EXHIBIT C-2 hereto.
(f) At the time this Agreement is executed and at the Closing Date,
the Initial Purchasers shall have received from Arthur Andersen LLP,
independent certified public accountants, dated as of the date of this
Agreement and as of the Closing Date, customary comfort letters addressed
to the Initial Purchasers and in form and substance satisfactory to the
Initial Purchasers and counsel for the Initial Purchasers with respect to
the financial statements and certain financial information of the Company
and its subsidiaries contained in the Offering Memorandum.
(g) The Initial Purchasers shall have received an opinion, dated the
Closing Date, in form and substance reasonably satisfactory to the Initial
Purchasers, of Paul, Hastings, Janofsky & Walker LLP, counsel for the
Initial Purchasers, covering such matters as are customarily covered in
such opinions.
(h) Paul, Hastings, Janofsky & Walker LLP, shall have been furnished
with such documents, in addition to those set forth above, as they may
reasonably require for the purpose of enabling them to review or pass upon
the matters referred to in this Section 8 and in order to evidence the
accuracy, completeness or satisfaction in all material respects of any of
the representations, warranties or conditions herein contained.
(i) Prior to the Closing Date, the Company shall have furnished to the
Initial Purchasers such further information, certificates and documents as
the Initial Purchasers may reasonably request.
(j) The Company and the Trustee shall have entered into and delivered
the Indenture and the Initial Purchasers shall have received a counterpart,
conformed as executed, thereof. The Indenture shall be in full force and
effect.
(k) The Company shall have entered into the Registration Rights
Agreement and the Initial Purchasers shall have received a counterpart,
conformed as executed, thereof. The Registration Rights Agreement shall be
in full force and effect.
(1) After the execution and delivery of this Agreement, there shall
not have been (i) any downgrading by Standard & Poor's Ratings Group
("S&P") in the rating of the Notes; (ii) any downgrading by Moody's
Investors Service Inc. ("MOODY'S") in the rating of the Notes; or (iii) any
notice given by S&P or Moody's of any intended or potential downgrading in
any such rating or of a possible change in any such rating that does not
indicate the direction of the possible change.
All opinions, certificates, letters and other documents required by
this Section 8 to be delivered by the Company will be in compliance with the
provisions hereof only if they are reasonably satisfactory in form and substance
to the Initial Purchasers. The Company will furnish the Initial Purchasers with
such conformed copies of such opinions, certificates, letters and other
documents as it shall reasonably request.
23
<PAGE> 25
9. INFORMATION FURNISHED BY THE INITIAL PURCHASER. The Company
acknowledges that the statements with respect to the offering of the Notes set
forth in the first sentence of the last paragraph of the cover page and the
third paragraph under the caption "Plan of Distribution" in such Offering
Memorandum constitute the only information furnished in writing by the Initial
Purchasers expressly for use in the Offering Memorandum.
10. SURVIVAL OF REPRESENTATIONS AND AGREEMENTS. All representations and
warranties, covenants and agreements of the Initial Purchasers and the Company
contained in this Agreement, including the agreements contained in Sections 4(f)
and 11(d), the indemnity agreements contained in Section 6 and the contribution
agreements contained in Section 7, shall remain operative and in full force and
effect regardless of any investigation made by or on behalf of the Initial
Purchasers or any controlling person thereof or by or on behalf of the Company,
any of its officers and directors or any controlling person thereof, and shall
survive delivery of and payment for the Notes to and by the Initial Purchasers.
The representations contained in Section 5 and the agreements contained in
Sections 4(f), 6, 7 and 11(d) shall survive the termination of this Agreement,
including any termination pursuant to Section 11.
11. EFFECTIVE DATE OF AGREEMENT; TERMINATION.
(a) This Agreement shall become effective upon execution and delivery
of a counterpart hereof by each of the parties hereto.
(b) The Initial Purchasers shall have the right to terminate this
Agreement at any time prior to the Closing Date by notice to the Company from
the Initial Purchasers, without liability (other than with respect to Sections
4(f), 6, 7 and 17, which shall remain in effect) to the Company on the part of
the Initial Purchasers if, on or prior to such date, (i) the Company shall have
failed, refused or been unable to perform in any material respect any agreement
on its part to be performed hereunder, (ii) any other condition to the
obligations of the Initial Purchasers hereunder as provided in Section 8 is not
fulfilled when and as required in any material respect, (iii) any material
adverse change shall have occurred since the respective dates as of which
information is given in the Offering Memorandum in the condition (financial or
otherwise), business, properties, assets, liabilities, prospects, net worth,
results of operations or cash flows of the Company and its subsidiaries, taken
as a whole, whether or not arising in the ordinary course of business other than
as set forth in the Offering Memorandum, such as, in the judgment of the Initial
Purchasers, makes it inadvisable or impracticable to proceed with the Offering
or delivery of the Notes as contemplated hereby and by the Offering Memorandum,
or (iv)(A) any domestic or international event or act or occurrence has
materially disrupted, or in the opinion of the Initial Purchasers will in the
immediate future materially disrupt, the market for the Company's securities or
for securities in general; or (B) trading in securities on the New York or
American Stock Exchanges or over-the-counter market shall have been generally
suspended or materially limited, or minimum or maximum prices shall have been
generally established, or maximum price ranges for prices for securities shall
have been generally required, on the New York or American Stock Exchanges or in
the over-the-counter market by the Commission, or by such exchange or other
regulatory body or governmental authority having jurisdiction; or (C) a general
banking moratorium shall have been declared by a federal or state authority; or
(D) there is an outbreak or escalation of armed hostilities involving the United
States on or after the date hereof, or there has been a declaration by the
United States of a national emergency or war, the effect of which shall be, in
the judgment of the Initial Purchasers, to make it inadvisable or impracticable
to proceed with the offering or delivery of the Notes on the terms and in the
manner
24
<PAGE> 26
contemplated in the Offering Memorandum; or (E) there shall have occurred such a
material adverse change in general economic, political or financial conditions
or the effect of international conditions on the financial markets in the United
States shall be such as, in the judgment of the Initial Purchasers, makes it
inadvisable or impracticable to proceed with the offering or delivery of the
Notes as contemplated hereby and by the Offering Memorandum.
(c) Any notice of termination pursuant to this Section 11 shall be by
telephone, telex, telephonic facsimile, or telegraph, confirmed in writing by
letter.
(d) If this Agreement shall be terminated pursuant to any of the
provisions hereof (other than pursuant to Section 11(b) (except clauses (i) and
(ii) thereof)), or if the sale of the Notes provided for herein is not
consummated because any condition to the obligations of the Initial Purchasers
set forth herein is not satisfied or because of any refusal, inability or
failure on the part of the Company to perform any agreement herein or comply
with any provision hereof, the Company will reimburse the Initial Purchasers for
all out-of-pocket expenses (including the reasonable fees and expenses of
counsel to the Initial Purchasers), incurred by the Initial Purchasers in
connection herewith.
12. DEFAULT BY AN INITIAL PURCHASER. If one of the Initial Purchasers
shall fail at the Closing Date to purchase the Notes that it is obligated to
purchase under the terms of this Agreement, the other Initial Purchasers shall
have the right, but not the obligation, within 24 hours thereafter, to make
arrangements to purchase all, but not less than all, of such Notes upon the
terms herein set forth; if, however, the other Initial Purchaser(s) shall not
have completed such arrangements within such 24-hour period, then this Agreement
shall terminate without liability on the part of any nondefaulting Initial
Purchaser. No action pursuant to this Section shall relieve any defaulting
Initial Purchaser from liability in respect of its default. In the event of any
such default that does not result in a termination of this Agreement, either a
nondefaulting Initial Purchaser or the Company shall have the right to postpone
the Closing Date for a period not exceeding seven days to effect any required
changes in the Offering Memorandum or in any other documents or arrangement.
13. NOTICE. All communications hereunder, except as may be otherwise
specifically provided herein, shall be in writing and, if sent to the Initial
Purchaser shall be mailed, delivered, or telexed, telegraphed or telecopied and
confirmed in writing to the Initial Purchasers c/o Bear, Stearns & Co. Inc., 245
Park Avenue, New York, New York 10167, Attention: Joseph Sheehan, facsimile
number: (212) 272-3092, with a copy to Paul, Hastings, Janofsky & Walker LLP,
399 Park Avenue, New York, New York 10022, Attention: William F. Schwitter,
facsimile number (212) 319-4090; and if sent to the Company, shall be mailed,
delivered or telexed, telegraphed or telecopied and confirmed in writing to 50
Kennedy Plaza, Providence, Rhode Island 02903-2603, Attention: Almon C. Hall,
facsimile number: (401) 751-4610, with a copy to Ropes & Gray, One
International Place, Boston, Massachusetts 02110-2624, Attention: Douglass N.
Ellis, Jr., telecopy number: (617) 951-7050.
14. PARTIES. This Agreement shall inure solely to the benefit of, and
shall be binding upon, the Initial Purchasers and the Company and the
controlling persons and agents referred to in Sections 6 and 7, and their
respective successors and assigns, and no other person shall have or be
construed to have any legal or equitable right, remedy or claim under or in
respect of or by virtue of this Agreement or any provision herein contained. The
term "successors and assigns" shall not include a purchaser, in its capacity as
such, of Notes from an Initial Purchaser.
25
<PAGE> 27
15. CAPTIONS. The captions included in this Agreement are included solely
for convenience of reference and are not to be considered a part of this
Agreement.
16. COUNTERPARTS. This Agreement may be executed in one or more
counterparts which together shall constitute one and the same instrument.
17. GOVERNING LAW; CONSTRUCTION. This Agreement shall be governed by and
construed in accordance with the internal laws of the State of New York, without
giving effect to any provisions relating to conflicts of laws. TIME IS OF THE
ESSENCE IN THIS AGREEMENT.
18. PARTIAL INVALIDITY. In case any provision of this Agreement shall be
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions shall not in any way be affected or impaired thereby.
26
<PAGE> 28
If the foregoing correctly sets forth the understanding among the Initial
Purchasers and the Company please so indicate in the space provided below for
that purpose, whereupon this letter shall constitute a binding agreement among
us.
Very truly yours,
NORTEK, INC.
By: /s/ Almon C. Hall
---------------------------------
Name: Almon C. Hall
Title: Vice President
Accepted and agreed as of
the date first above written:
BEAR, STEARNS & CO., INC.
By:
------------------------------
Name:
Title:
WASSERSTEIN PERELLA SECURITIES, INC.
BY: /s/ Peter H. Rothschild
------------------------------
Name: Peter H. Rothschild
Title:
BT SECURITIES CORPORATION
BY: /s/ Amelia Silver
------------------------------
Name: Amelia Silver
Title: Vice President
<PAGE> 29
<TABLE>
SCHEDULE I
<CAPTION>
Principal
Amount of
Initial Purchaser Notes
----------------- ---------
<S> <C>
Bear, Stearns & Co., Inc. ........................................ $105,000,000
Wasserstein Perella Securities, Inc. ............................. $ 52,500,000
BT Securities Corporation ........................................ $ 17,500,000
------------
TOTAL ................................................... $175,000,000
============
</TABLE>
I-1
<PAGE> 30
EXHIBIT A
List of Employee Pension and Benefit Plans of
Nortek, Inc. and its Subsidiaries
A-1
<PAGE> 31
NORTEK, INC.
DEFINED BENEFIT PLANS
PLANS LOCATED IN THE MASTER TRUST AT HOSPITAL TRUST (THE TRUSTEE)
- --------------------------------------------------------------------------------
DEFINED BENEFIT PLANS
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
NORTEK, INC. RETIREMENT PLAN
- --------------------------------------------------------------------------------
BROAN MFG. CO., INC. PENSION PLAN "A"
Appendix II to the Nortek, Inc. Retirement Plan
BROAN MFG. CO., INC. PENSION PLAN "B"
Appendix III to the Nortek, Inc. Retirement Plan
PENSION PLAN FOR EMPLOYEES OF NORDYNE, INC.
Appendix VI to the Nortek, Inc. Retirement Plan
MUSIC & SOUND, INC. PENSION PLAN FOR NON-PRODUCTION EMPLOYEES
Appendix VIII to the Nortek, Inc. Retirement Plan
NORTEK, INC. PENSION PLAN FOR CERTAIN EMPLOYEES OF PROVIDENCE, RI
Appendix IX to the Nortek, Inc. Retirement Plan
SMB CORPORATION EMPLOYEES PENSION PLAN--GOVERNAIR
Appendix XII of the Nortek, Inc. Retirement Plan
SMB CORPORATION EMPLOYEES PENSION PLAN--TEMTROL
Appendix XII of the Nortek, Inc. Retirement Plan
MOHAWK FLUSH DOORS PENSION PLAN FOR SALARIED EMPLOYEES
Appendix XIV, III
MOHAWK FLUSH DOORS PENSION PLAN FOR HOURLY-RATED EMPLOYEES OF NORTHUMBERLAND
Appendix XV
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
UNIVERSAL-RUNDLE CORPORATION RETIREMENT PLAN "A"
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
MILWAUKEE FAUCETS RETIREMENT INCOME PLAN
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
NORTHWAY PRODUCTS RETIREMENT INCOME PLAN
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
MAMMOTH NEGOTIATED HOURLY PENSION PLAN
- --------------------------------------------------------------------------------
<PAGE> 32
<TABLE>
NORTEK, INC.
- ---------------------------------------------------------------------------------------------------------------------
<CAPTION>
DEFINED CONTRIBUTION PLANS TRUSTEE(S)
- ---------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------
<S> <C>
CES GROUP FLEXIBLE SAVINGS PLAN (401(k)) American Express Trust Company
- ---------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------
NORTHWAY PRODUCTS SAVINGS PLAN Evan Kaffenes
William Morris
Carol Wyman
- ---------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------
MAMMOTH NEGOTIATED HOURLY 401(k) PLAN Capital Guardian Trust Company
- ---------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------
UNIVERSAL-RUNDLE PROFIT SHARING AND THRIFT PLAN Evan Kaffenes
William Morris
Carol Wyman
- ---------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------
UNIVERSAL-RUNDLE SAVINGS PLAN FOR UNION EMPLOYEES Evan Kaffenes
William Morris
Carol Wyman
- ---------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------
M & S SYSTEMS, INC. 401(k) SAVINGS PLAN Hospital Trust (Master Trust)
- ---------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------
NORDYNE, INC. 401(k) SAVINGS PLAN Hospital Trust (Master Trust)
- ---------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------
BROAN MFG. CO., INC. 401(k) SAVINGS PLAN Hospital Trust (Master Trust)
- ---------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------
LINEAR CORPORATION 401(k) PLAN Hospital Trust (Master Trust)
- ---------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------
MOORE-O-MATIC, INC. 401(k) PLAN Hospital Trust (Master Trust)
- ---------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------
NORTEK, INC. 401(k) SAVINGS PLAN Hospital Trust (Master Trust)
- ---------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------
THE BROAN GROUP 401(k) PLAN FOR EMPLOYEES OF JENSEN INDUSTRIES, INC. AND Hospital Trust (Master Trust)
AUBREY MANUFACTURING, INC.
- ---------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------
RANGAIRE, INC. 401(k) PLAN Hospital Trust (Master Trust)
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 33
EXHIBIT B
Form of Registration Rights Agreement
<PAGE> 34
REGISTRATION RIGHTS AGREEMENT
This REGISTRATION RIGHTS AGREEMENT (this "Agreement") is made and
entered into as of March 17, 1997 between NORTEK, INC., a Delaware corporation
(the "COMPANY"), and Bear, Stearns & Co. Inc., Wasserstein Perella Securities,
Inc. and BT Securities Corporation (collectively, the "INITIAL PURCHASERS").
This Agreement is made pursuant to the Purchase Agreement dated as of
March 12, 1997 (the "PURCHASE AGREEMENT"), between the Company and the Initial
Purchasers, which provides for the sale by the Company to the Initial Purchasers
of an aggregate of $175,000,000 aggregate principal amount of the Company's
9 1/4% Senior Notes due 2007 (the "NOTES"). In order to induce the Initial
Purchasers to enter into the Purchase Agreement and to purchase the Notes, the
Company has agreed to provide to the Initial Purchasers and their direct and
indirect transferees the registration rights for the Notes set forth in this
Agreement. The execution and delivery of this Agreement is a condition precedent
to the obligations of the Initial Purchasers under the Purchase Agreement.
In consideration of the foregoing, the parties hereto agree as
follows:
1. DEFINITIONS. As used in this Agreement, the following capitalized
defined terms shall have the following meanings (and, unless otherwise
indicated, capitalized terms used herein without definition shall have the
meanings ascribed to them in the Purchase Agreement):
"ACT" shall mean the Securities Act of 1933, as amended.
"AGREEMENT" shall have the meaning set forth in the preamble to this
Agreement.
"APPLICABLE PERIOD" shall have the meaning set forth in Section 3(t)
hereof.
"CLOSING DATE" shall mean the Closing Date as defined in the Purchase
Agreement.
"COMMISSION" shall mean the Securities and Exchange Commission, or
such other federal agency administering the Act or the Exchange Act.
"COMPANY" shall have the meaning set forth in the preamble to this
Agreement, and shall also include the Company's successors.
"DEPOSITORY" shall mean The Depository Trust Company, or any successor
depositary appointed by the Company; PROVIDED, HOWEVER, that such
depositary must have an address in the Borough of Manhattan, The City of
New York.
<PAGE> 35
"EFFECTIVENESS PERIOD" shall have the meaning set forth in Section
2(b) hereof.
"EVENT DATE" shall have the meaning set forth in Section 2(e) hereof.
"EXCHANGE ACT" shall mean the Securities Exchange Act of 1934, as
amended.
"EXCHANGE OFFER" shall mean the exchange offer by the Company of
Exchange Notes for Notes pursuant to Section 2(a) hereof.
"EXCHANGE OFFER REGISTRATION" shall mean a registration under the Act
affected pursuant to Section 2(a) hereof.
"EXCHANGE OFFER REGISTRATION STATEMENT" shall mean the registration
statement (on Form S-4 or, if applicable, on any other appropriate form)
relating to the Exchange Offer, and all amendments and supplements to such
registration statement, including post-effective amendments, in each case
including the Prospectus contained therein, all exhibits thereto and all
material incorporated by reference therein.
"EXCHANGE PERIOD" shall have the meaning set forth in Section 2(a)
hereof.
"EXCHANGE NOTES" shall mean the 9 1/4% Series B Senior Notes due
2007, to be issued by the Company under the Indenture and containing terms
identical to the Notes (except that (i) interest thereon shall accrue from
the last date on which interest was paid on the Notes or, if no such
interest has been paid, from March 17, 1997, and (ii) the transfer
restrictions thereon shall be eliminated) to be offered to Holders of Notes
in exchange for Notes pursuant to the Exchange Offer.
"HOLDER" shall mean each Initial Purchaser, for so long as it owns any
Registrable Securities, and each of its respective successors, assigns and
direct and indirect transferees who become registered owners of Registrable
Securities under the Indenture.
"INDENTURE" shall mean the Indenture dated as of March 17, 1997 by and
between the Company and State Street Bank and Trust Company, as trustee, as
the same may be amended or supplemented from time to time in accordance
with the terms thereof.
"INITIAL PURCHASERS" shall have the meaning set forth in the preamble
to this Agreement.
"INSPECTORS" shall have the meaning set forth in Section 3(n) hereof.
"LIQUIDATED DAMAGES" shall have the meaning set forth in Section 2(e)
hereof.
2
<PAGE> 36
"MAJORITY HOLDERS" shall mean the Holders of a majority of the
aggregate principal amount of outstanding (as determined under the
Indenture) Registrable Securities.
"NASD" shall mean the National Association of Securities Dealers, Inc.
"NOTES" shall have the meaning set forth in the preamble to this
Agreement.
"PARTICIPATING BROKER-DEALER" shall have the meaning set forth in
Section 3(t) hereof.
"PERSON" shall mean any individual, corporation, limited liability
company, general or limited partnership, limited liability partnership,
joint venture, association, joint-stock company, trust, charitable
foundation, unincorporated organization, government or agency or political
subdivision thereof or any other entity.
"PRIVATE EXCHANGE" shall have the meaning set forth in Section 2(a)
hereof.
"PRIVATE EXCHANGE NOTES" shall have the meaning set forth in
Section 2(a) hereof.
"PROSPECTUS" shall mean the prospectus included in a Registration
Statement, including any preliminary prospectus, and any such prospectus as
amended or supplemented by any prospectus supplement, including a
prospectus supplement with respect to the terms of the offering of any
portion of the Registrable Securities covered by a Shelf Registration
Statement, including post-effective amendments, and in each case including
all material incorporated by reference therein.
"PURCHASE AGREEMENT" shall have the meaning set forth in the preamble
to this Agreement.
"RECORDS" shall have the meaning set forth in Section 3(n) hereof.
"REGISTRABLE SECURITIES" shall mean the Notes and, if issued, the
Private Exchange Notes; PROVIDED, HOWEVER, that Notes or Private Exchange
Notes, as the case may be, shall cease to be Registrable Securities when
(i) a Registration Statement with respect to such Notes or Private Exchange
Notes or the resale thereof shall have been declared effective under the
Act and such Notes or Private Exchange Notes, as the case may be, shall
have been disposed of pursuant to such Registration Statement, (ii) such
Notes or Private Exchange Notes, as the case may be, shall have become
eligible to be sold to the public pursuant to Rule 144(k) (or any similar
provision then in force, but not Rule 144A) under the Act, (iii) such Notes
or Private Exchange Notes, as the case may be, shall have ceased to be
outstanding or (iv) with
3
<PAGE> 37
respect to the Notes, such Notes have been exchanged for Exchange Notes
upon consummation of the Exchange Offer.
"REGISTRATION EXPENSES" shall mean any and all expenses incident to
performance of or compliance by the Company with this Agreement, including,
without limitation: (i) Commission, stock exchange or NASD registration and
filing fees, including, if applicable, the fees and expenses of any
"qualified independent underwriter" and its counsel that is required to be
retained by any Holder of Registrable Securities in accordance with the
rules and regulations of the NASD, (ii) fees and expenses incurred in
connection with compliance with state securities or blue sky laws
(including reasonable fees and disbursements of counsel for any
underwriters or Holders in connection with the blue sky qualification of
any of the Exchange Notes or Registrable Securities) and compliance with
the rules of the NASD, (iii)expenses of any Persons in preparing or
assisting in preparing, printing and distributing any Registration
Statement, any Prospectus and any amendments or supplements thereto, and in
preparing or assisting in preparing, printing and distributing any
underwriting agreements, securities sales agreements and other documents
relating to the performance of and compliance with the obligations under
this Agreement, (iv) rating agency fees, (v) fees and disbursements of
counsel for and independent certified public accountants of the Company,
including the expenses of any "cold comfort" letters required by or
incident to such performance and compliance, (vi) fees and expenses of the
Trustee, and any exchange agent or custodian, (vii) fees and expenses
incurred in connection with the listing, if any, of any of the Registrable
Securities on any securities exchange or exchanges, and (viii) the
reasonable fees and expenses of any special experts retained by the Company
in connection with any Registration Statement.
"REGISTRATION STATEMENT" shall mean any registration statement of the
Company relating to the Exchange Notes or Registrable Securities pursuant
to the provisions of this Agreement, and all amendments and supplements to
any such registration statement, including post-effective amendments, in
each case including the Prospectus contained therein, all exhibits thereto
and all material incorporated by reference therein.
"SHELF REGISTRATION" shall mean a registration affected pursuant to
Section 2(b) hereof.
"SHELF REGISTRATION STATEMENT" shall mean a "shelf" registration
statement of the Company pursuant to the provisions of Section 2(b) of this
Agreement which covers all of the Registrable Securities, on an appropriate
form under Rule 415 under the Act, or any similar rule that may be adopted
by the Commission, and all amendments and supplements to such registration
statement, including post-effective amendments, in each case including the
Prospectus contained therein, all exhibits thereto and all material
incorporated by reference therein.
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<PAGE> 38
"TIA" shall mean the Trust Indenture Act of 1939, as amended.
"TRANSFER RESTRICTED SECURITIES" shall mean each Note until (i) the
date on which such Note has been exchanged by a Person other than a
broker-dealer for an Exchange Note in the Exchange Offer, (ii) following
the exchange by a broker-dealer in the Exchange Offer of a Note for an
Exchange Note, the date on which such Exchange Note is sold to a purchaser
who receives from such broker-dealer on or prior to the date of such sale a
copy of the prospectus contained in the Exchange Offer Registration
Statement, (iii) the date on which such Note has been effectively
registered under the Securities Act and disposed of in accordance with the
Shelf Registration Statement or (iv) the date on which such Note is
distributed to the public pursuant to Rule 144 under the Securities Act.
"TRUSTEE" shall mean the trustee under the Indenture.
2. Registration Under the Act.
--------------------------
(a) EXCHANGE OFFER. To the extent not prohibited by any applicable law
or applicable interpretation of the staff of the Commission, the Company
shall, for the benefit of the Holders, at the Company's cost, use its best
efforts to cause to be filed with the Commission an Exchange Offer
Registration Statement on or prior to 45 days after the Closing Date on an
appropriate form under the Act covering the offer by the Company to the
Holders to exchange all of the Registrable Securities (other than Private
Exchange Notes) for a like aggregate principal amount of Exchange Notes, to
cause such Exchange Offer Registration Statement to be declared effective
under the Act by the Commission on or prior to 120 days after the Closing
Date, to cause such Registration Statement to remain effective until the
closing of the Exchange Offer and to cause the Exchange Offer to be
consummated on or prior to 45 days after the date on which the Exchange
Offer Registration Statement was declared effective under the Act by the
Commission. The Exchange Notes will be issued under the Indenture. Upon the
effectiveness of the Exchange Offer Registration Statement, the Company
shall promptly commence the Exchange Offer, it being the objective of such
Exchange Offer to enable each Holder (other than Participating
Broker-Dealers (as defined in Section 3(t) hereof)) eligible and electing
to exchange Registrable Securities for Exchange Notes (assuming that such
Holder is not an affiliate of the Company within the meaning of Rule 405
under the Act, acquires the Exchange Notes in the ordinary course of such
Holder's business and has no arrangements or understandings with any Person
to participate in the Exchange Offer for the purpose of distributing the
Exchange Notes) to transfer such Exchange Notes from and after their
receipt without any limitations or restrictions under the Act or under
state securities or blue sky laws.
In connection with the Exchange Offer, the Company shall
(i) mail to each Holder a copy of the Prospectus forming part of the
Exchange Offer Registration Statement, together with an appropriate letter
of transmittal and related documents;
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<PAGE> 39
(ii) keep the Exchange Offer open for acceptance for a period of not
less than 30 days after the date notice thereof is mailed to the Holders,
or longer if required by applicable law (such period being referred to
herein as the "EXCHANGE PERIOD");
(iii) utilize the services of the Depository for the Exchange Offer;
(iv) permit Holders to withdraw tendered Notes at any time prior to
the close of business, New York City time, on the last business day of the
Exchange Period, by sending to the institution specified in the notice a
telegram, telex, facsimile transmission or letter setting forth the name of
such Holder, the principal amount of Notes delivered for exchange, and a
statement that such Holder is withdrawing its election to have such Notes
exchanged;
(v) notify each Holder that any Note not tendered will remain
outstanding and continue to accrue interest, but will not retain any rights
under this Agreement (except in the case of the Initial Purchasers and
Participating Broker-Dealers as provided herein); and
(vi) otherwise comply in all respects with all applicable laws
relating to the Exchange Offer.
If, prior to consummation of the Exchange Offer, any Initial Purchaser
holds any Notes acquired by it and having the status of an unsold allotment in
the initial distribution, the Company upon the request of such Initial Purchaser
shall, simultaneously with the delivery of the Exchange Notes in the Exchange
Offer, issue and deliver to such Initial Purchaser in exchange (the "PRIVATE
EXCHANGE") for Notes held by the Initial Purchasers a like principal amount of
debt securities of the Company that are identical (except that such securities
shall bear appropriate transfer restrictions) to the Exchange Notes (the
"PRIVATE EXCHANGE NOTES") and which are issued pursuant to the Indenture (which
will provide that the Exchange Notes will not be subject to the transfer
restrictions set forth in the Indenture and that the Exchange Notes, the Private
Exchange Notes and the Notes will vote and consent together on all matters as
one class and that none of the Exchange Notes, the Private Exchange Notes or the
Notes will have the right to vote or consent as a separate class on any matter).
The Private Exchange Notes shall be of the same series as and shall bear the
same CUSIP number as the Exchange Notes.
As soon as practicable after the close of the Exchange Offer or the
Private Exchange, as the case may be, the Company shall:
(i) accept for exchange all Notes or portions thereof duly tendered
and not validly withdrawn pursuant to the Exchange Offer;
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<PAGE> 40
(ii) accept for exchange all Notes or portions thereof duly tendered
pursuant to the Private Exchange; and
(iii) deliver, or cause to be delivered, to the Trustee for
cancellation all Notes or portions thereof so accepted for exchange by the
Company, and issue, and cause the Trustee to promptly authenticate and
deliver to each Holder, a new Exchange Note or Private Exchange Note, as
the case may be, equal in principal amount to the principal amount of the
Notes surrendered by such Holder.
To the extent not prohibited by applicable law or any applicable
interpretation of the staff of the Commission, the Company shall use its best
efforts to complete the Exchange Offer as provided above, and shall comply with
all applicable requirements of the Act, the Exchange Act and other applicable
laws in connection with the Exchange Offer. The Exchange Offer shall not be
subject to any condition, other than that (i) the Exchange Offer does not
violate any applicable law or interpretation of the staff of the Commission,
(ii) no action or proceeding has been instituted or threatened in any court or
by or before any governmental agency with respect to the Exchange Offer which,
in the reasonable judgment of the Company, might impair the ability of the
Company to proceed with the Exchange Offer, (iii) there has not been any
material change, or development involving a prospective material change, in the
business or financial affairs of the Company or any of its subsidiaries which,
in the reasonable judgment of the Company, would materially impair the Company's
ability to consummate the Exchange Offer or have a material adverse effect on
the Company if the Exchange Offer is consummated, (iv) there has not been
proposed, adopted, or enacted any law, statute, rule or regulation which, in the
reasonable judgment of the Company, might materially impair the ability of the
Company to proceed with the Exchange Offer or have a material adverse effect on
the Company if the Exchange Offer is consummated or (v) all governmental
approvals which the Company shall reasonably deem necessary for the consummation
of the Exchange Offer as contemplated shall have been obtained. Each Holder of
Registrable Securities who wishes to exchange such Registrable Securities for
Exchange Notes in the Exchange Offer will be required to make certain customary
representations in connection therewith, including representations that such
Holder is not an affiliate of the Company within the meaning of Rule 405 under
the Act, that any Exchange Notes to be received by it will be acquired in the
ordinary course of business and that at the time of the commencement of the
Exchange Offer it had no arrangement with any Person to participate in the
distribution (within the meaning of the Act) of the Exchange Notes and will be
required to make such other representations as may be necessary under
applicable Commission rules, regulations or interpretations to render available
the use of Form S-4 or any other appropriate form under the Act. The Company
shall inform the Initial Purchasers, after consultation with the Trustee and the
Initial Purchasers, of the names and addresses of the Holders to whom the
Exchange Offer is made, and the Initial Purchasers shall have the right to
contact such Holders and otherwise facilitate the tender of Registrable
Securities in the Exchange Offer.
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<PAGE> 41
In the event that the Company is unable to consummate the Exchange
Offer due to any event listed in clauses (i) through (v) in the paragraph
immediately above, the Company shall not be deemed to have breached any covenant
under this Section 2(a).
Upon consummation of the Exchange Offer in accordance with this
Section 2(a), the provisions of this Agreement shall continue to apply, MUTATIS
MUTANDIS, solely with respect to Registrable Securities that are Private
Exchange Notes and Exchange Notes held by Participating Broker-Dealers, and the
Company shall have no further obligation to register Registrable Securities
(other than Private Exchange Notes) pursuant to Section 2(b) of this Agreement.
(b) SHELF REGISTRATION. In the event that (i) the Company is not
permitted to commence or accept tenders pursuant to the Exchange Offer because
the Exchange Offer is not permitted by applicable law or Commission policy, (ii)
any Holder of Transfer Restricted Securities notifies the Company within 20
business days after the consummation of the Exchange Offer that (a) it is
prohibited by law or Commission policy from participating in the Exchange Offer,
(b) that it may not resell the Exchange Notes acquired by it in the Exchange
Offer to the public without delivering a prospectus and the prospectus contained
in the Exchange Offer Registration Statement is not appropriate or available for
such resales or (c) that it is a broker-dealer and owns Notes acquired directly
from the Company or an affiliate of the Company, or (iii) the Exchange Offer is
not for any other reason consummated within 165 days of the Closing Date, the
Company shall, at its cost, cause to be filed with the Commission as promptly as
practicable after such determination or date, as the case may be, and, in any
event, on or prior to 45 days thereafter, a Shelf Registration Statement
providing for the sale by the Holders of all of the Registrable Securities, and
shall use its best efforts to cause such Shelf Registration Statement declared
effective by the Commission on or prior to 90 days after such determination or
date. No Holder of Registrable Securities may include any of its Registrable
Securities in any Shelf Registration pursuant to this Agreement unless and until
such Holder furnishes to the Company in writing, within 15 days after receipt of
a request therefor, such information as the Company may, after conferring with
counsel with regard to information relating to Holders that would be required by
the Commission to be included in such Shelf Registration Statement or Prospectus
included therein, reasonably request for inclusion in any Shelf Registration
Statement or Prospectus included therein. Each Holder as to which any Shelf
Registration is being effected agrees to furnish promptly to the Company all
information required to be disclosed in the applicable Shelf Registration
Statement or Prospectus included therein by the rules and regulations of the
Commission applicable to the Shelf Registration Statement in order to make the
information previously furnished to the Company by such Holder not materially
misleading.
The Company agrees, subject to applicable law or applicable
interpretation of the staff of the Commission, to use its reasonable best
efforts to keep the Shelf Registration Statement continuously effective,
supplemented and amended under the Act for a period ending on the earlier of the
date which is two years from the Closing Date (subject
8
<PAGE> 42
to extension pursuant to the last paragraph of Section 3) or the date on which
all of the Registrable Securities covered by the Shelf Registration Statement
have been sold pursuant to the Shelf Registration Statement or cease to be
outstanding (the "EFFECTIVENESS PERIOD"). The Company shall not permit any
securities other than Registrable Securities to be included in the Shelf
Registration. The Company will, in the event a Shelf Registration Statement is
declared effective, provide to each Holder copies of the prospectus which is a
part of the Shelf Registration Statement, notify each such Holder when the Shelf
Registration Statement has become effective and take certain other actions as
are customary to permit unrestricted resales of the Registrable Securities
covered by the Shelf Registration Statement. The Company further agrees, if
necessary, to use its reasonable best efforts to supplement or amend the Shelf
Registration Statement, if required by the Act or the rules, regulations or
instructions applicable to the registration form used by the Company for such
Shelf Registration Statement or by any other rules and regulations thereunder
for shelf registrations, or if reasonably requested by the Majority Holders, and
the Company agrees to furnish to the Holders copies of any such supplement or
amendment promptly after its being used or filed with the Commission.
(c) EXPENSES. The Company shall pay all Registration Expenses in
connection with registrations pursuant to Section 2(a) or 2(b). Each Holder
shall pay all expenses of its counsel (other than the fees described in clauses
(i) and (ii) of the definition of "Registration Expenses"), underwriting
discounts and commissions and transfer taxes, if any, relating to the sale or
disposition of such Holder's Registrable Securities pursuant to the Exchange
Offer Registration Statement and the Shelf Registration Statement.
(d) EFFECTIVE REGISTRATION STATEMENT. An Exchange Offer Registration
Statement pursuant to Section 2(a) hereof or a Shelf Registration Statement
pursuant to Section 2(b) hereof will not be deemed to have become effective
unless it has been declared effective by the Commission; PROVIDED, HOWEVER, that
if, after it has been declared effective, the offering of Registrable Securities
pursuant to a Shelf Registration Statement is interfered with by any stop order,
injunction or other order or requirement of the Commission or any other
governmental agency or court, such Registration Statement will be deemed not to
have been effective during the period of such interference, until the offering
of Registrable Securities pursuant to such Registration Statement may legally
resume.
(e) LIQUIDATED DAMAGES. In the event that an Exchange Offer
Registration Statement has not been filed with the Commission on or prior to 45
days after the Closing Date, additional interest payable by the Company as
liquidated damages ("LIQUIDATED DAMAGES") will accrue on the Notes from and
including the 31st day after the Closing Date until but excluding the date such
Exchange Offer Registration Statement is filed. In addition, if on or prior to
120 days after the Closing Date, such Exchange Offer Registration Statement is
not declared effective under the Act by the Commission, Liquidated Damages will
accrue on the Notes from and including the 121st day after the Closing Date
until but excluding the date such Exchange Offer Registration Statement is
declared effective. Further, if on or prior to 45 days after the date specified
for effectiveness of the Exchange Offer Registration
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<PAGE> 43
Statement the Exchange Offer is not consummated, Liquidated Damages will accrue
on the Notes from and including the 46th day after the date specified for
effectiveness of the Exchange Offer Registration Statement, but excluding, the
consummation of the Exchange Offer. If a Shelf Registration Statement is
required to be filed pursuant to Section 2(b) and such Shelf Registration
Statement is not filed or declared effective within the time periods provided by
Section 2(b) hereof for such filing or declaration, Liquidated Damages will
accrue on the Notes (other than those exchanged in the Exchange Offer) or the
Private Exchange Notes, as the case may be, from and including the day
immediately following such default until but excluding the effective date of the
Shelf Registration Statement. Further, if the Shelf Registration Statement or
the Exchange Offer Registration Statement is declared effective but thereafter
ceases to be effective or usable during the time periods specified in this
Agreement, Liquidated Damages will accrue on the Notes (other than those
exchanged in the Exchange Offer) or the Private Exchange Notes, as the case may
be, from and including the day immediately following such default until but
excluding the date such Registration Statement becomes effective or usable. In
each case, such Liquidated Damages will be payable in cash semiannually in
arrears, with the first semiannual payment due on the first interest payment
date in respect of the Notes (or the Private Exchange Notes) following the date
from which Liquidated Damages begin to accrue, and will accrue, under each
circumstance set forth above at a rate per annum equal to an additional one half
of one percent (0.50%) of the principal amount of the Notes (or the Private
Exchange Notes) upon the occurrence of each such circumstance, which rate will
increase by one half of one percent (0.50%) for each 90-day period that such
Liquidated Damages continue to accrue under any circumstance, with an aggregate
maximum increase in the interest rate per annum equal to two percent (2.00%).
Upon the filing of the Exchange Offer Registration Statement, the
effectiveness of the Exchange Offer Registration Statement, or the consummation
of the Exchange Offer, as the case may be, the interest rate borne by the Notes
will be reduced by the full amount of any such increase to the extent that such
increase related to the failure of any such event to have occurred. Upon the
effectiveness of a Shelf Registration Statement, the interest rate borne by the
Notes (and the Private Exchange Notes) shall be reduced, from and as of the date
of such effectiveness, to the original interest rate of the Notes unless and
until increased as described above. Notwithstanding anything to the contrary
contained herein, the Company (i) shall not be required to amend or supplement
the Shelf Registration Statement, any related prospectus or any document
incorporated therein by reference and (ii) may suspend the effectiveness of any
such Shelf Registration Statement in the event that, and for a period not to
exceed, for so long as this Agreement is in effect, an aggregate of 90 days in
any one calendar year if (A) an event occurs and is continuing as a result of
which the Shelf Registration Statement, any related prospectus or any document
incorporated therein by reference as then amended or supplemented would, in the
Company's good faith judgment, contain an untrue statement of a material fact or
omit to state a material fact necessary in order to make the statements therein
not misleading, and (B) the Company determines in its good faith judgment that
the disclosure of such event at such time would have a material adverse effect
on the business, operations or prospects of the Company;
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<PAGE> 44
provided that any such suspension shall not relieve the Company from its
obligation to pay Liquidated Damages.
The Company shall notify the Trustee within three business days after
each and every date on which an event occurs in respect of which Liquidated
Damages is required to be paid (an "EVENT DATE"). Liquidated Damages shall be
paid by depositing with the Trustee, in trust, for the benefit of the Holders of
Notes, Exchange Notes or Private Exchange Notes, as the case may be, on or
before the applicable semiannual interest payment date, immediately available
funds in sums sufficient to pay the Liquidated Damages then due. The Liquidated
Damages due shall be payable on each interest payment date to the record Holder
of Notes entitled to receive the interest payment to be paid on such date as set
forth in the Indenture. Each obligation to pay Liquidated Damages shall be
deemed to accrue from and including the day following the applicable Event Date.
(f) SPECIFIC ENFORCEMENT. Without limiting the remedies available to
the Initial Purchasers and the Holders, the Company acknowledges that any
failure by the Company to comply with its obligations under Section 2(a) and
Section 2(b) hereof would result in material irreparable injury to the Initial
Purchasers or the Holders for which there is no adequate remedy at law, that it
would not be possible to measure damages for such injuries precisely and that,
in the event of any such failure, the Initial Purchasers or any Holder may
obtain such relief as may be required to specifically enforce the Company's
obligations under Section 2(a) and Section 2(b) hereof.
3. REGISTRATION PROCEDURES. In connection with the obligations of the
Company with respect to the Registration Statements pursuant to Sections 2(a)
and 2(b) hereof, the Company shall:
(a) prepare and file with the Commission a Registration Statement or
Registration Statements as prescribed by Sections 2(a) and 2(b) within the
relevant time periods specified in Section 2 hereof on the appropriate form
under the Act, which form (i) shall be selected by the Company, (ii) shall,
in the case of a Shelf Registration, be available for the sale of the
Registrable Securities by the selling Holders and (iii) shall comply as to
form in all material respects with the requirements of the applicable form
and include or incorporate by reference all financial statements required
by the Commission to be filed therewith, and the Company shall use its best
efforts to cause such Registration Statement to become effective and remain
effective in accordance with Section 2; PROVIDED, HOWEVER, that if (1) such
filing is pursuant to Section 2(b), or (2) a Prospectus contained in an
Exchange Offer Registration Statement filed pursuant to Section 2(a) is
required to be delivered under the Act by any Participating Broker-Dealer
who seeks to sell Exchange Notes, before filing any Registration Statement
or Prospectus or any amendments or supplements thereto, the Company, if
requested, shall furnish to and afford the Holders and each such
Participating Broker-Dealer, as the case may be, covered by such
Registration Statement, their counsel and the managing underwriters, if
any, a reasonable
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<PAGE> 45
opportunity to review copies of all such documents (including copies of any
documents to be incorporated by reference therein and all exhibits thereto)
proposed to be filed at least five business days prior to such filing. The
Company shall not file any Registration Statement or Prospectus or any
amendments or supplements thereto in respect of which the Holders, pursuant
to this Agreement, must be afforded an opportunity to review prior to the
filing of such document, if the Majority Holders or such Participating
Broker-Dealer, as the case may be, their counsel or the managing
underwriters, if any, shall reasonably object;
(b) subject to Section 3(a) hereof, prepare and file with the
Commission such amendments and post-effective amendments to each
Registration Statement as may be necessary to keep such Registration
Statement effective for the Effectiveness Period or the Applicable Period,
as the case may be, and cause each Prospectus to be supplemented by any
required prospectus supplement and as so supplemented to be filed pursuant
to Rule 424 (or any similar provision then in force) under the Act, and
comply with the provisions of the Act, the Exchange Act and the rules and
regulations promulgated thereunder applicable to it with respect to the
disposition of all securities covered by each Registration Statement during
the Effectiveness Period or the Applicable Period, as the case may be, in
accordance with the intended method or methods of distribution by the
selling Holders thereof described in this Agreement (including sales by any
Participating Broker-Dealer);
(c) in the case of a Shelf Registration, (i) notify each Holder, at
least five business days prior to filing, that a Shelf Registration
Statement with respect to the Registrable Securities is being filed and
advising such Holder that the distribution of Registrable Securities will
be made in accordance with the method selected by the Majority Holders,
(ii) furnish to each Holder and to each underwriter of an underwritten
offering of Registrable Securities, if any, without charge, as many copies
of each Prospectus, including each preliminary Prospectus, and any
amendment or supplement thereto and such other documents as such Holder or
underwriter may reasonably request, in order to facilitate the public sale
or other disposition of the Registrable Securities, and (iii) subject to
the last paragraph of this Section 3, consent to the use of the Prospectus
or any amendment or supplement thereto by each of the selling Holders in
connection with the offering and sale of the Registrable Securities covered
by the Prospectus or any amendment or supplement thereto, provided that
such use complies with all applicable laws and regulations;
(d) use its best efforts to register or qualify the Registrable
Securities under all applicable state securities or "blue sky" laws of such
jurisdictions as any Holder of Registrable Securities covered by a
Registration Statement and each underwriter of an underwritten offering of
Registrable Securities shall reasonably request by the time the applicable
Registration Statement is declared effective by the Commission, and do any
and all other acts and things which may be reasonably necessary or
advisable to enable such Holder and underwriter to consummate the dis-
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<PAGE> 46
position in each such jurisdiction of such Registrable Securities owned by
such Holder; PROVIDED, HOWEVER, that the Company shall not be required to
(i) qualify as a foreign partnership or foreign corporation or as a dealer
in securities in any jurisdiction where it would not otherwise be required
to qualify but for this Section 3(d), (ii) file any general consent to
service of process in any jurisdiction where it would not otherwise be
subject to such service of process or (iii) subject itself to taxation in
any such jurisdiction if it is not then so subject;
(e) in the case of (A) a Shelf Registration or (B) Participating
Broker-Dealers who have notified the Company that they will be utilizing
the Prospectus contained in the Exchange Offer Registration Statement as
provided in Section 3(t) hereof, are seeking to sell Exchange Notes and are
required to deliver Prospectuses, notify each Holder, or such Participating
Broker-Dealers, as the case may be, their counsel and the managing
underwriters, if any, promptly and, if requested by such Holder or
Participating Broker-Dealer, confirm such notice in writing (i) when a
Registration Statement has become effective and when any post-effective
amendments and supplements thereto become effective, (ii) of any request by
the Commission or any state securities authority for amendments and
supplements to a Registration Statement or Prospectus or for additional
information after the Registration Statement has become effective, (iii) of
the issuance by the Commission or any state securities authority of any
stop order suspending the effectiveness of a Registration Statement or the
initiation of any proceedings for that purpose, (iv) in the case of a Shelf
Registration, if, between the effective date of a Registration Statement
and the closing of any sale of Registrable Securities covered thereby, the
representations and warranties of the Company contained in any underwriting
agreement, securities sales agreement or other similar agreement, if any,
relating to such offering cease to be true and correct in all material
respects, (v) if the Company receives any notification with respect to the
suspension of the qualification of the Registrable Securities or the
Exchange Notes to be sold by any Participating Broker-Dealer for offer or
sale in any jurisdiction or the initiation of any proceeding for such
purpose, (vi) of the happening of any event or the failure of any event to
occur or the discovery of any facts or otherwise, during the period a Shelf
Registration Statement is effective or the Applicable Period, as the case
may be, which makes any statement made in the Shelf Registration Statement,
the Exchange Offer Registration Statement or any related Prospectus untrue
in any material respect or which causes such Registration Statement or
Prospectus, as the case may be, to omit to state a material fact necessary
to make the statements therein, in the light of the circumstances under
which they were made, not misleading and (vii) the Company's reasonable
determination that a post-effective amendment to the Registration Statement
would be appropriate;
(f) use its best efforts to obtain the withdrawal of any order
suspending the effectiveness of a Registration Statement at the earliest
possible moment;
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<PAGE> 47
(g) in the case of a Shelf Registration, furnish to each Holder, upon
request and without charge, at least one conformed copy of each
Registration Statement and any post-effective amendment thereto (without
documents incorporated therein by reference or exhibits thereto, unless
requested);
(h) in the case of a Shelf Registration, cooperate with the selling
Holders to facilitate the timely preparation and delivery of certificates,
if any, representing Registrable Securities to be sold, which certificates
shall not bear any restrictive legends and shall be in a form eligible for
deposit with the Depository; and cause such Registrable Securities to be in
such denominations (consistent with the provisions of the Indenture) and
registered in such names as the selling Holders or the managing
underwriters may reasonably request at least two business days prior to the
closing of any sale of Registrable Securities;
(i) subject to Section 3(a) hereof and the second paragraph of Section
2(e) hereof, in the case of a Shelf Registration or an Exchange Offer
Registration, upon the occurrence of any circumstance contemplated by
Section 3(e)(ii), 3(e)(iii), 3(e)(iv), 3(e)(v), 3(e)(vi) or 3(e)(vii)
hereof, use its best efforts to prepare a supplement or post-effective
amendment to the Registration Statement and the related Prospectus or any
document incorporated therein by reference or file any other required
document so that, as thereafter delivered to the purchasers of the
Registrable Securities, such Prospectus will not contain any untrue
statement of a material fact or omit to state a material fact necessary to
make the statements therein, in the light of the circumstances under which
they were made, not misleading. The Company agrees to notify each Holder to
suspend use of the Prospectus as promptly as practicable after the
occurrence of any such circumstance, and each Holder hereby agrees to
suspend use of the Prospectus until the Company has amended or supplemented
the Prospectus to correct such misstatement or omission;
(j) in the case of a Shelf Registration, furnish to each Holder of
Registrable Securities, upon request and without charge, a reasonable
number of copies of any document which is incorporated by reference into or
is an exhibit to a Registration Statement or a Prospectus after the initial
filing of a Registration Statement;
(k) obtain a CUSIP number for all Exchange Notes or Registrable
Securities, as the case may be, not later than the effective date of a
Registration Statement, and provide the Trustee with printed certificates
for the Exchange Notes or the Registrable Securities, as the case may be,
in a form eligible for deposit with the Depository;
(l) cause the Indenture to be qualified under the TIA in connection
with the registration of the Exchange Notes or Registrable Securities, as
the case may be, cooperate with the Trustee and the Holders to effect such
changes to the Indenture
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<PAGE> 48
as may be required for the Indenture to be so qualified in accordance with
the terms of the TIA and execute, and use its best efforts to cause the
Trustee to execute, all documents as may be required to effect such
changes, and all other forms and documents required to be filed with the
Commission to enable the Indenture to be so qualified in a timely manner;
(m) in the case of a Shelf Registration, enter into such agreements
(including underwriting agreements) as are customary in underwritten public
offerings and take all such other appropriate actions as are reasonably
requested in order to expedite or facilitate the registration or the
disposition of such Registrable Securities, and in such connection, whether
or not an underwriting agreement is entered into and whether or not the
registration is an underwritten registration: (i) make such representations
and warranties to Holders of such Registrable Securities and the
underwriters (if any), with respect to the business of the Company and its
subsidiaries and the Registration Statement, the Prospectus and all
documents, if any, incorporated or deemed to be incorporated by reference
therein, in each case, as are customarily made by issuers to underwriters
in underwritten public offerings, and confirm the same if and when
reasonably requested; (ii) obtain customary opinions of counsel to the
Company and updates thereof in form and substance reasonably satisfactory
to the managing underwriters (if any) and the Holders of a majority in
principal amount of the Registrable Securities being sold, addressed to
each selling Holder and the underwriters (if any) covering the matters
customarily covered in opinions requested in underwritten public offerings
and such other matters as may be reasonably requested by such Holders and
underwriters; (iii) obtain "cold comfort" letters and updates thereof in
form and substance reasonably satisfactory to the managing underwriters
from the independent certified public accountants of the Company (and, if
necessary, any other independent certified public accountants of any
subsidiary of the Company or of any business acquired or to be acquired by
the Company for which financial statements and financial data are, or are
required to be, included in the Registration Statement), addressed to the
selling Holders of Registrable Securities and to each of the underwriters,
such letters to be in customary form and covering matters of the type
customarily covered in "cold comfort" letters in connection with
underwritten public offerings; and (iv) if an underwriting agreement is
entered into, cause the same to contain indemnification provisions and
procedures no less favorable than those set forth in Section 4 hereof (or
such other provisions and procedures acceptable to Holders of a majority
in aggregate principal amount of Registrable Securities covered by such
Registration Statement and the managing underwriters or agents) with
respect to all parties to be indemnified pursuant to said Section. The
above shall be done at each closing under such underwriting agreement, or
as and to the extent required thereunder;
(n) if (a) a Shelf Registration is filed pursuant to Section 2(b) or
(B) A Prospectus contained in an Exchange Offer Registration Statement
filed pursuant to Section 2(a) is required to be delivered under the Act by
any Participating
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<PAGE> 49
Broker-Dealer who seeks to sell Exchange Notes during the Applicable
Period, make available for inspection by any selling Holder of such
Registrable Securities being sold, or each such Participating
Broker-Dealer, as the case may be, any underwriter participating in any
such disposition of Registrable Securities, if any, and any attorney,
accountant or other agent retained by any such selling Holder or each such
Participating Broker-Dealer, as the case may be, or underwriter
(collectively, the "INSPECTORS"), at the offices where normally kept,
during reasonable business hours, all financial and other records,
pertinent corporate documents and properties of the Company and its
subsidiaries (collectively, the "RECORDS") as shall be reasonably necessary
to enable them to exercise any applicable due diligence responsibilities,
and cause the officers, directors and employees of the Company and its
subsidiaries to supply all information in each case reasonably requested by
any such Inspector in connection with such Registration Statement. Records
which the Company determines, in good faith, to be confidential and as to
which they notify the Inspectors are confidential shall not be disclosed by
the Inspectors unless, after prior consultation with the Company, (i) the
disclosure of such Records is necessary to avoid or correct a material
misstatement or omission in such Registration Statement, (ii) the release
of such Records is ordered pursuant to an effective subpoena or other order
from a court of competent jurisdiction or (iii) the information in such
Records has been made generally available to the public, other than as a
result of a breach of confidentiality or secrecy to the Company. Each
selling Holder of such Registrable Securities and each such Participating
Broker-Dealer will be required to agree that information obtained by it as
a result of such inspections shall be deemed confidential and shall not be
used by it as the basis for any market transactions in the securities of
the Company unless and until such is made generally available to the
public, other than as a result of a breach of confidentiality or secrecy to
the Company. Each selling Holder of such Registrable Securities and each
such Participating Broker-Dealer will be required to further agree that it
will, upon learning that disclosure of such Records is sought in a court of
competent jurisdiction or is otherwise required upon the written advice of
counsel to such Participating Broker-Dealer, give notice to the Company and
allow the Company at its expense to undertake appropriate action to prevent
disclosure of the Records deemed confidential;
(o) comply with all applicable rules and regulations of the Commission
and, as soon as reasonably practicable, make generally available to the
Holders earnings statements of the Company covering at least 12 months
satisfying the provisions of Section 11(a) of the Act and Rule 158
thereunder (or any similar rule promulgated under the Act);
(p) upon consummation of an Exchange Offer or a Private Exchange,
obtain an opinion of counsel to the Company addressed to the Trustee for
the benefit of all Holders of Registrable Securities participating in the
Exchange Offer or the Private Exchange, as the case may be, and which
includes an opinion that (i) the
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<PAGE> 50
Company has duly authorized, executed and delivered the Exchange Notes and
Private Exchange Notes and the Indenture, as the case may be, and (ii) each
of the Exchange Notes or the Private Exchange Notes and the Indenture, as
the case may be, constitute a legal, valid and binding obligation of the
Company, enforceable against the Company in accordance with its respective
terms (in each case, with customary exceptions);
(q) if an Exchange Offer or a Private Exchange is to be consummated,
upon delivery of the Registrable Securities by Holders to the Company (or
to such other Person as directed by the Company) in exchange for the
Exchange Notes or the Private Exchange Notes, as the case may be, the
Company shall mark, or cause to be marked, on such Registrable Securities
delivered by such Holders that such Registrable Securities are being
cancelled in exchange for the Exchange Notes or the Private Exchange Notes,
as the case may be; in no event shall such Registrable Securities be marked
as paid or otherwise satisfied;
(r) cooperate with each seller of Registrable Securities covered by
any Registration Statement and each underwriter, if any, participating in
the disposition of such Registrable Securities and their respective counsel
in connection with any filings required to be made with the NASD;
(s) use its best efforts to take all other steps necessary to effect
the registration of the Registrable Securities covered by a Registration
Statement contemplated hereby;
(t) (A) in the case of the Exchange Offer Registration Statement (i)
include in the Exchange Offer Registration Statement a section entitled
"Plan of Distribution," which section shall be reasonably acceptable to the
Initial Purchasers or another representative of the Participating
Broker-Dealers, and which shall contain a summary statement of the
positions taken or policies made by the staff of the Commission with
respect to the potential "underwriter" status of any broker-dealer (a
"PARTICIPATING BROKER-DEALER") that holds Registrable Securities acquired
for its own account as a result of market-making activities or other
trading activities and that will be the beneficial owner (as defined in
Rule 13d-3 under the Exchange Act) of Exchange Notes to be received by such
broker-dealer in the Exchange Offer, whether such positions or policies
have been publicly disseminated by the staff of the Commission or such
positions or policies, in the reasonable judgment of the Initial Purchasers
or such other representative, represent the prevailing views of the staff
of the Commission, including a statement that any such broker-dealer who
receives Exchange Notes for Registrable Securities pursuant to the Exchange
Offer may be deemed a statutory underwriter and must deliver a prospectus
meeting the requirements of the Act in connection with any resale of such
Exchange Notes, (ii) furnish to each Participating Broker-Dealer who has
delivered to the Company the notice referred to in Section 3(e), without
charge, as many copies of each Prospectus
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<PAGE> 51
included in the Exchange Offer Registration Statement, including any
preliminary prospectus, and any amendment or supplement thereto, as such
Participating Broker-Dealer may reasonably request, (iii) subject to the
last paragraph of this Section 3, hereby consent to the use of the
Prospectus forming part of the Exchange Offer Registration Statement or any
amendment or supplement thereto, by any Person subject to the prospectus
delivery requirements of the Commission, including all Participating
Broker-Dealers, in connection with the sale or transfer of the Exchange
Notes covered by the Prospectus or any amendment or supplement thereto,
(iv) use its best efforts to keep the Exchange Offer Registration Statement
effective and to amend and supplement the Prospectus contained therein, in
order to permit such Prospectus to be lawfully delivered by all Persons
subject to the prospectus delivery requirements of the Act for such period
of time as such Persons must comply with such requirements in order to
resell the Exchange Notes (PROVIDED, HOWEVER, that such period shall not be
required to exceed 180 days, or such longer period if extended pursuant to
the last sentence of this Section 3 (the "APPLICABLE PERIOD")), and (v)
include in the transmittal letter or similar documentation to be executed
by an exchange offeree all necessary information for such offeree to
participate in the Exchange Offer;
(B) in the case of any Exchange Offer Registration Statement, the
Company agrees to deliver to the Initial Purchasers or to another
representative of the Participating Broker-Dealers on behalf of the
Participating Broker-Dealers upon consummation of the Exchange Offer (i) an
opinion of counsel substantially in the form attached hereto as EXHIBIT A,
(ii) an Officers' Certificate containing certifications substantially
similar to those set forth in Section 8(d) of the Purchase Agreement and
such additional certifications as are customarily delivered in a public
offering of debt securities, and (iii) a comfort letter in customary form
permitted by Statement of Auditing Standards No. 72 of the American
Institute of Certified Public Accountants.
The Company may require each seller of Registrable Securities as to
which any registration is being effected to furnish to the Company such
information regarding such seller and the proposed distribution of such
Registrable Securities as the Company may from time to time reasonably request
in writing. The Company may exclude from such registration the Registrable
Securities of any seller who unreasonably fails to furnish such information
within a reasonable time after receiving such request.
In the case of (i) a Shelf Registration Statement or (ii)
Participating Broker-Dealers who have notified the Company that they will be
utilizing the Prospectus contained in the Exchange Offer Registration Statement
as provided in Section 3(t) hereof, are seeking to sell Exchange Notes and are
required to deliver copies of such Prospectus, each Holder agrees that, upon
receipt of any notice from the Company of the happening of any event of the kind
described in Section 3(e)(ii), 3(e)(iii), 3(e)(iv), 3(e)(v), 3(e)(vi) or
3(e)(vii) hereof, such Holder will forthwith discontinue disposition of
Registrable Securities
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<PAGE> 52
pursuant to a Registration Statement until such Holder's receipt of the copies
of the supplemented or amended Prospectus contemplated by Section 3(i) hereof or
until it is advised in writing by the Company that the use of the applicable
Prospectus may be resumed, and, if so directed by the Company, such Holder will
deliver to the Company (at the Company's expense) all copies in such Holder's
possession, other than permanent file copies then in such Holder's possession,
of the Prospectus covering such Registrable Securities or Exchange Notes, as the
case may be, current at the time of receipt of such notice. If the Company
shall give any such notice to suspend the disposition of Registrable Securities
or Exchange Notes, as the case may be, pursuant to a Registration Statement, the
Company shall use its best efforts to file and have declared effective (if an
amendment) as soon as practicable an amendment or supplement to the Registration
Statement and shall extend the period during which such Registration Statement
shall be maintained effective pursuant to this Agreement by the number of days
in the period from and including the date of the giving of such notice to and
including the date when the Company shall have made available to the Holders
copies of the supplemented or amended Prospectus necessary to resume such
dispositions or shall have advised the Holders in writing that the use of the
applicable Prospectus may be resumed.
4. INDEMNIFICATION AND CONTRIBUTION. (a) The Company shall indemnify
and hold harmless the Initial Purchasers, each Holder, each Participating
Broker-Dealer, each underwriter who participates in an offering of Registrable
Securities, each of their respective affiliates, each Person, if any, who
controls any of such parties within the meaning of Section 15 of the Act or
Section 20 of the Exchange Act, and each of their respective directors,
officers, partners, employees, representatives and agents, to the fullest extent
lawful as follows'
(i) from and against any and all loss, liability, claim, damage and
expense whatsoever, joint or several, as incurred, arising out of any
untrue statement or alleged untrue statement of a material fact contained
in any Registration Statement or any amendment thereto pursuant to which
the offer and sale of the Registrable Securities or Exchange Notes were
registered under the Act including all documents incorporated therein by
reference, or the omission or alleged omission therefrom of a material fact
required to be stated therein or necessary to make the statements thereto
not misleading, or arising out of any untrue statement or alleged untrue
statement of a material fact contained in any Prospectus or any amendment
or supplement thereto, or the omission or alleged omission therefrom of a
material fact necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading;
(ii) from and against any and all loss, liability, claim, damage and
expense whatsoever, joint or several, to the extent of the aggregate amount
paid in settlement of any litigation, or any investigation or proceeding by
any court or governmental agency or body, whether commenced or threatened,
or any claim whatsoever based upon any such untrue statement or omission,
or any such alleged untrue statement or
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<PAGE> 53
omission, if and only if such settlement is effected with the prior written
consent of the Company; and
(iii) from and against any and all expenses whatsoever (including
reasonable fees and disbursements of counsel chosen by the Initial
Purchasers, Holder, Participating Broker-Dealer or underwriter (except to
the extent otherwise expressly provided in Section 4(c) hereof)), as
incurred, reasonably incurred in investigating, preparing for or defending
against any litigation, or any investigation or proceeding by any court or
governmental agency or body, whether commenced or threatened, or any other
claim whatsoever based upon any such untrue statement or omission, or any
such alleged untrue statement or omission, to the extent that any such
expense is not paid under subparagraph (i) or (ii) of this Section 4(a);
PROVIDED, HOWEVER, that this indemnity does not apply to any loss, liability,
claim, damage or expense to the extent arising out of an untrue statement or
omission or alleged untrue statement or omission (i) made solely in reliance
upon and in conformity with written information furnished to the Company by the
Initial Purchasers, such Holder, such Participating Broker-Dealer or any
underwriter in writing expressly for use in the Registration Statement (or any
amendment thereto) or any Prospectus (or any amendment or supplement thereto) or
(ii) contained in any preliminary prospectus or any Prospectus if the Initial
Purchasers, such Holder, such Participating Broker-Dealer or such underwriter
failed to send or deliver a copy of the Prospectus (as then amended or
supplemented if the Company shall have timely furnished any amendments or
supplements thereto) to the Person asserting such losses, liabilities, claims or
damages on or prior to the delivery of written confirmation of any sale of
securities covered thereby to such Person in any case where such delivery is
required by the Act and such Prospectus (as so amended or supplemented) would
have corrected such untrue statement or omission and the delivery thereof would
have eliminated such losses, claims, damages or liabilities. Any amounts
advanced by the Company to an indemnified party pursuant to this Section 4 as a
result of such losses shall be returned to the Company if it shall be determined
by a court that such indemnified party was not entitled to indemnification by
the Company.
(b) Each Holder agrees, severally and not jointly, to indemnify and
hold harmless the Company, the Initial Purchasers, each underwriter who
participates in an offering of Registrable Securities and the other selling
Holders and each of their respective directors, officers (including each officer
of the Company who signed the Registration Statement), employees,
representatives and agents, and each Person, if any, who controls the Company,
the Initial Purchasers, any underwriter or any other selling Holder within the
meaning of Section 15 of the Act or Section 20 of the Exchange Act, from and
against any and all loss, liability, claim, damage and expense whatsoever
described in the indemnity contained in Section 4(a) hereof, as reasonably
incurred, but only with respect to untrue statements or omissions, or alleged
untrue statements or omissions, made in the Registration Statement (or any
amendment thereto) or any Prospectus (or any amendment or supplement thereto)
solely in reliance upon and in conformity with written information furnished to
the
20
<PAGE> 54
Company by such selling Holder expressly for use in the Registration Statement
(or any amendment thereto) or any such Prospectus (or any amendment or
supplement thereto); PROVIDED, HOWEVER, that, in the case of a Shelf
Registration Statement, no such Holder shall be liable for any claims hereunder
in excess of the amount of net proceeds received by such Holder from the sale of
Registrable Securities pursuant to such Shelf Registration Statement.
(c) Each indemnified party shall give prompt notice to each
indemnifying party of any action commenced against it in respect of which
indemnity may be sought hereunder, enclosing a copy of all papers properly
served on such indemnified party (but failure to notify an indemnifying party
shall not relieve such indemnifying party from any liability hereunder to the
extent it is not materially prejudiced as a result thereof and in any event
shall not relieve it from any liability which it may have other than on account
of this indemnity agreement). An indemnifying party may participate, at its own
expense, in the defense of any such action. If an indemnifying party so elects
within a reasonable time after receipt of such notice, such indemnifying party,
jointly with any other indemnifying party, may assume the defense of such action
with counsel chosen by it and reasonably satisfactory to the indemnified parties
defendant in such action; PROVIDED, HOWEVER, that if any such indemnified party
reasonably determines, upon written advice of counsel, that there may be legal
defenses available to such indemnified party which are different from or in
addition to those available to such indemnifying party or that representation of
such indemnifying party and any indemnified party by the same counsel would
present a conflict of interest, then one additional counsel in each jurisdiction
for all indemnified parties having consistent interests and such different or
additional defenses or subject to such conflict shall be entitled to conduct the
defense of such indemnified parties with the fees and expenses of such counsel
to be borne by the indemnifying party or parties. If an indemnifying party
assumes the defense of an action in accordance with and as permitted by the
provisions of this Section 4(c), such indemnifying party shall not be liable for
any fees and expenses of counsel for the indemnified parties incurred thereafter
in connection with such action (except to the extent set forth in the proviso
contained in the immediately preceding sentence). In no event shall the
indemnifying party or parties be liable for the fees and expenses of more than
one counsel for all indemnified parties in connection with any one action, or
separate but similar or related actions in the same jurisdiction arising out of
the same general allegations or circumstances. No indemnifying party shall,
without the prior written consent of the indemnified parties, which consent
shall not be unreasonably withheld, settle or compromise or consent to the entry
of any judgment with respect to any litigation, or any investigation or
proceeding by any governmental agency or body, commenced or threatened, or any
claim whatsoever in respect of which indemnification or contribution could be
sought under this Section 4, unless such settlement, compromise or consent
includes an unconditional release of each indemnified party from all liability
arising out of such litigation, investigation, proceeding or claim and does not
include a statement as to or an admission of fault, culpability or a failure to
act by or on behalf of any indemnified party.
(d) Notwithstanding any payment or payments made by the Company
hereunder, the Company hereby expressly waives subrogation to, and agrees that
it shall not
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<PAGE> 55
be entitled to be subrogated to, any of the rights of any indemnified party
against the Company or any other right of offset held by any indemnified party
for the payment of any amounts owed to any indemnified party pursuant to this
Section 4; PROVIDED, HOWEVER, that if any of the foregoing provisions of this
paragraph are held to be contrary to applicable law or unenforceable by a court
of competent jurisdiction, the Company hereby expressly agrees that any right of
subrogation or contribution that the Company may have as a result of such
applicable law or unenforceability, as the case may be, shall be subordinate in
right of payment to the payment in full in cash of all amounts owed to any
indemnified party pursuant to this Section 4.
(e) If the indemnification provided for in this Section 4 is for any
reason unavailable to or insufficient to hold harmless an indemnified party in
respect of any losses, liabilities, claims, damages or expenses referred to
herein, then each indemnifying party shall contribute to the aggregate amount of
such losses, liabilities, claims, damages and expenses incurred by such
indemnified party, as incurred, (i) in such proportion as is appropriate to
reflect the relative benefits received by the indemnifying party or parties on
the one hand and the indemnified party or parties on the other hand from the
offering of the Notes pursuant to the Purchase Agreement, or (ii) if the
allocation provided by clause (i) is not permitted by applicable law, in such
proportion as is appropriate to reflect not only the relative benefits referred
to in clause (i) above but also the relative fault of the indemnifying party or
parties on the one hand and of the indemnified party or parties on the other
hand in connection with the statements or omissions which resulted in such
losses, liabilities, claims, damages or expenses, as well as any other relevant
equitable considerations.
The relative benefits received by the Company on the one hand and the
Initial Purchasers on the other hand in connection with the offering of the
Notes pursuant to the Purchase Agreement shall be deemed to be in the same
respective proportions as the total net proceeds from the offering of the Notes
pursuant to the Purchase Agreement (before deducting expenses) received by the
Company and the total discount received by the Initial Purchasers bear to the
aggregate initial offering price of the Notes.
The relative fault of the Company on the one hand and the Holders on
the other hand shall be determined by reference to, among other things, whether
any such untrue or alleged untrue statement of a material fact or omission or
alleged omission to state a material fact relates to information supplied by the
Company or by the Holders, and the respective parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission.
The Company and the Holders agree that it would not be just and
equitable if contribution pursuant to this Section 4 were determined by PRO RATA
allocation (even if the Holders were treated as one entity for such purpose) or
by any other method of allocation which does not take account of the equitable
considerations referred to above in this Section 4(e). The aggregate amount of
losses, liabilities, claims, damages and expenses incurred by an indemnified
party and referred to above in this Section 4(e) shall be deemed to include
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<PAGE> 56
any legal or other expenses reasonably incurred by such indemnified party in
investigating, preparing for or defending against any litigation, or any
investigation or proceeding by any governmental agency or body, commenced or
threatened, or any claim whatsoever based upon any untrue or alleged untrue
statement or omission or alleged omission referred to in Section 4(a)(i).
Notwithstanding the provisions of this Section 4(e), no Initial
Purchaser shall be required to contribute any amount in excess of the amount by
which the total discount received by such Initial Purchaser in respect of the
purchase price of the Notes purchased by it from the Company exceeds the amount
of any damages which the Initial Purchasers have otherwise been required to pay
by reason of such untrue or alleged untrue statement or omission or alleged
omission.
No person guilty of fraudulent misrepresentation (within the meaning
of Section 11(f) of the Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation.
For purposes of this Section 4(e), each person, if any, who controls
an Initial Purchaser, a Holder, a Participating Broker-Dealer, an underwriter
who participates in an offering of Registrable Securities, or the affiliates of
any of them, within the meaning of Section 15 of the Act or Section 20 of the
Exchange Act shall have the same rights to contribution as the Initial
Purchasers, and each director, officer (including each officer of the Company
who signed the Registration Statement), partner, employee, representative and
agent of the Company, the Initial Purchasers, each Holder, each Participating
Broker-Dealer, and each underwriter who participates in an offering of
Registrable Securities and each person, if any, who controls the Company within
the meaning of Section 15 of the Act or Section 20 of the Exchange Act shall
have the same rights to contribution as the Company.
5. PARTICIPATION IN UNDERWRITTEN REGISTRATIONS. No Holder may
participate in any underwritten registration hereunder unless such Holder (a)
agrees to sell such Holder's Registrable Securities on the basis provided in any
customary underwriting arrangements approved by the Holders of a majority in
aggregate principal amount of the Registrable Securities included in such
offering and (b) completes and executes all reasonable questionnaires, powers of
attorney, indemnities, underwriting agreements, lock-up letters and other
documents reasonably required in connection with such underwriting arrangements.
6. SELECTION OF UNDERWRITERS. In any underwritten offering, the
underwriter or underwriters and manager or managers that will administer the
offering will be selected by the Holders of a majority in aggregate principal
amount of the Registrable Securities included in such offering; PROVIDED,
HOWEVER, that such underwriters and managers must be reasonably satisfactory to
the Company.
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7. MISCELLANEOUS.
(a) NO INCONSISTENT AGREEMENTS. The Company has not entered into nor
will the Company on or after the date of this Agreement enter into any agreement
that is inconsistent with the rights granted to the Holders of Registrable
Securities in this Agreement or otherwise conflicts with the provisions hereof.
(b) AMENDMENTS AND WAIVERS. The provisions of this Agreement,
including the provisions of this sentence, may not be amended, modified or
supplemented, and waivers or consents to departures from the provisions hereof
may not be given, unless the Company has obtained the written consent of the
Majority Holders; PROVIDED, HOWEVER, that no amendment, modification or
supplement or waiver or consent to the departure with respect to the provisions
of Section 4 hereof shall be effective as against any Holder of Registrable
Securities unless consented to in writing by such Holder of Registrable
Securities.
(c) NOTICES. All notices and other communications hereunder shall be
in writing and shall be deemed to have been duly given if sent by registered or
certified mail, postage prepaid, sent by any national courier service
guaranteeing overnight delivery or transmitted by any standard form of
telecommunication, as follows: (i) if to a Holder, at the most current address
given by such Holder to the Company in accordance with the provisions of this
Section 7(c), which address, with respect to an Initial Purchaser, shall
initially be the address provided for such Initial Purchaser in the Purchase
Agreement; and (ii) if to the Company, at its address as set forth in the
Purchase Agreement, or at such other address provided in accordance with the
provisions of this Section 7(c).
All such notices and communications shall be deemed to have been duly
given at the earlier of: (i) the time of actual receipt by the addressee; or
(ii) the time delivered, if personally delivered, or five business days after
being sent by registered or certified mail, postage prepaid, if mailed, or when
answered back, if telexed, or when transmission is confirmed, if telecopied, or
on the next business day, if timely delivered to a national courier service
guaranteeing overnight delivery.
Copies of all notices, demands, or other communications shall be
concurrently delivered by the Person giving the same to the Trustee at its
address specified in the Indenture.
(d) SUCCESSORS AND ASSIGNS. This Agreement shall inure to the benefit
of and be binding upon the successors, assigns and transferees of the Initial
Purchasers, including, without limitation and without the need for an express
assignment, subsequent Holders; PROVIDED, HOWEVER, that nothing herein shall be
deemed to permit any assignment, transfer or other disposition of Registrable
Securities in violation of the terms of the Purchase Agreement or the Indenture.
If any transferee of any Holder shall acquire Registrable Securities, in any
manner, whether by operation of law or otherwise, such Registrable Securities
shall be held subject to all of the terms of this Agreement, and by taking and
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<PAGE> 58
holding such Registrable Securities, such Person shall be conclusively deemed to
have agreed to be bound by and to perform all of the terms and provisions of
this Agreement and such Person shall be entitled to receive the benefits hereof.
(e) THIRD PARTY BENEFICIARY. The Holders shall be third party
beneficiaries of the agreements made hereunder between the Company, on the one
hand, and the Initial Purchasers, on the other hand, and the Holders shall have
the right to enforce such agreements directly to the extent they deem such
enforcement necessary or advisable to protect their rights or the rights of any
of the other Holders.
(f) HEADINGS. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
(g) GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK, WITHOUT GIVING
EFFECT TO ANY PROVISIONS RELATING TO CONFLICTS OF LAWS.
(h) SEVERABILITY. In the event that any one or more of the provisions
contained herein, or the application thereof in any circumstance, is held
invalid, illegal or unenforceable, the validity, legality and enforceability of
any such provision in every other respect and of the remaining provisions
contained herein shall not be affected or impaired thereby.
(i) NOTES HELD BY THE COMPANY OR ITS AFFILIATES. Whenever the consent
or approval of Holders of a specified percentage of Registrable Securities is
required hereunder, Registrable Securities held by the Company or any affiliate
of the Company (as such term is defined in Rule 405 under the Act) shall not be
counted in determining whether such consent or approval was given by the Holders
of such required percentage.
(j) COUNTERPARTS. This Agreement may be executed in one or more
counterparts and, when so executed, all such counterparts taken together shall
constitute one and the same agreement.
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Exhibit A
---------
Form of Opinion of Counsel
--------------------------
1. Each of the Exchange Offer Registration Statement and the
Prospectus (other than the financial statements, notes or schedules thereto and
other financial and statistical data and supplemental schedules included or
referred to therein or omitted therefrom and the Form T-l, as to which such
counsel need express no opinion), complies as to form in all material respects
with the applicable requirements of the Act and the applicable rules and
regulations promulgated under the Act.
2. In the course of such counsel's review and discussion of the
contents of the Exchange Offer Registration Statement and the Prospectus with
certain officers and other representatives of the Company and representatives of
the independent certified public accountants of the Company, but without
independent check or verification or responsibility for the accuracy,
completeness or fairness of the statements contained therein, on the basis of
the foregoing (relying as to materiality to a large extent upon representations
and opinions of officers and other representatives of the Company), no facts
have come to such counsel's attention which cause such counsel to believe that
the Exchange Offer Registration Statement (other than the financial statements,
notes and schedules thereto and other financial and statistical information
contained or referred to therein and the Form T-l, as to which such counsel need
express no belief), at the time the Exchange Offer Registration Statement became
effective, contained an untrue statement of a material fact or omitted to state
a material fact required to be stated therein or necessary to make the
statements contained therein not misleading, or that the Prospectus (other than
the financial statements, notes and schedules thereto and other financial and
statistical information contained or referred to therein, as to which such
counsel need express no belief) contains any untrue statement of a material fact
or omits to state a material fact necessary to make the statements contained
therein, in the light of the circumstances under which they were made, not
misleading.
A-1
<PAGE> 60
EXHIBIT C-1
Form of Opinion of Ropes & Gray
Capitalized terms used herein and not otherwise defined shall have the
meanings assigned to them in the Purchase Agreement.
1. The Company is duly incorporated and is validly existing as a
corporation in good standing under the laws of the State of Delaware and is duly
qualified and in good standing as a foreign corporation authorized to do
business in each jurisdiction in which the nature of its business or its
ownership or leasing of property requires such qualification, except where the
failure to be so qualified or in good standing would not have a material adverse
effect on the Company and its subsidiaries taken as a whole. The Company has all
requisite corporate authority to carry on its business as it is currently being
conducted and to own, lease and operate its properties as described in the
Offering Memorandum. The Company has all requisite corporate authority to
execute, deliver and perform its obligations under the Purchase Agreement and
each of the other Operative Documents to which it is a party and to consummate
the transactions contemplated hereby and thereby, including, without limitation,
the corporate power and authority to issue, sell and deliver the Notes as
provided herein and therein.
2. The Purchase Agreement has been duly authorized, executed and
delivered by the Company.
3. The Indenture has been duly authorized, executed and delivered by
the Company and, assuming the due authorization, execution and delivery thereof
by the Trustee, is a legal, valid and binding obligation of the Company,
enforceable against the Company in accordance with its terms, except to the
extent that (i) the enforceability thereof may be limited by bankruptcy,
insolvency, fraudulent conveyance, reorganization or other similar laws relating
to or affecting enforcement of creditors' rights generally and (ii) rights of
acceleration and the availability of equitable remedies may be limited by
general principles of equity.
4. The Registration Rights Agreement has been duly authorized,
executed and delivered by the Company and is a legal, valid and binding
obligation of the Company, enforceable against the Company in accordance with
its terms, except to the extent that (i) the enforceability thereof may be
limited by bankruptcy, insolvency, fraudulent conveyance, reorganization or
other similar laws relating to or affecting enforcement of creditors' rights
generally, (ii) rights of acceleration and the availability of equitable
remedies may be limited by general principles of equity and (iii) rights of
indemnity or contribution thereunder may be limited by federal or state
securities laws or regulations or the public policy underlying such laws or
regulations.
5. The Notes have been duly authorized, executed and delivered by the
Company for issuance and sale to the Initial Purchasers pursuant to the Purchase
Agreement and, when issued and authenticated in accordance with the terms of the
Indenture and delivered against payment therefor in accordance with the terms
hereof and thereof, will be legal, valid and binding obligations of the Company,
enforceable against the Company in accordance with their terms and entitled to
the benefits of the Indenture, subject to applicable bankruptcy, insolvency,
fraudulent conveyance, reorganization or
C-l-1
<PAGE> 61
similar laws relating to or affecting the rights of creditors generally, and
subject to limitations on rights of acceleration and the availability of
equitable remedies under general principles of equity.
6. The Series B Notes and the Private Exchange Notes, if any, have
been duly authorized by the Company for issuance and, when executed, delivered,
issued and authenticated in accordance with the terms of the Registration Rights
Agreement and the Indenture, will be legal, valid and binding obligations of the
Company, enforceable against the Company in accordance with their terms and
entitled to the benefits of the Indenture, subject to applicable bankruptcy,
insolvency, fraudulent conveyance, reorganization or similar laws relating to or
affecting the rights of creditors generally, and subject to limitations on
rights of acceleration and the availability of equitable remedies under general
principles of equity.
7. When the Notes are issued and delivered pursuant to the Purchase
Agreement, no Note will be of the same class (within the meaning of Rule 144A
under the Act) as securities of the Company that are listed on a national
securities exchange registered under Section 6 of the Exchange Act or that are
quoted in a United States automated inter-dealer quotation system.
8. The execution and delivery by the Company of the Purchase Agreement
and of the other Operative Documents, the performance by the Company of its
agreements pursuant to the Purchase Agreement and the other Operative Documents
and the consummation of the transactions contemplated hereby and thereby
(including, without limitation, the issuance, sale and delivery of the Notes by
the Company) do not (i) conflict with or result in a breach or violation of, or
constitute a default (or an event which, with notice or lapse of time or both,
would constitute a default) under, or give rise to any right to accelerate the
maturity of or require the prepayment of any obligation of the Company, or
require any consent, or result in the creation or imposition of any lien, charge
or encumbrance upon any property or assets of the Company pursuant to, the terms
of any contract, agreement or document identified as an exhibit to the Company's
Annual Report on Form 10-K, (ii) violate or conflict with any provisions of the
certificate of incorporation or bylaws of the Company or (iii) to such counsel's
knowledge (assuming, solely for purposes of the opinion set forth in this clause
(iii), compliance with state securities or Blue Sky laws and the antifraud
provisions of federal and state securities laws, as to which such counsel need
not express an opinion), violate or conflict with any judgment, decree, order,
statute, rule or regulation of any court or any public, governmental or
regulatory agency or body having jurisdiction over the Company or any of its
respective properties or assets, except for such breaches, violations or
conflicts which, individually or in the aggregate, do not and would not
reasonably be expected to have a material adverse effect on the business,
properties, assets, liabilities (contingent or otherwise), earnings, operations,
conditions (financial and otherwise) or results of operations of the Company and
its subsidiaries taken as a whole. Assuming compliance with applicable state
securities and Blue Sky laws, as to which such counsel need express no opinion,
and except for the filing of a registration statement under the Act and
qualification of the Indenture under the Trust Indenture Act, in each case as
contemplated by the Registration Rights Agreement, no consent, approval,
authorization or order of, or filing, registration, qualification, license or
permit of or with any court or governmental agency, body or administrative
agency is required for (1) the execution, delivery and performance by the
Company of the Purchase Agreement or any of the other Operative Documents to
which it is a party; or (2) the issuance and sale of the Notes, except such as
have been obtained and made or have been disclosed in the Offering Memorandum.
C-1-2
<PAGE> 62
9. Neither the Company nor any subsidiary of the Company is and upon
consummation of the transactions contemplated in the Purchase Agreement none of
the Company or any subsidiary of the Company will be, subject to registration as
an "investment company" within the meaning of the Investment Company Act of 1940
and the rules and regulations promulgated thereunder.
10. Assuming (i) the accuracy of, and compliance with, the
representations, warranties, covenants and agreements of the Company and the
Initial Purchasers contained in the Purchase Agreement, (ii) the accuracy of,
and compliance with, the representations, warranties, covenants and agreements
of each of the persons to whom the Initial Purchasers initially resells or
otherwise transfers the Notes, as specified in the Offering Memorandum, and
(iii) the compliance by the Initial Purchasers with the offering and transfer
procedures and restrictions described in the Offering Memorandum, it is not
necessary in connection with the offer, sale and delivery of the Notes to the
Initial Purchasers or in connection with the initial resale of the Notes by the
Initial Purchasers in the manner contemplated by the Purchase Agreement and the
Offering Memorandum to register the sale of the Notes to the Initial Purchasers
or the Exempt Resales under the 1933 Act, it being understood that such counsel
need not express any opinion as to any subsequent reoffers, resales or other
transfers of any Notes, or to qualify the Indenture under the Trust Indenture
Act of 1939, as amended.
11. None of the execution, delivery and performance of the Purchase
Agreement, the issuance and sale of the Notes, the application of the proceeds
from the issuance and sale of the Notes and the consummation of the transactions
contemplated thereby as set forth in the Offering Memorandum, will violate
Regulation G, T, U or X promulgated by the Board of Governors of the Federal
Reserve System.
12. The Purchase Agreement, the Indenture, the Notes and the
Registration Rights Agreement conform in all material respects as to the
descriptions thereof contained in the Offering Memorandum.
13. To such counsel's knowledge, no stop order preventing the use of
the Preliminary Offering Memorandum or the Offering Memorandum, or any amendment
or supplement thereto, or any order asserting that any of the transactions
contemplated by the Purchase Agreement are subject to the registration
requirements of the Act, has been issued.
In addition, such counsel shall state that (i) it has participated in
certain discussions with representatives of and counsel to the Initial
Purchasers, and representatives of the Company and its independent accountants,
in which the business and affairs of the Company and the contents of the
Offering Memorandum were discussed; (ii) such counsel has not reviewed
individual litigation files of the Company or consulted with counsel directly
involved in handling particular legal or governmental proceedings for the
Company and its investigation of pending or threatened legal or governmental
proceedings consisted solely of its participation in such discussions; (iii) on
the basis of information that such counsel has gained in the course of its
representation of the Company in connection with its preparation of the Offering
Memorandum and its participation in the discussions referred to above, such
counsel has no reason to believe that, as of the date of the Offering Memorandum
or the Closing Date, the Offering Memorandum contained or contains any untrue
statement of a material fact or omitted or omits to state any material fact
required to be stated therein or necessary to make the statements therein, in
the light of the circumstances under which they were made, not misleading. Such
counsel need express
C-I-3
<PAGE> 63
no opinion as to the financial statements, including the notes and schedules
thereto, or any other financial, statistical or accounting information set forth
or referred to in the Offering Memorandum, or as to any statement or omission
made by the Company in reliance upon information furnished in writing to the
Company by any Initial Purchaser in connection with the Offering Memorandum.
C- 1-4
<PAGE> 64
EXHIBIT C-2
Form of Opinion of General Counsel to the Company
Capitalized terms used herein and not otherwise defined shall have the
meanings assigned to them in the Purchase Agreement.
1. The Company is duly incorporated and is validly existing as a
corporation in good standing under the laws of the State of Delaware and is duly
qualified and in good standing as a foreign corporation authorized to do
business in each jurisdiction in which the nature of its business or its
ownership or leasing of property requires such qualification, except where the
failure to be so qualified or in good standing would not have a material adverse
effect on the Company and its subsidiaries taken as a whole. The Company has all
requisite corporate authority to carry on its business as it is currently being
conducted and to own, lease and operate its properties as described in the
Offering Memorandum. The Company has all requisite corporate authority to
execute, deliver and perform its obligations under the Purchase Agreement and
each of the other Operative Documents to which it is a party and to consummate
the transactions contemplated hereby and thereby, including, without limitation,
the corporate power and authority to issue, sell and deliver the Notes as
provided herein and therein.
2. Each Significant Subsidiary of the Company is duly incorporated and
is validly existing as a corporation in good standing under the laws of the
state of its incorporation and is duly qualified and in good standing as a
foreign corporation authorized to do business in each jurisdiction in which the
nature of its business or its ownership or leasing of property requires such
qualification, except where the failure to be so qualified or in good standing
would not have a material adverse effect on the Company and its subsidiaries
taken as a whole. Each Significant Subsidiary of the Company has all requisite
corporate authority to carry on its business as it is currently being conducted
and to own, lease and operate its properties as described in the Offering
Memorandum.
3. All of the outstanding capital stock of the Company has been duly
authorized, validly issued, and is fully paid and nonassessable and, to such
counsel's knowledge, was not issued in violation of any preemptive or similar
rights.
4. The Purchase Agreement has been duly authorized, executed and
delivered by the Company.
5. The Indenture has been duly authorized, executed and delivered by
the Company and, assuming the due authorization, execution and delivery thereof
by the Trustee, is a legal, valid and binding obligation of the Company,
enforceable against the Company in accordance with its terms, except to the
extent that (i) the enforceability thereof may be limited by bankruptcy,
insolvency, fraudulent conveyance, reorganization or other similar laws relating
to or affecting enforcement of creditors' rights generally and (ii) rights of
acceleration and the availability of equitable remedies may be limited by
general principles of equity.
6. The Registration Rights Agreement has been duly authorized,
executed and delivered by the Company and is a legal, valid and binding
obligation of the Company, enforceable against the Company in accordance with
its terms, except to the extent that (i) the enforceability thereof
C-2-1
<PAGE> 65
may be limited by bankruptcy, insolvency, fraudulent conveyance, reorganization
or other similar laws relating to or affecting enforcement of creditors' rights
generally, (ii) rights of acceleration and the availability of equitable
remedies may be limited by general principles of equity and (iii) rights of
indemnity or contribution thereunder may be limited by federal or state
securities laws or regulations or the public policy underlying such laws or
regulations.
7. The Notes have been duly authorized, executed and delivered by the
Company for issuance and sale to the Initial Purchasers pursuant to the Purchase
Agreement and, when issued and authenticated in accordance with the terms of the
Indenture and delivered against payment therefor in accordance with the terms
hereof and thereof, will be legal, valid and binding obligations of the Company,
enforceable against the Company in accordance with their terms and entitled to
the benefits of the Indenture, subject to applicable bankruptcy, insolvency,
fraudulent conveyance, reorganization or similar laws relating to or affecting
the rights of creditors generally, and subject to limitations on rights of
acceleration and the availability of equitable remedies under general principles
of equity.
8. The Series B Notes and the Private Exchange Notes, if any, have
been duly authorized by the Company for issuance and, when executed, delivered,
issued and authenticated in accordance with the terms of the Registration Rights
Agreement and the Indenture, will be legal, valid and binding obligations of the
Company, enforceable against the Company in accordance with their terms and
entitled to the benefits of the Indenture, subject to applicable bankruptcy,
insolvency, fraudulent conveyance, reorganization or similar laws relating to or
affecting the rights of creditors generally, and subject to limitations on
rights of acceleration and the availability of equitable remedies under general
principles of equity.
9. The execution and delivery by the Company of the Purchase Agreement
and of the other Operative Documents, the performance by the Company of its
agreements pursuant to the Purchase Agreement and the other Operative Documents
and the consummation of the transactions contemplated hereby and thereby
(including, without limitation, the issuance, sale and delivery of the Notes by
the Company) do not (i) conflict with or result in a breach or violation of, or
constitute a default (or an event which, with notice or lapse of time or both,
would constitute a default) under, or give rise to any right to accelerate the
maturity of or require the prepayment of any obligation of the Company or any
Significant Subsidiary, or require any consent, or result in the creation or
imposition of any lien, charge or encumbrance upon any property or assets of the
Company or any Significant Subsidiary pursuant to, the terms of any contract,
agreement or document identified as an exhibit to the Company's Annual Report on
Form 10-K, (ii) violate or conflict with any provisions of the certificate of
incorporation or bylaws of the Company or any Significant Subsidiary or (iii) to
such counsel's knowledge (assuming, solely for purposes of the opinion set forth
in this clause (iii), compliance with state securities or Blue Sky laws and the
antifraud provisions of federal and state securities laws, as to which such
counsel need not express an opinion), violate or conflict with any judgment,
decree, order, statute, rule or regulation of any court or any public,
governmental or regulatory agency or body having jurisdiction over the Company
or any Significant Subsidiary or any of their respective properties or assets,
except for such breaches, violations or conflicts which, individually or in the
aggregate, do not and would not reasonably be expected to have a material
adverse effect on the business, properties, assets, liabilities (contingent or
otherwise), earnings, operations, conditions (financial and otherwise) or
results of operations of the Company and its subsidiaries taken as a whole.
Assuming compliance with applicable state securities and Blue Sky laws, as to
which such counsel need express no opinion, and
C-2-2
<PAGE> 66
except for the filing of a registration statement under the Act and
qualification of the Indenture under the Trust Indenture Act, in each case as
contemplated by the Registration Rights Agreement, no consent, approval,
authorization or order of, or filing, registration, qualification, license or
permit of or with any court or governmental agency, body or administrative
agency is required for (1) the execution, delivery and performance by the
Company of the Purchase Agreement or any of the other Operative Documents to
which it is a party; or (2) the issuance and sale of the Notes, except such as
have been obtained and made or have been disclosed in the Offering Memorandum.
10. To such counsel's knowledge, there is no litigation, action, suit,
investigation or proceeding, governmental or otherwise, before any court or
before or by any public, regulatory or governmental agency or body pending or
threatened against, or involving the properties or business of, the Company or
relating to the issuance or sale of the Notes, which would have a material
adverse effect on the ability of the Company to perform its obligations under
any Operative Document or to consummate the transactions contemplated by the
Offering Memorandum or the Operative Documents.
11. Except as set forth in the Registration Rights Agreement, to such
counsel's knowledge, there are no holders of securities of the Company or any of
its subsidiaries who, by reason of the execution by the Company of the Purchase
Agreement or any other Operative Document or the consummation by the Company and
of the transactions contemplated hereby and thereby, have the right to request
or demand that the Company or any of its subsidiaries register under the Act or
analogous foreign laws and regulations securities held by them.
12. The Purchase Agreement, the Indenture, the Notes and the
Registration Rights Agreement conform in all material respects as to the
descriptions thereof contained in the Offering Memorandum.
13. To such counsel's knowledge, no stop order preventing the use of
the Preliminary Offering Memorandum or the Offering Memorandum, or any amendment
or supplement thereto, or any order asserting that any of the transactions
contemplated by the Purchase Agreement are subject to the registration
requirements of the Act, has been issued.
In addition, such counsel shall state that (i) it has participated in
certain discussions with representatives of and counsel to the Initial
Purchasers, and representatives of the Company and its independent accountants,
in which the business and affairs of the Company and the contents of the
Offering Memorandum were discussed; (ii) although such counsel has
responsibility for the legal affairs of the Company, the Company is represented
by separate litigation counsel with respect to litigation matters, and such
counsel has not reviewed individual litigation files of the Company or consulted
with counsel directly involved in handling particular legal or governmental
proceedings for the Company and such counsel's investigation of pending or
threatened legal or governmental proceedings has consisted of the regular
conduct of such counsel's duties as the Company's general counsel and
correspondence with litigation counsel and representatives of the Company; (iii)
on the basis of information that such counsel has gained in the regular conduct
of such counsel's duties as the Company's general counsel, such counsel does not
know of any legal or governmental proceeding to which the Company or any of its
subsidiaries is a party or to which any of its property is subject required to
be described in the Offering Memorandum which is not so described, nor of any
contract or other document of a character required to be described in the
Offering Memorandum which is not so described; (iv) based on such information
and participation,
C-2-3
<PAGE> 67
such counsel has no reason to believe that, as of the date of the Offering
Memorandum or the Closing Date, the Offering Memorandum contained or contains
any untrue statement of a material fact or omitted or omits to state any
material fact required to be stated therein or necessary to make the statements
therein, in the light of the circumstances under which they were made, not
misleading. Such counsel need express no opinion as to the financial statements,
including the notes and schedules thereto, or any other financial, statistical
or accounting information set forth or referred to in the Offering Memorandum,
or as to any statement or omission made by the Company in reliance upon
information furnished in writing to the Company by any Initial Purchaser in
connection with the Offering Memorandum.
C-2-4
<PAGE> 1
Exhibit 4.2
EXECUTION COPY
--------------
NORTEK, INC.,
Company,
and
STATE STREET BANK AND TRUST COMPANY,
Trustee
-------------------------------------
INDENTURE
Dated as of March 17, 1997
-------------------------------------
$175,000,000
Series A and Series B
9 1/4% Senior Notes due March 15, 2007
<PAGE> 2
TABLE OF CONTENTS1/
-------------------
<TABLE>
<CAPTION>
Page
<S> <C> <C>
ARTICLE 1
DEFINITIONS AND INCORPORATION BY REFERENCE.............................................1
SECTION 1.01 Definitions..........................................................1
SECTION 1.02 Other Definitions...................................................17
SECTION 1.03 Incorporation by Reference of Trust Indenture Act...................17
SECTION 1.04 Rules of Construction...............................................18
SECTION 1.05 Acts of Holders.....................................................18
SECTION 1.06 Exchange Rates......................................................19
ARTICLE 2
THE NOTES.............................................................................19
SECTION 2.01 Form and Dating.....................................................19
SECTION 2.02 Execution and Authentication........................................20
SECTION 2.03 Registrar and Paying Agent..........................................21
SECTION 2.04 Paying Agent to Hold Money in Trust.................................22
SECTION 2.05 Holder Lists........................................................22
SECTION 2.06 Transfer and Exchange...............................................22
SECTION 2.07 Replacement Notes...................................................32
SECTION 2.08 Outstanding Notes; Determinations of Holders' Action
.................................................................................33
SECTION 2.09 Temporary Notes.....................................................33
SECTION 2.10 Cancellation........................................................34
SECTION 2.11 CUSIP Number........................................................34
SECTION 2.12 Defaulted Interest..................................................34
SECTION 2.13 Liquidated Damages Under Registration Rights Agreement
.................................................................................34
ARTICLE 3
REDEMPTION
.....................................................................................35
SECTION 3.01 Right to Redeem; Notices to Trustee.................................35
SECTION 3.02 Selection of Notes to be Redeemed...................................35
SECTION 3.03 Notice of Redemption................................................35
SECTION 3.04 Effect of Notice of Redemption......................................36
SECTION 3.05 Deposit of Redemption Price.........................................36
</TABLE>
- --------
[FN]
1/ This Table of Contents shall not, for any purpose, be deemed to be part of
this Indenture.
i
<PAGE> 3
<TABLE>
<CAPTION>
<S> <C> <C>
SECTION 3.06 Notes Redeemed in Part..............................................36
ARTICLE 4
COVENANTS.............................................................................36
SECTION 4.01 Payment of Notes....................................................36
SECTION 4.02 Reports.............................................................37
SECTION 4.03 Compliance Certificates.............................................38
SECTION 4.04 Further Instruments and Acts........................................39
SECTION 4.05 Maintenance of Office or Agency.....................................39
SECTION 4.06 Limitation on Restricted Payments...................................39
SECTION 4.07 Limitation on Additional Indebtedness...............................41
SECTION 4.08 Limitation on Sale or Issuance of Preferred Stock of
Restricted Subsidiaries...........................................................45
SECTION 4.09 Limitation on Liens.................................................45
SECTION 4.10 Limitation on Certain Restrictions Affecting Subsidiaries
.................................................................................46
SECTION 4.11 Repurchase Upon Change of Control...................................47
SECTION 4.12 Limitation On Use of Proceeds from Asset Sales......................49
SECTION 4.13 Limitation on Transactions With Affiliates..........................50
SECTION 4.14 Limitation on Guaranties by Subsidiaries............................50
SECTION 4.15 Payment of Taxes and Other Claims...................................51
SECTION 4.16 Corporate Existence.................................................51
SECTION 4.17 Maintenance of Properties and Insurance.............................52
SECTION 4.18 Stay, Extension and Usury Laws......................................52
SECTION 4.19 Investment Company Act..............................................52
SECTION 4.20 Payments for Consents...............................................52
SECTION 4.21 Covenant to Comply with Securities Laws Upon Purchase of
Notes.............................................................................52
ARTICLE 5
SUCCESSOR CORPORATION.................................................................53
SECTION 5.01 When the Company May Merge or Transfer Assets.......................53
SECTION 5.02 Successor Corporation Substituted...................................54
ARTICLE 6
DEFAULTS AND REMEDIES
.....................................................................................55
SECTION 6.01 Events of Default...................................................55
SECTION 6.02 Acceleration........................................................57
SECTION 6.03 Other Remedies......................................................58
SECTION 6.04 Waiver of Past Defaults.............................................58
SECTION 6.05 Control by Majority.................................................58
SECTION 6.06 Limitation on Suits.................................................58
</TABLE>
ii
<PAGE> 4
<TABLE>
<CAPTION>
<S> <C> <C>
SECTION 6.07 Rights of Holders to Receive Payment................................59
SECTION 6.08 Collection Suit by Trustee..........................................59
SECTION 6.09 Trustee May File Proofs of Claim....................................59
SECTION 6.10 Priorities..........................................................60
SECTION 6.11 Undertaking for Costs...............................................60
SECTION 6.12 Restoration of Rights and Remedies..................................60
ARTICLE 7
TRUSTEE...............................................................................61
SECTION 7.01 Duties of Trustee...................................................61
SECTION 7.02 Rights of Trustee...................................................62
SECTION 7.03 Individual Rights of Trustee........................................63
SECTION 7.04 Trustee's Disclaimer................................................63
SECTION 7.05 Notice of Defaults..................................................63
SECTION 7.06 Reports by Trustee to Holders.......................................63
SECTION 7.07 Compensation and Indemnity..........................................63
SECTION 7.08 Replacement of Trustee..............................................64
SECTION 7.09 Successor Trustee by Merger.........................................65
SECTION 7.10 Eligibility; Disqualification.......................................65
SECTION 7.11 Preferential Collection of Claims Against the Company
.................................................................................65
ARTICLE 8
DISCHARGE OF INDENTURE................................................................65
SECTION 8.01 Discharge of Liability on Notes.....................................65
SECTION 8.02 Repayment to the Company or Subsidiary Guarantors...................66
ARTICLE 9
AMENDMENTS............................................................................67
SECTION 9.01 Without Consent of Holders..........................................67
SECTION 9.02 With Consent of Holders.............................................67
SECTION 9.03 Compliance with Trust Indenture Act.................................68
SECTION 9.04 Revocation and Effect of Consents, Waivers and Actions
.................................................................................68
SECTION 9.05 Notation on or Exchange of Notes....................................69
SECTION 9.06 Trustee to Sign Supplemental Indentures.............................69
SECTION 9.07 Effect of Supplemental Indentures...................................69
ARTICLE 10
MISCELLANEOUS.........................................................................69
SECTION 10.01 Trust Indenture Act Controls.......................................69
SECTION 10.02 Notices............................................................70
SECTION 10.03 Communication by Holders with Other Holders........................71
</TABLE>
iii
<PAGE> 5
<TABLE>
<CAPTION>
<S> <C> <C>
SECTION 10.04 Certificate and Opinion as to Conditions Precedent.................71
SECTION 10.05 Statements Required in Certificate or Opinion......................71
SECTION 10.06 Separability Clause................................................71
SECTION 10.07 Rules by Trustee, Paying Agent and Registrar.......................72
SECTION 10.08 Legal Holidays.....................................................72
SECTION 10.09 GOVERNING LAW......................................................72
SECTION 10.10 No Recourse Against Others.........................................72
SECTION 10.11 Successors.........................................................72
SECTION 10.12 Multiple Originals.................................................72
</TABLE>
iv
<PAGE> 6
INDENTURE, dated as of March 17, 1997, between Nortek, Inc., a Delaware
corporation (the "Company"), and State Street Bank and Trust Company, a
Massachusetts trust company (the "Trustee").
Each party agrees as follows for the benefit of the other party and for the
equal and ratable benefit of the Holders of the Company's 9 1/4% Series A Senior
Notes due March 15, 2007 (the "Series A Notes") and the 9 1/4% Series B Senior
Notes due March 15, 2007 (the "Series B Notes"):
ARTICLE 1
DEFINITIONS AND INCORPORATION BY REFERENCE
SECTION 1.01 Definitions.
"Acquired Indebtedness" means, with respect to any Person, Indebtedness of
such Person (i) assumed in connection with an acquisition of assets or
properties from such Person or (ii) existing at the time such Person becomes a
Restricted Subsidiary of any other Person provided such Person was not
immediately prior thereto an Unrestricted Subsidiary (in each case other than
any Indebtedness incurred in connection with, or in contemplation of, such
acquisition or such Person becoming such a Restricted Subsidiary).
"Affiliate" means, with respect to any Person, any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. A Person shall be deemed to "control"
(including the correlative meanings, the terms "controlling", "controlled by"
and "under common control with") another Person if the controlling Person
possesses, directly or indirectly, the power to direct or cause the direction of
the management or policies of the controlled Person, whether through ownership
of voting securities, by agreement or otherwise.
"Agent" means any Registrar, Paying Agent or co-registrar.
"Allowable Subsidiary Loans" means Indebtedness of the Company to a
Restricted Subsidiary not to exceed the Net Cash Proceeds received by the
Company as a result of such Restricted Subsidiary becoming less than a
Wholly-Owned Subsidiary through the sale of Equity Interests in compliance with
the terms of the Indenture, provided that (i) all such Allowable Subsidiary
Loans are contractually subordinated in right of payments to the Notes and (ii)
the total amount of all Allowable Subsidiary Loans at any time outstanding does
not exceed $35,000,000.
"Asset Sale" means, with respect to any Person, the sale, lease, conveyance
or other transfer or disposition by such Person of any of its assets or
properties (including by way of a sale-and-leaseback and including the sale,
issuance or other transfer of any of the Capital Stock of any Subsidiary of such
Person), in a single transaction or through a series of related
<PAGE> 7
transactions, for aggregate consideration received by such Person or a
Subsidiary of such Person (but if such Person is the Company or any Restricted
Subsidiary, only if such Subsidiary is a Restricted Subsidiary), net of
out-of-pocket costs relating thereto (including, without limitation, legal,
accounting and investment banking fees and sales commissions), in excess of
$5,000,000. For purposes of this definition, consideration shall include,
without limitation, any indebtedness for borrowed money of such Person or such
Subsidiary that is assumed by the transferee of any assets or any such
indebtedness of any Subsidiary of such Person whose stock is purchased by the
transferee. Notwithstanding anything to the contrary in the foregoing provisions
of this definition, the term "Asset Sale", with respect to any Person, shall not
include (i) the sale, lease or other transfer or disposition of assets acquired
and held for resale in the ordinary course of business; (ii) the sale, lease or
other transfer or disposition of assets in accordance with the provisions of
Article 5 hereof; (iii) the sale, lease or other transfer or disposition of
damaged, worn out or obsolete property in the ordinary course of business or
other property no longer necessary for the proper conduct of the business of
such Person or its Subsidiaries; (iv) the abandonment of assets or properties
which are no longer useful in the business of such Person or its Subsidiaries
and are not readily saleable; (v) the granting of any Lien permitted under
Section 4.09 hereof (and any foreclosure or other sale under any such Lien,
except to the extent there are surplus proceeds from such foreclosure); (vi) any
sale, lease, assignment or other disposition by such Person or its Subsidiaries
if such Person has outstanding senior debt securities all of which are rated
BBB-- or higher by S&P and have not been placed on credit watch by S&P for a
possible downgrade or are rated Baa3 or higher by Moody's and have not been
placed on credit watch by Moody's for a possible downgrade; or (vii) the sale or
other transfer or disposition of receivables in connection with an asset
securitization transaction by such Person or its Subsidiaries.
"Average Life" means, as of the date of determination, with respect to any
debt security, the quotient obtained by dividing (i) the sum of the products of
the number of years from the date of determination to the date of each
successive scheduled principal payment (assuming the exercise by the obligor of
such debt security of all unconditional (other than as to the giving of notice)
extension options of each such scheduled payment date) of such debt security
multiplied by the amount of such principal payment by (ii) the sum of all such
principal payments.
"Board of Directors" of any corporation means the Board of Directors of
such corporation, or any duly authorized committee of such Board of Directors.
"Board Resolution" means, with respect to any Person, a copy of a
resolutions certified by the Secretary or an Assistant Secretary of such Person
to have been duly adopted by the Board of Directors of such Person and to be in
full force and effect on the date of such certification, as filed with the
corporate records of such Person.
"Broan Limited Credit Facility" means a credit facility between Broan
Limited or any of the Canadian Subsidiaries, and one or more banks or other
institutional lenders, as the same may be amended, extended, amended and
restated, supplemented or otherwise modified or replaced from time to time.
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<PAGE> 8
"Business Day" means any day that is not a Saturday, a Sunday or a day on
which banking institutions in the Commonwealth of Massachusetts are authorized
or required to close.
"Canadian Subsidiary" means any Subsidiary of Broan Limited and any
Subsidiary of the Company whose headquarters is located in Canada.
"Capital Lease Obligations" means, with respect to any Person, all
obligations under leases of property by such Person as lessee which would be
capitalized on a balance sheet of such Person prepared in accordance with GAAP,
and for purposes of this Indenture the amount of such obligations at any time
shall be the aggregate capitalized amount thereof at such time, as determined in
accordance with GAAP.
"Capital Stock" means any and all shares, interests, participations, rights
or other equivalents (however designated) of corporate stock (including common
or preferred stock) or partnership interests.
"Cash Equivalents" means (i) any evidence of Indebtedness, maturing not
more than 365 days after the date of acquisition, issued or fully guaranteed or
insured by the United States of America, or an instrumentality or agency thereof
(provided that the full faith and credit of the United States of America is
pledged in support thereof), (ii) any certificate of deposit, overnight bank
deposit or bankers' acceptance, maturing not more than 365 days after the date
of acquisition, issued by, or time deposit of, a commercial banking institution
having unsecured long-term debt (or whose holding company has unsecured
long-term debt) rated, at the time as of which any Investment therein is made,
BBB-- or better by S&P or Moody's or the equivalent of such rating by a
successor rating agency, (iii) commercial paper, maturing not more than 90 days
after the date of acquisition, issued by a corporation (other than an Affiliate
or Subsidiary of the Company) organized and existing under the laws of the
United States of America or any State thereof or the District of Columbia which
is rated, at the time as of which any Investment therein is made, P-1 or better
by Moody's or A-1 or better by S&P, or the equivalent of such rating by a
successor rating agency, (iv) Investments in mutual funds, money market funds,
investment pools and other savings vehicles, substantially all of the assets of
which are invested in Investments described in clause (i), (ii) or (iii) above,
and (v) in the case of Broan Limited and the Canadian Subsidiaries, (a) any
evidence of Indebtedness, maturing not more than 365 days after the date of
acquisition, issued or fully guaranteed or insured by Canada or any
instrumentality or agency thereof (provided that the full faith and credit of
Canada is pledged in support thereof), (b) any certificate of deposit, overnight
bank deposit or bankers' acceptance, maturing not more than 365 days after the
date of acquisition, issued by, or time deposit of, a commercial banking
institution having unsecured long-term debt (or whose holding company has
unsecured long-term debt) rated, at the time as of which any Investment therein
is made, A or better by Dominion Bond Rating Services or the equivalent of such
rating by a successor rating agency and (c) commercial paper, maturing not more
than 90 days after the date of acquisition, issued by a corporation (other than
an Affiliate or Subsidiary of the Company) organized and existing under the laws
of Canada or any province thereof which is rated, at the time as of which
3
<PAGE> 9
any Investment therein is made, R-1 or better by Dominion Bond Rating Services
or the equivalent of such rating by a successor rating agency.
"Commodity Agreement" means any agreement or arrangement designed to
protect the Company or any of its Restricted Subsidiaries against fluctuations
in the prices of commodities used by the Company or any of its Subsidiaries in
the ordinary course of business.
"Company Credit Facility" means one or more credit facilities between the
Company or any of its Subsidiaries and one or more banks or other institutional
lenders, as the same may be amended, extended, amended and restated,
supplemented or otherwise modified or replaced from time to time, specifically
designated in each such credit facility as a "Company Credit Facility." All
Company Credit Facilities are referred to collectively in the Indenture as the
"Company Credit Facility."
"Consolidated Amortization Expense" means, with respect to any Person for
any period, the amortization expense of such Person and its Subsidiaries (or if
such Person is the Company, the amortization expense of the Company and its
Restricted Subsidiaries), determined on a consolidated basis for such period in
accordance with GAAP, excluding any amortization expense included in
Consolidated Interest Expense.
"Consolidated Cash Flow" means, with respect to any Person for any period,
the sum of, without duplication, (i) Consolidated Net Income of such Person for
such period, (ii) Consolidated Interest Expense of such Person for such period,
(iii) Consolidated Income Tax Expense of such Person for such period, (iv)
Consolidated Depreciation Expense of such Person for such period, (v)
Consolidated Amortization Expense of such Person for such period, and (vi) the
amount, not to exceed 10% of Consolidated Cash Flow of such Person for such
period (which amount shall be excluded in determining such Consolidated Cash
Flow), by which (A) other non-cash items of expense that reduce Consolidated Net
Income of such Person for such period exceed (B) other non-cash items of expense
that increase Consolidated Net Income of such Person for such period.
"Consolidated Cash Flow Coverage Ratio" means, with respect to any Person
for any period, the ratio of Consolidated Cash Flow of such Person for such
period to Consolidated Interest Expense of such Person for such period;
provided, however, that, Consolidated Cash Flow and Consolidated Interest
Expense shall be calculated on a pro forma basis after giving effect, as if
occurring at the beginning of such period, to (i) the incurrence of Indebtedness
giving rise to the need to calculate the Consolidated Cash Flow Coverage Ratio
and the retirement of any Indebtedness refinanced with the proceeds of such
Indebtedness, (ii) the incurrence, during such period or since the last day of
such period, of any Indebtedness (other than Indebtedness incurred for working
capital purposes), and the retirement of any Indebtedness refinanced with the
proceeds of such Indebtedness, (iii) the acquisition by such Person (directly or
through a Restricted Subsidiary of such Person if such Person is the Company and
directly or through a Subsidiary of such Person if such Person is not the
Company) of any company or business during such period or since the last day of
such period and (iv) the sale or other disposition of assets or properties
4
<PAGE> 10
outside the ordinary course of business by such Person (directly or through a
Restricted Subsidiary of such Person if such Person is the Company and directly
or through a Subsidiary of such Person if such Person is not the Company) and
the actual application of the proceeds therefrom during such period or since the
last day of such period.
"Consolidated Depreciation Expense" means, with respect to any Person for
any period, the depreciation and depletion expense of such Person and its
Subsidiaries (or if such Person is the Company, the depreciation and depletion
expense of the Company and its Restricted Subsidiaries), determined on a
consolidated basis for such period in accordance with GAAP.
"Consolidated Income Tax Expense" means, with respect to any Person for any
period, the provision for federal, state, local and foreign income taxes
(including franchise, net worth or similar taxes) of such Person and its
Subsidiaries (or if such Person is the Company, the provision for such taxes of
the Company and its Restricted Subsidiaries) for such period, determined on a
consolidated basis in accordance with GAAP.
"Consolidated Interest Expense" means, with respect to any Person for any
period, without duplication, the sum of (i) the interest expense of such Person
and its Subsidiaries (or if such Person is the Company, the interest expense of
the Company and its Restricted Subsidiaries) for such period, determined on a
consolidated basis in accordance with GAAP, including, without limitation, all
original issue discount and other interest portion of any deferred payment
Indebtedness and all commissions, discounts and other fees and charges owed with
respect to letters of credit and bankers' acceptance financing less any interest
income included in Consolidated Net Income for such period, but excluding any
deferred financing fees otherwise includible in Consolidated Interest Expense
for such period; (ii) the interest component of Capital Lease Obligations paid,
accrued and/or scheduled to be paid or accrued by such Person and its
Subsidiaries (or if such Person is the Company, such interest expense paid,
accrued and/or scheduled to be paid or accrued by the Company and its Restricted
Subsidiaries) during such period as determined on a consolidated basis in
accordance with GAAP; and (iii) all cash dividends or other distributions
declared or paid on any Capital Stock (other than common stock or preferred
stock that is not Redeemable Stock or, with respect to the Company, special
common stock) of such Person and its Subsidiaries (or if such Person is the
Company, all such dividends or other distributions declared or paid on any such
Capital Stock of the Company and its Restricted Subsidiaries) for such period as
determined on a consolidated basis in accordance with GAAP; provided, however,
that any Indebtedness bearing a floating rate of interest shall be computed as
if the rate in effect on the date of computation had been the applicable rate
for the entire period.
"Consolidated Net Income" means, with respect to any Person for any period,
the aggregate net income (or loss) of such Person and its Subsidiaries (or if
such Person is the Company, the aggregate net income (or loss) of the Company
and its Restricted Subsidiaries) for such period, before discontinued
operations, extraordinary items and the cumulative effect of a change in
accounting principles, determined on a consolidated basis in accordance with
GAAP,
5
<PAGE> 11
provided that there shall also be excluded from Consolidated Net Income (but
only to the extent included in calculating such Consolidated Net Income): (i)
any net gains or losses in respect of dispositions of assets other than in the
ordinary course of business; (ii) any gains from currency exchange transactions
not in the ordinary course of business consistent with past practice; (iii) any
gains or losses realized from the termination of any employee pension benefit
plan; (iv) any gains or losses realized upon the refinancing of any Indebtedness
of such Person or any of its Subsidiaries (or if such Person is the Company, any
gains or losses realized upon the refinancing of any Indebtedness of Company and
its Restricted Subsidiaries); (v) any gains or losses arising from the
destruction of property or assets due to fire or other casualty; (vi) any gains
or losses from the revaluation of property or assets; (vii) the net income (or
loss) of any Person that is not a Subsidiary of such first Person (or that is
not a Restricted Subsidiary if such first Person is the Company) except to the
extent of cash dividends or distributions paid to such first Person by such
other Person in such period; (viii) the net income (or loss) of any Subsidiary
of such first Person except to the extent of the interest of such Person in such
Subsidiary; (ix) the net income (or loss) of any Subsidiary of such Person that
is subject to any restriction or limitation on the payment of dividends and
other distributions (including loans or advances) by operation of the terms of
its charter or by agreement, instrument, judgment, decree, order or governmental
regulation applicable to such Subsidiary to the extent of such restriction or
limitation in such period; and (x) the excess of (a) the consolidated
compensation expense recorded by the Company in the computation of net earnings
of the Company in respect of shares of Capital Stock (other than Redeemable
Stock) or other Equity Interests awarded, pursuant to a plan or other
arrangement approved by the Board of Directors of the Company (or of a Reporting
Subsidiary, if applicable), to or for the benefit of any employee, officer or
director of the Company or any of its Subsidiaries or to or by any employee
stock ownership plan or similar trust for the benefit of any such employee,
officer or director, over (b) the amount of consolidated income tax benefit
recorded by the Company in connection with such consolidated compensation
expense of the Company.
"Consolidated Net Worth" means, with respect to any Person at any date of
determination, the sum of the Capital Stock, additional paid-in capital and
cumulative translation, pension and other adjustment account plus retained
earnings (or minus accumulated deficit), excluding amounts attributable to
Redeemable Stock, any Capital Stock convertible into Indebtedness, or Treasury
Stock, of such Person and its Restricted Subsidiaries, determined on a
consolidated basis in accordance with GAAP.
"Currency Agreement" means any foreign exchange contract, currency swap
agreement or other similar agreement or arrangement entered into in the ordinary
course of business and designed to protect the Company or any of its Restricted
Subsidiaries against fluctuations in currency values to or under which the
Company or any of its Restricted Subsidiaries is a party or a beneficiary on the
issue date of the Notes or becomes a party or a beneficiary thereafter.
"Default" means any event which is, or after notice or passage of time or
both would be, an Event of Default.
6
<PAGE> 12
"Definitive Notes" means Notes that are in the form of Exhibit A attached
hereto (but without including the text referred to in footnote 1 thereto and the
additional schedule referred to therein).
"Depository" means, with respect to the Notes issuable or issued in whole
or in part in global form, the Person specified in Section 2.03 hereof as the
Depository with respect to the Notes, until a successor shall have been
appointed and become such pursuant to the applicable provision of this
Indenture, and, thereafter "Depository" shall mean or include such successor.
"Disinterested Director" means, with respect to any transaction or series
of transactions in respect of which the Board of Directors of the Company is
required to deliver a Board Resolution under the Indenture, a member of such
Board of Directors who does not have any material direct or indirect financial
interest in or with respect to such transaction or series of transactions.
"Eligible Inventory" means, with respect to any Person, the finished goods,
raw materials and work-in-process of such Person less any applicable reserves,
each of the foregoing determined on the FIFO method of accounting in accordance
with GAAP.
"Eligible Receivables" means, with respect to any Person, the trade
receivables of such Person less the allowance for doubtful accounts, each of the
foregoing determined in accordance with GAAP.
"Equity Interests" means Capital Stock, warrants, options or other rights
to acquire Capital Stock (but excluding any debt security which is convertible
into, or exchangeable for, Capital Stock).
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Exchange Note" means any Series B Note issued in exchange for an Original
Note pursuant to the Exchange Offer or the Private Exchange.
"Exchange Offer" means the offer by the Company to the Holders of all
outstanding Transfer Restricted Securities to exchange all such outstanding
Transfer Restricted Securities held by such Holders for Series B Notes, in an
aggregate principal amount equal to the aggregate principal amount of the
Transfer Restricted Securities tendered in such exchange offer by such Holders.
"Exchange Offer Registration Statement" means the registration statement
under the Securities Act relating to the Exchange Offer, including the related
prospectus.
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<PAGE> 13
"Exempt Person" means (i) Richard L. Bready, (ii) any Person which is an
Affiliate of Richard L. Bready, and (iii) any other Affiliate of such Person so
long as such Person is an Affiliate of Richard L. Bready.
"Existing Indebtedness" means Indebtedness of the Company and its
Restricted Subsidiaries, in existence on the issue date of the Notes.
"Existing Investments" means (i) Investments of the Company and its
Restricted Subsidiaries, in existence on the issue date of the Notes and (ii)
Investments to be made pursuant to commitments authorized by the Board of
Directors of the Company prior to the issue date of the Notes (a) in Ecological
Engineering Associates, L.P. in an amount not to exceed $3.0 million (including
such Investments made prior to the issue date of the Notes) and (b) in or
related to a joint venture involving Universal-Rundle Corporation in an amount
not to exceed $10.0 million.
"Fair Market Value" means, with respect to any asset, the price which could
be negotiated in an arm's-length free market transaction, for cash, between a
willing seller and a willing buyer, neither of which is under pressure or
compulsion to complete the transaction; provided, however, that the Fair Market
Value of any asset or assets of the Company or any of its Subsidiaries shall be
determined by the Board of Directors of the Company or, if such Subsidiary is a
Reporting Subsidiary, of such Reporting Subsidiary, acting in good faith, and
evidenced by a Board Resolution of the Company or such Reporting Subsidiary, as
the case may be, delivered to the Trustee.
"GAAP" means generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board or in such other statements by such
other entity as approved by a significant segment of the accounting profession,
from time to time; provided, however, that for purposes of Articles 4 and 5
hereof and the definitions used therein, GAAP shall be determined on the basis
of such principles as in effect on the issue date of the Notes.
"Global Note" means a Note registered in the name of the Depository or its
nominee that contains the paragraph referred to in footnote 1 and the additional
schedule referred to in the form of Note attached hereto as Exhibit A.
"Guaranty" means, with respect to any obligation, (i) a guaranty (other
than by endorsement of negotiable instruments for collection in the ordinary
course of business), direct or indirect, of all or any part of such obligation
and (ii) an agreement, direct or indirect, contingent or otherwise, the
practical effect of which is to assure the payment or performance of (or payment
of damages in the event of non-performance) of all or any part of such
obligation.
"Holder" means a Person in whose name a Note is registered on the
Registrar's books.
8
<PAGE> 14
"Indebtedness" means, with respect to any Person, without duplication, any
indebtedness, contingent or otherwise, (i) with respect to borrowed money
(whether or not the recourse of the lender is to the whole of the assets of such
Person or only to a portion thereof), or evidenced by bonds, notes, debentures
or similar instruments or consisting of reimbursement obligations with respect
to letters of credit, or (ii) representing the deferred and unpaid balance of
the purchase price of any property excluding any such balance that constitutes a
trade payable or an accrued liability, in each case arising in the ordinary
course of business, if and to the extent any of the foregoing indebtedness would
appear as a liability upon a balance sheet of such Person prepared on a
consolidated basis in accordance with GAAP, and shall also include, to the
extent not otherwise included, (a) any Capital Lease Obligations, (b) the
maximum fixed repurchase price of any Redeemable Stock, (c) indebtedness secured
by a Lien to which the property or assets owned or held by such Person is
subject, whether or not the obligations secured thereby shall have been assumed,
(d) guaranties of items that would be included within this definition to the
extent of such guaranties, and (e) net liabilities in respect of Commodity
Agreements, Currency Agreements and Interest Rate Agreements. For purposes of
the immediately preceding sentence, the maximum fixed repurchase price of any
Redeemable Stock which does not have a fixed repurchase price shall be
calculated in accordance with the terms of such Redeemable Stock as if such
Redeemable Stock were repurchased on any date on which Indebtedness shall be
required to be determined pursuant to the Indenture, provided that if such
Redeemable Stock is not then permitted to be repurchased, the repurchase price
shall be the book value of such Redeemable Stock. The amount of Indebtedness of
any Person at any date shall be without duplication (y) the outstanding balance
at such date of all unconditional obligations as described above and the maximum
liability of any such contingent obligations at such date and (z) in the case of
Indebtedness of others secured by a Lien to which the property or assets owned
or held by such Person is subject, the lesser of the Fair Market Value at such
date of any property or asset subject to a Lien securing the Indebtedness of
others or the amount of the Indebtedness secured. The amount of any Indebtedness
issued at a discount shall be equal to the gross proceeds of such issuance (and
not the face amount of any bond, note, debenture or similar instrument
representing such Indebtedness).
"Indenture" means this Indenture, as amended or supplemented from time to
time in accordance with the terms hereof, including the provisions of the TIA
that are deemed to be a part hereof.
"Interest Rate Agreement" means any interest rate protection agreement,
interest rate future agreement, interest rate option agreement, interest rate
swap agreement, interest rate cap agreement, interest rate collar agreement,
interest rate hedge agreement, or other similar agreement or arrangement entered
into in the ordinary course of business and designed to protect the Company or
any of its Restricted Subsidiaries against fluctuations in interest rates to or
under which the Company or any of its Restricted Subsidiaries is a party or a
beneficiary thereof.
"Investment" means, with respect to any Person, (i) any direct or indirect
loan or other extension of credit (other than extensions of trade credit by such
Person on commercially
9
<PAGE> 15
reasonable terms and relating to the sale of property or services in the
ordinary course of business) or capital contribution (by means of any transfer
of cash or other property to others or any payment for property or services for
the account or use of others) to any other Person, or (ii) any purchase or
acquisition by such Person of any Capital Stock, bonds, notes, debentures or
other securities or evidences of Indebtedness issued by any other Person.
"Lien" means any mortgage, lien, pledge, charge, security interest or
encumbrance of any kind, whether or not filed, recorded or otherwise perfected
under applicable law (including any conditional sale or other title retention
agreement, any lease intended as security, any option or other agreement to sell
or give any security interest and any filing of or other agreement to give any
financing statement under the Uniform Commercial Code (or equivalent statutes)
of any jurisdiction other than a financing statement covering leased goods under
a lease not intended as security).
"Liquidated Damages" means all liquidated damages then owing pursuant to
the Registration Rights Agreement.
"Moody's" means Moody's Investors Service, Inc. and its successors.
"Net Cash Proceeds" means the aggregate Cash Proceeds received by the
Company or any of its Restricted Subsidiaries in respect of any Asset Sale, net
of the out-of-pocket costs relating to such Asset Sale (including, without
limitation, legal, accounting and investment banking fees and sales commissions)
and any relocation expenses and severance and shutdown costs incurred as a
result thereof, and all federal, state, provincial, foreign and local taxes
required to be accrued as a liability under GAAP as a consequence of such Asset
Sale, amounts required to be applied to the repayment of Indebtedness secured by
a Lien on the asset or assets which are the subject of such Asset Sale and any
reasonable reserve in accordance with GAAP for adjustments in respect of the
sale price of such asset or assets.
"Non-Recourse Debt" means Indebtedness (i) as to which neither the Company
or any of its Restricted Subsidiaries (a) provides credit support of any kind
(including any undertaking, agreement or instrument that would constitute
Indebtedness), (b) is directly or indirectly liable (as a guarantor or
otherwise), or (c) constitutes the lender; (ii) no default with respect to which
(including any rights that the holders thereof may have to take enforcement
action against an Unrestricted Subsidiary) would permit (upon notice, lapse of
time or both) any holder of any other Indebtedness of the Company or any of its
Restricted Subsidiaries to declare a default on such other Indebtedness or cause
the payment thereof to be accelerated or payable prior to its stated maturity;
and (iii) as to which the lenders have been notified in writing that they will
not have any recourse to the stock or assets of the Company or any of its
Restricted Subsidiaries.
"Notes" means the Original Notes and the Exchange Notes.
"9 7/8% Notes" means the Company's 9 7/8% Senior Subordinated Notes due
2004.
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<PAGE> 16
"Note Custodian" means the Trustee, as custodian for the Depository with
respect to the Notes in global form, or any successor entity thereto.
"Officer" means, with respect to any corporation, the Chairman of the
Board, any Vice Chairman, the President, any Vice President, any Assistant Vice
President, the Treasurer, the Secretary, any Assistant Treasurer or any
Assistant Secretary of such corporation.
"Officers' Certificate" means, with respect to any Person, a certificate
containing the information specified in Sections 10.04 and 10.05 hereof signed
by the Chief Executive Officer or President and the Chief Financial Officer or
chief accounting officer of such Person.
"Opinion of Counsel" means a written opinion containing the information
specified in Sections 10.04 and 10.05 hereof, rendered by legal counsel (who may
be counsel to the Company) acceptable to the Trustee.
"Original Notes" means the Series A Notes initially issued under this
Indenture prior to the issuance of Exchange Notes.
"Permitted Investments" means any of the following: (i) Cash Equivalents;
(ii) Existing Investments; (iii) Investments by the Company or a Restricted
Subsidiary of the Company in any Subsidiary of the Company that is a Restricted
Subsidiary or any other Person that concurrently with the making of such
Investment becomes a Subsidiary of the Company that is a Restricted Subsidiary;
(iv) guaranties by Restricted Subsidiaries of the Company permitted under
Section 4.07 or 4.14 hereof; (v) Indebtedness of the Company to any Restricted
Subsidiary of the Company, provided that such Indebtedness is contractually
subordinated in right of payment to the Notes; (vi) Investments by the Company
or any of its Restricted Subsidiaries in debt securities or debt instruments
having maturities of 10 years or less and (A) issued or fully guaranteed or
insured by the United States of America, or an instrumentality or agency thereof
(provided that the full faith and credit of the United States of America is
pledged in support thereof) or (B) with a rating of BBB- or better by S&P or
Baa-3 or better by Moody's or the equivalent of such rating by a successor
rating agency; (vii) any Investment by Broan Limited and or any Canadian
Subsidiary in debt securities or debt instruments having maturities of 10 years
or less and issued or fully guaranteed or insured by Canada or an
instrumentality or agency thereof or rated, at the time of such Investment, BBB-
or better by Dominion Bond Rating Services or the equivalent of such rating by a
successor rating agency, so long as the aggregate amount of all such Investments
by Broan Limited and any Canadian Subsidiaries that are Restricted Subsidiaries
does not exceed $15,000,000 at any one time outstanding; (viii) loans and
advances to officers and directors of the Company or any Restricted Subsidiary
of the Company made in the ordinary course of business or pursuant to any
employee benefit plan, up to $5,000,000 in the aggregate at any one time
outstanding; (ix) loans and advances to vendors, suppliers and contractors of
the Company or any Restricted Subsidiary of the Company and made in the ordinary
course of business; (x) the receipt by the Company or its Restricted
Subsidiaries of consideration other than Cash Proceeds in any Asset Sale made in
compliance with the terms of the Indenture; (xi) so long as no Default or Event
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<PAGE> 17
of Default shall have occurred and be continuing, other Investments made after
the issue date of the Series A Notes not exceeding in the aggregate at any time
outstanding (A) $40,000,000, if at the time of the making of such Investment the
Notes are not rated BB+ or better by S&P or Bal or better by Moody's, or (B)
$50,000,000, if at the time of the making of such Investment the Notes are rated
BB+ or better by S&P or Bal or better by Moody's; (xii) any Lien permitted under
Section 4.09 hereof; and (xiii) Investments by Restricted Subsidiaries of the
Company not exceeding in the aggregate $10,000,000 at any one time outstanding
in Cash Equivalents described in clause (ii) of the definition of such term in
this Indenture, provided that for purposes of this clause (xiii) an instrument
referred to in such clause (ii) may be issued by any commercial banking
institution having capital and surplus of not less than $100,000,000.
"Permitted Liens" means (i) Liens for taxes, assessments, governmental
charges or claims that are not yet due or are being contested in good faith by
appropriate legal proceedings, provided that any reserve or other appropriate
provision, if any, as shall be required in conformity with GAAP shall have been
made therefor; (ii) statutory Liens of landlords and carriers, warehousemen,
mechanics, suppliers, materialmen, repairmen or other similar Liens arising in
the ordinary course of business and with respect to amounts not yet delinquent
or being contested in good faith by appropriate legal proceedings, provided that
any reserve or other appropriate provision, if any, as shall be required in
conformity with GAAP shall have been made therefor; (iii) Liens incurred or
deposits made in the ordinary course of business in connection with workers'
compensation, unemployment insurance or other types of social Note; (iv) Liens
incurred or deposits made to secure the performance of tenders, bids, leases,
statutory or regulatory obligations, bankers' acceptances, surety and appeal
bonds, government contracts, performance and return-of-money bonds and other
obligations of a similar nature incurred in the ordinary course of business
(exclusive of obligations for the payment of borrowed money); (v) easements,
rights-of-way, municipal and zoning ordinances and similar charges,
encumbrances, title defects or other irregularities that do not materially
interfere with the ordinary course of business of the Company or any of its
Subsidiaries, taken as a whole; (vi) Liens securing Purchase Money Obligations
permitted to be incurred by the provisions of the Indenture; (vii) leases or
subleases or licenses or sublicenses granted to others in the ordinary course of
business of the Company or any of its Restricted Subsidiaries, taken as a whole;
(viii) Liens encumbering property or assets under construction arising from
progress or partial payments by a customer of the Company or any of its
Restricted Subsidiaries relating to such property or assets; (ix) any interest
or title of a lessor in the property subject to any Capital Lease Obligation;
(x) Liens arising from filing Uniform Commercial Code financing statements
regarding leases; (xi) Liens on property of, or on shares of stock or
Indebtedness of, any corporation existing at the time such corporation becomes,
or becomes a part of, a Restricted Subsidiary; (xii) Liens in favor of the
Company or any Subsidiary; (xiii) Liens securing any real property or other
assets of the Company or any Restricted Subsidiary of the Company in favor of
the United States of America or any State, or any department, agency,
instrumentality or political subdivision thereof, in connection with the
financing of industrial revenue bond facilities or of any equipment or other
property designed primarily for the purpose of air or water pollution control;
provided that any such Lien on such facilities, equipment or other property
shall not apply to any other assets of the
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<PAGE> 18
Company or such Restricted Subsidiary of the Company; (xiv) Liens arising from
the rendering of a final judgment or order against the Company or any Restricted
Subsidiary of the Company that does not give rise to an Event of Default; (xv)
Liens securing reimbursement obligations with respect to letters of credit that
encumber documents and other property relating to such letters of credit and the
products and proceeds thereof; (xvi) Liens in favor of customs and revenue
authorities arising as a matter of law to secure payment of customs duties in
connection with the importation of goods; (xvii) Liens encumbering customary
initial deposits and margin deposits, and other Liens that are either within the
general parameters customary in the industry and incurred in the ordinary course
of business or otherwise permitted under the terms of the Company Credit
Facility, in each case securing Indebtedness under Commodity Agreements,
Interest Rate Agreements and Currency Agreements; and (xviii) Liens arising out
of conditional sale, title retention, consignment or similar arrangements for
the sale of goods entered into by the Company or any of its Restricted
Subsidiaries in the ordinary course of business in accordance with the past
practices of the Company and its Restricted Subsidiaries prior to the Closing
Date.
"Person" means any individual, corporation, partnership, joint venture,
incorporated or unincorporated association, joint-stock company, trust,
unincorporated organization or government or other agency or political
subdivision thereof or other entity of any kind.
"Principal Property" means any manufacturing or processing plant, warehouse
or other building used by the Company or any Restricted Subsidiary, other than a
plant, warehouse or other building that, in the good faith opinion of the Board
of Directors as reflected in a Board Resolution, is not of material importance
as of the date such Board Resolution is adopted to the businesses conducted by
the Company and its Subsidiaries, on a consolidated basis, or conducted by any
Significant Subsidiary of the Company.
"Private Exchange" means a private exchange pursuant to Section 2(a) of the
Registration Rights Agreement.
"Purchase Money Obligations" means any Indebtedness of the Company or any
of its Restricted Subsidiaries incurred to finance the acquisition or
construction of any property or business (including Indebtedness incurred within
one year following such acquisition or construction), including Indebtedness of
a Person existing at the time such Person becomes a Restricted Subsidiary of the
Company or assumed by the Company or a Restricted Subsidiary of the Company in
connection with the acquisition of assets from such Person; provided, however,
that (i) any Lien on such Indebtedness shall not extend to any property other
than the property so acquired or constructed and (ii) at no time shall the
aggregate principal amount of outstanding Indebtedness secured thereby be
increased.
"Redeemable Stock" means any Equity Interest which, by its terms (or by the
terms of any security into which it is convertible or for which it is
exchangeable before the Stated Maturity of the Notes), or upon the happening of
any event, matures or is mandatorily redeemable, in whole or in part, prior to
the Stated Maturity of the Notes.
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<PAGE> 19
"Redemption Date" or "redemption date" means the date specified for
redemption of the Notes in accordance with the terms of the Notes and this
Indenture.
"Redemption Price" or "redemption price" shall have the meaning set forth
in paragraph 6 of the Notes.
"Registration Rights Agreement" means the Registration Rights Agreement
dated the date hereof between the Company and the Initial Purchasers named
therein.
"Restricted Subsidiary" means (i) any Subsidiary of the Company in
existence on the date of the Indenture, unless such Subsidiary shall have been
designated as an Unrestricted Subsidiary by resolution of the Board of Directors
of the Company as provided in and in compliance with the definition of
"Unrestricted Subsidiary", (ii) any Subsidiary of the Company (other than a
Subsidiary that is also a Subsidiary of an Unrestricted Subsidiary) organized or
acquired after the date of the Indenture, unless such Subsidiary shall have been
designated as an Unrestricted Subsidiary by resolution of the Board of Directors
of the Company as provided in and in compliance with the definition of
"Unrestricted Subsidiary" and (iii) any Unrestricted Subsidiary which is
designated as a Restricted Subsidiary by the Board of Directors of the Company;
provided that, immediately after giving effect to the designation referred to in
clause (iii), no Default or Event of Default shall have occurred and be
continuing and the Company could incur at least $1.00 of additional Indebtedness
under Section 4.07 hereof. The Company shall evidence any such designation to
the Trustee by promptly filing with the Trustee an Officers' Certificate
certifying that such designation has been made and stating that such designation
complies with the requirements of the immediately preceding sentence.
"SEC" means the Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended.
"Series A Notes" means the Company's 9 1/4% Series A Senior Notes due March
15, 2007 to be issued pursuant to this Indenture.
"Series B Notes" means the Company's 9 1/4% Series B Senior Notes due March
15, 2007 to be issued pursuant to this Indenture in the Exchange Offer and the
Private Exchange.
"Shelf Registration Statement" means a "shelf" registration statement of
the Company pursuant to the provisions of Section 2(b) of the Registration
Rights Agreement which covers all of the Registrable Securities (as defined in
the Registration Rights Agreement), on an appropriate form under Rule 415 under
the Act or any similar rule that may be adopted by the SEC, and all amendments
and supplements to such registration statement, including post-effective
amendments, in each case including the Prospectus contained therein, all
exhibits thereto and all material incorporated by reference therein.
14
<PAGE> 20
"Significant Subsidiary" means any Subsidiary that would be a "significant
subsidiary" as defined in Rule 1-02 of Regulation S-X promulgated by the SEC, as
such regulation is in effect on the date of the Indenture.
"Stated Maturity" means, with respect to any security or Indebtedness, the
date specified therein as the fixed date on which the principal of such security
or Indebtedness is due and payable, including pursuant to any mandatory
redemption provision (but excluding any provision providing for the repurchase
of such security or Indebtedness at the option of the holder thereof upon the
happening of any contingency).
"Subsidiary" of any Person means any corporation, partnership, association
or other business entity of which more than 50% of the total voting power of
shares of Capital Stock entitled (without regard to the occurrence of any
contingency) to vote in the election of directors or, in the case of a Person
which is not a corporation, the members of the appropriate governing board or
other group is at the time owned or controlled, directly or indirectly, by such
Person or one or more of the other Subsidiaries of such Person or a combination
thereof.
"Subsidiary Guarantor" means, with respect to any Subsidiary Guaranty, the
issuer of such Subsidiary Guaranty, so long as such Subsidiary Guaranty remains
outstanding.
"Subsidiary Guaranty" means any guaranty of the Notes pursuant to a
supplemental indenture executed and delivered pursuant to Section 4.14 hereof,
including as the context may require either or both of the guaranty of the Notes
set forth in Article 11 hereof attached hereto as Exhibit E, upon the execution
and delivery by a Subsidiary Guarantor of such supplemental indenture and any
separate guaranty of the Notes, substantially in the form of Exhibit F hereto,
or confirmation of guaranty executed and delivered by such Subsidiary Guarantor
pursuant to such supplemental indenture.
"TIA" means the Trust Indenture Act of 1939 as amended and as in effect on
the date of this Indenture; provided, however, that in the event the TIA is
amended after such date, TIA means, to the extent required by any such
amendment, the TIA as so amended.
"Transfer Restricted Securities" means each Note until (i) the date on
which such Note has been exchanged by a Person other than a broker-dealer for an
Exchange Note in the Exchange Offer, (ii) following the exchange by a
broker-dealer in the Exchange Offer of a Note for an Exchange Note, the date on
which such Exchange Note is sold to a purchaser who receives from such
broker-dealer on or prior to the date of such sale a copy of the prospectus
contained in the Exchange Offer Registration Statement, (iii) the date on which
such Note has been effectively registered under the Securities Act and disposed
of in accordance with the Shelf Registration Statement or (iv) the date on which
such Note is distributed to the public pursuant to Rule 144 under the Securities
Act.
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<PAGE> 21
"Trust Officer," when used with respect to the Trustee, means any officer
assigned to and working in the corporate trust department of the Trustee or any
other officer of the Trustee customarily performing functions similar to those
performed by any of the above officers and also means, with respect to a
particular corporate trust matter, any other officer to whom such matter is
referred because of his knowledge of and familiarity with the particular
subject.
"Trustee" means the party named as the "Trustee" in the first paragraph of
this Indenture until a successor replaces it pursuant to the applicable
provisions of this Indenture and, thereafter, shall mean such successor.
"Unrestricted Subsidiary" means, until such time as any of the following
shall be designated as a Restricted Subsidiary of the Company by the Board of
Directors of the Company as provided in and in compliance with the definition of
"Restricted Subsidiary," (i) any Subsidiary of the Company or of a Restricted
Subsidiary organized or acquired after the date of the Indenture that is
designated concurrently with its organization or acquisition as an Unrestricted
Subsidiary by resolution of the Board of Directors of the Company, (ii) any
Subsidiary of any Unrestricted Subsidiary, and (iii) any Restricted Subsidiary
of the Company that is designated as an Unrestricted Subsidiary by resolution of
the Board of Directors of the Company, provided that, (a) immediately after
giving effect to such designation, no Default or Event of Default shall have
occurred and be continuing, (b) any such designation shall be deemed the making
of a Restricted Payment at the time of such designation in an amount equal to
the Fair Market Value of the Investment in such Subsidiary and shall be subject
to the restrictions contained in Section 4.06, and (c) such Subsidiary or any of
its Subsidiaries does not own any Capital Stock or Indebtedness of, or own or
hold any Lien on any property of, the Company or any other Restricted Subsidiary
of the Company that is not a Subsidiary of the Subsidiary to be so designated. A
Person may be designated as an Unrestricted Subsidiary only if and for so long
as such Person (i) has no Indebtedness other than Non-Recourse Debt; (ii) is a
Person with respect to which neither the Company nor any of its Restricted
Subsidiaries has any direct or indirect obligation (a) to subscribe for
additional Equity Interests or (b) to make any payment to maintain or preserve
such Person's financial condition or to cause such Person to achieve any
specified levels of operating results, except to the extent any such direct or
indirect obligation would then be permitted in accordance with Section 4.06; and
(iii) has not guaranteed or otherwise directly or indirectly provided credit
support for any Indebtedness of the Company or any of its Restricted
Subsidiaries. The Company shall evidence any designation pursuant to clause (i)
or (iii) of the first sentence hereof to the Trustee by filing with the Trustee
within 45 days of such designation an Officers' Certificate certifying that such
designation has been made and that such designation complies with the
requirements of the Indenture and all conditions thereto have been satisfied.
"Wholly-Owned Subsidiary" of any Person means any Subsidiary of such Person
to the extent the entire voting share capital of such Subsidiary is owned by
such Person (either directly or indirectly through Wholly-Owned Subsidiaries).
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SECTION 1.02 Other Definitions.
-----------------
<TABLE>
<CAPTION>
Term Defined
- ---- in
Section
-------
<S> <C>
"Act"........................................................... 1.05
"Bankruptcy Law"................................................ 6.01
"Cash Proceeds"................................................. 4.12
"Change of Control"............................................. 4.11
"Change of Control Offer"....................................... 4.11
"Change of Control Payment Date"................................ 4.11
"Custodian"..................................................... 6.01
"Event of Default".............................................. 6.01
"Excess Proceeds Offer"......................................... 4.12
"incurrence".................................................... 4.07
"Legal Holiday"................................................. 10.08
"Paying Agent".................................................. 2.03
"refinance"..................................................... 4.07
"Refinancing Indebtedness"...................................... 4.07
"Registrar"..................................................... 2.03
"Reporting Subsidiary".......................................... 4.06
"Restricted Payment"............................................ 4.06
"Securities Act"................................................ 7.04
"surviving entity".............................................. 5.01
"U.S. Government Obligations"................................... 8.01
</TABLE>
SECTION 1.03 INCORPORATION BY REFERENCE OF TRUST INDENTURE ACT. Whenever
this Indenture refers to a provision of the TIA, such provision is incorporated
by reference in and made a part of this Indenture. The following TIA terms used
in this Indenture have the following meanings:
"Commission" means the SEC.
"Indenture to be qualified" means this Indenture.
"Indenture trustee" or "institutional trustee" means the Trustee.
"Obligor" on the Notes means the Company and each Subsidiary Guarantor, if
any, and each other obligor on the Notes or any Subsidiary Guaranty.
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<PAGE> 23
All other TIA terms used in this Indenture that are defined by the TIA,
defined by TIA reference to another statute or defined by SEC rule have the
meanings assigned to them by such definitions.
SECTION 1.04 RULES OF CONSTRUCTION. Unless the context otherwise requires:
(1) a term has the meaning assigned to it;
(2) an accounting term not otherwise defined has the meaning assigned
to it in accordance with GAAP;
(3) "or" is not exclusive;
(4) "including" means including, without limitation;
(5) words in the singular include the plural, and words in the plural
include the singular.
SECTION 1.05 Acts Of Holders.
---------------
(1) any request, demand, authorization, direction, notice, consent,
waiver or other action provided by this Indenture to be given or taken by
Holders may be embodied in and evidenced by one or more instruments of
substantially similar tenor signed by such Holders in person or by an agent
duly appointed in writing; and, except as herein otherwise expressly
provided, such action shall become effective when such instrument or
instruments are delivered to the Trustee and, where it is hereby expressly
required, to the Company. Such instrument or instruments (and the action
embodied therein and evidenced thereby) are herein sometimes referred to as
the "Act" of Holders signing such instrument or instruments. Proof of
execution of any such instrument or of a writing appointing any such agent
shall be sufficient for any purpose of this Indenture and conclusive in
favor of the Trustee and the Company, if made in the manner provided in
this Section.
(2) The fact and date of the execution by any Person of any such
instrument or writing may be proved in any manner which the Trustee deems
sufficient.
(3) The ownership of Notes shall be proved by the Register.
(4) Any request, demand, authorization, direction, notice, consent,
waiver or other Act of the Holder of any Note shall bind every future
Holder of the same Note as the holder of every Note issued upon the
registration of transfer thereof or in exchange therefor or in lieu thereof
in respect of anything done, omitted or suffered to be done by the Trustee
or the Company in reliance thereon, whether or not notation of such action
is made upon such Note.
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<PAGE> 24
(5) If the Company shall solicit from the Holders any request, demand,
authorization, direction, notice, consent, waiver or other Act, the Company
may, at its option, by or pursuant to a Board Resolution, fix in advance a
record date for the determination of Holders entitled to give such request,
demand, authorization, direction, notice, consent, waiver or other Act, but
the Company shall have no obligation to do so. If such a record date is
fixed, such request, demand, authorization, direction, notice, consent,
waiver or other Act may be given before or after such record date, but only
the Holders of record at the close of business on such record date shall be
deemed to be Holders for the purposes of determining whether Holders of the
requisite proportion of outstanding Notes have authorized or agreed or
consented to such request, demand, authorization, directions, notice,
consent, waiver or other Act, and for that purpose the outstanding Notes
shall be computed as of such record date, PROVIDED that no such
authorization, agreement or consent by the Holders on such record date
shall be deemed effective unless it shall become effective pursuant to the
provisions of this Indenture not later than six months after the record
date.
SECTION 1.06 EXCHANGE RATES. Except as otherwise required under GAAP or in
connection with the preparation of any financial statements, any computation of
the U.S. dollar equivalent of any foreign currency required for any calculation
or computation under this Indenture (including, without limitation, in
connection with the limitations under the definition of "Consolidated Net
Income" and Section 4.03 hereof) shall be made at the exchange rate published in
THE WALL STREET JOURNAL which is in effect as of the close of business on the
first Business Day in the month in which such computation is required to be made
hereunder.
ARTICLE 2
THE NOTES
---------
SECTION 2.01 FORM AND DATING. The Original Notes and the Trustee's
certificate of authentication relating thereto shall be substantially in the
form of Exhibit A hereto, with such appropriate insertions, substitutions and
other variations as are required or permitted by this Indenture. The Exchange
Notes and the Trustee's certificate of authentication relating thereto shall be
substantially in the form of Exhibit A hereto, with such appropriate insertions,
substitutions and other variations as are required or permitted by this
Indenture; provided, that Exchange Notes issued in the Exchange Offer shall not
bear the legend set forth in Exhibit A hereto as indicated by footnote 2;
provided, further, that Exchange Notes issued in either the Exchange Offer or
the Private Exchange shall not contain any reference to Liquidated Damages and
shall not include paragraph 19 of Exhibit A hereto. The Notes may have
notations, legends or endorsements required by this Indenture, law, stock
exchange rule, depository rule or usage. Any such notation, legend or
endorsement shall be delivered in writing to the Trustee by the Company. Each
Note shall be dated the date of its issuance and show the date of its
authentication.
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<PAGE> 25
The terms and provisions contained in the Notes, annexed hereto as Exhibit
A, shall constitute, and are hereby expressly made, a part of this Indenture. To
the extent applicable, the Company, by its execution and delivery of this
Indenture, expressly agrees to such terms and provisions and to be bound
thereby.
The Original Notes initially will be issued in global form, substantially
in the form of Exhibit A attached hereto (including the text set forth in
footnote 1 thereto and the additional schedule referred to therein) and may be
issued in definitive form, substantially in the form of Exhibit A hereto (not
including the text set forth in footnote 1 thereto and the additional schedule
referred to therein). The Original Notes initially will be deposited with the
Trustee, as Note Custodian. The Global Notes initially shall be registered in
the name of the Depository or the nominee of the Depository. A Global Note shall
represent such of the outstanding Notes as shall be specified therein and shall
provide that it shall represent the aggregate amount of outstanding Notes from
time to time endorsed thereon and that the aggregate amount of outstanding Notes
represented thereby may from time to time be reduced or increased, as
appropriate, to reflect exchanges and redemptions. Any endorsement of a Global
Note to reflect the amount of any increase or decrease in the amount of
outstanding Notes represented thereby shall be made by the Trustee, as Note
Custodian, in accordance with instructions given by the Holder thereof as
required by Section 2.06 hereof.
To the extent permitted by the terms of the 9-7/8% Notes and the indenture
governing the 9-7/8% Notes (the "9-7/8% Indenture"), all obligations owing under
this Indenture and the Notes, including interest accruing after the occurrence
of an event described in clause (5) or (6) of Section 6.01 of the Indenture,
shall constitute "Specified Senior Indebtedness" or similarly- designated
indebtedness under the 9-7/8% Notes and the 9-7/8% Indenture and under any other
existing or future subordinated indebtedness of the Company.
SECTION 2.02 EXECUTION AND AUTHENTICATION. The Notes shall be executed on
behalf of the Company by its Chairman of the Board, one of its Vice Chairmen,
its President or one of its Vice Presidents, under its corporate seal reproduced
thereon attested by its Secretary or one of its Assistant Secretaries. The
signature of any such officer on the Notes may be manual or facsimile.
If an Officer of the Company whose signature is on a Note no longer holds
that office at the time the Note is authenticated, the Note shall nevertheless
be valid.
Only such Notes as shall bear thereon a certificate of authentication
substantially in the form set forth in Exhibit A hereto, manually executed by
the Trustee, shall be entitled to the benefits of this Indenture or be valid or
obligatory for any purpose. Such certificate of authentication executed by the
Trustee upon any Note executed by the Company shall be conclusive evidence that
the Note so authenticated has been duly authenticated and made available for
delivery hereunder.
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<PAGE> 26
At any time and from time to time after the execution and delivery of this
Indenture, the Company may deliver Notes executed by the Company to the Trustee
for authentication, together with a request for the authentication and delivery
of such Notes signed by an Officer of the Company, and the Trustee, in
accordance with such request, shall authenticate and deliver such Notes as
provided in this Indenture.
The Trustee shall authenticate (i) Original Notes for original issue in the
aggregate principal amount not to exceed $175,000,000, and (ii) Exchange Notes
issued, either (x) in the Exchange Offer for the Original Notes pursuant to the
Exchange Offer Registration Statement filed with the Commission from time to
time, for issue only in exchange for a like principal amount of Original Notes
or (y) in the Private Exchange, for issue only in exchange for a like principal
amount of Original Notes, in each case, upon written order of the Company in the
form of an Officers' Certificate. Such Officers' Certificate shall specify the
amount of Notes to be authenticated and the date on which the Notes are to be
authenticated, whether the Notes are to be Original Notes or Exchange Notes and
whether the Notes are to be Definitive Notes or Global Notes. Except as
contemplated by Section 2.07 hereof, the aggregate principal amount of Notes
outstanding at any time may not exceed $175,000,000. Notwithstanding the
foregoing, all Notes issued under this Indenture shall vote and consent together
on all matter as one class and no series of Notes will have the right to vote or
consent as a separate class on any matter.
The Notes shall be issuable in fully registered form only, without coupons,
in denominations of $1,000 and any integral multiple thereof.
The Trustee shall act as the initial authenticating agent. Thereafter, the
Trustee may appoint an authenticating agent reasonably acceptable to the Company
to authenticate the Notes. An authenticating agent may authenticate Notes
whenever the Trustee may do so. Each reference in this Indenture to
authentication by the Trustee includes authentication by such agent. An
authenticating agent has the same rights as an Agent to deal with the Company or
an Affiliate of the Company. The Trustee shall not be liable for any act or
failure to act of the authenticating agent to perform any duty either required
herein or authorized herein to be performed by such person in accordance with
this Indenture. Each authenticating agent shall be acceptable to the Company and
otherwise comply in all respects with the eligibility requirements of the
Trustee contained in this Indenture.
SECTION 2.03 REGISTRAR AND PAYING AGENT. The Company shall maintain or
cause to be maintained an office or agency where (a) Notes may be presented for
registration of transfer or for exchange ("Registrar"), (b) Notes may be
presented or surrendered for purchase or payment ("Paying Agent") and (c)
notices and demands to or upon the Company in respect of the Notes may be
served. The Registrar shall keep a register of the Notes and of their transfer
and exchange. The Company may appoint one or more co-registrars and one or more
additional paying agents. The term "Registrar" includes any co-registrar and the
term "Paying Agent" includes any additional paying agents. The Company may
change any Paying Agent or Registrar without notice to any Holder. The Company
shall notify the Trustee of the name and address of
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<PAGE> 27
any Agent not a party to this Indenture. If the Company fails to appoint or
maintain another entity as Registrar or Paying Agent, the Trustee shall act as
such and shall be entitled to appropriate compensation in accordance with
Section 7.07 hereof. The Company or any of its Subsidiaries may act as Paying
Agent or Registrar.
The Company shall enter into an appropriate agency agreement with any Agent
not a party to this Indenture, which shall incorporate the provisions of the
TIA. The agreement shall implement the provisions of this Indenture that relate
to such Agent. The Company initially appoints The Depository Trust Company
("DTC") to act as Depository with respect to the Global Notes.
The Company initially appoints the Trustee to act as the Registrar and
Paying Agent and agent for service of notices and demands in connection with the
Notes.
SECTION 2.04 PAYING AGENT TO HOLD MONEY IN TRUST. Except as otherwise
provided herein, prior to each due date of the principal, premium, if any, and
interest on any Note, the Company shall deposit with the Paying Agent a sum of
money sufficient to pay such principal, premium, if any, and interest or
Liquidated Damages so becoming due. The Company shall require each Paying Agent
(other than the Trustee or the Company) to agree in writing that such Paying
Agent shall hold in trust for the benefit of the Holders or the Trustee all
money held by the Paying Agent for the payment of principal, premium, if any,
and interest on the Notes (whether such money has been paid to it by the Company
or any other obligor on the Notes) and shall notify the Trustee of any default
by the Company (or any other obligor on the Notes) in making any such payment.
At any time during the continuance of any such default, the Paying Agent shall,
upon the request of the Trustee, forthwith pay to the Trustee all money so held
in trust and account for any money disbursed to it. The Company at any time may
require a Paying Agent to pay all money held by it to the Trustee and to account
for any money disbursed by it. Upon doing so, the Paying Agent shall have no
further liability for the money so paid over to the Trustee. If the Company, a
Subsidiary or an Affiliate of either of them acts as Paying Agent, it shall
segregate the money held by it as Paying Agent and hold it as a separate trust
fund.
SECTION 2.05 HOLDER LISTS. The Trustee shall preserve in as current a form
as is reasonably practicable the most recent list available to it of the names
and addresses of Holders. If the Trustee is not the Registrar, the Company shall
cause to be furnished to the Trustee on or before each interest payment date and
at such other times as the Trustee may request in writing, within five Business
Days of such request, a list in such form as the Trustee may reasonably require
of the names and addresses of Holders.
SECTION 2.06 Transfer and Exchange.
---------------------
(1) TRANSFER AND EXCHANGE OF DEFINITIVE NOTES. When Definitive Notes
are presented to the Registrar with the request to register the transfer of
the Definitive Notes, or to exchange such Definitive Notes for an equal
principal amount of Definitive Notes of
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<PAGE> 28
other authorized denominations, the Registrar shall register the transfer
or make the exchange as requested if its requirements for such transactions
are met; provided, however, that the Definitive Notes presented or
surrendered for registration of transfer or exchange:
(a) shall be duly endorsed or accompanied by a written
instrument of transfer in form satisfactory to the Trustee and
the Registrar duly executed by the Holder thereof or by an
attorney who is duly authorized in writing to act on behalf of
the Holder; and
(b) shall, in the case of a Transfer Restricted Security, be
accompanied by the following additional information and
documents, as applicable:
(i) if such Transfer Restricted Securities are being
delivered to the Registrar by a Holder for registration in
the name of such Holder, without transfer, a certification
from such Holder to that effect (in substantially the form
of Exhibit B hereto); or
(ii) if such Transfer Restricted Securities are being
transferred (1) to a "qualified institutional buyer" (as
defined in Rule 144A under the Securities Act) in a
transaction meeting the requirements of Rule 144A under the
Securities Act or (2) pursuant to an exemption from
registration in a transaction meeting the requirements of
Rule 144 under the Securities Act (based upon an Opinion of
Counsel if the Company so requests) or (3) pursuant to an
effective registration statement under the Securities Act, a
certification to that effect from such Holder (in
substantially the form of Exhibit B hereto); or
(iii) if such Transfer Restricted Securities are being
transferred to an institutional "accredited investor,"
within the meaning of Rule 501(a)(1), (2), (3) or (7) under
the Securities Act pursuant to a private placement exemption
from the registration requirements of the Securities Act
(based upon an Opinion of Counsel if the Company so
requests), a certification to that effect from such Holder
(in substantially the form of Exhibit B hereto) and a
certification from the applicable transferee (in
substantially the form of Exhibit C hereto);
(iv) if such Transfer Restricted Securities are being
transferred outside the U.S. to a foreign person pursuant to
an exemption from registration in a transaction meeting the
requirements of Regulation S under the Securities Act (based
on an Opinion of Counsel if the Company so requests),
certification to that effect from such Holder (in
substantially the form of Exhibits B and D hereto); or
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(v) if such Transfer Restricted Securities are being
transferred in reliance on another exemption from the
registration requirements of the Securities Act (based upon
an Opinion of Counsel if the Company so requests), a
certification to that effect from such Holder (in
substantially the form of Exhibit B hereto).
(2) TRANSFER OF A DEFINITIVE NOTE FOR A BENEFICIAL INTEREST IN A
GLOBAL NOTE. A Definitive Note may not be exchanged for a beneficial
interest in a Global Note except upon satisfaction of the requirements set
forth below. Upon receipt by the Trustee of a Definitive Note, duly
endorsed or accompanied by a written instrument of transfer in form
satisfactory to the Trustee duly executed by the Holder thereof or by an
attorney who is duly authorized in writing to act on behalf of the Holder,
together with:
(a) if such Definitive Note is being delivered to the
Trustee by a Holder, without transfer, to enable such Holder to
obtain a beneficial interest in a Global Note, a certification
from such Holder to that effect (in substantially the form of
Exhibit B hereto); provided that such Holder provides a
certification that such Holder is otherwise permitted to hold a
beneficial interest in a Global Note;
(b) if such Definitive Note is a Transfer Restricted
Security and is being transferred, certification, substantially
in the form of Exhibit B hereto, that either (A) such Definitive
Note is being transferred to a "qualified institutional buyer"
(as defined in Rule 144A under the Securities Act) in a
transaction meeting the requirements of Rule 144A under the
Securities Act, (B) to an institutional "accredited investor,"
within the meaning of Rule 501(a)(1), (2), (3) or (7) under the
Securities Act pursuant to a private placement exemption from the
registration requirements of the Securities Act (based upon an
Opinion of Counsel if the Company so requests), provided that the
Trustee receives a certification from such transferee (in
substantially the form of Exhibit C hereto), or (C) to a foreign
person outside the U.S. pursuant to an exemption from
registration in a transaction meeting the requirements of
Regulation S under the Securities Act (based upon an Opinion of
Counsel if the Company so requests), provided, that the Trustee
receives a certification from such transferor (in substantially
the form of Exhibit D hereto); and
(c) whether or not such Definitive Note is a Transfer
Restricted Security, written instructions directing the Trustee
to cause, or directing the Note Custodian to cause in accordance
with the standing instructions and procedures existing between
the Depository and the Note Custodian, the aggregate principal
amount of Notes represented by the Global Note to be increased;
then the Trustee shall cancel such Definitive Note in accordance with Section
2.01 hereof and cause, or direct the Note Custodian to cause, in accordance with
the standing instructions and
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procedures existing between the Depository and the Note Custodian, the aggregate
principal amount of Notes represented by the Global Note to be increased
accordingly. If no Global Notes are then outstanding, the Company shall issue
and, upon receipt of an authentication order in accordance with Section 2.02
hereof, and an agreement with the Depository in customary form and substance
acceptable to the Trustee, the Trustee shall authenticate a new Global Note in
the appropriate principal amount.
(3) TRANSFER AND EXCHANGE OF GLOBAL NOTES. The transfer and
exchange of Global Notes or beneficial interests therein shall be
effected through the Depository, in accordance with this Indenture and
the procedures of the Depository therefor, which shall include
restrictions on transfer comparable to those set forth herein to the
extent required by the Securities Act; provided, however, that neither
the Trustee nor the Registrar shall have any obligation to monitor or
restrict the transfer of any beneficial interest in the Notes
transferable through the book-entry facilities of the Depository.
(4) TRANSFER OF A BENEFICIAL INTEREST IN A GLOBAL NOTE FOR A
DEFINITIVE NOTE.
(a) Any Person having a beneficial interest in a Global Note
may upon request exchange such beneficial interest for a
Definitive Note. Upon receipt by the Trustee of written
instructions or such other form of instructions as is customary
for the Depository from the Depository or its nominee on behalf
of any Person having a beneficial interest in a Global Note, and,
in the case of a Transfer Restricted Security, the following
additional information and documents (all of which may be
submitted by facsimile):
(i) if such beneficial interest is being
transferred to the Person designated by the Depository as
being the beneficial owner, a certification from such
Person to that effect (in substantially the form of
Exhibit B hereto); or
(ii) if such beneficial interest is being
transferred (1) to a "qualified institutional buyer" (as
defined in Rule 144A under the Securities Act) in a
transaction meeting the requirements of Rule 144A under
the Securities Act or (2) pursuant to an exemption from
registration in a transaction meeting the requirements of
Rule 144 under the Securities Act (based upon an Opinion
of Counsel if the Company so requests) or (3) pursuant to
an effective registration statement under the Securities
Act, a certification to that effect from the transferor
(in substantially the form of Exhibit B hereto); or
(iii) if such beneficial interest is being
transferred to an institutional "accredited investor,"
within the meaning of Rule 501(a)(1), (2), (3) or (7)
under the Securities Act pursuant to a private placement
exemption from
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the registration requirements of the Securities Act (based
upon an Opinion of Counsel if the Company so requests), a
certification to that effect from such transferor (in
substantially the form of Exhibit B hereto) and a
certification from the applicable transferee (in
substantially the form of Exhibit C hereto); or
(iv) if such beneficial interest is being
transferred outside the U.S. to a foreign person pursuant
to an exemption from registration in a transaction meeting
the requirements of Regulation S under the Securities Act
(based upon an Opinion of Counsel if the Company so
requests), certifications to that effect from such
transferor (in substantially the form of Exhibits B and D
hereto); and
(v) if such beneficial interest is being
transferred in reliance on another exemption from the
registration requirements of the Securities Act (based
upon an Opinion of Counsel if the Company so requests), a
certification to that effect from such transferor (in
substantially the form of Exhibits B and D hereto);
then the Trustee or the Note Custodian, at the direction of the Trustee, shall,
in accordance with the standing instructions and procedures existing between the
Depository and the Note Custodian, cause the aggregate principal amount of
Global Notes to be reduced accordingly and, following such reduction, the
Company shall execute and, upon receipt of an authentication order in accordance
with Section 2.02 hereof, the Trustee shall authenticate and deliver to the
transferee a Definitive Note in the appropriate principal amount.
(b) Definitive Notes issued in exchange for a beneficial
interest in a Global Note pursuant to this Section 2.06(4) shall
be registered in such names and in such authorized denominations
as the Depository, pursuant to instructions from its direct or
indirect participants or otherwise, shall instruct the Trustee.
The Trustee shall deliver such Definitive Notes to or as directed
by the Persons in whose names such Notes are so registered.
(5) RESTRICTIONS ON TRANSFER AND EXCHANGE OF GLOBAL NOTES.
Notwithstanding any other provisions of this Indenture (other than the
provisions set forth in subsection (6) of this Section 2.06), a Global
Note may not be transferred except as a whole by the Depository to a
nominee of the Depository or by a nominee of the Depository to the
Depository or another nominee of the Depository or by the Depository
or any such nominee to a successor Depository or a nominee of such
successor Depository.
(6) Authentication Of Definitive Notes. If at any time:
----------------------------------
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(a) the Company notifies the Trustee in writing that the
Depository for the Notes is no longer willing or able to act as
Depository for the Global Notes and a successor Depository for the
Global Notes is not appointed by the Company within 90 days after
delivery of such notice; or
(b) the Company, at its option, notifies the Trustee in writing
that it elects to cause the issuance of Definitive Notes under this
Indenture;
then the Company will execute, and the Trustee, upon receipt of an Officers'
Certificate requesting the authentication and delivery of Definitive Notes, will
authenticate and deliver Definitive Notes, in an aggregate principal amount
equal to the principal amount of the Global Notes, in exchange for such Global
Notes and registered in such names as the Depository shall instruct the Trustee
or the Company in writing.
(7) LEGENDS.
(a) Except as permitted by the following paragraphs (c) and (d),
each Note certificate evidencing the Global Notes and the Definitive
Notes (and all Notes issued in exchange therefor or substitution
thereof) shall bear a legend in substantially the following form until
after the second anniversary of the later of the date of original
issuance of the Note and the last day on which the Company or any
Affiliate of the Company was the owner of such Note (or any
predecessor Note or any beneficial interest therein):
"THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "SECURITIES ACT"), AND, ACCORDINGLY, MAY
NOT BE OFFERED OR SOLD TO, OR FOR THE ACCOUNT OR BENEFIT OF, ANY
PERSON EXCEPT AS SET FORTH IN THE FOLLOWING SENTENCE. BY ITS
ACQUISITION HEREOF, THE HOLDER (1) REPRESENTS THAT (A) IT IS A
"QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER
THE SECURITIES ACT), (B) IT IS AN "ACCREDITED INVESTOR" (AS
DEFINED IN RULE 501(a)(1), (2), (3) OR (7) UNDER THE SECURITIES
ACT) WHO IS AN INSTITUTION (AN "INSTITUTIONAL ACCREDITED
INVESTOR"), OR (C) IT IS NOT A U.S. PERSON AND IS ACQUIRING THIS
NOTE IN AN OFFSHORE TRANSACTION IN COMPLIANCE WITH RULE 904 UNDER
THE SECURITIES ACT, (2) AGREES THAT IT WILL NOT PRIOR TO THE DATE
WHICH IS TWO YEARS AFTER THE LATER OF THE DATE OF ORIGINAL
ISSUANCE OF THIS NOTE AND THE LAST DATE ON WHICH THE ISSUER OR
ANY AFFILIATE OF THE ISSUER WAS THE OWNER OF THIS NOTE (THE
"RESALE RESTRICTION TERMINATION DATE") OFFER,
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SELL OR OTHERWISE TRANSFER THIS NOTE, EXCEPT (A) TO THE ISSUER,
(B) TO A PERSON WHOM THE SELLER REASONABLY BELIEVES IS A
QUALIFIED INSTITUTIONAL BUYER PURCHASING FOR ITS OWN ACCOUNT OR
FOR THE ACCOUNT OF ANOTHER QUALIFIED INSTITUTIONAL BUYER IN
COMPLIANCE WITH THE RESALE PROVISIONS OF RULE 144A UNDER THE
SECURITIES ACT, OR TO AN INSTITUTIONAL ACCREDITED INVESTOR THAT,
PRIOR TO SUCH TRANSFER, FURNISHES TO THE TRUSTEE A WRITTEN
CERTIFICATION CONTAINING CERTAIN REPRESENTATIONS AND AGREEMENTS
RELATING TO THE RESTRICTIONS ON TRANSFER OF THIS NOTE (THE FORM
OF WHICH LETTER CAN BE OBTAINED FROM THE TRUSTEE), (D) PURSUANT
TO THE RESALE LIMITATIONS PROVIDED BY RULE 144 UNDER THE
SECURITIES ACT (IF AVAILABLE), (E) PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT, (F) OUTSIDE THE
U.S. TO A FOREIGN PERSON IN A TRANSACTION MEETING THE
REQUIREMENTS OF REGULATION S UNDER THE SECURITIES ACT OR (G)
PURSUANT TO ANY OTHER AVAILABLE EXEMPTION FROM THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT (BASED, IN THE CASE OF CLAUSES
(C), (D), (F) AND (G) ABOVE, UPON AN OPINION OF COUNSEL
REASONABLY ACCEPTABLE TO THE ISSUER IF THE ISSUER SO REQUESTS),
SUBJECT IN EACH OF THE FOREGOING CASES TO ANY REQUIREMENT OF LAW
THAT THE DISPOSITION OF ITS PROPERTY OR THE PROPERTY OF SUCH
ACCOUNT BE AT ALL TIMES WITHIN ITS CONTROL AND TO COMPLIANCE WITH
APPLICABLE STATE SECURITIES LAWS AND (3) AGREES THAT IT WILL
DELIVER TO EACH PERSON TO WHOM THIS NOTE IS TRANSFERRED A NOTICE
SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND. IF THE PROPOSED
TRANSFEREE IS AN INSTITUTIONAL ACCREDITED INVESTOR, THE HOLDER
MUST, PRIOR TO SUCH TRANSFER, FURNISH TO THE TRUSTEE AND THE
ISSUER SUCH CERTIFICATIONS, LEGAL OPINIONS OR OTHER INFORMATION
AS EITHER OF THEM MAY REASONABLY REQUIRE TO CONFIRM THAT SUCH
TRANSFER IS BEING MADE PURSUANT TO AN EXEMPTION FROM, OR IN A
TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT. THE FOREGOING RESTRICTIONS ON RESALE WILL NOT
APPLY SUBSEQUENT TO THE RESALE RESTRICTION TERMINATION DATE."
(b) Each Global Note shall also bear the following legend:
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UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR NOTES IN
DEFINITIVE FORM, THIS NOTE MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY THE
DEPOSITORY TO A NOMINEE OF THE DEPOSITORY OR BY A NOMINEE OF THE DEPOSITORY TO
THE DEPOSITORY OR ANOTHER NOMINEE OF THE DEPOSITORY OR BY THE DEPOSITORY OR ANY
SUCH NOMINEE TO A SUCCESSOR DEPOSITORY OR A NOMINEE OF SUCH SUCCESSOR
DEPOSITORY. UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE
OF THE DEPOSITORY TRUST COMPANY (55 WATER STREET, NEW YORK, NEW YORK) ("DTC"),
TO THE ISSUER OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT,
AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER
NAME AS MAY BE REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT
IS MADE TO CEDE & CO. OR SUCH OTHER ENTITY AS MAY BE REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN. THIS NOTE IS A GLOBAL NOTE WITHIN
THE MEANING OF THE INDENTURE REFERRED TO HEREINAFTER. THIS GLOBAL NOTE MAY NOT
BE EXCHANGED, IN WHOLE OR IN PART, FOR A NOTE REGISTERED IN THE NAME OF ANY
PERSON OTHER THAN THE DEPOSITORY TRUST COMPANY OR A NOMINEE THEREOF EXCEPT IN
THE CIRCUMSTANCES SET FORTH IN SECTION 2.06 OF THE INDENTURE, AND MAY NOT BE
TRANSFERRED, IN WHOLE OR IN PART, EXCEPT IN ACCORDANCE WITH THE RESTRICTIONS SET
FORTH IN SECTION 2.06 OF THE INDENTURE. BENEFICIAL INTEREST IN THIS GLOBAL NOTE
MAY NOT BE TRANSFERRED EXCEPT IN ACCORDANCE WITH SECTION 2.06 OF THE INDENTURE.
(c) Upon any sale or transfer of a Transfer Restricted
Security (including any Transfer Restricted Security represented
by a Global Note) pursuant to Rule 144 under the Securities Act
or an effective registration statement under the Securities Act:
(i) in the case of any Transfer Restricted Security
that is a Definitive Note, the Registrar shall permit the
Holder thereof to exchange such Transfer Restricted Security
for a Definitive Note that does not bear the legend set
forth in clause (a) above and rescind any restriction on the
transfer of such Transfer Restricted Security; and
(ii) in the case of any Transfer Restricted Security
represented by a Global Note, such Transfer Restricted
Security shall not be required to bear the legend set forth
in clause (a) above if all other interests in such
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Global Note have been or are concurrently being sold or
transferred pursuant to Rule 144 under the Securities Act or
pursuant to an effective registration statement under the
Securities Act, but such Transfer Restricted Securities
shall continue to be subject to the provisions of Section
2.06(3) hereof; provided, however, that with respect to any
request for an exchange of a Transfer Restricted Security
that is represented by a Global Note for a Definitive Note
that does not bear a legend set forth in clause (a) above,
which request is made in reliance upon Rule 144, the Holder
thereof shall certify in writing to the Registrar that such
request is being made pursuant to Rule 144 (such
certification to be substantially in the form of Exhibit B
hereto).
(d) Notwithstanding the foregoing, upon consummation of the
Exchange Offer, the Company shall issue and, upon receipt of an
authentication order in accordance with Section 2.02 hereof, the
Trustee shall authenticate Series B Notes in exchange for Series
A Notes accepted for exchange in the Exchange Offer, which Series
B Notes shall not bear the legend set forth in clause (a) above,
and the Registrar shall rescind any restriction on the transfer
of such Notes, in each case unless the Holder of such Series A
Notes is either (A) a broker-dealer, (B) a Person participating
in the distribution (within the meaning of the Securities Act) of
the Series A Notes or (C) a Person who is an affiliate (as
defined in Rule 501 under the Securities Act) of the Company. The
Company shall identify to the Trustee such Holders of the Notes
in a written certification signed by an Officer of the Company
and, absent certification from the Company to such effect, the
Trustee shall assume that there are no such Holders.
(e) By its acceptance of any Note bearing the legend set
forth in Section 2.06(7)(a) hereof, each Holder of such a Note
acknowledges the restrictions on transfer of such Note set forth
in this Indenture and in such legend and agrees that it will
transfer such Note only as provided in this Indenture.
(8) CANCELLATION AND/OR ADJUSTMENT OF GLOBAL NOTE. At such time
as all beneficial interests in a Global Note have either been
exchanged for Definitive Notes, redeemed, repurchased or canceled,
such Global Note shall be returned to or retained and canceled by the
Trustee. At any time prior to such cancellation, if any beneficial
interest in a Global Note is exchanged for Definitive Notes, redeemed,
repurchased or canceled, the principal amount of Notes represented by
such Global Note shall be reduced and an endorsement shall be made on
such Global Note, by the Trustee or the Note Custodian, at the
direction of the Trustee to reflect such reduction.
(9) General Provisions with Respect to Transfer and Exchange.
--------------------------------------------------------
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(a) To permit registration of transfers and exchanges, the
Company shall execute and the Trustee shall authenticate,
pursuant to the terms of this Indenture, Definitive Notes and
Global Notes at the Registrar's request.
(b) No service charge shall be made to a Holder for any
registration of transfer or exchange, but the Company may require
payment of a sum sufficient to cover any transfer tax or similar
governmental charge payable in connection therewith (other than
any such transfer taxes or similar governmental charges payable
upon exchange or transfer pursuant to Section 2.09, 3.01, 4.11,
4.12, and 9.05 hereof).
(c) Neither the Company nor the Registrar shall be required
to register the transfer or exchange of any Note selected for
redemption in whole or in part, except the unredeemed portion of
any Note being redeemed in part.
(d) All Definitive Notes and Global Notes issued upon any
registration of transfer or exchange of Definitive Notes or
Global Notes shall be the valid obligations of the Company,
evidencing the same debt, and entitled to the same benefit under
this Indenture as the Definitive Notes or Global Notes
surrendered upon such registration of transfer or exchange.
(e) The Company shall not be required to issue or register
the transfer or exchange of Notes during a period beginning at
the opening of 15 days before the day of any selection of Notes
for redemption under Section 3.02 and ending at the close of
business on the day of selection.
(f) Prior to due presentment for registration of transfer of
any Note, the Trustee, any Agent and the Company may deem and
treat the Person in whose name any Note is registered as the
absolute owner of such Note for the purpose of receiving payment
of principal of, and premium, interest and Liquidated Damages, if
any, on such Note, and neither the Trustee, any Agent nor the
company shall be affected by notice to the contrary.
(g) The Trustee shall authenticate Definitive Notes and
Global Notes in accordance with the provisions of Section 2.02
hereof.
(h) Neither the Company nor the Trustee shall be liable for
any delay by the Depository in identifying the beneficial owners
of the Notes and each such Person may conclusively rely on, and
shall be protected in relying on, instructions from the
Depository for all purposes (including with respect to the
registration and delivery, and the respective principal amounts,
of any Notes to be issued).
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(i) Members of, or participants in, the Depository shall
have no rights under this Indenture with respect to any Global
Note held on their behalf by the Depository, or the Trustee as
the Note Custodian, or under the Global Note, and the Depository
may be treated by the Company, the Trustee and any agent of the
Company or the Trustee as the absolute owner of the Global Note
for all purposes whatsoever. Notwithstanding the foregoing,
nothing herein shall (x) prevent the Company, the Trustee or any
agent of the Company or the Trustee from giving effect to any
written certification, proxy or other authorization furnished by
the Depository or (y) impair, as between the Depository and
members of, or participants in, the Depository, the operation of
customary practices governing the exercise of the rights of a
Holder of any Note.
SECTION 2.07 REPLACEMENT NOTES. If any mutilated Note is surrendered to the
Company or the Trustee, or the Company and the Trustee receive evidence to their
satisfaction of the destruction, loss or theft of any Note, and there is
delivered to the Company and the Trustee such security or indemnity as may be
required by them to save each of them harmless, then, in the absence of notice
to the Company or the Trustee that such Note has been acquired by a bona fide
purchaser, the Company shall execute, and upon its written request, the Trustee
shall authenticate and make available for delivery, in exchange for any such
mutilated Note or in lieu of any such destroyed, lost or stolen Note, a new Note
of like tenor and principal amount, bearing a number not contemporaneously
outstanding.
In case any such mutilated, destroyed, lost or stolen Note has become or is
about to become due and payable, or is about to be purchased by the Company
pursuant to Article 3 hereof, the Company in its discretion may, instead of
issuing a new Note, pay or purchase such Note, as the case may be.
Upon the issuance of new Notes under this Section 2.07, the Company may
require the payment of a sum sufficient to cover any tax or other governmental
charge that may be imposed in relation thereto and any other expenses (including
the fees and expenses of the Trustee) in connection therewith.
Every new Note issued pursuant to this Section 2.07 in lieu of any
mutilated, destroyed, lost or stolen Note shall constitute an original
additional contractual obligation of the Company, whether or not the mutilated,
destroyed, lost or stolen Note shall be at any time enforceable by anyone, and
shall be entitled to all benefit of this Indenture equally and proportionately
with any and all other Notes duly issued hereunder.
The provisions of this Section 2.07 are exclusive and shall preclude (to
the extent lawful) all other rights and remedies with respect to the replacement
or payment of mutilated, destroyed, lost or stolen Notes.
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SECTION 2.08 OUTSTANDING NOTES; DETERMINATIONS OF HOLDERS' ACTION. Notes
outstanding at any time are all the Notes authenticated by the Trustee except
for those cancelled by it, those delivered to it for cancellation, those
referred to in Section 2.07 hereof, or purchased by the Company pursuant to
Article 3 hereof and those described in this Section 2.08 as not outstanding. A
Note does not cease to be outstanding because the Company or an Affiliate
thereof holds the Note; PROVIDED, HOWEVER, that in determining whether the
holders of the requisite principal amount of Notes have given or concurred in
any request, demand, authorization, direction, notice, consent or waiver
hereunder, Notes owned by the Company, any other obligor upon the Notes or any
Affiliate of the Company or such other obligor shall be disregarded and deemed
not to be outstanding, except that, in determining whether the Trustee shall be
protected in relying upon such request, demand, authorization, direction,
notice, consent or waiver, only Notes which a Trust Officer of the Trustee knows
based upon an examination of the Register to be so owned shall be so
disregarded. Subject to the foregoing, only Notes outstanding at the time of
such determination shall be considered in any such determination (including
determinations pursuant to Articles 6 and 9).
If a Note is replaced pursuant to Section 2.07, it ceases to be outstanding
unless the Trustee receives proof satisfactory to it that the replaced Note is
held by a bona fide purchaser.
If the Paying Agent (other than the Company) holds, in accordance with this
Indenture, at maturity or on a Redemption Date, money sufficient to pay the
Notes payable on that date, then immediately on the date of maturity or such
Redemption Date, as the case may be, such Notes shall cease to be outstanding
and interest, if any, on such Notes shall cease to accrue.
SECTION 2.09 TEMPORARY NOTES. Pending the preparation of Definitive Notes,
the Company may execute, and upon receipt of an Officers' Certificate from the
Company, the Trustee shall authenticate and make available for delivery,
temporary Notes which are printed, lithographed, typewritten, mimeographed or
otherwise produced, in any authorized denomination, substantially of the tenor
of the Definitive Notes in lieu of which they are issued and with such
appropriate insertions, omissions, substitutions and other variations as the
Officers of the Company executing such Notes may determine, as conclusively
evidenced by their execution of such Notes.
If temporary Notes are issued, the Company will cause Definitive Notes to
be prepared without unreasonable delay. After the preparation of Definitive
Notes, the temporary Notes shall be exchangeable for Definitive Notes upon
surrender of the temporary Notes at the office or agency of the Company
designated for such purpose pursuant to Section 2.03 hereof, without charge to
the Holder. Upon surrender for cancellation of any one or more temporary Notes,
the Company shall execute and the Trustee, upon receipt of an Officers'
Certificate from the Company, shall authenticate and make available for delivery
in exchange therefor a like principal amount of Definitive Notes of authorized
denominations. Until so exchanged, the temporary Notes shall in all respects be
entitled to the same benefits under this Indenture as Definitive Notes.
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SECTION 2.10 CANCELLATION. All Notes surrendered for payment, purchase by
the Company, redemption by the Company pursuant to Article 3 hereof, or
registration of transfer or exchange shall, if surrendered to any Person other
than the Trustee, be delivered to the Trustee and shall be promptly cancelled by
it. The Company may at any time deliver to the Trustee for cancellation any
Notes previously authenticated and made available for delivery hereunder which
the Company may have acquired in any manner whatsoever, and all Notes so
delivered shall be promptly cancelled by the Trustee. The Company may not
reissue, or issue new Notes to replace Notes it has paid or delivered to the
Trustee for cancellation. No Notes shall be authenticated in lieu of or in
exchange for any Notes cancelled as provided in this Section 2.10, except as
expressly permitted by this Indenture. All cancelled Notes held by the Trustee
shall be destroyed by the Trustee.
SECTION 2.11 CUSIP NUMBER. The Company, in issuing the Notes may use
"CUSIP" numbers (if then generally in use), and the Trustee shall use CUSIP
numbers in notices of redemption or exchange as a convenience to Holders;
provided that any such notice shall state that no representation is made as to
the correctness of such numbers either as printed on the Notes or as contained
in any notice of redemption or exchange and that reliance may be placed only on
the other identification number printed on the Notes and any redemption shall
not be affected by any defect in or omission of such numbers.
SECTION 2.12 DEFAULTED INTEREST. If the Company defaults on a payment of
interest on the Notes, it shall pay the defaulted interest, plus (to the extent
lawful) any interest payable on the defaulted interest (as provided in Section
4.01), to the Persons who are Holders on a subsequent special record date, and
such special record date, as used in this Section 2.12 with respect to the
payment of any defaulted interest, shall mean the 15th day next preceding the
date fixed by the Company for the payment of defaulted interest, whether or not
such day is a Business Day. At least 15 days before the subsequent special
record date, the Company shall mail to each Holder and to the Trustee a notice
that states the subsequent special record date, the payment date and the amount
of defaulted interest to be paid. The Company may also pay defaulted interest in
any other lawful manner.
SECTION 2.13 LIQUIDATED DAMAGES UNDER REGISTRATION RIGHTS AGREEMENT. Under
certain circumstances, the Company shall be obligated to pay certain Liquidated
Damages to the Holders, all as set forth in Section 2 of the Registration Rights
Agreement. In any such case, and for all purposes hereunder, the Trustee shall
rely conclusively upon the Company's certification as to the existence and
amount of any obligation to pay any such Liquidated Damages, and as to any other
matters pertaining thereto.
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ARTICLE 3
REDEMPTION
----------
SECTION 3.01 RIGHT TO REDEEM; NOTICES TO TRUSTEE. At any time on and after
March 15, 2002, the Company, at its option, may redeem the Notes for cash in
accordance with this Article 3 and the provisions of paragraph 6 of the Notes.
If the Company elects to redeem Notes pursuant to paragraph 6 of the Notes, it
shall notify the Trustee in writing of the Redemption Date, the principal amount
of Notes to be redeemed and the Redemption Price.
The Company shall give the notice to the Trustee provided for in this
Section 3.01 at least 45 days before the Redemption Date (unless a shorter
notice shall be satisfactory to the Trustee).
SECTION 3.02 SELECTION OF NOTES TO BE REDEEMED. If less than all the
outstanding Notes are to be redeemed at any time, the Trustee shall select the
Notes to be redeemed by lot or, if such method is prohibited by the rules of any
stock exchange on which the Notes are then listed, any other method the Trustee
considers reasonable. The Trustee shall make the selection at least 30 but not
more than 60 days before the Redemption Date from outstanding Notes not
previously called for redemption. Notes and portions of them the Trustee selects
shall be in principal amount of $1,000 or an integral multiple of $1,000.
Provisions of this Indenture that apply to Notes called for redemption also
apply to portions of Notes called for redemption. The Trustee shall notify the
Company promptly of the Notes or portions of Notes to be redeemed.
SECTION 3.03 NOTICE OF REDEMPTION. At least 30 days but not more than 60
day before a Redemption Date, the Company shall mail or cause to be mailed a
notice of redemption by first-class mail, postage prepaid, to each Holder of
Notes to be redeemed at the Holder's last address as it shall appear on the
registry book. A copy of such notice shall be mailed to the Trustee on the same
day the notice is mailed to Holders of Notes.
The notice shall identify the Notes to be redeemed and shall state:
(1) the Redemption Date;
(2) the Redemption Price;
(3) the CUSIP number (subject to the provisions of Section 2.11
hereof);
(4) the name and address of the Paying Agent;
(5) that Notes called for redemption must be surrendered to the Paying
Agent to collect the Redemption Price;
(6) if fewer than all the outstanding Notes are to be redeemed, the
identification and principal amounts of the particular Notes to be
redeemed; and
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(7) that, unless the Company defaults in making such redemption
payment together with accrued and unpaid interest and Liquidated Damages,
if any, to the Redemption Date, interest will cease to accrue on Notes
called for redemption on and after the Redemption Date.
At the Company's written request, the Trustee shall give the notice of
redemption in the Company's name and at the Company's expense; PROVIDED,
HOWEVER, that in all cases, the text of such notice of redemption shall be
prepared or approved by the Company and the Trustee shall have no responsibility
whatsoever with regard to such notice being accurate or correct.
SECTION 3.04 EFFECT OF NOTICE OF REDEMPTION. Once notice of redemption is
given, Notes called for redemption become due and payable on the Redemption Date
and at the Redemption Price. Upon the later of the Redemption Date and the date
such Notes are surrendered to the Paying Agent, such Notes called for redemption
shall be paid at the Redemption Price if money sufficient for that purpose has
been deposited as provided in Section 3.05 hereof.
Notice of redemption shall be deemed to be given when mailed in the manner
provided in Section 3.03, whether or not the Holder receives the notice. In any
event, failure to give such notice, or any defect therein, shall not affect the
validity of the proceedings for the redemption of the Notes.
SECTION 3.05 DEPOSIT OF REDEMPTION PRICE. Prior to the Redemption Date, the
Company shall deposit with the Paying Agent (or if the Company or a Subsidiary
or an Affiliate of either of them is the Paying Agent, shall segregate and hold
in trust) money sufficient to pay the Redemption Price of all Notes to be
redeemed on that date other than Notes or portions of Notes called for
redemption which prior thereto have been delivered by the Company to the Trustee
for cancellation.
SECTION 3.06 NOTES REDEEMED IN PART. Upon surrender of a Note that is
redeemed in part, the Company shall execute, and the Trustee shall authenticate
at the expense of the Company and make available for delivery to the Holder, a
new Note in an authorized denomination equal in principal amount to the
unredeemed portion of the Note surrendered.
ARTICLE 4
COVENANTS
---------
SECTION 4.01 PAYMENT OF NOTES. The Company shall pay the principal of,
premium, if any, and interest (including interest accruing on or after the
filing of a petition in bankruptcy or reorganization relating to the Company,
whether or not a claim for post-filing interest is allowed in such proceeding)
on the Notes on (or prior to) the dates and in the manner provided
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in the Notes or pursuant to this Indenture. An installment of principal,
premium, if any, or interest shall be considered paid on the applicable date due
if on such date the Trustee or the Paying Agent shall have received before 12:00
noon on such date and shall then hold, in accordance with this Indenture, money
sufficient to pay all of such installment then due. The Company shall pay all
Liquidated Damages, if any, in the same manner on the dates and in the amounts
set forth in the Registration Rights Agreement. If any Liquidated Damages become
payable, the Company shall not later than three Business Days prior to the date
that any payment of Liquidated Damages is due (i) deliver an Officers'
Certificate to the Trustee setting forth the amount of Liquidated Damages
payable to Holders and (ii) instruct the Paying Agent to pay such amount of
Liquidated Damages to Holders entitled to receive such Liquidated Damages. The
Company shall pay interest on overdue principal and premium, if any, and
interest on overdue installments of interest and Liquidated Damages, if any
(including interest accruing on or after the filing of a petition in bankruptcy
or reorganization relating to the Company whether or not a claim for post-filing
interest is allowed in such proceeding), to the extent lawful, at 2% above the
rate per annum borne by the Notes, which interest on overdue interest shall
accrue from the date such amounts became overdue.
SECTION 4.02 Reports.
-------
(1) Whether or not required by the rules and regulations of the
SEC, so long as any Notes are outstanding, the Company will furnish to the
Holders of Notes (i) all quarterly and annual financial information that
would be required to be contained in a filing with the SEC on Forms 10-Q
and 10-K if the Company were required to file such Forms, including a
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" that describes the financial condition and results of
operations of the Company and its Subsidiaries and, with respect to the
annual information only, a report thereon by the Company's independent
certified public accountants and (ii) all reports that would be required to
be filed with the SEC on Form 8-K if the Company were required to file such
reports. In addition, whether or not required by the rules and regulations
of the SEC, the Company will file a copy of all such information with the
SEC for public availability (unless the SEC will not accept such filing)
and make such information available to investors or prospective investors
who request it in writing.
(2) If the Company is not subject to and in compliance with the
informational requirements of Sections 13 or 15(d) of the Exchange Act at
any time while the Notes constitute "restricted securities" within the
meaning of the Securities Act, it will furnish to the Holders of the Notes
and prospective purchasers of the Notes designated by Holders of the Notes,
upon their request, the information required to be delivered pursuant to
Rule 144A(d)(4) under the Securities Act until such time as the Company
either exchanges all of the Notes for the Exchange Notes or has registered
under the Securities Act and continues to maintain a registration statement
with respect to the resale of all of the Notes pursuant to the Registration
Rights Agreement.
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(3) Upon qualification of this Indenture under the TIA, the
Company shall also comply with the provisions of TIA [section].314(a).
(4) For so long as any Transfer Restricted Securities remain
outstanding, the Company shall, if it is not subject to and in compliance
with the informational requirements of Section 13 or 15(d) of the Exchange
Act, furnish to all Holders or beneficial owners of Notes and prospective
purchasers of the Notes designated by the Holders of Transfer Restricted
Securities, upon their request, the information required to be delivered
pursuant to Rule 144A(d)(4) under the Securities Act.
(5) The Company shall deliver directly, or shall at its own
expense provide the Trustee with a sufficient number of copies thereof for
delivery at the Company's expense by the Trustee, all reports and other
documents and information that the Company may be required to deliver to
the Holders under this Section 4.02.
SECTION 4.03 Compliance Certificates.
-----------------------
(1) The Company shall deliver to the Trustee within 90 days after
the end of each of the Company's fiscal years an Officers' Certificate
executed by Officers of the Company, stating whether or not the signers
know of any Default or Event of Default. Such certificate shall contain a
certification from the principal executive officer, principal financial
officer or principal accounting officer of the Company as to his or her
knowledge of the Company's compliance with all conditions and covenants
under this Indenture. For purposes of this Section 4.03(1), such compliance
shall be determined without regard to any period of grace or requirement of
notice provided under this Indenture. If they do know of such a Default or
Event of Default, the certificate shall describe any such Default or Event
of Default, and its status.
(2) So long as not contrary to the then current recommendation of
the American Institute of Certified Public Accountants, the Company shall
deliver to the Trustee within 125 days after the end of each fiscal year a
written statement by the Company's independent certified public accountants
stating (a) that their audit examination has included a review of the terms
of this Indenture and the Notes as they relate to accounting matters, and
(b) whether, in connection with their audit examination, any Default has
come to their attention and, if such a Default has come to their attention,
specifying the nature and period of the existence thereof; PROVIDED,
HOWEVER, that the independent certified public accountants delivering such
statement shall not be liable in respect of such statement by reason of any
failure to obtain knowledge of any such Default or Event of Default that
would not be disclosed in the course of an audit examination conducted in
accordance with GAAP.
(3) The Company shall deliver to the Trustee as soon as possible
and in any event within 15 days after the Company becomes aware of the
occurrence of each Default or
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Event of Default, which is continuing, an Officers' Certificate setting
forth the details of such Default or Event of Default, and the action which
the Company proposes to take with respect thereto.
SECTION 4.04 FURTHER INSTRUMENTS AND ACTS. Upon request of the Trustee, the
Company shall execute and deliver such further instruments and do such further
acts as may be reasonably necessary or proper to carry out more effectively the
purposes of this Indenture.
SECTION 4.05 MAINTENANCE OF OFFICE OR AGENCY. The Company will maintain or
cause to be maintained an office or agency of the Trustee, Registrar and Paying
Agent where Notes may be presented or surrendered for payment, where Notes may
be surrendered for registration of transfer, exchange or redemption and where
notices and demands to or upon the Company in respect of the Notes and this
Indenture may be served. The corporate trust office of the Trustee at the
address specified in Section 10.02 hereof shall initially be such office or
agency for all of the aforesaid purposes. The Company shall give prompt written
notice to the Trustee of any change of location of such office or agency. If at
any time the Company shall fail to maintain or cause to be maintained any such
required office or agency or shall fail to furnish the Trustee with the address
thereof, such presentations, surrenders, notices and demands may be made or
served at the address of the Trustee set forth in Section 10.02 hereof.
The Company may also from time to time designate one or more other offices
or agencies where the Notes may be presented or surrendered for any or all such
purposes and may from time to time rescind such designations. The Company will
give prompt written notice to the Trustee of any such designation or rescission
and of any change in location of any such other office or agency.
SECTION 4.06 LIMITATION ON RESTRICTED PAYMENTS. The Company shall not, and
shall not permit any of its Restricted Subsidiaries to, directly or indirectly:
(i) declare or pay any dividend on, or make any distribution in respect of the
Company's or any such Restricted Subsidiary's Capital Stock or other Equity
Interests, except to the extent any such dividend or other distribution is (a)
actually received by the Company or a Restricted Subsidiary thereof or (b)
payable solely in shares of Capital Stock or other Equity Interests (other than
Redeemable Stock or Capital Stock convertible into any security other than such
Capital Stock) of the Company or such Restricted Subsidiary, as the case may be;
(ii) purchase, redeem or otherwise acquire or retire for value any Capital Stock
or other Equity Interests of the Company or any of its Restricted Subsidiaries
(other than Capital Stock or other Equity Interests held by the Company or any
Wholly-Owned Subsidiary of the Company that is a Restricted Subsidiary); (iii)
prepay, repay, purchase, repurchase, redeem, defease or otherwise acquire or
retire for value, prior to a scheduled repayment date, scheduled mandatory
sinking fund payment date or maturity date any Indebtedness of the Company that
is subordinate in right of payment to the Notes (other than in connection with
any refinancing of such Indebtedness permitted by this Indenture); or (iv) make
any Investment other than Permitted Investments (each such action described in
any of clauses (i) through (iv) above being referred to as a "Restricted
Payment"), if, at the time of such Restricted Payment,
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(1) a Default or Event of Default shall have occurred and be
continuing or shall occur as a consequence thereof;
(2) such Restricted Payment, together with the aggregate amount of all
other Restricted Payments declared or made on or after the issue date of
the Notes (including, without duplication, Restricted Payments described in
the next succeeding paragraph), exceeds the sum of (A) 50% of the
cumulative Consolidated Net Income of the Company for the period commencing
on January 1, 1997 through the last day of the fiscal quarter immediately
preceding the date of such proposed Restricted Payment (provided that if
the amount of such cumulative Consolidated Net Income divided by the number
of full fiscal quarters of the Company in the applicable period exceeds
$5,250,000, then such amount shall equal (i) 50% of the product of
$5,250,000 multiplied by the number of full fiscal quarters in such period
plus (ii) 75% of the amount in excess of the product of $5,250,000
multiplied by the number of full fiscal quarters in such period) (or, if
the cumulative Consolidated Net Income of the Company shall be a deficit,
minus 100% of such deficit); (B) the aggregate net cash proceeds, and the
Fair Market Value of any property other than cash, if any, received by the
Company (other than from a Restricted Subsidiary of the Company) from the
issuance and sale of either Capital Stock of the Company (other than
Redeemable Stock or any Capital Stock convertible into any security other
than such Capital Stock) or Indebtedness that is convertible into Capital
Stock of the Company (other than Redeemable Stock or any Capital Stock
convertible into any security other than such Capital Stock), to the extent
such Indebtedness is actually converted into such Capital Stock; (C) an
amount equal to any cash and the Fair Market Value (at the time of receipt)
of other assets received by the Company or any of its Restricted
Subsidiaries after the date of the issuance of the Notes as a dividend or
other distribution from any Unrestricted Subsidiary; (D) the Fair Market
Value of any Investment held by either the Company or any Restricted
Subsidiary of the Company in any Unrestricted Subsidiary at the time such
Unrestricted Subsidiary is redesignated as a Restricted Subsidiary in
accordance with the provisions of this Indenture; and (E) $35,000,000; or
(3) the Company could not incur at least $1.00 of additional
Indebtedness pursuant to the first paragraph of Section 4.07 hereof.
The foregoing provisions shall not prohibit, so long as no Default or Event
of Default shall have occurred and be continuing or shall occur as a consequence
thereof, (i) the payment of any dividend within 60 days after the date of
declaration thereof, if at such date of declaration such payment would have
complied with the provisions of this Indenture; (ii) the declaration and payment
by a Restricted Subsidiary of the Company which is required to file periodic
reports under Section 13 or 15(d) of the Exchange Act (a "Reporting Subsidiary")
of dividends on its common stock to all holders of such common stock on a pro
rata basis out of funds legally available for the payment of dividends, provided
that the amount of such dividends in any fiscal year of such Reporting
Subsidiary shall not exceed 25% of the Consolidated Net Income of such Reporting
Subsidiary for
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the immediately preceding fiscal year; (iii) the purchase, redemption,
acquisition, cancellation or other retirement for value of shares of Capital
Stock of the Company, options to purchase such shares or related stock
appreciation rights or similar securities held by current or former officers,
employees or directors (or their estates or beneficiaries under their estates)
of the Company or any Restricted Subsidiary; provided that the aggregate
consideration paid for such purchase, redemption, cancellation or other
retirement after the date hereof does not exceed $2,500,000 in the aggregate in
any fiscal year of the Company; (iv) the prepayment, repayment, purchase,
repurchase, redemption, defeasance or other acquisition or retirement for value
of any or all of the 9 7/8% Notes at any time within one year of the scheduled
maturity date thereof; and (v) the redemption, repurchase, defeasance or other
acquisition or retirement for value of Indebtedness of the Company that is
subordinated in right of payment to the Notes in exchange for, or out of the
proceeds of a substantially concurrent offering of, shares of Capital Stock of
the Company.
SECTION 4.07 LIMITATION ON ADDITIONAL INDEBTEDNESS. The Company shall not,
and shall not permit any of its Restricted Subsidiaries to, directly or
indirectly, create, incur, issue, assume, guarantee or otherwise become directly
or indirectly liable with respect to (each, an "incurrence") any Indebtedness,
including, without limitation, Acquired Indebtedness; provided, however, that
the Company may incur Indebtedness if (i) no Default or Event of Default shall
have occurred and be continuing at the time or after giving effect to the
incurrence of such Indebtedness and (ii) the Consolidated Cash Flow Coverage
Ratio of the Company for the four full fiscal quarters ending immediately prior
to the date of the incurrence of such additional Indebtedness is at least 2.0 to
1.0.
The foregoing limitations set forth in this Section 4.07 shall not apply,
without duplication, to:
(i) Existing Indebtedness;
(ii) Indebtedness of (a) the Company represented by the
Notes and this Indenture or (b) any Subsidiary Guarantor
under any Subsidiary Guaranty;
(iii) Indebtedness of the Company and its Restricted
Subsidiaries under the Company Credit Facility; provided,
that the aggregate principal amount of Indebtedness
(including the available undrawn amount of any letters of
credit issued thereunder) so incurred on any date, together
with all other Indebtedness incurred pursuant to this clause
(iii) and outstanding on such date, shall not exceed the
greater of (a) $75,000,000 and (b) the sum of 85% of
Eligible Receivables of the Company and its Subsidiaries,
plus 65% of Eligible Inventory of the Company and its
Subsidiaries;
(iv) Indebtedness of (a) Broan Limited and any Canadian
Subsidiaries which are Restricted Subsidiaries under the
Broan Limited
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Credit Facility; provided that (1) the aggregate outstanding
principal amount (including the available undrawn amount of
any letters of credit issued thereunder) so incurred on any
date, together with all other Indebtedness incurred pursuant
to this clause (iv) and outstanding on such date, shall not
exceed the greater of (x) $30,000,000 (Canadian) and (y) the
sum of 85% of Eligible Receivables of Broan Limited and the
Canadian Subsidiaries which are Restricted Subsidiaries plus
65% of Eligible Inventory of Broan Limited and the Canadian
Subsidiaries which are Restricted Subsidiaries (but without
duplication of any such Eligible Receivables or Eligible
Inventory of Broan Limited and the Canadian Subsidiaries
used as a basis to incur Indebtedness pursuant to clause
(iii) above) and (2) such Indebtedness shall be secured only
by Liens on assets of Broan Limited and the Canadian
Subsidiaries which are Restricted Subsidiaries; and (b) the
Company under its limited guaranty of not more than
$20,000,000 (Canadian) of the Indebtedness of Broan Limited
and the Canadian Subsidiaries which are Restricted
Subsidiaries under the Broan Limited Credit Facility;
(v) Indebtedness of Universal-Rundle Corporation for
facility expansion or improvement or joint venture
investment purposes not exceeding at any time $6,000,000 in
aggregate outstanding principal amount and, if secured,
secured only by Liens on assets of Universal-Rundle
Corporation or the applicable joint venture;
(vi) Indebtedness of the Company to any of its
Wholly-Owned Subsidiaries that is a Restricted Subsidiary,
provided that such Indebtedness is contractually
subordinated in right of payment to the Notes, or
Indebtedness of any Subsidiary of the Company that is a
Restricted Subsidiary to the Company or to any other
Wholly-Owned Subsidiary of the Company that is a Restricted
Subsidiary, provided that if the Company or any of its
Restricted Subsidiaries incurs Indebtedness to a Wholly-
Owned Subsidiary of the Company that is a Restricted
Subsidiary which, at any time after such incurrence, ceases
to be a Wholly-Owned Subsidiary, then all such Indebtedness
in excess of the amount of Allowable Subsidiary Loans shall
be deemed to have been incurred at the time such former
Wholly-Owned Subsidiary ceases to be a Wholly-Owned
Subsidiary of the Company;
(vii) Indebtedness of a Restricted Subsidiary under a
guaranty of Indebtedness of the Company (other than the
Notes) which causes such Restricted Subsidiary to become a
Subsidiary Guarantor pursuant to the provisions of Section
4.14 hereof;
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(viii) Indebtedness of the Company and its Restricted
Subsidiaries under Interest Rate Agreements, Currency
Agreements and Commodity Agreements, provided that (a) in
the case of Interest Rate Agreements, such Interest Rate
Agreements relate to Indebtedness permitted to be incurred
under this Indenture and the notional principal amount of
the obligations of the Company and its Restricted
Subsidiaries under such Interest Rate Agreements does not
exceed the principal amount of such Indebtedness, and (b) in
the case of Currency Agreements that relate to other
Indebtedness, such Currency Agreements do not increase the
Indebtedness of the Company and its Restricted Subsidiaries
outstanding at any time other than as a result of
fluctuations in foreign currency exchange rates or by reason
of fees, indemnities and compensation payable thereunder;
(ix) Indebtedness of the Company and its Restricted
Subsidiaries incurred in the ordinary course of business
under guaranties of Indebtedness of suppliers, licensees,
franchisees or customers;
(x) Indebtedness incurred by the Company and its
Restricted Subsidiaries consisting of Purchase Money
Obligations and Capital Lease Obligations not exceeding at
any time $30,000,000 in aggregate outstanding principal
amount;
(xi) Acquired Indebtedness incurred by a Restricted
Subsidiary of the Company to the extent such Indebtedness
could have been incurred by the Company under the
limitations set forth in the preceding paragraph of this
Section 4.07, after giving pro forma effect to the
acquisition of such Restricted Subsidiary by the Company;
(xii) Indebtedness of any Restricted Subsidiary
existing at the time of the designation of such Subsidiary
as a Restricted Subsidiary in accordance with the terms of
this Indenture if immediately prior to such designation such
Subsidiary was an Unrestricted Subsidiary, provided that,
after giving pro forma effect to such designation, such
Indebtedness could have been incurred by the Company under
the limitations set forth in the preceding paragraph of this
Section 4.07 (assuming for purposes of this clause (xii)
only that the Consolidated Cash Flow Coverage Ratio set
forth in such paragraph were 2.25 to 1.0); and provided
further that, none of the Company or any of its other
Restricted Subsidiaries shall provide credit support of any
kind (including any undertaking, agreement or instrument
that would constitute Indebtedness), or otherwise be at any
time, directly or indirectly liable (as a guarantor or
otherwise), for such existing Indebtedness, except to the
extent the Company or any of its Restricted Subsidiaries
could become so liable in accordance with the provisions of
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this Section 4.07 (other than solely in accordance with
clause (vi) above or this clause (xii)).
(xiii) Indebtedness of the Company and its Restricted
Subsidiaries in respect of performance bonds, bankers'
acceptances, letters of credit, short-term overdraft
facilities and surety or appeal bonds incurred or provided
in the ordinary course of business;
(xiv) Indebtedness of (a) Nortek (UK) Limited and its
Subsidiaries arising out of advances on exports, advances on
imports, advances on trade receivables, factoring of
receivables and similar transactions in the ordinary course
of business and, if secured, secured only by Liens on assets
of Nortek (UK) Limited and its Subsidiaries and (b) the
Company under its limited guaranty of not more than
$10,000,000 of any such Indebtedness of Nortek (UK) Limited
and its Subsidiaries;
(xv) other Indebtedness of the Company and its
Restricted Subsidiaries not to exceed at any time
$25,000,000 in aggregate outstanding principal amount;
(xvi) Liens permitted under Section 4.09; and
(xvii) Indebtedness ("Refinancing Indebtedness")
created, incurred, issued, assumed or guaranteed in exchange
for, or the proceeds of which are used to extend, refinance,
renew, replace, substitute or refund ("refinance"),
Indebtedness described in the preceding paragraph or
referred to in clauses (i) through (xv) above; provided,
however, that (a) the principal amount of such Refinancing
Indebtedness (or if such Refinancing Indebtedness is issued
at a price less than the principal amount thereof, the
original issue amount of such Refinancing Indebtedness),
together with the principal amount of any remaining
Indebtedness under the agreement or instrument governing the
Indebtedness being refinanced, shall not exceed (1) in the
case of Refinancing Indebtedness incurred to refinance
Indebtedness permitted to be incurred under any of clauses
(iii) through (v) and (xv) above, an amount which, when
added to all other Indebtedness outstanding under such
clause, shall not exceed the aggregate amount of
Indebtedness permitted to be incurred under such clause, and
(2) in the case of Refinancing Indebtedness incurred to
refinance Indebtedness permitted to be incurred under any of
clauses (i), (ii) and (vi) through (xiii) above, the
aggregate amount of such Indebtedness outstanding at the
time of such refinancing, in each case, after giving effect
to any mandatory reductions in principal or other repayments
required under the agreement or instrument governing such
Indebtedness; (b) such Refinancing Indebtedness
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shall be subordinated in right of payment to the Notes at
least to the same extent as the Indebtedness to be
refinanced; (c) such Refinancing Indebtedness shall have an
Average Life and Stated Maturity equal to, or greater than,
the Average Life and Stated Maturity of the Indebtedness to
be refinanced at the time of such incurrence; (d) the
proceeds of such Refinancing Indebtedness, if incurred by a
Restricted Subsidiary of the Company, shall not be used to
refinance Indebtedness of the Company or another Subsidiary
of the Company; and (e) the incurrence of any such
Refinancing Indebtedness is substantially simultaneous with
the refinancing of the Indebtedness to be refinanced.
For purposes of this Section 4.07, the accretion of original issue discount
on Indebtedness shall not be deemed to be an incurrence of Indebtedness.
SECTION 4.08 LIMITATION ON SALE OR ISSUANCE OF PREFERRED STOCK OF
RESTRICTED SUBSIDIARIES. The Company shall not (i) permit any of its Restricted
Subsidiaries to issue or sell to any Person except the Company or a Wholly-Owned
Subsidiary of the Company that is a Restricted Subsidiary any preferred stock of
any Restricted Subsidiary, or (ii) sell or otherwise convey or dispose of, or
permit any of its Wholly-Owned Subsidiaries that is a Restricted Subsidiary to
sell or otherwise convey or dispose of, any such preferred stock so issued or
sold to the Company or any of its Wholly-Owned Subsidiaries that is a Restricted
Subsidiary (other than to the issuer of such preferred stock, the Company or
another Wholly-Owned Subsidiary of the Company that is a Restricted Subsidiary).
SECTION 4.09 LIMITATION ON LIENS. The Company shall not, and shall not
permit any Restricted Subsidiary to, directly or indirectly, create, incur,
assume or suffer to exist any Lien on any Principal Property or on any shares of
Capital Stock of any Restricted Subsidiary of the Company held by the Company or
any other Restricted Subsidiary of the Company or on any Indebtedness owed by
any Restricted Subsidiary to the Company or any other Restricted Subsidiary of
the Company.
The foregoing limitation does not apply to:
(i) Liens securing obligations under the Notes;
(ii) Liens securing obligations under the Company
Credit Facility (but such Liens shall not secure
Indebtedness in excess of the amount of Indebtedness then
permitted to be incurred under clause (iii) of the second
paragraph of Section 4.07 plus the amount of any
Indebtedness then outstanding pursuant to such clause
(iii));
(iii) other Liens existing on the Closing Date;
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(iv) Liens with respect to the assets of a Restricted
Subsidiary granted by such Restricted Subsidiary to the
Company or a Restricted Subsidiary that is a Wholly-Owned
Subsidiary of the Company to secure Indebtedness owing to
the Company or such Wholly-Owned Subsidiary by such
Restricted Subsidiary;
(v) Liens permitted by clauses (iv), (v), (x), (xiii)
and (xiv) of Section 4.07;
(vi) Liens granted in connection with the extension,
renewal or refinancing, in whole or in part, of any
Indebtedness under the Notes or described in clause (iii)
above; provided that (1) such new Indebtedness is permitted
to be incurred under Section 4.07 and (2) the amount of
Indebtedness secured by such Lien is not increased thereby;
and provided, further, that the extension, renewal or
refinancing of Indebtedness of the Company may not be
secured by Liens on assets of any Restricted Subsidiary
other than to the extent the Indebtedness being extended,
renewed or refinanced was at any time previously secured by
Liens on assets of such Restricted Subsidiary; and
(vii) Permitted Liens.
SECTION 4.10 LIMITATION ON CERTAIN RESTRICTIONS AFFECTING SUBSIDIARIES. The
Company shall not, and shall not permit any of its Restricted Subsidiaries to,
directly or indirectly, create or enter into or otherwise cause or permit to
exist or become effective any agreement with any Person that would cause any
consensual encumbrance or restriction on the ability of any such Restricted
Subsidiary to (i) pay dividends or make any other distributions on its Capital
Stock or any other interest or participation in, or measured by, its profits,
owned by the Company or any of its Restricted Subsidiaries, (ii) pay or repay
any Indebtedness owed to the Company or any of its Restricted Subsidiaries which
owns Equity Interests in such Restricted Subsidiary, (iii) make loans or
advances to the Company or any of its Restricted Subsidiaries which owns Equity
Interests in such Restricted Subsidiary, (iv) transfer any of its properties or
assets to the Company or any of its Restricted Subsidiaries which owns Equity
Interests in such Restricted Subsidiary or (v) guarantee any Indebtedness of the
Company or any other Restricted Subsidiary of the Company except, in each case,
for such encumbrances or restrictions existing under or by reason of (a)
applicable law, (b) the Indenture, (c) customary nonassignment provisions of any
lease governing a leasehold interest of the Company or any of its Restricted
Subsidiaries, (d) any instrument governing Indebtedness of a Person acquired by
the Company or any of its Restricted Subsidiaries at the time of such
acquisition, which encumbrance or restriction is not applicable to any Person,
or the properties or assets of any Person, other than the Person so acquired,
(e) agreements existing as of the issue date of the Notes, (f) the Company
Credit Facility, (g) the Broan Limited Credit Facility, (h) any other agreement
pursuant to which any Restricted Subsidiary of the Company incurs Indebtedness
in accordance with Section 4.07 and (i) any
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agreement effecting a refinancing of Indebtedness issued pursuant to any
agreement or instrument referred to in clause (d), (e), (f), (g) or (h) above,
provided that the terms and conditions of any such encumbrances and restrictions
are not materially less favorable to the Holders than those under the agreement
or instrument evidencing the Indebtedness being refinanced.
The foregoing shall not restrict the ability of any Restricted Subsidiary
of the Company to grant any Lien to the extent otherwise permitted in this
Indenture.
SECTION 4.11 REPURCHASE UPON CHANGE OF CONTROL. Upon the occurrence of a
Change of Control, each Holder will have the right to require the repurchase of
all or any part of such Holder's Notes pursuant to the offer described below
(the "Change of Control Offer") at a purchase price equal to 101% of the
aggregate principal amount thereof plus accrued and unpaid interest and
Liquidated Damages, if any, to the date of purchase (the "Change of Control
Payment").
Immediately following any Change of Control, the Company is required to
mail a notice to the Trustee and to each Holder stating: (i) that the Change of
Control Offer is being made pursuant to this Section 4.11 of this Indenture and
that all Notes tendered will be accepted for payment; (ii) the amount of the
Change of Control Payment and the purchase date (the "Change of Control Payment
Date"), which may not be earlier than 30 days nor later than 60 days from the
date such notice is mailed; (iii) that any Note not tendered will continue to
accrue interest; (iv) that, unless the Company defaults in the payment thereof,
all Notes accepted for payment pursuant to the Change of Control Offer will
cease to accrue interest on and after the Change of Control Payment Date; (v)
that Holders electing to have any Notes purchased pursuant to a Change of
Control Offer will be required to surrender the Notes to be purchased to the
Paying Agent at the address specified in the notice prior to the close of
business on the third Business Day preceding the Change of Control Payment Date;
(vi) that Holders will be entitled to withdraw Notes they have tendered on the
terms and conditions set forth in such notice; and (vii) that Holders whose
Notes are being purchased only in part will be issued new Notes (or book-entry
notation made with respect thereto) equal in principal amount to the unpurchased
portion of the Notes tendered; provided that the portion of each Note purchased
and each such new Note issued (or book-entry notation, if applicable) shall be
in a principal amount of $1,000 or an integral multiple thereof.
On the Change of Control Payment Date, the Company will, to the extent
lawful: (i) accept for payment all Notes or portions thereof tendered pursuant
to the Change of Control Offer and not withdrawn; (ii) deposit with the Paying
Agent an amount sufficient to pay the Change of Control Payment in respect of
all Notes or portions thereof so tendered and not withdrawn; and (iii) deliver
or cause to be delivered to the Trustee all Notes so tendered and not withdrawn
together with an Officers' Certificate specifying the Notes or portions thereof
tendered to the Company. The Paying Agent will promptly mail to each Holder of
Notes so tendered and not withdrawn the Change of Control Payment in respect of
such Notes, and the Trustee will promptly authenticate and mail to such Holder a
new Note (or cause to be transferred by book entry) equal in principal amount to
any unpurchased portion of the Notes surrendered; provided that each such
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new Note shall be in a principal amount of $1,000 or an integral multiple
thereof. The Company will publicly announce the results of the Change of Control
Offer on or as soon as practicable after the Change of Control Payment Date.
A "Change of Control" will be deemed to have occurred at such time as any
of the following events occur:
(i) there is consummated any consolidation or merger of
the Company with or into another corporation, or all or
substantially all of the assets of the Company are sold,
leased or otherwise transferred or conveyed to another
Person (other than pursuant to a bona fide pledge of assets
to secure Indebtedness made in accordance with this
Indenture), and the holders of the Company's common stock
outstanding immediately prior to such consolidation, merger,
sale, lease or other transfer or conveyance or one or more
Exempt Persons do not hold, directly or indirectly, at least
a majority of the common stock of the continuing or
surviving corporation immediately after such consolidation
or merger or at least a majority of the Equity Interests of
such Person;
(ii) there is filed a report on Schedule 13D or 14D-1
(or any successor schedule, form or report) pursuant to the
Exchange Act disclosing that any person (defined, solely for
the purposes of the Change of Control provision, as the term
"person" is used in Section 13(d)(3) or Section 14(d)(2) of
the Exchange Act or any successor provision to either of the
foregoing) has become the beneficial owner (as the term
"beneficial owner" is defined under Rule 13d-3 or any
successor rule or regulation promulgated under the Exchange
Act) of 50% or more of the combined voting power of all the
Company's then outstanding securities entitled to vote
generally for the election of directors; provided, however,
that a person shall not be deemed to be the beneficial owner
of, or to own beneficially, (A) any securities tendered
pursuant to a tender or exchange offer made by or on behalf
of such person or any of such person's Affiliates or
associates until such tendered securities are accepted for
purchase or exchange thereunder, or (B) any securities if
such beneficial ownership (1) arises solely as a result of a
revocable proxy delivered in response to a proxy or consent
solicitation made pursuant to the applicable rules and
regulations under the Exchange Act, and (2) is not also then
reportable on Schedule 13D (or any successor schedule) under
the Exchange Act; or
(iii) during any consecutive two-year period,
individuals who at the beginning of such period constituted
the Board of Directors of the Company (together with any new
directors whose election by such Board
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of Directors or whose nomination for election by the
stockholders of the Company was approved by a vote of
66 2/3% of the directors then still in office who were
either directors at the beginning of such period or whose
election or nomination for election was previously so
approved) cease for any reason to constitute a majority
of the Board of Directors of the Company then in office.
Notwithstanding the foregoing, a Change of Control shall not be deemed to
have occurred under clause (ii) of the immediately preceding paragraph solely by
virtue of the Company, any Subsidiary of the Company, any employee stock
ownership plan or any other employee benefit plan of the Company or any such
Subsidiary, any other Person holding securities of the Company for or pursuant
to the terms of any such employee benefit plan, or any Exempt Person, filing or
becoming obligated to file a report on Schedule 13D or Schedule 14D-1 (or any
successor schedule, form or report) under the Exchange Act disclosing beneficial
ownership by it of securities of the Company, whether in excess of 50% of the
combined voting power of the Company's then outstanding securities entitled to
vote generally for the election of directors or otherwise.
SECTION 4.12 LIMITATION ON USE OF PROCEEDS FROM ASSET SALES. The Company
shall not, and shall not permit any of its Restricted Subsidiaries to, directly
or indirectly, consummate any Asset Sale unless (i) the Company or such
Restricted Subsidiary, as the case may be, receives consideration at the time of
any such Asset Sale having a value (including the Fair Market Value of any
non-cash consideration) at least equal to the Fair Market Value of the
securities or assets being sold or otherwise disposed of, and (ii) at least 75%
of the consideration from such Asset Sale is received in the form of cash, Cash
Equivalents (together with cash, "Cash Proceeds") or indebtedness for borrowed
money of the Company or such Restricted Subsidiary that is assumed by the
transferee of any such assets or any such indebtedness of any Restricted
Subsidiary of the Company whose stock is purchased by the transferee. Any Net
Cash Proceeds (a) in excess of the amount of cash applied by the Company or any
Restricted Subsidiary of the Company during the period beginning 12 months prior
to the date of the Asset Sale (but not prior to the issue date of the Notes) and
ending 12 months after the date of such Asset Sale to purchase any business that
is, or any properties and assets used primarily in, the same or a related
business as those owned and operated by the Company and its Subsidiaries as of
the issue date of the Notes or at the date of such Asset Sale and (b) not
applied within 12 months after the date of the Asset Sale to reduce Indebtedness
of the Company (other than Indebtedness which is subordinated by its terms to
the Notes) or any Restricted Subsidiary shall be deemed to be "Excess Proceeds."
When the aggregate amount of Excess Proceeds exceeds $15,000,000, the Company
shall make an offer (the "Excess Proceeds Offer") to apply the Excess Proceeds
to purchase the Notes. The Excess Proceeds Offer must be in cash in an amount
equal to 100% of the principal amount plus accrued and unpaid interest, if any,
thereon and Liquidated Damages, if any, to the date fixed for the closing of
such offer, substantially in accordance with the procedures for a Change of
Control Offer described in Section 4.11. To the extent that the aggregate amount
of Notes tendered pursuant to the Excess Proceeds Offer is less than the Excess
Proceeds, the Company may use the remaining Excess
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Proceeds for general corporate purposes and such amounts shall no longer be
deemed Excess Proceeds. If the aggregate principal amount of Notes surrendered
by Holders exceeds the amount of Excess Proceeds, the Trustee shall select the
Notes to be purchased on a pro rata basis, subject to the limitation on the
authorized denominations of the Notes.
SECTION 4.13 LIMITATION ON TRANSACTIONS WITH AFFILIATES. Except as
otherwise permitted by this Indenture, neither the Company nor any of its
Restricted Subsidiaries shall make any Investment, loan, advance, guaranty or
capital contribution to, or for the benefit of, or sell, lease or otherwise
transfer or dispose of any of its properties or assets to, or for the benefit
of, or purchase or lease any property or assets from, or enter into or amend any
contract, agreement or understanding with, or for the benefit of, any Affiliate
of the Company or any of its Restricted Subsidiaries, unless (i) such
transaction or series of transactions is in the best interests of the Company or
such Restricted Subsidiary based on all relevant facts and circumstances; (ii)
such transaction or series of transactions is fair to the Company or such
Restricted Subsidiary and on terms that are no less favorable to the Company or
such Restricted Subsidiary, as the case may be, than those that could have been
obtained in a comparable transaction on an arms' length basis from a Person that
is not an Affiliate of the Company or any of its Restricted Subsidiaries; and
(iii) (a) with respect to a transaction or series of related transactions
involving aggregate payments in excess of $2,500,000, the Board of Directors and
a majority of the Disinterested Directors shall approve such transaction or
series of transactions by a Board Resolution evidencing their determination that
such transaction or series of transactions complies with clauses (i) and (ii)
above, and (b) with respect to a transaction or series of transactions involving
aggregate payments equal to or greater than $10,000,000, the Company receives a
written opinion from a nationally recognized investment bank or valuation firm
or, with respect to a transaction requiring the valuation of real property, a
nationally recognized real estate appraisal firm, that such transaction or
series of transactions is fair to the Company from a financial point of view.
The foregoing limitation shall not apply to: (i) any payment of money or
issuance of securities by the Company or any Restricted Subsidiary of the
Company pursuant to employment agreements or arrangements and employee benefit
plans, including reimbursement or advancement of out-of-pocket expenses and
directors' and officers' liability insurance; (ii) reasonable and customary
payments and other benefits (including indemnification) provided to directors
for service on the Board of Directors of the Company or any of its Restricted
Subsidiaries and reimbursement of expenses related thereto; or (iii)
transactions between the Company and any Restricted Subsidiary of the Company,
or between one Restricted Subsidiary of the Company and another Restricted
Subsidiary of the Company, provided that not more than 20% of such Restricted
Subsidiary is owned by any Affiliate of the Company or any of its Restricted
Subsidiaries (other than the Company or a Wholly-Owned Subsidiary of the
Company).
SECTION 4.14 LIMITATION ON GUARANTIES BY SUBSIDIARIES. The Company shall
not permit any Restricted Subsidiary of the Company, directly or indirectly, to
assume, guarantee or in any other manner become liable with respect to any
Indebtedness of the Company or any Subsidiary Guarantor (other than the Notes),
unless (a) such liability is in respect of the Company Credit
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Facility or (b) such Restricted Subsidiary is a Subsidiary Guarantor or
simultaneously executes and delivers (i) to the Company and the Trustee a
supplemental indenture to this Indenture providing for a Subsidiary Guaranty of
the Notes by such Restricted Subsidiary and any other Subsidiary Guarantors by
adding an Article 11 to this Indenture, in the form of Exhibit E hereto and (ii)
to the Trustee a Subsidiary Guaranty substantially in the form of Exhibit F
hereto.
No Lien on the properties or assets of any Restricted Subsidiary of the
Company permitted by Section 4.09 shall constitute a guaranty of the payment of
any Indebtedness of the Company for purposes of this Section 4.14.
The provisions of this Section 4.14 and any supplemental indenture referred
to in this Section 4.14 shall cease to have further force and effect (and if
there then exists any Subsidiary Guarantor, such Subsidiary Guarantor will be
deemed to be released from all obligations under its Subsidiary Guaranty) at
such time as Section 4.15 in the indenture governing the Company's 9 7/8% Notes
shall cease to have further force and effect (whether by reason of amendment,
redemption or repayment of such Indebtedness or otherwise), provided, however,
that if the instrument or other agreement governing any Indebtedness incurred to
refinance the 9 7/8% Notes includes such a covenant similar to Section 4.15 of
the indenture governing the 9 7/8% Notes, the provisions of this Section 4.14
and any supplemental indenture referred to in this Section 4.14 shall continue
in full force and effect for so long as such similar covenant remains in force
and effect.
SECTION 4.15 PAYMENT OF TAXES AND OTHER CLAIMS. The Company shall pay or
discharge or cause to be paid or discharged, before any penalty accrues thereon,
(i) all material taxes, assessments and governmental charges levied or imposed
upon the Company or any of its Subsidiaries upon the income, profits or property
of the Company or any of its Subsidiaries and (ii) all material lawful claims
for labor, materials and supplies which, if unpaid, would by law become a Lien
upon the property of the Company or any of its Subsidiaries; provided that none
of the Company or any of its Subsidiaries shall be required to pay or discharge
or cause to be paid or discharged any such tax, assessment, charge or claims the
amount, applicability or validity of which is being contested in good faith by
appropriate proceedings and for which adequate provision has been made or where
the failure to effect such payment or discharge is not adverse in any material
respect to the Holders.
SECTION 4.16 CORPORATE EXISTENCE. Subject to Article 5 hereof, the Company
will do or cause to be done all things necessary to preserve and keep in full
force and effect its corporate existence and the corporate, partnership or other
existence of any of its Subsidiaries in accordance with the respective
organizational documents of such Subsidiary and the rights (charter and
statutory), licenses and franchises of the Company and its Subsidiaries;
PROVIDED, HOWEVER, that the Company shall not be required to preserve any such
right, license or franchise, or the corporate, partnership or other existence of
any such Subsidiary, if the Board of Directors of the Company shall determine
that the preservation thereof is no longer desirable in the conduct of the
business of the Company and its Subsidiaries taken as a whole and that the loss
thereof is not
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adverse in any material respect to the Holders.
SECTION 4.17 MAINTENANCE OF PROPERTIES AND INSURANCE. The Company shall
cause all material properties owned by or leased to it or any of its
Subsidiaries and used or useful in the conduct of its business or the business
of such Subsidiary to be maintained and kept in normal condition, repair and
working order and supplied with all necessary equipment and shall cause to be
made all necessary repairs, renewals, replacements, betterments and improvements
thereof, all as in the judgment of the Company may be necessary so that the
business carried on in connection therewith may be properly and advantageously
conducted at all times; provided, however, that nothing in this Section 4.17
shall prevent the Company or any of its Subsidiaries from discontinuing the
maintenance of any such properties, if such discontinuance is desirable in the
conduct of its business or the business of such Subsidiary
The Company shall provide or cause to be provided, for itself and any of
its Subsidiaries, insurance (including appropriate self-insurance) against loss
or damage of the kinds customarily insured against by corporations similarly
situated and owning like properties, including, but not limited to, public
liability insurance, with reputable insurers in such amounts with such
deductibles and by such methods as shall be customary for corporations similarly
situated in the industry.
SECTION 4.18 STAY, EXTENSION AND USURY LAWS. The Company covenants (to the
extent it may lawfully do so) that it will not at any time insist upon, plead,
or in any manner whatsoever claim or take the benefit or advantage of, any stay,
extension or usury law wherever enacted, now or at any time hereafter in force,
which may affect the covenants or the performance of this Indenture; and the
Company (to the extent it may lawfully do so) hereby expressly waives all
benefit or advantage of any such law, and covenants that it will not resort to
any such law that would hinder, delay or impede the execution of any power
herein granted to the Trustee, but will suffer and permit the execution of every
such power as though no such law has been enacted.
SECTION 4.19 INVESTMENT COMPANY ACT. The Company shall not become an
investment company subject to registration under the Investment Company Act of
1940, as amended.
SECTION 4.20 PAYMENTS FOR CONSENTS. The Company shall not, and shall not
permit any of its Subsidiaries to, directly or indirectly, pay or cause to be
paid any consideration whether by way of interest, fee or otherwise, to any
Holder of any Notes for or as an inducement to any consent, waiver or amendment
of any of the terms or provisions of this Indenture or the Notes unless such
consideration is offered to be paid or agreed to be paid to all Holders of the
Notes which so consent, waive or agree to amend in the time frame set forth in
solicitation documents relating to such consent, waiver or agreement.
SECTION 4.21 COVENANT TO COMPLY WITH SECURITIES LAWS UPON PURCHASE OF
NOTES. In connection with any offer to purchase or purchase of Notes under
Section 4.11 or 4.12 hereof, the Company shall (i) comply with Rule 14e-1 under
the Exchange Act, and (ii) otherwise comply
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with all Federal and state securities laws so as to permit the rights and
obligations under Sections 4.11 and 4.12 hereof to be exercised in the time and
in the manner specified in Sections 4.11 and 4.12 hereof.
ARTICLE 5
SUCCESSOR CORPORATION
---------------------
SECTION 5.01 When the Company May Merge or Transfer Assets, Etc.
---------------------------------------------------
(a) The Company shall not consolidate with, merge with or into, or
transfer all or substantially all of its assets (as an entirety or
substantially as an entirety in one transaction or a series of related
transactions) to, any Person or permit any Person to merge with or into it,
or permit any of its Subsidiaries to enter into any such transaction or
transactions if such transaction or transactions in the aggregate would
result in a transfer of all or substantially all of the assets of the
Company and its Subsidiaries on a consolidated basis, unless:
(1) the Company shall be the continuing Person, or the Person, if
other than the Company, formed by such consolidation or into which the
Company is merged or to which the properties and assets of the Company or
of the Company and its Subsidiaries on a consolidated basis, substantially
as an entirety, are transferred shall be a corporation organized and
existing under the laws of the United States or any state thereof or the
District of Columbia and shall expressly assume, by an indenture
supplemental to this Indenture, executed and delivered to the Trustee, in
form satisfactory to the Trustee, all the obligations of the Company under
the Notes and this Indenture, and this Indenture remains in full force and
effect;
(2) immediately before and immediately after giving effect to such
transaction, no Event of Default and no Default shall have occurred and be
continuing;
(3) the Person which is formed by or survives such consolidation or
merger or to which such assets are transferred (the "surviving entity"),
after giving pro forma effect to such transaction, could incur $1.00 of
additional Indebtedness under the first paragraph of Section 4.07 hereof;
(4) immediately after giving effect to such transaction on a pro forma
basis the Consolidated Net Worth of the surviving entity shall be equal to
or greater than the Consolidated Net Worth of the Company immediately
before such transaction; and
(5) each Subsidiary Guarantor, if any, unless it is the other party to
the applicable transaction described above or its Subsidiary Guaranty,
after giving effect to such transaction, is to be released in accordance
with the terms hereof and of such Subsidiary
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Guaranty, shall have confirmed by supplemental indenture that its
Subsidiary Guaranty shall apply to the obligations of the Company or the
surviving entity under this Indenture.
In connection with any such consolidation, merger or transfer, the Company
shall deliver, or cause to be delivered, to the Trustee, in form and substance
reasonably satisfactory to the Trustee, an Officers' Certificate and an Opinion
of Counsel, each stating that such consolidation, merger or transfer and the
supplemental indenture in respect thereto comply with this Section 5.01(a) and
that all conditions precedent provided for relating to such transactions have
been complied with.
(b) A Subsidiary Guarantor shall not, and the Company shall not permit
a Subsidiary Guarantor to, consolidate with, or merge with or into, any
Person unless its Subsidiary Guaranty, after giving effect to such merger
or consolidation, is to be released in accordance with the terms hereof and
of such Subsidiary Guaranty or:
(1) such Subsidiary Guarantor or the Company shall be the
continuing person or the resulting or surviving person in such
transaction ("the surviving entity") or the surviving entity shall be
a corporation organized and existing under the laws of the United
States or any state thereof or the District of Columbia and shall
expressly assume, by a supplemental indenture executed and delivered
to the Trustee, in form and substance reasonably satisfactory to the
Trustee, all of the obligations of such Subsidiary Guarantor under
this Indenture, as modified by such supplemental indenture, and its
Subsidiary Guaranty; and
(2) immediately before and immediately after giving effect to
such merger or consolidation, no Event of Default and no Default shall
have occurred and be continuing.
In connection with any such consolidation or merger, the Company
shall deliver, or caused to be delivered, to the Trustee, in form and
substance reasonably satisfactory to the Trustee, an Officers'
Certificate and an Opinion of Counsel, each stating that such
consolidation or merger, and if a supplemental indenture is required
in connection with such transaction, such supplemental indenture
comply with this Section 5.01(b) and that all conditions precedent
provided for in this Indenture relating to such transaction have been
complied with.
SECTION 5.02 SUCCESSOR CORPORATION SUBSTITUTED. Upon any consolidation or
merger, or any transfer of all or substantially all of the assets of the Company
and its Subsidiaries on a consolidated basis, in accordance with Section 5.01
hereof, the successor Person formed by such consolidation or into which the
Company or any Subsidiary Guarantor, as the case may be, is merged or the
successor Person to which such transfer is made shall succeed to, and be
substituted for, and may exercise every right and power of, the Company or such
Subsidiary Guarantor, as the case may be, under this Indenture and, in the case
of such Subsidiary Guarantor, under such
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Subsidiary Guaranty, with the same effect as if such successor Person had been
named as the Company in this Indenture or as such Subsidiary Guarantor in this
Indenture and such Subsidiary Guaranty, as the case may be, and when a successor
Person assumes all the obligations of its predecessor under this Indenture, the
Notes or a Subsidiary Guaranty, the predecessor shall be released from those
obligations; provided, however, that in the case of a transfer by lease, the
predecessor shall not be released from the payment of principal of, premium, if
any, interest and Liquidated Damages, if any, on the Notes.
ARTICLE 6
DEFAULTS AND REMEDIES
---------------------
SECTION 6.01 EVENTS OF DEFAULT. An "Event of Default" occurs if one of the
following shall have occurred and be continuing:
(1) the Company defaults in the payment, when due and payable, of (i)
interest on or Liquidated Damages, if any, with respect to any Note and the
default continues for a period of 30 days, or (ii) principal of or premium,
if any, on any Notes when the same becomes due and payable at maturity, by
acceleration, on the Redemption Date, on the Change of Control Payment
Date, on any payment date respecting an Excess Proceeds Offer or otherwise;
(2) the Company fails to comply with any of its covenants or
agreements under Article 5 hereof.
(3) the Company fails to comply with any of its covenants or
agreements in the Notes or this Indenture (other than those referred to in
clause (1) or (2) above), or any Subsidiary Guarantor fails to comply with
any of its covenants or agreements in this Indenture or its Subsidiary
Guaranty, and in either case such failure continues for the period and
after receipt by the Company of the notice specified below;
(4) default under any mortgage, indenture or instrument under which
there may be issued or by which there may be secured or evidenced any
indebtedness for money borrowed by the Company or any of its Restricted
Subsidiaries (or the payment of which is guaranteed by the Company or any
of its Restricted Subsidiaries), whether such indebtedness or guaranty is
now existing or hereafter created, if such default shall constitute a
failure to pay any portion of the principal of such indebtedness when due
and payable or if as a result of such default the maturity of such
indebtedness has been accelerated prior to its stated maturity and, in
either case, the principal amount of such indebtedness, together with the
principal amount of any other such indebtedness for money borrowed which
has not been paid when due and payable or the maturity of which has been
accelerated as a result of such default, aggregates $15,000,000 or more;
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(5) the Company or any of its Significant Subsidiaries that is a
Restricted Subsidiary (or any group of Restricted Subsidiaries that, taken
together, would constitute a Significant Subsidiary) pursuant to or within
the meaning of any Bankruptcy Law:
(a) commences a voluntary case or proceeding;
(b) consents to the entry of an order for relief against it in an
involuntary case or proceeding;
(c) consents to the appointment of a Custodian of it or for all or
substantially all of its property;
(d) makes a general assignment for the benefit of its creditors; or
(e) admits in writing its inability to pay its debts generally as they
become due;
(6) a court of competent jurisdiction enters an order or decree under
any Bankruptcy Law that:
(a) is for relief against the Company or any of its Significant
Subsidiaries that is a Restricted Subsidiary (or any group of Restricted
Subsidiaries that, taken together, would constitute a Significant
Subsidiary) in an involuntary case or proceeding;
(b) appoints a Custodian of the Company or any of its Significant
Subsidiaries that is a Restricted Subsidiary (or any group of Restricted
Subsidiaries that, taken together, would constitute a Significant
Subsidiary) for all or substantially all of its properties;
(c) orders the liquidation of the Company or any of its Significant
Subsidiaries that is a Restricted Subsidiary (or any group of Restricted
Subsidiaries that, taken together, would constitute a Significant
Subsidiary);
(d) and in each case the order or decree remains unstayed and in
effect for 60 days;
(7) final judgments for the payment of money which in the aggregate
exceed $15,000,000 shall be rendered against the Company or any of its
Restricted Subsidiaries by a court and shall remain unstayed or
undischarged for a period of 60 days; or
(8) any Subsidiary Guaranty ceases to be in full force and effect or
is declared null and void, or any Subsidiary Guarantor denies that it has
any further liability under any Subsidiary Guaranty or gives notice to such
effect (in each case other than by reason of the termination of this
Indenture or the release of such Subsidiary Guaranty in accordance with the
terms of this Indenture and such Subsidiary Guaranty) and such condition
shall
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have continued for the period and after receipt by the Company of the
notice specified below.
"Bankruptcy Law" means Title 11, United States Code, or any similar Federal
or state law for the relief of debtors. "Custodian" means any receiver, trustee,
assignee, liquidator, sequestrator, custodian or similar official under any
Bankruptcy Law.
A Default under clause (3) or (8) above is not an Event of Default until
the Trustee notifies the Company, or the Holders of at least 25% in aggregate
principal amount of the Notes at the time outstanding notify the Company and the
Trustee, of the Default and the Company does not cure such Default within 30
days after receipt of such notice. Any such notice must specify the Default,
demand that it be remedied and state that such notice is a "Notice of Default."
In the case of any Event of Default (other than as a result of the failure
to comply with Section 4.11) occurring by reason of any willful action (or
inaction) taken (or not taken) by or on behalf of the Company with the intention
of avoiding payment of the premium which the Company would have to pay if the
Company then had elected to redeem the Notes, an equivalent premium shall also
become and be immediately due and payable to the extent permitted by law,
anything in this Indenture or in the Notes contained to the contrary
notwithstanding.
In the case of an Event of Default as a result of a failure to comply with
Section 4.11 hereof occurring by reason of any willful action (or inaction)
taken (or not taken) by or on behalf of the Company with the intention of
avoiding payment of the premium which the Company would have to pay pursuant to
Section 4.11, such premium shall also become and be immediately due and payable
at such time as the principal and interest on the Notes become due and payable
pursuant to Section 6.02 hereof to the extent permitted by law, anything in this
Indenture or in the Notes contained to the contrary notwithstanding.
SECTION 6.02 ACCELERATION. If any Event of Default (other than an Event of
Default specified in clause (5) or (6) of Section 6.01 hereof) occurs and is
continuing, the Trustee may, by Notice to the Company, or the Holders of at
least 25% in aggregate principal amount of the Notes then outstanding, by notice
to the Company and the Trustee, and the Trustee shall, upon the request of such
Holders, declare the unpaid principal, premium, if any, and accrued interest on
and Liquidated Damages, if any, with respect to, the Notes to be due and payable
immediately. If any Event or Default under clause (5) or (6) of Section 6.01
hereof occurs, all unpaid principal, premium, if any, interest on and Liquidated
Damages, if any, with respect to the Notes then outstanding shall IPSO FACTO
become and be immediately due and payable without declaration or other act on
the part of the Trustee or any Holder. The Holders of at least a majority in
aggregate principal amount of the Notes then outstanding by written notice to
the Trustee and to the Company may rescind an acceleration and its consequences
(except an acceleration due to a default in payment of principal of, premium, if
any, and accrued interest on and Liquidated Damages, if any, with respect to,
the Notes) if all existing Events of Default have been cured or waived except
non-payment of principal of, premium, if any, and accrued interest on and
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Liquidated Damages, if any, that has become due solely because of the
acceleration.
SECTION 6.03 OTHER REMEDIES. If any Event of Default occurs and is
continuing, the Trustee may pursue any available remedy by proceeding at law or
in equity to collect the payment of principal of, premium, if any, or interest
on the Notes or to enforce the performance of any provision of the Notes or this
Indenture.
The Trustee may maintain a proceeding even if the Trustee does not possess
any of the Notes or does not produce any of the Notes in the proceeding. A delay
or omission by the Trustee or any Holder in exercising any right or remedy
accruing upon an Event of Default shall not impair the right or remedy or
constitute a waiver of, or acquiescence in, the Event of Default. No remedy is
exclusive of any other remedy. All available remedies are cumulative.
SECTION 6.04 WAIVER OF PAST DEFAULTS. The Holders of not less than a
majority in aggregate principal amount of the Notes at the time outstanding, by
notice to the Trustee (and without notice to any other Holder), may waive an
existing Default or Event of Default and its consequences except (i) an Event of
Default described in Section 6.01(1) hereof, or (ii) a Default in respect of a
provision that under Section 9.02 hereof cannot be amended without the consent
of each Holder affected. When a Default or Event of Default is waived, it is
deemed cured and shall cease to exist, but no such wavier shall extend to any
subsequent or other Default or Event of Default or impair any consequent right.
SECTION 6.05 CONTROL BY MAJORITY. The Holders of not less than a majority
in aggregate principal amount of the Notes at the time outstanding may direct,
by an instrument or concurrent instruments in writing delivered to the Trustee,
the time, method and place of conducting any proceeding for any remedy available
to the Trustee or of exercising any trust or power conferred on the Trustee.
However, the Trustee may refuse to follow any direction that conflicts with law
or this Indenture or that the Trustee determines in good faith is unduly
prejudicial to the rights of other Holders or would involve the Trustee in
personal liability. Subject to the provisions of Section 315 of the TIA, the
Trustee may take any other action deemed proper by the Trustee which is not
inconsistent with such direction.
SECTION 6.06 LIMITATION ON SUITS. Except as provided in Section 6.07
hereof, a Holder may not pursue any remedy with respect to this Indenture or the
Notes unless:
(1) the Holder gives to the Trustee written notice stating that an
Event of Default is continuing;
(2) the Holders of at least 25% in aggregate principal amount of the
Notes at the time outstanding make a written request to the Trustee to
pursue the remedy;
(3) such Holder or Holders offer to the Trustee reasonable security or
indemnity against any loss, liability or expense satisfactory to the
Trustee;
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(4) the Trustee does not comply with the request within 30 days after
receipt of the notice, the request and the offer of security or indemnity;
and
(5) the Holders of a majority in aggregate principal amount of the
Notes at the time outstanding do not give the Trustee a direction
inconsistent with the request during such 30-day period.
A Holder may not use this Indenture to prejudice the rights of another
Holder or to obtain a preference or priority over any other Holder.
SECTION 6.07 RIGHTS OF HOLDERS TO RECEIVE PAYMENT. Notwithstanding any
other provision of this Indenture, the right of any Holder to receive payment of
the principal amount, premium, if any, or interest, or Liquidated Damages, if
any, in respect of the Notes held by such Holder, on or after the respective due
dates expressed in the Notes, any Redemption Date, any Change in Control Payment
Date or any payment date respecting an Excess Proceeds Offer, or to bring suit
for the enforcement of any such payment on or after such respective dates shall
not be impaired or affected adversely without the consent of each such Holder.
SECTION 6.08 COLLECTION SUIT BY TRUSTEE. If an Event of Default described
in Section 6.01(1) hereof occurs and is continuing, the Trustee may recover
judgment in its own name and as trustee of an express trust against the Company
or any other obligor on the Notes for the whole amount owing with respect to the
Notes and the amounts provided for in Section 7.07 hereof.
SECTION 6.09 TRUSTEE MAY FILE PROOFS OF CLAIM. In case of the pendency of
any receivership, insolvency, liquidation, bankruptcy, reorganization,
arrangement, adjustment, composition or other judicial proceeding relative to
the Company or the property of the Company or to any other obligor on the Notes
or the property of such obligor, the Trustee shall be entitled and empowered, by
intervention in such proceeding or otherwise:
(1) to file and prove a claim for the whole amount of the principal
amount, premium, if any, and interest on the Notes and to file such other
papers or documents as may be necessary or advisable in order to have the
claims of the Trustee (including any claim for the reasonable compensation,
expenses, disbursements and advances of the Trustee, its agents and
counsel) and of the Holders allowed in such judicial proceeding; and
(2) to collect and receive any moneys or other property payable or
deliverable on any such claims and to distribute the same;
and any Custodian in any such judicial proceeding is hereby authorized by each
Holder to make such payments to the Trustee and, in the event that the Trustee
shall consent to the making of such payments directly to the Holders, to pay the
Trustee any amount due it for the reasonable
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compensation, expenses, disbursements and advances of the Trustee, its agents
and counsel, and any other amounts due the Trustee under Section 7.07 hereof.
Nothing herein contained shall be deemed to authorize the Trustee to
authorize or consent to or accept or adopt on behalf of any Holder any plan of
reorganization, arrangement, adjustment or composition affecting the Notes or
the rights of any Holder thereof, or to authorize the Trustee to vote in respect
of the claim of any Holder in any such proceeding.
SECTION 6.10 PRIORITIES. If the Trustee collects any money pursuant to this
Article 6, it shall pay out the money in the following order:
FIRST: to the Trustee for amounts due under Section 7.07 hereof;
SECOND: to Holders for amounts due and unpaid on the Notes for
the principal amount, premium, if any, interest, if any, and Liquidated Damages,
if any, as the case may be, ratably, without preference or priority of any kind,
according to such amounts due and payable on the Notes; and
THIRD: the balance, if any, to the Company or to the Person or
Persons otherwise entitled thereto.
The Trustee may fix a record date and payment date for any payment to
Holders pursuant to this Section 6.10.
SECTION 6.11 UNDERTAKING FOR COSTS. In any suit for the enforcement of any
right or remedy under this Indenture or in any suit against the Trustee for any
action taken or omitted by it as Trustee, a court in its discretion may require
the filing by any party litigant (other than the Trustee) in the suit of an
undertaking to pay the costs of the suit, and the court in its discretion may
assess reasonable costs, including reasonable attorneys' fees and expenses,
against any party litigant in the suit, having due regard to the merit and good
faith of the claims or defense made by the party litigant. This Section 6.11
does not apply to a suit by the Trustee, a suit by a Holder pursuant to Section
6.07 hereof or a suit by Holder of more than 10% in aggregate principal amount
of the Notes at the time outstanding.
SECTION 6.12 RESTORATION OF RIGHTS AND REMEDIES. If the Trustee or any
Holder has instituted any proceeding to enforce any right or remedy under this
Indenture, any Note or any Subsidiary Guaranty and such proceeding has been
discontinued or abandoned for any reason, or has been determined adversely to
the Trustee or to such Holder, then and in every such case the Company, each
Subsidiary Guarantor, if any, the Trustee and the Holders shall, subject to any
determination in such proceeding, be restored severally and respectively to
their former positions hereunder, and thereafter all rights and remedies of the
Trustee and the Holders shall continue as though no such proceeding had been
instituted.
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ARTICLE 7
TRUSTEE
-------
SECTION 7.01 Duties of Trustee.
-----------------
(1) If an Event of Default has occurred and is continuing (and is not
cured), the Trustee shall exercise the rights and powers vested in it by
this Indenture and use the same degree of care and skill in its exercise as
a prudent person would exercise or use under the circumstances in the
conduct of his own affairs.
(2) Except during the continuance of an Event of Default:
(a) the Trustee need perform only those duties that are specifically
set forth in this Indenture and not others and no implied covenants or
obligations shall be read into this Indenture against the Trustee and the
duties of the Trustee shall be determined solely by the express provisions
of this Indenture; and
(b) in the absence of bad faith on its part, the Trustee may
conclusively rely, as to the truth of the statements and the correctness of
the opinions expressed therein, upon certificates or opinions furnished to
the Trustee and conforming to the requirements of this Indenture. However,
in the case of any such certificate or opinion which by any provision
hereof is specifically required to be furnished to the Trustee, the Trustee
shall examine the certificates and opinions to determine whether or not
they conform to the requirement of this Indenture.
The Trustee shall not be liable for any interest on any money received by
it.
(3) The Trustee may not be relieved from liability for its own
negligent action, its own negligent failure to act or its willful
misconduct, except that:
(a) this paragraph (3) does not limit the effect of paragraph (2) of
this Section 7.01;
(b) the Trustee shall not be liable for any error of judgment made in
good faith by any Trust Officer unless it is proved that the Trustee was
negligent in ascertaining the pertinent facts; and
(c) the Trustee shall not be liable with respect to any action it
takes or omits to take in good faith in accordance with a direction
received by it pursuant to Section 6.04 or 6.05 hereof.
(4) Whether or not expressly so provided, every provision of this
Indenture that
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in any way relates to the Trustee is subject to paragraphs (1), (2), (3),
(5) and (7) of this Section 7.01 and Section 7.02.
(5) The Trustee may refuse to perform any duty or exercise any right
or power or extend or risk its own funds or otherwise incur any financial
liability unless it receives reasonable security or indemnity satisfactory
to it against any loss, liability or expense.
(6) Money held by the Trustee in trust hereunder need not be
segregated from other funds except to the extent required by law. The
Trustee shall be under no liability for interest on any money held by it
hereunder.
(7) The Trustee shall not be deemed to have knowledge of the existence
of any fact or matter unless such fact or matter is known to one of its
Trust Officers.
SECTION 7.02 Rights of Trustee.
------------------
(1) The Trustee may rely on any document believed by it to be genuine
and to have been signed or presented by the proper Person. The Trustee need
not investigate any fact or matter stated in any such document but the
Trustee may, in its discretion, make such further inquiry or investigation
into such facts or matters stated in any such document as it sees fit.
(2) Before the Trustee acts or refrains from acting, it may require an
Officers' Certificate and an Opinion of Counsel. The Trustee shall not be
liable for any action it takes or omits to take in good faith in reliance
on such Officers' Certificate and Opinion of Counsel.
(3) The Trustee may act through agents and shall not be responsible
for the misconduct or negligence of any agent appointed with due care.
(4) The Trustee shall not be liable for any action it takes or omits
to take in good faith which it believes to be authorized or within its
rights or powers.
(5) The Trustee may consult with counsel of its selection and the
advice of such counsel or any Opinion of Counsel shall be full and complete
authorization and protection in respect of any action taken, suffered or
omitted by it hereunder in good faith and in reliance thereon.
(6) The Trustee shall be under no obligation to exercise any of the
rights or powers vested in it by this Indenture at the request or direction
of any of the Holders pursuant to this Indenture, unless such Holders shall
have offered to the Trustee reasonable security and indemnity satisfactory
to it against the costs, expenses and liabilities which might be incurred
by it in compliance with such request or direction.
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SECTION 7.03 INDIVIDUAL RIGHTS OF TRUSTEE. The Trustee in its individual or
any other capacity may become the owner or pledgee of Notes and may otherwise
deal with the Company or its Affiliates with the same rights it would have if it
were not Trustee. Any Paying Agent, Registrar or co-registrar may do the same
with like rights. However, the Trustee must comply with Section 7.10 and 7.11
hereof.
SECTION 7.04 TRUSTEE'S DISCLAIMER. The Trustee makes no representation as
to the validity or adequacy of this Indenture or the Notes, it shall not be
accountable for the Company's use of the proceeds from the Notes, and it shall
not be responsible for any statement in the registration statement for the Notes
under the Securities Act of 1933, as amended (the "Securities Act") (other than
statements contained in the Form T-1 filed with the SEC under the TIA) or in
this Indenture or the Notes (other than its certificate of authentication), or
the determination as to which beneficial owners are entitled to receive any
notices hereunder.
SECTION 7.05 NOTICE OF DEFAULTS. If a Default occurs and is continuing and
if it is known to the Trustee, the Trustee shall mail to each Holder as their
names and addresses appear on the Note Register, notice of the Default within 90
days after it becomes known to the Trustee unless such Default shall have been
cured or waived. Except in the case of a Default described in Section 6.01(1)
hereof, the Trustee may withhold such notice if and so long as a committee of
Trust Officers in good faith determines that the withholding of such notice is
in the interests of Holders.
SECTION 7.06 REPORTS BY TRUSTEE TO HOLDERS. Within 60 days after each May
15th beginning with May 15, 1997, the Trustee shall mail to each Holder a brief
report dated as of such May 15th in accordance with and to the extent required
under Section 313 of the TIA.
A copy of each report at the time of its mailing to Holders shall be filed
with the Company, the SEC and each stock exchange on which the Notes are listed.
The Company agrees to promptly notify the Trustee whenever the Notes become
listed on any stock exchange and of any delisting thereof.
SECTION 7.07 Compensation and Indemnity. The Company agrees:
--------------------------
(1) To pay to the Trustee from time to time such compensation as shall
be agreed in writing between the Company and the Trustee for all services
rendered by it hereunder (which compensation shall not be limited by any
provision of law in regard to the compensation of a trustee of an express
trust);
(2) To reimburse the Trustee upon its request for all reasonable
expenses, disbursements and advances incurred or made by the Trustee in
accordance with any provision of this Indenture (including the reasonable
compensation and the expenses, disbursements and advances of its agents and
counsel and other persons not regularly in
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its employ), including all reasonable expenses, disbursements and advances
incurred or made by the Trustee in connection with any membership on any
creditor's committee, except any such expense, disbursement or advance as
may be attributable to its negligence or bad faith; and
(3) To indemnify the Trustee, its officers, directors and
shareholders, for, and to hold it harmless against, any and all loss,
liability or expense, incurred without negligence or bad faith on its part,
arising out of or in connection with the acceptance or administration of
this trust, including the costs and expenses of defending itself against
any claim or liability in connection with the exercise or performance of
any of its powers or duties hereunder.
The Trustee shall have a claim and lien prior to the Notes as to all
property and funds held by it hereunder for any amount owing it or any
predecessor Trustee pursuant to this Section 7.07, except with respect to funds
held in trust for the payment of principal of, premium, if any, or interest on
particular Notes.
The Company's payment obligations pursuant to this Section 7.07 shall
survive the discharge of this Indenture. When the Trustee renders services or
incurs expenses after the occurrence of a Default specified in Section 6.01(5)
or (6) hereof, the compensation for services and expenses are intended to
constitute expenses of administration under any Bankruptcy Law.
SECTION 7.08 REPLACEMENT OF TRUSTEE. The Trustee may resign by so notifying
the Company in writing at least 30 days prior to the date of the proposed
resignation; PROVIDED, HOWEVER, no such resignation shall be effective until a
successor Trustee has accepted its appointment pursuant to this Section 7.08.
The Holders of a majority in aggregate principal amount of the Notes at the time
outstanding may remove the Trustee by so notifying the Trustee in writing and
may appoint a successor Trustee subject to the consent of the Company. The
Trustee shall resign if:
(1) the Trustee fails to comply with Section 7.10 hereof;
(2) the Trustee is adjudged bankrupt or insolvent;
(3) a receiver or public officer takes charge of the Trustee or
its property; or
(4) the Trustee otherwise becomes incapable of acting.
If the Trustee resigns or is removed or if a vacancy exists in the office
of Trustee for any reason, the Company shall promptly appoint, by a Board
Resolution, a successor Trustee.
A successor Trustee shall deliver a written acceptance of its appointment
to the retiring Trustee and to the Company. Thereupon the resignation or removal
of the retiring Trustee shall
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become effective, and the successor Trustee shall have all the rights, powers
and duties of the Trustee under this Indenture. The successor Trustee shall mail
a notice of its succession to Holders. Subject to payment of all amounts owing
to the Trustee under Section 7.07 hereof and subject further to its lien under
Section 7.07, the retiring Trustee shall promptly transfer all property held by
it as Trustee to successor Trustee.
If a successor Trustee does not take office within 30 days after the
retiring Trustee resigns or is removed, the retiring Trustee, the Company or the
Holders of a majority in aggregate principal amount of the Notes at the time
outstanding may petition any court of competent jurisdiction for the appointment
of a successor Trustee.
If the Trustee fails to comply with Section 7.10 hereof, any Holder may
petition any court of competent jurisdiction for the removal of the Trustee and
the appointment of a successor Trustee.
SECTION 7.09 SUCCESSOR TRUSTEE BY MERGER. If the Trustee consolidates with,
merges or converts into, or transfers all or substantially all its corporate
trust business or assets (including this Trusteeship) to, another corporation,
the resulting, surviving or transferee corporation without any further act shall
be the successor Trustee.
SECTION 7.10 ELIGIBILITY; DISQUALIFICATION. The Trustee shall at all times
satisfy the requirements of TIA Section 310(a)(1) and (5). The Trustee shall
have a combined capital and surplus of at least $50,000,000 as set forth in its
most recently published annual report of condition. The Trustee shall comply
with TIA Section 310(b). In determining whether the Trustee has conflicting
interests as defined in TIA Section 310(b)(1), the provisions contained in the
proviso to TIA Section 310(b)(1) shall be deemed incorporated herein.
SECTION 7.11 PREFERENTIAL COLLECTION OF CLAIMS AGAINST THE COMPANY. If and
when the Trustee shall be or become a creditor of the Company (or any other
obligor under the Notes), the Trustee shall be subject to the provisions of the
TIA regarding the collection of claims against the Company (or any such other
obligor).
ARTICLE 8
DISCHARGE OF INDENTURE
----------------------
SECTION 8.01 DISCHARGE OF LIABILITY ON NOTES. When (i) the Company delivers
to the Trustee all outstanding Notes (other than Notes replaced pursuant to
Section 2.07 hereof or Notes which are purchased pursuant to Section 4.11 or
4.12 hereof or Notes for whose payment money has theretofore been held in trust
and thereafter repaid to the Company, as provided in Section 8.02 hereof) for
cancellation or (ii) the Company irrevocably deposits with the Trustee money
and/or direct non-callable obligations of, or non-callable obligations
guaranteed by, the United States of America for the payment of which guarantee
or obligation the full faith and credit of the
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United States is pledged ("U.S. Government Obligations"), maturing as to
principal and interest in such amounts and at such times as are sufficient,
without consideration of any reinvestment of such interest, to pay principal of,
premium, if any, interest on, or Liquidated Damages with respect to the
outstanding Notes (other than Notes replaced pursuant to Section 2.07 hereof) to
maturity or redemption, as the case may be, in accordance with the terms of this
Indenture and the Notes issued hereunder, and if in either case the Company pays
all other sums payable here under by the Company, then this Indenture shall,
subject to Sections 2.06 and 7.07 hereof, and each Subsidiary Guaranty, if any,
shall except as to the obligations of the Subsidiary Guarantor thereunder in
respect of such Sections, cease to be of further effect. The Trustee shall join
in the execution of any documents prepared by the Company acknowledging
satisfaction and discharge of this Indenture and each such Subsidiary Guaranty
on written demand of the Company accompanied by an Officers' Certificate and
Opinion of Counsel and at the cost and expense of the Company. In the case of
any such deposit pursuant to clause (ii) above, the obligation to pay the
principal of and any interest on such Notes and the obligations under Section
7.07 hereof shall continue until the Notes are paid in full (provided that the
provisions of Section 7.07 hereof shall survive the payment of the Notes and
discharge of the Indenture). The Company will be entitled to make such a deposit
if the Company has delivered to the Trustee (i)(A) a ruling directed to the
Trustee from the Internal Revenue Service to the effect that the holders of the
Notes will not recognize income, gain or loss for federal income tax purposes as
a result of such deposit and defeasance of this Indenture and will be subject to
federal income tax on the same amount and in the same manner and at the same
times, as would have been the case if such deposit and defeasance had not
occurred, or (B) an opinion of counsel, reasonably satisfactory to the Trustee,
to the same effect as clause (i)(A) above, (ii) an Opinion of Counsel (who may
be an employee of or counsel for the Company), and an Officers' Certificate in
accordance with this Indenture and (iii) a report from a nationally recognized
firm of independent public accountants stating that the amount of such deposit
is sufficient to pay and discharge the amounts described in clause (ii) above
with respect to the Notes.
If the Trustee or Paying Agent is unable to apply any money in accordance
with this Section 8.01 by reason of any order or judgment of any court or
governmental authority enjoining, restraining or otherwise prohibiting such
application, then the obligations of the Company and each Subsidiary Guarantor
under this Indenture and the Notes shall be revived and reinstated as though no
deposit had occurred pursuant to this Section 8.01 until such time as the
Trustee or Paying Agent is permitted to apply all such money in accordance with
this Section 8.01; PROVIDED, HOWEVER, that if the Company or any Subsidiary
Guarantor, as the case may be, makes any payment of interest on or principal of
any Note following the reinstatement of its obligations, the Company or any
Subsidiary Guarantor, as the case may be, shall be subrogated to the right of
the Holders of such Notes to receive such payment from the money held by the
Trustee or Paying Agent.
SECTION 8.02 REPAYMENT TO THE COMPANY OR SUBSIDIARY GUARANTORS. Subject to
Section 7.07 hereof, the Trustee and the Paying Agent shall promptly pay to the
Company, or if deposited with the Trustee by any Subsidiary Guarantor, to such
Subsidiary Guarantor, upon written request
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any excess money or U.S. Government Obligations held by them at any time. The
Trustee and the Paying Agent shall adhere to applicable law and appropriate
regulations in the disposition of any unclaimed funds. After return to the
Company or any SUBSIDIARY Guarantor, Holders entitled to the money must look to
the Company for payment as general creditors unless an applicable abandoned
property law designates another Person, and all liability of the Trustee and
such Paying Agent with respect to such money shall cease.
ARTICLE 9
AMENDMENTS
----------
SECTION 9.01 WITHOUT CONSENT OF HOLDERS. From time to time, when authorized
by Board Resolutions of each of them, the Company and the Trustee, without
notice to or the consent of the Holders of the Notes issued hereunder, may amend
or supplement this Indenture or the Notes as follows:
(1) to cure any ambiguity, defect or inconsistency;
(2) to comply with Article 5 hereof;
(3) to provide for uncertificated Notes in addition to or in place of
certificated Notes so long as such uncertificated Notes are in registered
form for purposes of the Internal Revenue Code of 1986, as amended;
(4) to make any other change that does not adversely affect the rights
of any Holder;
(5) to comply with any requirement of the SEC in connection with the
qualification of this Indenture under the TIA; or
(6) to add any Subsidiary of the Company as a Subsidiary Guarantor.
SECTION 9.02 WITH CONSENT OF HOLDERS. With the consent of the Holders of at
least a majority in aggregate principal amount of the Notes at the time
outstanding, the Company and the Trustee may amend this Indenture or the Notes
or may waive future compliance by the Company or any Subsidiary Guarantor with
any provisions of this Indenture, the Notes or such Subsidiary Guarantor's
Subsidiary Guaranty. However, without the consent of each Holder affected, a
waiver or an amendment to this Indenture or the Notes may not:
(1) reduce the percentage of principal amount of the Notes whose
Holders must consent to an amendment or waiver; or
(2) make any change to the Stated Maturity of the principal of,
premium, if any,
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or any interest on or Liquidated Damages, if any, with respect to, the
Notes or any Redemption Price thereof, or impair the right to institute
suit for the enforcement of any such payment or make any Note payable in
money or securities other than that stated in the Note; or
(3) waive a default in the payment of the principal of, premium, if
any, interest on, or Liquidated Damages with respect to any Note;
(4) release any Subsidiary Guarantor from any of its obligations under
its Subsidiary Guaranty or the Indenture other than in compliance with the
terms of the Indenture and such Subsidiary Guaranty; or
(5) make any change in the provisions of Sections 4.11, 4.12, 6.04 or
6.07 hereof; or
(6) make any change to Section 9.01 or 9.02 hereof.
It shall not be necessary for the consent of the Holders under this Section
9.02 to approve the particular form of any proposed amendment, but it shall be
sufficient if such consent approves the substance thereof.
In the event that certain Holders are willing to defer or waive certain
obligations of the Company hereunder with respect to Notes held by them, such
deferral or waiver shall not be deemed to affect any other Holder who receives
the subject payment or performance in a timely manner.
After an amendment or waiver under this Section 9.02 becomes effective, the
Company shall mail to each Holder a notice briefly describing the amendment or
waiver. Any failure of the Company to mail such notice, or any defect therein,
shall not, however, in any way impair or affect the validity of any such
amendment or waiver.
SECTION 9.03 COMPLIANCE WITH TRUST INDENTURE ACT. Every supplemental
indenture executed pursuant to this Article 9 shall comply with the TIA.
SECTION 9.04 REVOCATION AND EFFECT OF CONSENTS, WAIVERS AND ACTIONS. Until
an amendment, waiver or other action by Holders becomes effective, a consent to
it or any other action by a Holder of a Note hereunder is a continuing consent
by the Holder and every subsequent Holder of that Note or portion of the Note
that evidences the same obligation as the consenting Holder's Note, even if
notation of the consent, waiver or action is not made on the Note. However, any
such Holder or subsequent Holder may revoke the consent, waiver or action as to
such Holder's Note or portion of the Note if the Trustee receives the notice of
revocation before the consent of the requisite aggregate principal amount of the
Notes then outstanding has been obtained and not revoked. After an amendment,
waiver or action becomes effective, it shall
68
<PAGE> 74
bind every Holder, except as provided in Section 9.02 hereof.
The Company may, but shall not be obligated to, fix a record date for the
purpose of determining the Holders entitled to consent to any amendment or
waiver. If a record date is fixed, then, notwithstanding the first two sentences
of the immediately preceding paragraph, those Persons who were Holders at such
record date (or their duly designated proxies), and only those Persons, shall be
entitled to consent to such amendment, supplement or waiver or to revoke any
consent previously given, whether or not such Persons continue to be Holders
after such record date. No such consent shall be valid or effective for more
than 90 days after such record date.
SECTION 9.05 NOTATION ON OR EXCHANGE OF NOTES. Notes authenticated and made
available for delivery after the execution of any supplemental indenture
pursuant to this Article 9 may, and shall, if required by the Trustee, bear a
notation in form approved by the Trustee as to any matter provided for in such
supplemental indenture. If the Company shall so determine, new Notes so modified
as to conform, in the opinion of the Trustee and the Board of Directors of the
Company, to any such supplemental indenture may be prepared and executed by the
Company and authenticated and made available for delivery by the Trustee in
exchange for outstanding Notes.
SECTION 9.06 TRUSTEE TO SIGN SUPPLEMENTAL INDENTURES. The Trustee shall
sign any supplemental indenture authorized pursuant to this Article 9 if the
supplemental indenture does not adversely affect the rights, duties, liabilities
or immunities of the Trustee. If it does, the Trustee may, but need not, sign
it. In signing such amendment the Trustee shall be entitled to receive, and
shall be fully protected in relying upon, an Officers' Certificate and Opinion
of Counsel stating that such supplemental indenture is authorized or permitted
by this Indenture.
SECTION 9.07 EFFECT OF SUPPLEMENTAL INDENTURES. Upon the execution of any
supplemental indenture under this Article 9, this Indenture shall be modified in
accordance therewith, and such supplemental indenture shall form a part of this
Indenture for all purposes; and every Holder of Notes theretofore or thereafter
authenticated and made available for delivery hereunder shall be bound thereby.
ARTICLE 10
MISCELLANEOUS
-------------
SECTION 10.01 TRUST INDENTURE ACT CONTROLS. If any provision of this
Indenture limits, qualifies or conflicts with the duties imposed by operation of
subsection (c) of Section 318 of the TIA, the imposed duties shall control. The
provisions of Sections 310 to 317, inclusive, of the TIA that impose duties on
any Person (including provisions automatically deemed included in an indenture
unless the indenture provides that such provisions are excluded) are a part of
and govern this Indenture, except as, and to the extent, expressly excluded from
this Indenture, as permitted by the TIA.
69
<PAGE> 75
SECTION 10.02 NOTICES. Any notice or communication shall be in writing and
delivered in Person or mailed by first-class mail, postage prepaid, addressed as
follows:
if to the Company:
Nortek, Inc.
50 Kennedy Plaza
Providence, RI 02903-2360
Attention: Mr. Richard L. Bready
if to any Subsidiary Guarantor:
[Name of Guarantor]
c/o Nortek Inc.
50 Kennedy Plaza
Providence, RI 02903-2360
Attention: President
if to the Trustee:
State Street Bank and Trust Company
61 Broadway
Concourse Level
New York, NY 10006
-with a copy to-
State Street Bank and Trust Company
Two International Place - 4th Floor
Boston, MA 02110
Attention: Corporate Trust Department
The Company or the Trustee by notice to the other may designate additional
or different addresses for subsequent notices or communications.
Any notice or communication given to a Holder shall be mailed to the Holder
at the Holder's address as it appears on the registration books of the Registrar
and shall be sufficiently given if so mailed within the time prescribed.
Failure to mail a notice or communication to a Holder or any defect in it
shall not affect
70
<PAGE> 76
its sufficiency with respect to other Holders. If a notice or communication is
mailed in the manner provided above, it is duly given, whether or not received
by the addressee.
If the Company mails a notice or communication to the Holders, it shall
mail a copy to the Trustee and each Registrar, Paying Agent or co-registrar.
SECTION 10.03 COMMUNICATION BY HOLDERS WITH OTHER HOLDERS. Holders may
communicate pursuant to TIA Section 312(b) with other Holders with respect to
their rights under this Indenture or the Notes. The Company, the Trustee, the
Registrar, the Paying Agent and anyone else shall have the protection of TIA
Section 312(c).
SECTION 10.04 CERTIFICATE AND OPINION AS TO CONDITIONS PRECEDENT. Upon any
request or application by the Company to the Trustee to take any action under
this Indenture, the Company shall furnish to the Trustee:
(1) an Officers' Certificate stating that, in the opinion of the
signers, all conditions precedent, if any, provided for in this Indenture
relating to the proposed action have been complied with; and
(2) an Opinion of Counsel stating that, in the opinion of such
counsel, all such conditions precedent have been complied with.
SECTION 10.05 STATEMENTS REQUIRED IN CERTIFICATE OR OPINION. Each Officers'
Certificate and Opinion of Counsel with respect to compliance with a covenant or
condition provided for in this Indenture shall include:
(1) a statement that each Person making such Officers' Certificate
or Opinion of Counsel has read such covenant or condition;
(2) a brief statement as to the nature and scope of examination or
investigation upon which the statements or opinions contained in such
Officers' Certificate or Opinion of Counsel are based;
(3) a statement that, in the opinion of each such Person, he has
made such examination or investigation as is necessary to enable such
Person to express an informed opinion as to whether or not such covenant or
condition has been complied with; and
(4) a statement that, in the opinion of such Person, such covenant
or condition has been complied with; provided, however, that with respect
to matters of fact, an Opinion of Counsel may rely on an Officers'
Certificate or certificates of public officials.
SECTION 10.06 SEPARABILITY CLAUSE. In case any provision in this Indenture,
the Notes or any Subsidiary Guaranty shall be invalid, illegal or unenforceable,
the validity, legality and
71
<PAGE> 77
enforceability of the remaining provisions shall not in any way be affected or
impaired thereby.
SECTION 10.07 RULES BY TRUSTEE, PAYING AGENT AND REGISTRAR. The Trustee
may make reasonable rules for action by or a meeting of Holders. The Registrar
and Paying Agent may make reasonable rules for their functions.
SECTION 10.08 LEGAL HOLIDAYS. A "Legal Holiday" is any day other than a
Business Day. If any specified date (including a date for giving notice) is a
Legal Holiday, the action shall be taken on the next succeeding day that is not
a Legal Holiday, and, if the action to be taken on such date is a payment in
respect of the Notes, no principal, premium, if any, interest installment or
Liquidated Damages, if any, shall accrue for the intervening period.
SECTION 10.09 GOVERNING LAW. THIS INDENTURE, THE NOTES AND EACH SUBSIDIARY
GUARANTY SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF NEW YORK, AS APPLIED TO CONTRACTS MADE AND PERFORMED WITHIN THE STATE
OF NEW YORK, WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAWS. EACH OF THE
PARTIES AGREES TO SUBMIT TO THE JURISDICTION OF THE FEDERAL AND STATE COURTS OF
THE STATE OF NEW YORK IN NEW YORK CITY IN ANY ACTION OR PROCEEDING ARISING OUT
OF OR RELATING TO THIS INDENTURE.
SECTION 10.10 NO RECOURSE AGAINST OTHERS. A director, officer, employee or
stockholder, as such, of the Company or any Subsidiary Guarantor shall not have
any liability for any obligations of the Company under the Notes or this
Indenture or for any obligations of such Subsidiary Guarantor under its
Subsidiary Guaranty or for any claim based on, in respect of or by reason of
such obligations or their creation. By accepting a Note, each Holder shall waive
and release all such liability. The waiver and release shall be part of the
consideration for the issue of the Notes.
SECTION 10.11 SUCCESSORS. All agreements of the Company and any Subsidiary
Guarantor in this Indenture, the Notes and any Subsidiary Guaranties shall bind
their successors. All agreements of the Trustee in this Indenture shall bind its
successor.
SECTION 10.12 MULTIPLE ORIGINALS. The parties may sign any number of copies
of this Indenture. Each signed copy shall be an original, but all of them
together represent the same agreement. One signed copy is enough to prove this
Indenture.
72
<PAGE> 78
SIGNATURES
IN WITNESS WHEREOF, the undersigned, being duly authorized, have executed
this Indenture on behalf of the respective parties hereto as of the date first
above written.
NORTEK, INC.
By:
-----------------------------
Name:
---------------------
Title:
--------------------
STATE STREET BANK AND TRUST
COMPANY
By:
-----------------------------
Name:
---------------------
Title:
--------------------
73
<PAGE> 79
EXHIBIT A
[FORM OF FACE OF NOTE]
NORTEK, INC.
9 1/4% [Series A/B] Senior Note due March 15, 2007
No. CUSIP No.
--- -------
$
----------
Nortek, Inc., a Delaware corporation ("the Company", which term includes
any successor corporation under the Indenture hereinafter referred to), promises
to pay to or its registered assigns, the principal amount of
Dollars on March 15, 2007.
Interest Payment Dates: March 15 and September 15, commencing September 15,
1997.
Record Dates: March 1 and September 1.
Reference is hereby made to the further provisions of this Note set forth
on the following pages which further provisions shall for all purposes have the
same effect as if set forth at this place.
IN WITNESS WHEREOF, the Company has caused this Note to be signed manually
or by facsimile by its duly authorized officers and a facsimile of its corporate
seal to be affixed hereto or imprinted hereon.
NORTEK, INC.
By:
--------------------------
Name:
Title:
ATTESTED:
By:
---------------------------
Name:
Title:
A-1
<PAGE> 80
[SEAL]
Dated:
------------------------
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Notes referred to in
the within-mentioned Indenture.
STATE STREET BANK AND TRUST COMPANY, as Trustee
By:
--------------------------
Authorized Officer
A-2
<PAGE> 81
[UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR NOTES IN
DEFINITIVE FORM, THIS NOTE MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY THE
DEPOSITORY TO A NOMINEE OF THE DEPOSITORY OR BY A NOMINEE OF THE DEPOSITORY TO
THE DEPOSITORY OR ANOTHER NOMINEE OF THE DEPOSITORY OR BY THE DEPOSITORY OR ANY
SUCH NOMINEE TO A SUCCESSOR DEPOSITORY OR A NOMINEE OF SUCH SUCCESSOR
DEPOSITORY. UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE
OF THE DEPOSITORY TRUST COMPANY (55 WATER STREET, NEW YORK, NEW YORK) ("DTC"),
TO THE ISSUER OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT,
AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER
NAME AS MAY BE REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT
IS MADE TO CEDE & CO. OR SUCH OTHER ENTITY AS MAY BE REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN. THIS NOTE IS A GLOBAL NOTE WITHIN
THE MEANING OF THE INDENTURE REFERRED TO HEREINAFTER. THIS GLOBAL NOTE MAY NOT
BE EXCHANGED, IN WHOLE OR IN PART, FOR A NOTE REGISTERED IN THE NAME OF ANY
PERSON OTHER THAN THE DEPOSITORY TRUST COMPANY OR A NOMINEE THEREOF EXCEPT IN
THE CIRCUMSTANCES SET FORTH IN SECTION 2.06 OF THE INDENTURE, AND MAY NOT BE
TRANSFERRED, IN WHOLE OR IN PART, EXCEPT IN ACCORDANCE WITH THE RESTRICTIONS SET
FORTH IN SECTION 2.06 OF THE INDENTURE. BENEFICIAL INTEREST IN THIS GLOBAL NOTE
MAY NOT BE TRANSFERRED EXCEPT IN ACCORDANCE WITH SECTION 2.06 OF THE
INDENTURE.1/]
["THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT"), AND, ACCORDINGLY, MAY NOT BE OFFERED OR
SOLD TO, OR FOR THE ACCOUNT OR BENEFIT OF, ANY PERSON EXCEPT AS SET FORTH
IN THE FOLLOWING SENTENCE. BY ITS ACQUISITION HEREOF, THE HOLDER (1)
REPRESENTS THAT (A) IT IS A "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN
RULE 144A UNDER THE SECURITIES ACT), (B) IT IS AN "ACCREDITED INVESTOR" (AS
DEFINED IN RULE 501(a)(1), (2), (3) OR (7) UNDER THE SECURITIES ACT) WHO IS
AN INSTITUTION (AN "INSTITUTIONAL ACCREDITED INVESTOR"), OR (C) IT IS NOT A
U.S. PERSON AND IS ACQUIRING THIS NOTE IN AN OFFSHORE TRANSACTION IN
COMPLIANCE WITH RULE 904 UNDER THE
- --------
1/ This paragraph should be included only if the Note is issued in global form.
A-3
<PAGE> 82
SECURITIES ACT, (2) AGREES THAT IT WILL NOT PRIOR TO THE DATE WHICH IS TWO
YEARS AFTER THE LATER OF THE DATE OF ORIGINAL ISSUANCE OF THIS NOTE AND THE
LAST DATE ON WHICH THE ISSUER OR ANY AFFILIATE OF THE ISSUER WAS THE OWNER
OF THIS NOTE (THE "RESALE RESTRICTION TERMINATION DATE") OFFER, SELL OR
OTHERWISE TRANSFER THIS NOTE, EXCEPT (A) TO THE ISSUER, (B) TO A PERSON
WHOM THE SELLER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER
PURCHASING FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF ANOTHER QUALIFIED
INSTITUTIONAL BUYER IN COMPLIANCE WITH THE RESALE PROVISIONS OF RULE 144A
UNDER THE SECURITIES ACT, (C) TO AN INSTITUTIONAL ACCREDITED INVESTOR THAT,
PRIOR TO SUCH TRANSFER, FURNISHES TO THE TRUSTEE A WRITTEN CERTIFICATION
CONTAINING CERTAIN REPRESENTATIONS AND AGREEMENTS RELATING TO THE
RESTRICTIONS ON TRANSFER OF THIS NOTE (THE FORM OF WHICH LETTER CAN BE
OBTAINED FROM THE TRUSTEE), (D) PURSUANT TO THE RESALE LIMITATIONS PROVIDED
BY RULE 144 UNDER THE SECURITIES ACT (IF AVAILABLE), (E) PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT, (F) OUTSIDE THE
U.S. TO A FOREIGN PERSON IN A TRANSACTION MEETING THE REQUIREMENTS OF
REGULATION S UNDER THE SECURITIES ACT OR (G) PURSUANT TO ANY OTHER
AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES
ACT (BASED, IN THE CASE OF CLAUSES (C), (D), (F) AND (G) ABOVE, UPON AN
OPINION OF COUNSEL REASONABLY ACCEPTABLE TO THE ISSUER IF THE ISSUER SO
REQUESTS), SUBJECT IN EACH OF THE FOREGOING CASES TO ANY REQUIREMENT OF LAW
THAT THE DISPOSITION OF ITS PROPERTY OR THE PROPERTY OF SUCH ACCOUNT BE AT
ALL TIMES WITHIN ITS CONTROL AND TO COMPLIANCE WITH APPLICABLE STATE
SECURITIES LAWS AND (3) AGREES THAT IT WILL DELIVER TO EACH PERSON TO WHOM
THIS NOTE IS TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS
LEGEND. IF THE PROPOSED TRANSFEREE IS AN INSTITUTIONAL ACCREDITED INVESTOR,
THE HOLDER MUST, PRIOR TO SUCH TRANSFER, FURNISH TO THE TRUSTEE AND THE
ISSUER SUCH CERTIFICATIONS, LEGAL OPINIONS OR OTHER INFORMATION AS EITHER
OF THEM MAY REASONABLY REQUIRE TO CONFIRM THAT SUCH TRANSFER IS BEING MADE
PURSUANT TO AN EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT. THE FOREGOING RESTRICTIONS
ON RESALE WILL NOT APPLY SUBSEQUENT TO THE RESALE RESTRICTION
A-4
<PAGE> 83
TERMINATION DATE."]2/
- --------
2/ This paragraph should not be included on Exchange Notes received in an
Exchange Offer.
A-5
<PAGE> 84
[FORM OF REVERSE SIDE OF NOTE]
9 1/4% [Series A/B] Senior Note due March 15, 2007
(1) Interest.
--------
Nortek, Inc., a Delaware corporation ("the Company") promises to pay
interest on the principal amount of this Note at the rate per annum shown above
and to pay Liquidated Damages, if any, payable pursuant to Section 2 of the
Registration Rights Agreement referred to below. Interest will be payable
semi-annually on each interest payment date, commencing September 15, 1997.
Interest and Liquidated Damages, if any, on the Notes will accrue from the most
recent date to which interest has been paid, or if no interest has been paid,
from March 17, 1997; provided that, if there is no existing Event of Default in
the payment of interest and if this Note is authenticated between a record date
referred to on the face hereof and the next succeeding interest payment date,
interest shall accrue from such interest payment date. Interest will be computed
on the basis of a 360-day year of twelve 30-day months.
The Company shall pay interest on overdue principal and interest on overdue
installments of interest and Liquidated Damages, to the extent lawful, at 2%
above the rate per annum borne by the Notes.
(2) Method of Payment
-----------------
The Company will pay interest on the Notes (except defaulted interest) and
Liquidated Damages to the persons who are registered Holders at the close of
business on March 1, and September 1, as the case may be, immediately preceding
the interest payment date even if the Note is cancelled on registration of
transfer or registration of exchange (other than with respect to the purchase of
Notes pursuant to an offer to purchase Notes made in connection with Section
4.11 or 4.12 of the Indenture after such record date). Holders must surrender
Notes to a Paying Agent to collect principal payments. The Company will pay
principal, premium, if any, interest and Liquidated Damages, if any, in money of
the United States that at the time of payment is legal tender for payment of
public and private debts. However, the Company may pay principal, premium, if
any, interest and Liquidated Damages, if any, by its check payable in such
money; provided, that payment by wire transfer of immediately available/same day
funds will be required with respect to principal, premium, if any, interest and
Liquidated Damages, if any, on all Global Notes. It may mail an interest payment
to a Holder's address as it appears on the Register.
(3) Paying Agent and Registrar
--------------------------
Initially, the Trustee will act as Paying Agent and Registrar. The Company
may appoint and change any Paying Agent or Registrar without notice, other than
notice to the Trustee. The Company or any Subsidiary or an Affiliate of either
of them may act as Paying
A-6
<PAGE> 85
Agent, Registrar or co-registrar.
(4) Indenture
---------
The Company issued the Notes under an Indenture, dated as of March 17, 1997
(the "Indenture"), between the Company and the Trustee. The terms of the Notes
include those stated in the Indenture and those made part of the Indenture by
reference to the Trust Indenture Act of 1939, as amended and as in effect on the
date of the Indenture (the "TIA") and as provided in the Indenture. Capitalized
terms used herein and not defined herein have the meaning ascribed thereto in
the Indenture. The Notes are subject to all such terms, and Holders are referred
to the Indenture and the TIA for a statement of those terms.
The Notes are unsecured obligations of the Company limited to $175,000,000
aggregate principal amount.
To the extent permitted by the terms of the Company's 9 7/8% Senior
Subordinated Notes due 2004 (the "9 7/8% Notes") and the indenture governing the
9 7/8% Notes (the "9 7/8% Indenture"), all obligations owing under the Indenture
and the Notes, including interest accruing after the occurrence of an event
described in clause (5) or (6) of Section 6.01 of the Indenture, shall
constitute "Specified Senior Indebtedness" or similarly-designated indebtedness
under the 9 7/8% Notes and the 9 7/8% Indenture and under any other existing or
future subordinated indebtedness of the Company.
(5) Guaranties
----------
This Note may be entitled after the date hereof to certain senior
Subsidiary Guaranties made for the benefit of the Holders. Reference is hereby
made to Section 4.14 of the Indenture and to Exhibits E and F to the Indenture
for the terms of any such Subsidiary Guaranty.
(6) Optional Redemption
-------------------
The Notes are redeemable as a whole, or from time to time in part, at any
time on and after March 15, 2002 at the option of the Company at the following
redemption prices (expressed as a percentage of principal) together with accrued
and unpaid interest and Liquidated Damages, if any, thereon to the Redemption
Date (the "Redemption Price") if redeemed in the twelve-month period commencing:
A-7
<PAGE> 86
<TABLE>
<CAPTION>
March 15, Redemption Price
--------- ----------------
<S> <C>
2002 104.625%
2003 103.083%
2004 101.542%
2005 and thereafter 100.000%
</TABLE>
(7) Notice Of Redemption
--------------------
Notice of redemption will be mailed at least 30 days but not more than 60
days before the Redemption Date to each Holder of Notes to be redeemed at the
Holder's registered address. Notes in denominations larger than $1,000 of
principal amount may be redeemed in part but only in integral multiples of
$1,000 of principal amount.
(8) Requirement that the Company Offer to Purchase Notes under Certain
Circumstances
------------------------------------------------------------------
Subject to the terms and conditions of the Indenture, the Company shall
become immediately obligated to offer to purchase the Notes pursuant to Section
4.11 of the Indenture after the occurrence of a Change in Control of the Company
at a price equal to 101% of aggregate principal amount plus accrued and unpaid
interest and Liquidated Damages, if any, to the date of purchase. In addition,
to the extent that there are Net Cash Proceeds from Asset Sales which are not
reinvested, the Company will be obliged to offer to purchase Securities at 100%
of principal amount plus accrued and unpaid interest and Liquidated Damages, if
any, in accordance with Section 4.12 of the Indenture.
(9) Denominations: Transfer: Exchange
---------------------------------
The Notes are in registered form, without coupons, in denominations of
$1,000 of principal amount and integral multiples of $1,000. A Holder may
transfer or exchange Notes in accordance with the Indenture. The Registrar may
require a Holder, among other things, to furnish appropriate endorsements and
transfer documents and to pay any taxes and fees required by law or permitted by
the Indenture. The Registrar need not transfer or exchange any Notes selected
for redemption (except, in the case of a Note to be redeemed in part, the
portion of the Note not to be redeemed) or any Notes for a period of 15 days
before selection of Notes to be redeemed.
(10) Persons Deemed Owners
---------------------
The registered Holder of this Note may be treated as the owner of this Note
for all purposes.
(11) Amendment: Waiver
-----------------
A-8
<PAGE> 87
Subject to certain exceptions set forth in the Indenture, (i) the Indenture
or the Notes may be amended with the written consent of the Holders of at least
a majority in aggregate principal amount of the Notes at the time outstanding
and (ii) certain defaults or noncompliance with certain provisions may be waived
with the written consent of the Holders of a majority in aggregate principal
amount of the Notes at the time outstanding. Subject to certain exceptions set
forth in the Indenture, without the consent of any Holder, the Company and the
Trustee may amend the Indenture or the Notes to cure any ambiguity, defect or
inconsistency, or to comply with Article 5 of the Indenture, or to provide for
uncertificated Notes in addition to certificated Notes, or to comply with any
requirements of the Securities and Exchange Commission in connection with the
qualification of the Indenture under the TIA, or to make any change that does
not adversely affect the rights of any Holder.
(12) Defaults and Remedies
---------------------
Under the Indenture, Events of Default include (i) default in payment of
the principal amount, premium, if any, interest or Liquidated Damages, if any,
in respect of the Notes when the same becomes due and payable subject, in the
case of interest and Liquidated Damages, to the grace period contained in the
Indenture; (ii) failure by the Company to comply with other agreements in the
Indenture or the Notes, subject to notice and lapse of time; (iii) certain
events of acceleration prior to maturity of certain indebtedness; (iv) certain
final judgments which remain undischarged; (v) certain events of bankruptcy or
insolvency; or (vi) certain failures of Subsidiary Guaranties. If an Event of
Default occurs and is continuing, the Trustee or the Holders of at least 25% in
aggregate principal amount of the Notes at the time outstanding, may declare all
the Notes to be due and payable immediately. Certain events of bankruptcy or
insolvency are Events of Default which will result in the Notes becoming due and
payable immediately upon the occurrence of such Events of Default.
Holders may not enforce the Indenture or the Notes except as provided in
the Indenture. The Trustee may refuse to enforce the Indenture or the Notes
unless it receives reasonable indemnity or security. Subject to certain
limitations, Holders of a majority in aggregate principal amount of the Notes at
the time outstanding may direct the Trustee in its exercise of any trust or
power. The Trustee may withhold from Holders notice of any continuing Default
(except a Default in payment of amounts specified in clause (i) above) if it
determines that withholding notice is in their interests.
(13) Trustee Dealings with the Company
---------------------------------
Subject to certain limitations imposed by the TIA, the Trustee under the
Indenture, in its individual or any other capacity, may become the owner or
pledgee of Notes and may otherwise deal with and collect obligations owed to it
by the Company or its Affiliates and may otherwise deal with the Company or its
Affiliates with the same rights it would have if it were not Trustee.
A-9
<PAGE> 88
(14) No Recourse Against Others
--------------------------
A director, officer, employee or stockholder, as such, of the Company or
any Subsidiary Guarantor shall not have any liability for any obligations of the
Company under the Notes or the Indenture or for any obligations of a Subsidiary
Guarantor under its Subsidiary Guaranty or for any claim based on, in respect of
or by reason of such obligations or their creation. By accepting a Note, each
Holder waives and releases all such liability. The waiver and release are part
of the consideration for the issue of the Notes.
(15) Authentication
--------------
This Note shall not be valid until an authorized officer of the Trustee
manually signs the Trustee's Certificate of Authentication on the other side of
this Note.
(16) Abbreviations
-------------
Customary abbreviations may be used in the name of a Holder or an assignee,
such as TEN COM (=tenants in common), TEN ENT (=tenants by the entireties), JT
TEN (=joint tenants with right of survivorship and not as tenants in common),
CUST (=custodian), and U/G/M/A (=Uniform Gift to Minors Act).
(17) Unclaimed Money
---------------
If money for the payment of principal or interest remains unclaimed for
two years, the Trustee or Paying Agent will pay the money back to the Company
or, if applicable, a Subsidiary Guarantor upon request. After that, Holders
entitled to money must look to the Company or such Subsidiary Guarantor for
payment.
(18) Discharge Prior to Maturity
---------------------------
If the Company or any Subsidiary Guarantor deposits with the Trustee or
Paying Agent money or U.S. Government Obligations sufficient to pay the
principal of, premium, if any, interest and Liquidated Damages, if any, on the
Notes to maturity, the Company and the Subsidiary Guarantors will be discharged
from the Indenture except for certain Sections thereof.
(19) Registration Rights Agreement
-----------------------------
In addition to the rights provided to and the obligations of Holders of
Notes under the Indenture, Holders of Transfer Restricted Securities shall have
all the rights and shall be subject to all the obligations set forth in the
Registration Rights Agreement, dated as of the date of the Indenture.
A-10
<PAGE> 89
(20) CUSIP Numbers
-------------
Pursuant to a recommendation promulgated by the Committee on Uniform Note
Identification Procedures, the Company will cause CUSIP numbers to be printed on
the Notes as a convenience to Holders of the Notes. No representation is made as
to the accuracy of such numbers as printed on the Notes and reliance may be
placed only on the other identification numbers printed hereon.
(21) Successor
---------
When a successor Person to the Company or a Subsidiary Guarantor assumes
all the obligations of its predecessor under the Notes, a Subsidiary Guaranty
and the Indenture such predecessor shall be released from those obligations.
(22) Governing Law
-------------
THE INDENTURE, THIS NOTE AND ANY SUBSIDIARY GUARANTY SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, AS APPLIED
TO CONTRACTS MADE AND PERFORMED WITHIN THE STATE OF NEW YORK WITHOUT REGARD TO
PRINCIPLES OF CONFLICTS OF LAWS.
(23) Indenture
---------
Each Holder, by accepting a Note, agrees to be bound by all of the terms
and provisions of the Indenture, as the same may be amended from time to time.
The Company will furnish to any Holder upon written request and without
charge a copy of the Indenture or Registration Rights Agreement.
A-11
<PAGE> 90
ASSIGNMENT FORM
To assign this Note, fill in the form below:
(I) or (we) assign and transfer this Note to:
______________________________________________________________________________
(INSERT ASSIGNEE'S SOCIAL SECURITY OR TAX I.D. NUMBER)
______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
(PRINT OR TYPE ASSIGNEE'S NAME, ADDRESS AND ZIP CODE)
and irrevocably appoint_______________________________________________________
_______________________agent to transfer this Note on the books of the Company.
The agent may substitute another to act for him.
Dated: _________________ Signature: __________________________________
(SIGN EXACTLY AS YOUR NAME APPEARS
ON THE OTHER SIDE OF THIS NOTE)
Signature
Guarantee: ___________________________________________________________________
(Participant in recognized signature guarantee medallion program)
NOTICE: Your Signature must be guaranteed by an Institution which is a member of
one of the following recognized signature Guarantee Programs: (i) the Securities
Transfer Agent Medallion Program; (ii) The New York Stock Exchange Medallion
Program; (iii) The Stock Exchange Medallion Program; or (iv) any other guarantee
program acceptable to the Trustee.
In connection with any transfer of this Note the Holder hereof may be required
by the Indenture to deliver to the Trustee and the Registrar a certification
substantially in the form of Exhibit B to the Indenture.
A-12
<PAGE> 91
OPTION OF HOLDER TO ELECT PURCHASE
If you wish to elect to have all or any portion of this Note purchased by
the Company pursuant to Section 4.11 ("Change of Control Offer") or Section 4.12
("Excess Proceeds Offer") of the Indenture, check the applicable boxes:
[ ] Change of Control Offer: [ ] Excess Proceeds Offer:
in whole [ ] in whole [ ]
in part [ ] in part [ ]
Amount to be Amount to be
purchased: $ purchased: $
---- -----
Dated: _____________________ Signature: _______________________________________
(SIGN EXACTLY AS YOUR NAME APPEARS ON
THE OTHER SIDE OF THIS NOTE)
Signature
Guarantee: _____________________________________________________________________
(PARTICIPANT IN RECOGNIZED SIGNATURE GUARANTEE MEDALLION PROGRAM)
Social Security Number/
or Taxpayer Identification Number: _____________________________________________
A-13
<PAGE> 92
SCHEDULE OF EXCHANGES FOR DEFINITIVE NOTES
The following exchanges of a part of this Global Note for Definitive Notes have
been made:
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT OF SIGNATURE OF
AMOUNT OF DECREASE AMOUNT OF INCREASE THIS GLOBAL NOTE AUTHORIZED OFFICER OF
DATE OF IN PRINCIPAL AMOUNT IN PRINCIPAL AMOUNT FOLLOWING SUCH TRUSTEE OR NOTE
EXCHANGE OF THIS GLOBAL NOTE OF THIS GLOBAL NOTE DECREASE (OR INCREASE) CUSTODIAN
- -------------- ---------------------- ---------------------- ----------------------- ---------------------
<S> <C> <C> <C> <C>
</TABLE>
<PAGE> 93
EXHIBIT B
CERTIFICATE TO BE DELIVERED UPON EXCHANGE
OR REGISTRATION OF TRANSFER OF NOTES
Re: 9 1/4% [Series [A/B] Senior Notes due 2007 of Nortek, Inc.
This Certificate relates to $ principal amount of Notes held in
*/ book-entry or */ definitive form by
(the "Transferor").
The Transferor:*/
[ ] has requested the Registrar by written order to exchange or
register the transfer of a Note or Notes; or
[ ] has requested the Trustee by written order to exchange its Note
or Notes in definitive, registered form for a beneficial
interest in a Global Note held by the Depository equal to the
principal amount of Notes it holds (or the portion thereof
indicated above); or
[ ] has requested the Trustee by written order to deliver in
exchange for its beneficial interest in a Global Note held by
the Depository a Note or Notes in definitive, registered form
equal to its beneficial interest in such Global Note (or the
portion thereof indicated above).
In connection with such request and in respect of each such
Note, the Transferor does hereby certify that the Transferor is
familiar with the Indenture relative to the above captioned
Notes and that the transfer of this Note does not require
registration under the Securities Act (as defined below)
because:*/
[ ] Such Note is being acquired for the Transferor's own account
without transfer (in satisfaction of Section 2.06(1)(b)(i),
Section 2.06(2)(a) or Section 2.06(4)(a)(i) of the Indenture).
[ ] Such Note is being transferred to a "qualified institutional
buyer" (as defined in Rule 144A under the Securities Act of
1933, as amended (the "Securities Act")), in a transaction
meeting the requirements of Rule 144A under the Securities Act.
- --------
*/ Check applicable box.
B-1
<PAGE> 94
[ ] Such Note is being transferred outside the U.S. to a foreign
person pursuant to an exemption from registration in a
transaction meeting the requirements of Regulation S under the
Securities Act (based on an opinion of counsel if the Company so
requests and together with a certification in substantially the
form of Exhibit D to the Indenture).
[ ] Such Note is being transferred in a transaction meeting the
requirements of Rule 144 under the Securities Act (based on an
opinion of counsel if the Company so requests).
[ ] Such Note is being transferred pursuant to an effective
registration statement under the Securities Act.
[ ] Such Note is being transferred to an institutional "accredited
investor" within the meaning of Rule 501(a)(1), (2), (3) or (7)
under the Securities Act pursuant to a private placement
exemption from the registration requirements of the Securities
Act (based on an opinion of counsel if the Company so requests
together with a certification in substantially the form of
Exhibit C to the Indenture).
[ ] Such Note is being transferred in reliance on and in compliance
with another exemption from the registration requirements of the
Securities Act (based on an opinion of counsel if the Company so
requests).
--------------------------------
[INSERT NAME OF TRANSFEROR]
By:
-----------------------------
Name:
Title:
Address:
Date:
TO BE COMPLETED BY TRANSFEREE IF SECOND BOX ABOVE IS CHECKED
The undersigned represents and warrants that it is purchasing this Note for
its own account or an account with respect to which it exercises sole investment
discretion and that it and any such account is a "qualified institutional buyer"
within the meaning of Rule 144A
B-2
<PAGE> 95
under the Securities Act and is aware that the sale to it is being made in
reliance on Rule 144A and acknowledges that it has received such information
regarding the Company as the undersigned has requested pursuant to Rule 144A or
has determined not to request such information and that it is aware that the
transferor is relying upon the undersigned's foregoing representations in order
to claim the exemption from registration provided by Rule 144A.
Date: Signed:
----------------------- ---------------------------------
NOTICE: To be executed by an
executive officer
B-3
<PAGE> 96
EXHIBIT C
FORM OF CERTIFICATE TO BE DELIVERED BY
ACCREDITED INSTITUTIONS
----------------- --, ----
State Street Bank and Trust Company,
as Registrar
Attn: Corporate Trust Department
Dear Sirs:
In connection with our proposed purchases of $ aggregate principal
amount of % Series [A/B] Senior Notes due 2007 (the "Notes") of Nortek, Inc.
(the "Issuer"), a Delaware corporation, we confirm that:
1. We are an institutional "accredited investor" (as defined in Rule
501(a)(1), (2), (3) or (7) under the Securities Act of 1933, as amended (the
"Securities Act")) purchasing for our own account or for the account of such an
institutional "accredited investor," and we are acquiring the Notes for
investment purposes and not with a view to, or for offer or sale in connection
with, any distribution in violation of the Securities Act or the laws of any
state or other jurisdiction, and we have such knowledge and experience in
financial and business matters as to be capable of evaluating the merits and
risks of our investment in the Notes, and we and any accounts for which we are
acting are each able to bear the economic risk of our or its investment.
2. We understand that any subsequent transfer of the Notes is subject to
certain restrictions and conditions set forth in the Indenture relating to the
Notes (the "Indenture") and the undersigned agrees to be bound by, and not to
resell, pledge or otherwise transfer the Notes except in compliance with, such
restrictions and conditions of the Securities Act.
3. We understand that the offer and sale of the Notes have not been
registered under the Securities Act, and that the Notes may not be offered or
sold except as described below. We agree, on our own behalf and on behalf of any
account for which we are purchasing the Notes, and each subsequent holder of the
Notes by its acceptance thereof will agree, not to offer, sell or otherwise
transfer such Notes prior to the date which is two years after the later of the
date of original issue of such Notes and the last date on which the Issuer or
any affiliate of the Issuer was the owner of such Notes (the "Resale Restriction
Termination Date"), except (A) to the Issuer, (B) in accordance with Rule 144A
under the Securities Act to
C-1
<PAGE> 97
a "qualified institution buyer" (as defined therein) in a transaction meeting
the requirements of Rule 144A, (C) to an institutional "accredited investor" (as
defined above) that is purchasing for his own account or for the account of such
an "accredited investor" and that, prior to such transfer, furnishes to the
Trustee (as defined in the Indenture) a signed letter, substantially identical
to this letter, containing certain representations and agreements relating to
the restrictions on transfer of the Notes (the form of which letter can be
obtained from the Trustee), (D) pursuant to the exemption from registration
provided by Rule 144 under the Securities Act, if available, (E) pursuant to an
effective registration statement under the Securities Act, (F) outside the U.S.
to a foreign person in a transaction meeting the requirements of Regulation S
under the Securities Act, or (G) pursuant to any other available exemption from
the registration requirements of the Securities Act (based, in the cases of
clauses (C), (D), (F) and (G), upon an opinion of counsel reasonably acceptable
to the Issuer if the Issuer so requests), subject in each of the foregoing
cases, to any requirement of law that the disposition of our property or the
property of such investor account or accounts be at all times within our or
their control and to compliance with applicable securities laws of any state of
other jurisdiction. The foregoing restrictions on resale will not apply
subsequent to the Resale Restriction Termination Date, and we further agree to
provide to any person purchasing any of the Notes from us a notice advising such
purchaser that resales of the Notes are restricted as stated herein.
4. We understand that, on any proposed offer, sale or other transfer of any
Notes prior to the Resale Restriction Termination Date, we will be required to
furnish to the Trustee and the Issuer such certifications, legal opinions, and
other information as either of them may reasonably require to confirm that the
proposed transaction complies with the foregoing restrictions. We further
understand that the Notes purchased by us will bear a legend reflecting the
substance of this and the preceding paragraph.
5. We are acquiring the Notes purchased by us for our own account or for
one or more accounts (each of which is an institutional "accredited investor")
as to each of which we exercise sole investment discretion.
We acknowledge that you, the Trustee and others are entitled to rely upon
this letter and are irrevocably authorized to produce this letter or a copy
thereof to any interested party in any administrative or legal proceedings or
official inquiry with respect to the matters covered hereby. We agree to notify
you promptly in writing if any of our representations or warranties ceases to be
accurate and complete.
THIS LETTER SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE
LAWS OF THE STATE OF NEW YORK.
-----------------------------------
(Name of Purchaser)
By:
---------------------------
Name:
Title:
Address:
C-2
<PAGE> 98
EXHIBIT D
FORM OF CERTIFICATE TO BE DELIVERED IN CONNECTION
WITH TRANSFERS PURSUANT TO REGULATION S
------------------ --, ----
State Street Bank and Trust Company,
as Registrar
Attention: Corporate Trust Department
Ladies and Gentlemen:
In connection with our proposed sale of $ aggregate principal
amount of 9 1/4% Series [A/B] Senior Notes due 2007 (the "Notes") of Nortek,
Inc., a Delaware corporation (the "Company"), we represent that:
(i) the offer of the Notes was not made to a person in the United States;
(ii) at the time the buy order was originated, the transferee was outside
the United States or we and any person acting on our behalf reasonably
believed that the transferee was outside the United States;
(iii) no directed selling efforts have been made by us, any of our
affiliates or any person acting on our or their behalf in the United
States in contravention of the requirements of Rule 903(b) or Rule
904(b) of Regulation S, as applicable; and
(iv) the transaction is not part of a plan or scheme to evade the
registration requirements of the U.S. Securities Act of 1933.
D-1
<PAGE> 99
You and the Company are entitled to rely upon this letter and you are
irrevocably authorized to produce this letter or a copy hereof to any interested
party in any administrative or legal proceedings or official inquiry with
respect to the matters covered hereby. Terms used in this certificate have the
meanings set forth in Regulation S.
Very truly yours,
---------------------------
[Name of Transferor]
By:
-----------------------
Name:
Date:
Title:
D-2
<PAGE> 100
EXHIBIT E
ARTICLE 11
GUARANTY OF NOTES
-----------------
SECTION 11.01. SUBSIDIARY GUARANTY. Subject to the provisions of this
Article 11, each Subsidiary Guarantor hereby unconditionally guarantees to each
Holder of a Note authenticated and delivered by the Trustee and to the Trustee
that: (i) the principal of, premium, if any, interest on and Liquidated Damages,
if any, with respect to the Notes will be duly and punctually paid in full when
due, whether at maturity, by acceleration or otherwise, and interest on the
overdue principal and (to the extent permitted by law) interest, if any, on the
Notes and all other obligations of the Company or the Subsidiary Guarantors to
the Holders or the Trustee hereunder or thereunder (including fees and expenses)
will be promptly paid in full or performed, all in accordance with the terms
hereof and thereof; and (ii) in case of any extension of time of payment or
renewal of any Notes or any such obligations with respect to the Notes, the same
will be promptly paid in full when due or performed in accordance with the terms
of the extension or renewal, whether at Stated Maturity, by acceleration or
otherwise. This Subsidiary Guaranty is a present and continuing guaranty of
payment and performance, and not of collectibility. Accordingly, failing payment
when due of any amount so guaranteed, or failing performance of any other
obligation of the Company to the Holders under this Indenture or the Notes, for
whatever reason, each Subsidiary Guarantor shall be obligated to pay, or to
perform or cause the performance of, the same immediately.
Each Subsidiary Guarantor hereby agrees that its obligations under its
Subsidiary Guaranty shall be absolute and unconditional, irrespective of any
invalidity, irregularity or unenforceability of the Notes or this Indenture, the
absence of any action to enforce the same, any waiver or consent by any Holder
of the Notes with respect to any provisions hereof or thereof, any release of
any other Subsidiary Guarantor or any other obligor under the Notes, the
recovery of any judgment against the Company, any action to enforce the same,
whether or not a Subsidiary Guaranty is affixed to any particular Note, or any
other circumstance which might otherwise constitute a legal or equitable
discharge or defense of a guarantor. Each Subsidiary Guarantor hereby waives the
benefit of diligence, presentment, demand of payment, filing of claims with a
court in the event of insolvency or bankruptcy of the Company or any other
obligor under the Notes, any right to require a proceeding first against the
Company or any such obligor, protest, notice and all demands whatsoever and
covenants that its Subsidiary Guaranty will not be discharged except by complete
performance the obligations contained in the Notes, this Indenture and its
Subsidiary Guaranty. If any Holder or the Trustee is required by any court or
otherwise to return to the Company or to any Subsidiary Guarantor, or any
custodian, trustee, liquidator or other similar official acting in relation to
the Company or such Subsidiary Guarantor, any amount paid by the Company or such
Subsidiary Guarantor to the Trustee or such Holder, each Subsidiary Guaranty, to
the extent theretofore discharged, shall be reinstated in full force and effect.
Each Subsidiary
E-1
<PAGE> 101
Guarantor further agrees that, as between it, on the one hand, and the Holders
of Notes and the Trustee, on the other hand, (i) subject to this Article 11, the
maturity of the obligations guaranteed hereby may be accelerated as provided in
Article 6 hereof for the purposes of each Subsidiary Guaranty, notwithstanding
any stay, injunction or other prohibition preventing such acceleration in
respect of the obligations guaranteed by this Subsidiary Guaranty, and (ii) in
the event of any acceleration of such obligations as provided in Article 6
hereof, such obligations (whether or not due and payable) shall forthwith become
due and payable by each Subsidiary Guarantor for the purpose of its Subsidiary
Guaranty. Upon the effectiveness of any acceleration of the obligations
guaranteed by this Subsidiary Guaranty the Trustee shall promptly make a demand
for payment of such obligations by each Subsidiary Guarantor under this
subsidiary Guaranty. The obligations of the Subsidiary Guarantors under this
Subsidiary Guaranty shall be joint and several.
Each Subsidiary Guaranty shall remain in full force and effect and continue
to be effective should any petition be filed by or against the Company for
liquidation or reorganization, should the Company become insolvent or make an
assignment for the benefit of creditors or should a receiver or trustee be
appointed for all or any significant part of the Company's assets, and shall, to
the fullest extent permitted by law, continue to be effective or be reinstated,
as the case may be, if at any time payment and performance of the Notes are,
pursuant to applicable law, rescinded, or reduced in amount, or must otherwise
be restored or returned by any obligee on the Notes, whether as a "voidable
preference," "fraudulent transfer" or otherwise, all as though such payment or
performance had not been made. In the event that any payment, or any part
thereof, is rescinded, reduced, restored or returned, the Notes shall, to the
fullest extent permitted by law, be reinstated and deemed reduced only by such
amount paid and not so rescinded, reduced, restored or returned.
No stockholder, officer, director, employer or incorporator, past, present
or future, of any Subsidiary Guarantor, as such, shall have any personal
liability under such Subsidiary Guarantor's Subsidiary Guaranty by reason of
his, her or its status as such stockholder, officer, director, employer or
incorporator.
The Subsidiary Guarantors shall have the right to seek contribution from
any non-paying Subsidiary Guarantor so long as the exercise of such right does
not impair the rights of the Holders under any Subsidiary Guaranty.
Each Subsidiary Guaranty may be modified from time to time, without the
consent of the Holders, to reflect such fraudulent conveyance savings
provisions, net worth or maximum amount limitations as to recourse or similar
provisions as are set forth in, and after giving effect to, any guaranty by any
Subsidiary Guarantor of any Senior Indebtedness with respect to the Company
Credit Facility as such guaranty may be amended or otherwise modified from time
to time, PROVIDED that no such modification of this Subsidiary Guaranty shall
adversely affect the Holders in any respect or shall disadvantage the Holders
relative to the holders of Indebtedness of such Subsidiary Guarantor with
respect to the Company Credit Facility.
E-2
<PAGE> 102
SECTION 11.02. EXECUTION DELIVERY OF SUBSIDIARY GUARANTY. The validity and
enforceability of this Subsidiary Guaranty shall not be affected by the fact
that it is not affixed to any particular Note, and each Subsidiary Guarantor
hereby agrees that its Subsidiary Guaranty shall remain in full force and effect
notwithstanding any failure to endorse on each Note a notation of such
Subsidiary Guaranty.
If an Officer of a Subsidiary Guarantor whose signature is on the Indenture
or a Subsidiary Guaranty no longer holds that office at the time the Trustee
authenticates any Note or at any time thereafter, such Subsidiary Guarantor's
Subsidiary Guaranty of such Note shall be valid nevertheless.
The delivery by any Subsidiary Guarantor to the Trustee of any Subsidiary
Guaranty as required by Section 4.14 shall constitute due delivery of such
Subsidiary Guaranty on behalf of such Subsidiary Guarantor to and for the
benefit of all Holders of the Notes.
SECTION 11.03. ADDITIONAL GUARANTORS. Any person may become a guarantor of
the Notes by executing and delivering to the Trustee (i) a supplemental
indenture in form and substance satisfactory to the Trustee, which subjects such
person to the provisions of this Indenture as a guarantor of the Notes, and (ii)
an Opinion of Counsel to the effect that such supplemental indenture has been
duly authorized and executed by such person and constitutes the legal, valid,
binding and enforceable obligation of such person (subject to such customary
exceptions concerning fraudulent conveyance laws, creditors' rights and
equitable principles as may be acceptable to the Trustee in its discretion).
SECTION 11.04. RELEASE OF SUBSIDIARY GUARANTOR. Notwithstanding anything to
the contrary contained in this Indenture in the event that Section 4.14 of the
Indenture ceases to have further force or effect each Subsidiary Guarantor shall
be, and in the event a Subsidiary Guarantor is released from all obligations
which pursuant to Section 4.14 hereof obligate it to become a Subsidiary
Guarantor such Subsidiary Guarantor shall be, deemed automatically and
unconditionally released from all obligations under its Subsidiary Guaranty
without any further action required on the part of the Trustee or any Holder,
PROVIDED that, to the extent the provisions of Section 4.14 remain in force and
effect, the provisions of Section 4.14 hereof shall apply anew in the event that
such Subsidiary Guarantor subsequent to being released incurs any obligations
that pursuant to Section 4.14 hereof obligate it to become a Subsidiary
Guarantor. In addition, upon (i) the designation of any Subsidiary Guarantor as
an Unrestricted Subsidiary in compliance with the terms of the Indenture or (ii)
the sale or other disposition of all of the Capital Stock of a Subsidiary
Guarantor by the Company or a Subsidiary of the Company to, or upon the
consolidation or merger of a Subsidiary Guarantor with or into, any person other
than the Company or an Affiliate of the Company or any of its Subsidiaries, such
Subsidiary Guarantor shall be deemed automatically and unconditionally released
from all obligations under its Subsidiary Guaranty without any further action
required on the part of the Trustee or any Holder, PROVIDED that such sale or
other disposition, or consolidation or merger is made in accordance with the
terms of this Indenture, including
E-3
<PAGE> 103
Sections 4.12 and 5.01 hereof; PROVIDED, HOWEVER, that the foregoing proviso
shall not apply to the sale or disposition of a subsidiary Guarantor or of the
Capital Stock thereof in a foreclosure proceeding (whether or not judicial) to
the extent that such proviso would be inconsistent with the requirements of the
Uniform Commercial Code. Notwithstanding the immediately preceding sentence,
upon receipt of a request of the Company accompanied by an Officers' Certificate
certifying as to the compliance with this Section 11.04, the Trustee shall
deliver an appropriate instrument evidencing the release of such Subsidiary
Guarantor. Any Subsidiary Guarantor not so released or the entity surviving such
Subsidiary Guarantor, as applicable, shall remain or be liable under its
Subsidiary Guaranty as provided in this Article 11.
E-4
<PAGE> 104
EXHIBIT F
SENIOR GUARANTY
---------------
For value received. the undersigned hereby unconditionally guarantees to
the holder of a Note (as that term is defined in the Indenture dated as of March
17, 1997 (the "Indenture"), between Nortek, Inc. (the "Company") and State
Street Bank and Trust Company, as trustee (the "Trustee") and the Trustee, the
payments of principal of, premium, if any, interest on and Liquidated Damages,
if any, with respect to such Note in the amounts and at the time when due and
interest on the overdue principal, premium, if any, interest and Liquidated
Damages, if any, of such Note, if lawful, and the payments or performance of all
other obligations of the Company under the Indenture or the Notes, all in
accordance with and subject to the terms and limitations of such Note, Article
11 of the Indenture and this Guaranty. This Guaranty shall become effective in
accordance with Article 11 of the Indenture. The validity and enforceability of
this Guaranty shall not be affected by the fact that it is not affixed to any
particular Note.
The obligations of the undersigned to the holders of Notes and to the
Trustee pursuant to this Guaranty and the Indenture are expressly set forth in
Article 11 of the Indenture and reference is hereby made to the Indenture for
the precise terms of this Guaranty and all of the other provisions of the
Indenture to which this Guaranty relates. Each holder of a Note, by accepting
the same, agrees to and shall be bound by such provisions.
This Guaranty is subject to release upon the terms set forth in the
Indenture.
[NAME OF SUBSIDIARY GUARANTOR]
By: _____________________________
Name:
Title:
F-1
<PAGE> 105
CROSS REFERENCE TABLE4/
<TABLE>
<CAPTION>
TIA Indenture
Section Section
- ------- -------
<S> <C>
310(a)(1)............................................... 7.10
(a)(2)............................................ 7.10
(a)(3)............................................ N.A.5/
(a)(4)............................................ N.A.
(a)(5)....................................................7.10
(b)............................................... 7.08; 7.10
(c)............................................... N.A.
311(a).................................................. 7.11
(b)............................................... 7.11
(c)............................................... N.A.
312(a).................................................. 2.05
(b)............................................... 10.03
(c)............................................... 10.03
313(a).................................................. 7.06
(b)(1)............................................ N.A.
(b)(2)............................................ 7.06
(c)............................................... 10.02
(d)............................................... 7.06
314(a).................................................. 4.02; 10.02
(b)............................................... N.A.
(c)(1)............................................ 10.04
(c)(2)............................................ 10.04
(c)(3)............................................ N.A.
(d)............................................... N.A.
(e)............................................... 10.05
(f)............................................... 4.03
315(a).................................................. 7.01
(b)............................................... 7.05; 10.02
(c)............................................... 7.01
(d)............................................... 7.07
(e)............................................... 6.11
316(a) (last sentence).................................. 2.08
(a)(1)(A)......................................... 6.05
(a)(1)(B)......................................... 6.04
(a)(2)............................................ N.A.
</TABLE>
- --------
4/ Note: This Cross Reference Table shall not, for any purpose, be
deemed to be part of this Indenture.
5/ N.A. means Not Applicable.
F-i
<PAGE> 106
<TABLE>
<S> <C>
(b)............................................... 6.07
(c)............................................... N.A.
317(a)(1)............................................... 6.08
(a)(2)............................................ 6.09
(b)............................................... 2.04
318(a).................................................. 10.01
</TABLE>
F-ii
<PAGE> 1
Exhibit 4.3
REGISTRATION RIGHTS AGREEMENT
This REGISTRATION RIGHTS AGREEMENT (this "AGREEMENT") is made and
entered into as of March 17, 1997 between NORTEK, INC., a Delaware corporation
(the "COMPANY"), and Bear, Stearns & Co. Inc., Wasserstein Perella Securities,
Inc. and BT Securities Corporation (collectively, the "INITIAL PURCHASERS").
This Agreement is made pursuant to the Purchase Agreement dated as of
March 12, 1997 (the "PURCHASE AGREEMENT"), between the Company and the Initial
Purchasers, which provides for the sale by the Company to the Initial Purchasers
of an aggregate of $175,000,000 aggregate principal amount of the Company's
9 1/4% Senior Notes due 2007 (the "NOTES"). In order to induce the Initial
Purchasers to enter into the Purchase Agreement and to purchase the Notes, the
Company has agreed to provide to the Initial Purchasers and their direct and
indirect transferees the registration rights for the Notes set forth in this
Agreement. The execution and delivery of this Agreement is a condition precedent
to the obligations of the Initial Purchasers under the Purchase Agreement.
In consideration of the foregoing, the parties hereto agree as
follows:
1. DEFINITIONS. As used in this Agreement, the following capitalized
defined terms shall have the following meanings (and, unless otherwise
indicated, capitalized terms used herein without definition shall have the
meanings ascribed to them in the Purchase Agreement):
"ACT" shall mean the Securities Act of 1933, as amended.
"AGREEMENT" shall have the meaning set forth in the preamble to this
Agreement.
"APPLICABLE PERIOD" shall have the meaning set forth in Section 3(t)
hereof.
"CLOSING DATE" shall mean the Closing Date as defined in the Purchase
Agreement.
"COMMISSION" shall mean the Securities and Exchange Commission, or
such other federal agency administering the Act or the Exchange Act.
"COMPANY" shall have the meaning set forth in the preamble to this
Agreement, and shall also include the Company's successors.
"DEPOSITORY" shall mean The Depository Trust Company, or any successor
depositary appointed by the Company; PROVIDED, HOWEVER, that such
depositary must have an address in the Borough of Manhattan, The City of
New York.
<PAGE> 2
"EFFECTIVENESS PERIOD" shall have the meaning set forth in
Section 2(b) hereof.
"EVENT DATE" shall have the meaning set forth in Section 2(e) hereof.
"EXCHANGE ACT" shall mean the Securities Exchange Act of 1934, as
amended.
"EXCHANGE OFFER" shall mean the exchange offer by the Company of
Exchange Notes for Notes pursuant to Section 2(a) hereof.
"EXCHANGE OFFER REGISTRATION" shall mean a registration under the Act
effected pursuant to Section 2(a) hereof.
"EXCHANGE OFFER REGISTRATION STATEMENT" shall mean the registration
statement (on Form S-4 or, if applicable, on any other appropriate form)
relating to the Exchange Offer, and all amendments and supplements to such
registration statement. including post-effective amendments, in each case
including the Prospectus contained therein, all exhibits thereto and all
material incorporated by reference therein.
"EXCHANGE PERIOD" shall have the meaning set forth in Section 2(a)
hereof.
"EXCHANGE NOTES" shall mean the 9 1/4% Series B Senior Notes due 2007,
to be issued by the Company under the Indenture and containing terms
identical to the Notes (except that (i) interest thereon shall accrue from
the last date on which interest was paid on the Notes or, if no such
interest has been paid, from March 17, 1997, and (ii) the transfer
restrictions thereon shall be eliminated) to be offered to Holders of Notes
in exchange for Notes pursuant to the Exchange Offer.
"HOLDER" shall mean each Initial Purchaser, for so long as it owns any
Registrable Securities, and each of its respective successors, assigns and
direct and indirect transferees who become registered owners of Registrable
Securities under the Indenture.
"INDENTURE" shall mean the Indenture dated as of March 17, 1997 by and
between the Company and Sate Street Bank and Trust Company, as trustee, as
the same may be amended or supplemented from time to time in accordance
with the terms thereof.
"INITIAL PURCHASERS" shall have the meaning set forth in the preamble
to this Agreement.
"INSPECTORS" shall have the meaning set forth in Section 3(n) hereof.
"LIQUIDATED DAMAGES" shall have the meaning set forth in Section 2(e)
hereof.
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<PAGE> 3
"MAJORITY HOLDERS" shall mean the Holders of a majority of the
aggregate principal amount of outstanding (as determined under the
Indenture) Registrable Securities.
"NASD" shall mean the National Association of Securities Dealers, Inc.
"NOTES" shall have the meaning set forth in the preamble to this
Agreement.
"PARTICIPATING BROKER-DEALER" shall have the meaning set forth in
Section 3(t) hereof.
"PERSON" shall mean any individual, corporation, limited liability
company, general or limited partnership, limited liability partnership,
joint venture, association, joint-stock company, trust, charitable
foundation, unincorporated organization, government or agency or political
subdivision thereof or any other entity.
"PRIVATE EXCHANGE" shall have the meaning set forth in Section 2(a)
hereof.
"PRIVATE EXCHANGE NOTES" shall have the meaning set forth in Section
2(a) hereof.
"PROSPECTUS" shall mean the prospectus included in a Registration
Statement, including any preliminary prospectus, and any such prospectus as
amended or supplemented by any prospectus supplement, including a
prospectus supplement with respect to the terms of the offering of any
portion of the Registrable Securities covered by a Shelf Registration
Statement, including post-effective amendments, and in each case including
all material incorporated by reference therein.
"PURCHASE AGREEMENT" shall have the meaning set forth in the preamble
to this Agreement.
"RECORDS" shall have the meaning set forth in Section 3(n) hereof.
"REGISTRABLE SECURITIES" shall mean the Notes and, if issued, the
Private Exchange Notes; PROVIDED, HOWEVER, that Notes or Private Exchange
Notes, as the case may be, shall cease to be Registrable Securities when
(i) a Registration Statement with respect to such Notes or Private Exchange
Notes or the resale thereof shall have been declared effective under the
Act and such Notes or Private Exchange Notes, as the case may be, shall
have been disposed of pursuant to such Registration Statement, (ii) such
Notes or Private Exchange Notes, as the case may be, shall have become
eligible to be sold to the public pursuant to Rule 144(k) (or any similar
provision then in force, but not Rule 144A) under the Act, (iii) such Notes
or Private Exchange Notes, as the case may be, shall have ceased to be
outstanding or (iv) with
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<PAGE> 4
respect to the Notes, such Notes have been exchanged for Exchange Notes
upon consummation of the Exchange Offer.
"REGISTRATION EXPENSES" shall mean any and all expenses incident to
performance of or compliance by the Company with this Agreement,
including, without limitation: (i) Commission, stock exchange or NASD
registration and filing fees, including, if applicable, the fees and
expenses of any "qualified independent underwriter" and its counsel that
is required to be retained by any Holder of Registrable Securities in
accordance with the rules and regulations of the NASD. (ii) fees and
expenses incurred in connection with compliance with state securities or
blue sky laws (including reasonable fees and disbursements of counsel for
any underwriters or Holders in connection with the blue sky qualification
of any of the Exchange Notes or Registrable Securities) and compliance with
the rules of the NASD, (iii) expenses of any Persons in preparing or
assisting in preparing, printing and distributing any Registration
Statement, any Prospectus and any amendments or supplements thereto, and in
preparing or assisting in preparing, printing and distributing any
underwriting agreements, securities sales agreements and other documents
relating to the performance of and compliance with the obligations under
this Agreement, (iv) rating agency fees, (v) fees and disbursements of
counsel for and independent certified public accountants of the Company,
including the expenses of any "cold comfort" letters required by or
incident to such performance and compliance, (vi) fees and expenses of the
Trustee, and any exchange agent or custodian, (vii) fees and expenses
incurred in connection with the listing, if any, of any of the Registrable
Securities on any securities exchange or exchanges, and (viii) the
reasonable fees and expenses of any special experts retained by the Company
in connection with any Registration Statement.
"REGISTRATION STATEMENT" shall mean any registration statement of the
Company relating to the Exchange Notes or Registrable Securities pursuant
to the provisions of this Agreement, and all amendments and supplements to
any such registration statement, including post-effective amendments, in
each case including the Prospectus contained therein, all exhibits thereto
and all material incorporated by reference therein.
"SHELF REGISTRATION" shall mean a registration effected pursuant to
Section 2(b) hereof.
"SHELF REGISTRATION STATEMENT" shall mean a "shelf" registration
statement of the Company pursuant to the provisions of Section 2(b) of this
Agreement which covers all of the Registrable Securities, on an appropriate
form under Rule 415 under the Act, or any similar rule that may be adopted
by the Commission, and all amendments and supplements to such registration
statement, including post-effective amendments, in each case including the
Prospectus contained therein, all exhibits thereto and all material
incorporated by reference therein.
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<PAGE> 5
"TIA" shall mean the Trust Indenture Act of 1939, as amended.
"TRANSFER RESTRICTED SECURITIES" shall mean each Note until (i) the
date on which such Note has been exchanged by a Person other than a
broker-dealer for an Exchange Note in the Exchange Offer, (ii) following the
exchange by a broker-dealer in the Exchange Offer of a Note for an Exchange
Note, the date on which such Exchange Note is sold to a purchaser who receives
from such broker-dealer on or prior to the date of such sale a copy of the
prospectus contained in the Exchange Offer Registration Statement, (iii) the
date on which such Note has been effectively registered under the Securities
Act and disposed of in accordance with the Shelf Registration Statement or
(iv) the date on which such Note is distributed to the public pursuant to
Rule 144 under the Securities Act.
"TRUSTEE" shall mean the trustee under the Indenture.
2. Registration Under the Act.
--------------------------
(a) EXCHANGE OFFER. To the extent not prohibited by any applicable law
or applicable interpretation of the staff of the Commission, the Company shall,
for the benefit of the Holders, at the Company's cost, use its best efforts to
cause to be filed with the Commission an Exchange Offer Registration Statement
on or prior to 45 days after the Closing Date on an appropriate form under the
Act covering the offer by the Company to the Holders to exchange all of the
Registrable Securities (other than Private Exchange Notes) for a like aggregate
principal amount of Exchange Notes, to cause such Exchange Offer Registration
Statement to be declared effective under the Act by the Commission on or prior
to 120 days after the Closing Date, to cause such Registration Statement to
remain effective until the closing of the Exchange Offer and to cause the
Exchange Offer to be consummated on or prior to 45 days after the date on which
the Exchange Offer Registration Statement was declared effective under the Act
by the Commission. The Exchange Notes will be issued under the Indenture. Upon
the effectiveness of the Exchange Offer Registration Statement, the Company
shall promptly commence the Exchange Offer, it being the objective of such
Exchange Offer to enable each Holder (other than Participating Broker-Dealers
(as defined in Section 3(t) hereof)) eligible and electing to exchange
Registrable Securities for Exchange Notes (assuming that such Holder is not an
affiliate of the Company within the meaning of Rule 405 under the Act, acquires
the Exchange Notes in the ordinary course of such Holder's business and has no
arrangements or understandings with any Person to participate in the Exchange
Offer for the purpose of distributing the Exchange Notes) to transfer such
Exchange Notes from and after their receipt without any limitations or
restrictions under the Act or under state securities or blue sky laws.
In connection with the Exchange Offer, the Company shall:
(i) mail to each Holder a copy of the Prospectus forming part of the
Exchange Offer Registration Statement together with an appropriate letter
of transmittal and related documents;
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<PAGE> 6
(ii) keep the Exchange Offer open for acceptance for a period of not
less than 30 days after the date notice thereof is mailed to the Holders,
or longer if required by applicable law (such period being referred to
herein as the "EXCHANGE PERIOD");
(iii) utilize the services of the Depository for the Exchange Offer;
(iv) permit Holders to withdraw tendered Notes at any time prior to
the close of business, New York City time, on the last business day of the
Exchange Period, by sending to the institution specified in the notice a
telegram, telex, facsimile transmission or letter setting forth the name of
such Holder, the principal amount of Notes delivered for exchange, and a
statement that such Holder is withdrawing its election to have such Notes
exchanged;
(v) notify each Holder that any Note not tendered will remain
outstanding and continue to accrue interest, but will not retain any rights
under this Agreement (except in the case of the Initial Purchasers and
Participating Broker-Dealers as provided herein); and
(vi) otherwise comply in all respects with all applicable laws
relating to the Exchange Offer.
If, prior to consummation of the Exchange Offer, any Initial Purchaser
holds any Notes acquired by it and having the status of an unsold allotment in
the initial distribution, the Company upon the request of such Initial Purchaser
shall, simultaneously with the delivery of the Exchange Notes in the Exchange
Offer, issue and deliver to such Initial Purchaser in exchange (the "PRIVATE
EXCHANGE") for Notes held by the Initial Purchasers a like principal amount of
debt securities of the Company that are identical (except that such securities
shall bear appropriate transfer restrictions) to the Exchange Notes (the
"PRIVATE EXCHANGE NOTES") and which are issued pursuant to the Indenture (which
will provide that the Exchange Notes will not be subject to the transfer
restrictions set forth in the Indenture and that the Exchange Notes, the Private
Exchange Notes and the Notes will vote and consent together on all matters as
one class and that none of the Exchange Notes, the Private Exchange Notes or the
Notes will have the right to vote or consent as a separate class on any matter).
The Private Exchange Notes shall be of the same series as and shall bear the
same CUSIP number as the Exchange Notes.
As soon as practicable after the close of the Exchange Offer or the
Private Exchange, as the case may be, the Company shall;
(i) accept for exchange all Notes or portions thereof duly tendered
and not validly withdrawn pursuant to the Exchange Offer;
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<PAGE> 7
(ii) accept for exchange all Notes or portions thereof duly tendered
pursuant to the Private Exchange; and
(iii) deliver, or cause to be delivered, to the Trustee for
cancellation all Notes or portions thereof so accepted for exchange by the
Company, and issue, and cause the Trustee to promptly authenticate and
deliver to each Holder, a new Exchange Note or Private Exchange Note, as
the case may be, equal in principal amount to the principal amount of the
Notes surrendered by such Holder.
To the extent not prohibited by applicable law or any applicable
interpretation of the staff of the Commission, the Company shall use its best
efforts to complete the Exchange Offer as provided above, and shall comply with
all applicable requirements of the Act, the Exchange Act and other applicable
laws in connection with the Exchange Offer. The Exchange Offer shall not be
subject to any condition, other than that (i) the Exchange Offer does not
violate any applicable law or interpretation of the staff of the Commission,
(ii) no action or proceeding has been instituted or threatened in any court or
by or before any governmental agency with respect to the Exchange Offer which,
in the reasonable judgment of the Company, might impair the ability of the
Company to proceed with the Exchange Offer, (iii) there has not been any
material change, or development involving a prospective material change, in the
business or financial affairs of the Company or any of its subsidiaries which,
in the reasonable judgment of the Company, would materially impair the Company's
ability to consummate the Exchange Offer or have a material adverse effect on
the Company if the Exchange Offer is consummated, (iv) there has not been
proposed, adopted, or enacted any law, statute, rule or regulation which, in the
reasonable judgment of the Company, might materially impair the ability of the
Company to proceed with the Exchange Offer or have a material adverse effect on
the Company if the Exchange Offer is consummated or (v) all governmental
approvals which the Company shall reasonably deem necessary for the consummation
of the Exchange Offer as contemplated shall have been obtained. Each Holder of
Registrable Securities who wishes to exchange such Registrable Securities for
Exchange Notes in the Exchange Offer will be required to make certain customary
representations in connection therewith, including representations that such
Holder is not an affiliate of the Company within the meaning of Rule 405 under
the Act, that any Exchange Notes to be received by it will be acquired in the
ordinary course of business and that at the time of the commencement of the
Exchange Offer it had no arrangement with any Person to participate in the
distribution (within the meaning of the Act) of the Exchange Notes and will be
required to make such other representations as may be necessary under applicable
Commission rules, regulations or interpretations to render available the use of
Form S-4 or any other appropriate form under the Act. The Company shall inform
the Initial Purchasers, after consultation with the Trustee and the Initial
Purchasers, of the names and addresses of the Holders to whom the Exchange Offer
is made, and the Initial Purchasers shall have the right to contact such Holders
and otherwise facilitate the tender of Registrable Securities in the Exchange
Offer.
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<PAGE> 8
In the event that the Company is unable to consummate the Exchange
Offer due to any event listed in clauses (i) through (v) in the paragraph
immediately above, the Company shall not be deemed to have breached any covenant
under this Section 2(a).
Upon consummation of the Exchange Offer in accordance with this
Section 2(a), the provisions of this Agreement shall continue to apply, MUTATIS
MUTANDIS, solely with respect to Registrable Securities that are Private
Exchange Notes and Exchange Notes held by Participating Broker-Dealers, and the
Company shall have no further obligation to register Registrable Securities
(other than Private Exchange Notes) pursuant to Section 2(b) of this Agreement.
(b) SHELF REGISTRATION. In the event that (i) the Company is not
permitted to commence or accept tenders pursuant to the Exchange Offer because
the Exchange Offer is not permitted by applicable law or Commission policy, (ii)
any Holder of Transfer Restricted Securities notifies the Company within 20
business days after the consummation of the Exchange Offer that (a) it is
prohibited by law or Commission policy from participating in the Exchange Offer,
(b) that it may not resell the Exchange Notes acquired by it in the Exchange
Offer to the public without delivering a prospectus and the prospectus contained
in the Exchange Offer Registration Statement is not appropriate or available for
such resales or (c) that it is a broker-dealer and owns Notes acquired directly
from the Company or an affiliate of the Company, or (iii) the Exchange Offer is
not for any other reason consummated within 165 days of the Closing Date, the
Company shall, at its cost, cause to be filed with the Commission as promptly as
practicable after such determination or date, as the case may be, and, in any
event, on or prior to 45 days thereafter, a Shelf Registration Statement
providing for the sale by the Holders of all of the Registrable Securities, and
shall use its best efforts to cause such Shelf Registration Statement declared
effective by the Commission on or prior to 90 days after such determination or
date. No Holder of Registrable Securities may include any of its Registrable
Securities in any Shelf Registration pursuant to this Agreement unless and until
such Holder furnishes to the Company in writing, within 15 days after receipt of
a request therefor, such information as the Company may, after conferring with
counsel with regard to information relating to Holders that would be required by
the Commission to be included in such Shelf Registration Statement or Prospectus
included therein, reasonably request for inclusion in any Shelf Registration
Statement or Prospectus included therein. Each Holder as to which any Shelf
Registration is being effected agrees to furnish promptly to the Company all
information required to be disclosed in the applicable Shelf Registration
Statement or Prospectus included therein by the rules and regulations of the
Commission applicable to the Shelf Registration Statement in order to make the
information previously furnished to the Company by such Holder not materially
misleading.
The Company agrees, subject to applicable law or applicable
interpretation of the staff of the Commission, to use its reasonable best
efforts to keep the Shelf Registration Statement continuously effective,
supplemented and amended under the Act for a period ending on the earlier of the
date which is two years from the Closing Date (subject
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<PAGE> 9
to extension pursuant to the last paragraph of Section 3) or the date on which
all of the Registrable Securities covered by the Shelf Registration Statement
have been sold pursuant to the Shelf Registration Statement or cease to be
outstanding (the "EFFECTIVENESS PERIOD"). The Company shall not permit any
securities other than Registrable Securities to be included in the Shelf
Registration. The Company will, in the event a Shelf Registration Statement is
declared effective, provide to each Holder copies of the prospectus which is a
part of the Shelf Registration Statement, notify each such Holder when the Shelf
Registration Statement has become effective and take certain other actions as
are customary to permit unrestricted resales of the Registrable Securities
covered by the Shelf Registration Statement. The Company further agrees, if
necessary, to use its reasonable best efforts to supplement or amend the Shelf
Registration Statement, if required by the Act or the rules, regulations or
instructions applicable to the registration form used by the Company for such
Shelf Registration Statement or by any other rules and regulations thereunder
for shelf registrations, or if reasonably requested by the Majority Holders, and
the Company agrees to furnish to the Holders copies of any such supplement or
amendment promptly after its being used or filed with the Commission.
(c) EXPENSES. The Company shall pay all Registration Expenses in
connection with registrations pursuant to Section 2(a) or 2(b). Each Holder
shall pay all expenses of its counsel (other than the fees described in clauses
(i) and (ii) of the definition of "Registration Expenses"), underwriting
discounts and commissions and transfer taxes, if any, relating to the sale or
disposition of such Holder's Registrable Securities pursuant to the Exchange
Offer Registration Statement and the Shelf Registration Statement.
(d) EFFECTIVE REGISTRATION STATEMENT. An Exchange Offer Registration
Statement pursuant to Section 2(a) hereof or a Shelf Registration Statement
pursuant to Section 2(b) hereof will not be deemed to have become effective
unless it has been declared effective by the Commission; PROVIDED, HOWEVER, that
if, after it has been declared effective, the offering of Registrable Securities
pursuant to a Shelf Registration Statement is interfered with by any stop order,
injunction or other order or requirement of the Commission or any other
governmental agency or court, such Registration Statement will be deemed not to
have been effective during the period of such interference, until the offering
of Registrable Securities pursuant to such Registration Statement may legally
resume.
(e) LIQUIDATED DAMAGES. In the event that an Exchange Offer
Registration Statement has not been filed with the Commission on or prior to 45
days after the Closing Date, additional interest payable by the Company as
liquidated damages ("LIQUIDATED DAMAGES") will accrue on the Notes from and
including the 31st day after the Closing Date until but excluding the date such
Exchange Offer Registration Statement is filed. In addition, if on or prior to
120 days after the Closing Date, such Exchange Offer Registration Statement is
not declared effective under the Act by the Commission, Liquidated Damages will
accrue on the Notes from and including the 121st day after the Closing Date
until but excluding the date such Exchange Offer Registration Statement is
declared effective. Further, if on or prior to 45 days after the date specified
for effectiveness of the Exchange Offer Registration
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<PAGE> 10
Statement the Exchange Offer is not consummated, Liquidated Damages will accrue
on the Notes from and including the 46th day after the date specified for
effectiveness of the Exchange Offer Registration Statement, but excluding, the
consummation of the Exchange Offer. If a Shelf Registration Statement is
required to be filed pursuant to Section 2(b) and such Shelf Registration
Statement is not filed or declared effective within the time periods provided by
Section 2(b) hereof for such filing or declaration, Liquidated Damages will
accrue on the Notes (other than those exchanged in the Exchange Offer) or the
Private Exchange Notes, as the case may be, from and including the day
immediately following such default until but excluding the effective date of the
Shelf Registration Statement. Further, if the Shelf Registration Statement or
the Exchange Offer Registration Statement is declared effective but thereafter
ceases to be effective or usable during the time periods specified in this
Agreement, Liquidated Damages will accrue on the Notes (other than those
exchanged in the Exchange Offer) or the Private Exchange Notes, as the case may
be, from and including the day immediately following such default until but
excluding the date such Registration Statement becomes effective or usable. In
each case, such Liquidated Damages will be payable in cash semiannually in
arrears, with the first semiannual payment due on the first interest payment
date in respect of the Notes (or the Private Exchange Notes) following the date
from which Liquidated Damages begin to accrue, and will accrue, under each
circumstance set forth above at a rate per annum equal to an additional one half
of one percent (0.50%) of the principal amount of the Notes (or the Private
Exchange Notes) upon the occurrence of each such circumstance, which rate will
increase by one half of one percent (0.50%) for each 90-day period that such
Liquidated Damages continue to accrue under any circumstance, with an aggregate
maximum increase in the interest rate per annum equal to two percent (2.00%).
Upon the filing of the Exchange Offer Registration Statement, the
effectiveness of the Exchange Offer Registration Statement, or the consummation
of the Exchange Offer, as the case may be, the interest rate borne by the Notes
will be reduced by the full amount of any such increase to the extent that such
increase related to the failure of any such event to have occurred. Upon the
effectiveness of a Shelf Registration Statement, the interest rate borne by the
Notes (and the Private Exchange Notes) shall be reduced, from and as of the date
of such effectiveness, to the original interest rate of the Notes unless and
until increased as described above. Notwithstanding anything to the contrary
contained herein, the Company (i) shall not be required to amend or supplement
the Shelf Registration Statement, any related prospectus or any document
incorporated therein by reference and (ii) may suspend the effectiveness of any
such Shelf Registration Statement in the event that, and for a period not to
exceed, for so long as this Agreement is in effect, an aggregate of 90 days in
any one calendar year if (A) an event occurs and is continuing as a result of
which the Shelf Registration Statement, any related prospectus or any document
incorporated therein by reference as then amended or supplemented would, in the
Company's good faith judgment, contain an untrue statement of a material fact or
omit to state a material fact necessary in order to make the statements therein
not misleading, and (B) the Company determines in its good faith judgment that
the disclosure of such event at such time would have a material adverse effect
on the business, operations or prospects of the Company;
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<PAGE> 11
provided that any such suspension shall not relieve the Company from its
obligation to pay Liquidated Damages.
The Company shall notify the Trustee within three business days after
each and every date on which an event occurs in respect of which Liquidated
Damages is required to be paid (an "EVENT DATE"). Liquidated Damages shall be
paid by depositing with the Trustee, in trust, for the benefit of the Holders of
Notes, Exchange Notes or Private Exchange Notes, as the case may be, on or
before the applicable semiannual interest payment date, immediately available
funds in sums sufficient to pay the Liquidated Damages then due. The Liquidated
Damages due shall be payable on each interest payment date to the record Holder
of Notes entitled to receive the interest payment to be paid on such date as set
forth in the Indenture. Each obligation to pay Liquidated Damages shall be
deemed to accrue from and including the day following the applicable Event Date.
(f) SPECIFIC ENFORCEMENT. Without limiting the remedies available to
the Initial Purchasers and the Holders, the Company acknowledges that any
failure by the Company to comply with its obligations under Section 2(a) and
Section 2(b) hereof would result in material irreparable injury to the Initial
Purchasers or the Holders for which there is no adequate remedy at law, that it
would not be possible to measure damages for such injuries precisely and that,
in the event of any such failure, the Initial Purchasers or any Holder may
obtain such relief as may be required to specifically enforce the Company's
obligations under Section 2(a) and Section 2(b) hereof.
3. REGISTRATION PROCEDURES. In connection with the obligations of the
Company with respect to the Registration Statements pursuant to Sections 2(a)
and 2(b) hereof, the Company shall:
(a) prepare and file with the Commission a Registration Statement or
Registration Statements as prescribed by Sections 2(a) and 2(b) within the
relevant time periods specified in Section 2 hereof on the appropriate form
under the Act, which form (i) shall be selected by the Company, (ii) shall,
in the case of a Shelf Registration, be available for the sale of the
Registrable Securities by the selling Holders and (iii) shall comply as to
form in all material respects with the requirements of the applicable form
and include or incorporate by reference all financial statements required
by the Commission to be filed therewith, and the Company shall use its best
efforts to cause such Registration Statement to become effective and remain
effective in accordance with Section 2; PROVIDED, HOWEVER that if (1) such
filing is pursuant to Section 2(b), or (2) a Prospectus contained in an
Exchange Offer Registration Statement filed pursuant to Section 2(a) is
required to be delivered under the Act by any Participating Broker-Dealer
who seeks to sell Exchange Notes, before filing any Registration Statement
or Prospectus or any amendments or supplements thereto, the Company, if
requested, shall furnish to and afford the Holders and each such
Participating Broker-Dealer, as the case may be, covered by such
Registration Statement, their counsel and the managing underwriters, if
any, a reasonable
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opportunity to review copies of all such documents (including copies of any
documents to be incorporated by reference therein and all exhibits thereto)
proposed to be filed at least five business days prior to such filing. The
Company shall not file any Registration Statement or Prospectus or any
amendments or supplements thereto in respect of which the Holders, pursuant
to this Agreement, must be afforded an opportunity to review prior to the
filing of such document, if the Majority Holders or such Participating
Broker-Dealer, as the case may be, their counsel or the managing
underwriters, if any, shall reasonably object;
(b) subject to Section 3(a) hereof, prepare and file with the
Commission such amendments and post-effective amendments to each
Registration Statement as may be necessary to keep such Registration
Statement effective for the Effectiveness Period or the Applicable Period.
as the case may be, and cause each Prospectus to be supplemented by any
required prospectus supplement and as so supplemented to be filed pursuant
to Rule 424 (or any similar provision then in force) under the Act, and
comply with the provisions of the Act, the Exchange Act and the rules and
regulations promulgated thereunder applicable to it with respect to the
disposition of all securities covered by each Registration Statement during
the Effectiveness Period or the Applicable Period, as the case may be, in
accordance with the intended method or methods of distribution by the
selling Holders thereof described in this Agreement (including sales by any
Participating Broker-Dealer);
(c) in the case of a Shelf Registration, (i) notify each Holder, at
least five business days prior to filing, that a Shelf Registration
Statement with respect to the Registrable Securities is being filed and
advising such Holder that the distribution of Registrable Securities will
be made in accordance with the method selected by the Majority Holders,
(ii) furnish to each Holder and to each underwriter of an underwritten
offering of Registrable Securities, if any, without charge, as many copies
of each Prospectus, including each preliminary Prospectus, and any
amendment or supplement thereto and such other documents as such Holder or
underwriter may reasonably request, in order to facilitate the public sale
or other disposition of the Registrable Securities, and (iii) subject to
the last paragraph of this Section 3, consent to the use of the Prospectus
or any amendment or supplement thereto by each of the selling Holders in
connection with the offering and sale of the Registrable Securities covered
by the Prospectus or any amendment or supplement thereto, provided that
such use complies with all applicable laws and regulations;
(d) use its best efforts to register or qualify the Registrable
Securities under all applicable state securities or "blue sky" laws of such
jurisdictions as any Holder of Registrable Securities covered by a
Registration Statement and each underwriter of an underwritten offering of
Registrable Securities shall reasonably request by the time the applicable
Registration Statement is declared effective by the Commission, and do any
and all other acts and things which may be reasonably necessary or
advisable to enable such Holder and underwriter to consummate the dis-
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position in each such jurisdiction of such Registrable Securities owned by
such Holder; PROVIDED, HOWEVER, that the Company shall not be required to
(i) qualify as a foreign partnership or foreign corporation or as a dealer
in securities in any jurisdiction where it would not otherwise be required
to qualify but for this Section 3(d), (ii) file any general consent to
service of process in any jurisdiction where it would not otherwise be
subject to such service of process or (iii) subject itself to taxation in
any such jurisdiction if it is not then so subject;
(e) in the case of (A) a Shelf Registration or (B) Participating
Broker-Dealers who have notified the Company that they will be utilizing
the Prospectus contained in the Exchange Offer Registration Statement as
provided in Section 3(t) hereof, are seeking to sell Exchange Notes and are
required to deliver Prospectuses, notify each Holder, or such Participating
Broker-Dealers, as the case may be, their counsel and the managing
underwriters, if any, promptly and, if requested by such Holder or
Participating Broker-Dealer, confirm such notice in writing (i) when a
Registration Statement has become effective and when any post-effective
amendments and supplements thereto become effective, (ii) of any request by
the Commission or any state securities authority for amendments and
supplements to a Registration Statement or Prospectus or for additional
information after the Registration Statement has become effective, (iii) of
the issuance by the Commission or any state securities authority of any
stop order suspending the effectiveness of a Registration Statement or the
initiation of any proceedings for that purpose, (iv) in the case of a Shelf
Registration, if, between the effective date of a Registration Statement
and the closing of any sale of Registrable Securities covered thereby, the
representations and warranties of the Company contained in any underwriting
agreement, securities sales agreement or other similar agreement, if any,
relating to such offering cease to be true and correct in all material
respects, (v) if the Company receives any notification with respect to the
suspension of the qualification of the Registrable Securities or the
Exchange Notes to be sold by any Participating Broker-Dealer for offer or
sale in any jurisdiction or the initiation of any proceeding for such
purpose, (vi) of the happening of any event or the failure of any event to
occur or the discovery of any facts or otherwise, during the period a Shelf
Registration Statement is effective or the Applicable Period, as the case
may be, which makes any statement made in the Shelf Registration Statement,
the Exchange Offer Registration Statement or any related Prospectus untrue
in any material respect or which causes such Registration Statement or
Prospectus, as the case may be, to omit to state a material fact necessary
to make the statements therein, in the light of the circumstances under
which they were made, not misleading and (vii) the Company's reasonable
determination that a post-effective amendment to the Registration Statement
would be appropriate;
(f) use its best efforts to obtain the withdrawal of any order
suspending the effectiveness of a Registration Statement at the earliest
possible moment;
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(g) in the case of a Shelf Registration. furnish to each Holder. upon
request and without charge, at least one conformed copy of each
Registration Statement and any post-effective amendment thereto (without
documents incorporated therein by reference or exhibits thereto, unless
requested);
(h) in the case of a Shelf Registration, cooperate with the selling
Holders to facilitate the timely preparation and delivery of certificates,
if any, representing Registrable Securities to be sold, which certificates
shall not bear any restrictive legends and shall be in a form eligible for
deposit with the Depository; and cause such Registrable Securities to be in
such denominations (consistent with the provisions of the Indenture) and
registered in such names as the selling Holders or the managing
underwriters may reasonably request at least two business days prior to the
closing of any sale of Registrable Securities;
(i) subject to Section 3(a) hereof and the second paragraph of Section
2(e) hereof, in the case of a Shelf Registration or an Exchange Offer
Registration. upon the occurrence of any circumstance contemplated by
Section 3(e)(ii), 3(e)(iii), 3(e)(iv), 3(e)(v), 3(e)(vi) or 3(e)(vii)
hereof, use its best efforts to prepare a supplement or post-effective
amendment to the Registration Statement and the related Prospectus or any
document incorporated therein by reference or file any other required
document so that, as thereafter delivered to the purchasers of the
Registrable Securities, such Prospectus will not contain any untrue
statement of a material fact or omit to state a material fact necessary to
make the statements therein, in the light of the circumstances under which
they were made, not misleading. The Company agrees to notify each Holder to
suspend use of the Prospectus as promptly as practicable after the
occurrence of any such circumstance, and each Holder hereby agrees to
suspend use of the Prospectus until the Company has amended or supplemented
the Prospectus to correct such misstatement or omission;
(j) in the case of a Shelf Registration, furnish to each Holder of
Registrable Securities, upon request and without charge, a reasonable
number of copies of any document which is incorporated by reference into or
is an exhibit to a Registration Statement or a Prospectus after the initial
filing of a Registration Statement;
(k) obtain a CUSIP number for all Exchange Notes or Registrable
Securities, as the case may be, not later than the effective date of a
Registration Statement, and provide the Trustee with printed certificates
for the Exchange Notes or the Registrable Securities, as the case may be,
in a form eligible for deposit with the Depository;
(1) cause the Indenture to be qualified under the TIA in connection
with the registration of the Exchange Notes or Registrable Securities, as
the case may be, cooperate with the Trustee and the Holders to effect such
changes to the Indenture
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<PAGE> 15
as may be required for the Indenture to be so qualified in accordance with
the terms of the TIA and execute, and use its best efforts to cause the
Trustee to execute. all documents as may be required to effect such
changes. and all other forms and documents required to be filed with the
Commission to enable the Indenture to be so qualified in a timely manner;
(m) in the case of a Shelf Registration, enter into such agreements
(including underwriting agreements) as are customary in underwritten public
offerings and take all such other appropriate actions as are reasonably
requested in order to expedite or facilitate the registration or the
disposition of such Registrable Securities. and in such connection, whether
or not an underwriting agreement is entered into and whether or not the
registration is an underwritten registration: (i) make such representations
and warranties to Holders of such Registrable Securities and the
underwriters (if any), with respect to the business of the Company and its
subsidiaries and the Registration Statement, the Prospectus and all
documents, if any, incorporated or deemed to be incorporated by reference
therein, in each case, as are customarily made by issuers to underwriters
in underwritten public offerings, and confirm the same if and when
reasonably requested; (ii) obtain customary opinions of counsel to the
Company and updates thereof in form and substance reasonably satisfactory
to the managing underwriters (if any) and the Holders of a majority in
principal amount of the Registrable Securities being sold, addressed to
each selling Holder and the underwriters (if any) covering the matters
customarily covered in opinions requested in underwritten public offerings
and such other matters as may be reasonably requested by such Holders and
underwriters; (iii) obtain "cold comfort" letters and updates thereof in
form and substance reasonably satisfactory to the managing underwriters
from the independent certified public accountants of the Company (and, if
necessary, any other independent certified public accountants of any
subsidiary of the Company or of any business acquired or to be acquired by
the Company for which financial statements and financial data are, or are
required to be, included in the Registration Statement), addressed to the
selling Holders of Registrable Securities and to each of the underwriters,
such letters to be in customary form and covering matters of the type
customarily covered in "cold comfort" letters in connection with
underwritten public offerings; and (iv) if an underwriting agreement is
entered into, cause the same to contain indemnification provisions and
procedures no less favorable than those set forth in Section 4 hereof (or
such other provisions and procedures acceptable to Holders of a majority in
aggregate principal amount of Registrable Securities covered by such
Registration Statement and the managing underwriters or agents) with
respect to all parties to be indemnified pursuant to said Section. The
above shall be done at each closing under such underwriting agreement. or
as and to the extent required thereunder;
(n) if (A) a Shelf Registration is filed pursuant to Section 2(b) or
(B) a Prospectus contained in an Exchange Offer Registration Statement
filed pursuant to Section 2(a) is required to be delivered under the Act by
any Participating
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<PAGE> 16
Broker-Dealer who seeks to sell Exchange Notes during the Applicable
Period, make available for inspection by any selling Holder of such
Registrable Securities being sold, or each such Participating
Broker-Dealer, as the case may be, any underwriter participating in any
such disposition of Registrable Securities, if any, and any attorney,
accountant or other agent retained by any such selling Holder or each such
Participating Broker-Dealer, as the case may be, or underwriter
(collectively, the "INSPECTORS"), at the offices where normally kept,
during reasonable business hours, all financial and other records,
pertinent corporate documents and properties of the Company and its
subsidiaries (collectively, the "RECORDS") as shall be reasonably necessary
to enable them to exercise any applicable due diligence responsibilities,
and cause the officers, directors and employees of the Company and its
subsidiaries to supply all information in each case reasonably requested by
any such Inspector in connection with such Registration Statement. Records
which the Company determines, in good faith, to be confidential and as to
which they notify the Inspectors are confidential shall not be disclosed by
the Inspectors unless, after prior consultation with the Company, (i) the
disclosure of such Records is necessary to avoid or correct a material
misstatement or omission in such Registration Statement, (ii) the release
of such Records is ordered pursuant to an effective subpoena or other order
from a court of competent jurisdiction or (iii) the information in such
Records has been made generally available to the public, other than as a
result of a breach of confidentiality or secrecy to the Company. Each
selling Holder of such Registrable Securities and each such Participating
Broker-Dealer will be required to agree that information obtained by it as
a result of such inspections shall be deemed confidential and shall not be
used by it as the basis for any market transactions in the securities of
the Company unless and until such is made generally available to the
public, other than as a result of a breach of confidentiality or secrecy to
the Company. Each selling Holder of such Registrable Securities and each
such Participating Broker-Dealer will be required to further agree that it
will, upon learning that disclosure of such Records is sought in a court of
competent jurisdiction or is otherwise required upon the written advice of
counsel to such Participating Broker-Dealer, give notice to the Company and
allow the Company at its expense to undertake appropriate action to prevent
disclosure of the Records deemed confidential;
(o) comply with all applicable rules and regulations of the Commission
and, as soon as reasonably practicable, make generally available to the
Holders earnings statements of the Company covering at least 12 months
satisfying the provisions of Section 11(a) of the Act and Rule 158
thereunder (or any similar rule promulgated under the Act);
(p) upon consummation of an Exchange Offer or a Private Exchange,
obtain an opinion of counsel to the Company addressed to the Trustee for
the benefit of all Holders of Registrable Securities participating in the
Exchange Offer or the Private Exchange, as the case may be, and which
includes an opinion that (i) the
16
<PAGE> 17
Company has duly authorized, executed and delivered the Exchange Notes and
Private Exchange Notes and the Indenture, as the case may be, and (ii) each
of the Exchange Notes or the Private Exchange Notes and the Indenture, as
the case may be, constitute a legal, valid and binding obligation of the
Company, enforceable against the Company in accordance with its respective
terms (in each case, with customary exceptions);
(q) if an Exchange Offer or a Private Exchange is to be consummated,
upon delivery of the Registrable Securities by Holders to the Company (or
to such other Person as directed by the Company) in exchange for the
Exchange Notes or the Private Exchange Notes, as the case may be, the
Company shall mark, or cause to be marked, on such Registrable Securities
delivered by such Holders that such Registrable Securities are being
cancelled in exchange for the Exchange Notes or the Private Exchange Notes,
as the case may be; in no event shall such Registrable Securities be marked
as paid or otherwise satisfied;
(r) cooperate with each seller of Registrable Securities covered by
any Registration Statement and each underwriter, if any, participating in
the disposition of such Registrable Securities and their respective counsel
in connection with any filings required to be made with the NASD:
(s) use its best efforts to take all other steps necessary to effect
the registration of the Registrable Securities covered by a Registration
Statement contemplated hereby;
(t) (A) in the case of the Exchange Offer Registration Statement (i)
include in the Exchange Offer Registration Statement a section entitled
"Plan of Distribution," which section shall be reasonably acceptable to the
Initial Purchasers or another representative of the Participating
Broker-Dealers, and which shall contain a summary statement of the
positions taken or policies made by the staff of the Commission with
respect to the potential "underwriter" status of any broker-dealer (a
"PARTICIPATING BROKER-DEALER") that holds Registrable Securities acquired
for its own account as a result of market-making activities or other
trading activities and that will be the beneficial owner (as defined in
Rule 13d-3 under the Exchange Act) of Exchange Notes to be received by such
broker-dealer in the Exchange Offer, whether such positions or policies
have been publicly disseminated by the staff of the Commission or such
positions or policies, in the reasonable judgment of the Initial Purchasers
or such other representative, represent the prevailing views of the staff
of the Commission, including a statement that any such broker-dealer who
receives Exchange Notes for Registrable Securities pursuant to the Exchange
Offer may be deemed a statutory underwriter and must deliver a prospectus
meeting the requirements of the Act in connection with any resale of such
Exchange Notes, (ii) furnish to each Participating Broker-Dealer who has
delivered to the Company the notice referred to in Section 3(e), without
charge, as many copies of each Prospectus
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<PAGE> 18
included in the Exchange Offer Registration Statement, including any
preliminary prospectus, and any amendment or supplement thereto, as such
Participating Broker-Dealer may reasonably request, (iii) subject to the
last paragraph of this Section 3, hereby consent to the use of the
Prospectus forming part of the Exchange Offer Registration Statement or any
amendment or supplement thereto, by any Person subject to the prospectus
delivery requirements of the Commission, including all Participating
Broker-Dealers, in connection with the sale or transfer of the Exchange
Notes covered by the Prospectus or any amendment or supplement thereto,
(iv) use its best efforts to keep the Exchange Offer Registration Statement
effective and to amend and supplement the Prospectus contained therein, in
order to permit such Prospectus to be lawfully delivered by all Persons
subject to the prospectus delivery requirements of the Act for such period
of time as such Persons must comply with such requirements in order to
resell the Exchange Notes (PROVIDED, HOWEVER, that such period shall not be
required to exceed 180 days, or such longer period if extended pursuant to
the last sentence of this Section 3 (the "APPLICABLE PERIOD")), and (v)
include in the transmittal letter or similar documentation to be executed
by an exchange offeree all necessary information for such offeree to
participate in the Exchange Offer;
(B) in the case of any Exchange Offer Registration Statement, the
Company agrees to deliver to the Initial Purchasers or to another
representative of the Participating Broker-Dealers on behalf of the
Participating Broker-Dealers upon consummation of the Exchange Offer (i) an
opinion of counsel substantially in the form attached hereto as EXHIBIT A,
(ii) an Officers' Certificate containing certifications substantially
similar to those set forth in Section 8(d) of the Purchase Agreement and
such additional certifications as are customarily delivered in a public
offering of debt securities, and (iii) a comfort letter in customary form
permitted by Statement of Auditing Standards No. 72 of the American
Institute of Certified Public Accountants.
The Company may require each seller of Registrable Securities as to
which any registration is being effected to furnish to the Company such
information regarding such seller and the proposed distribution of such
Registrable Securities as the Company may from time to time reasonably request
in writing. The Company may exclude from such registration the Registrable
Securities of any seller who unreasonably fails to furnish such information
within a reasonable time after receiving such request.
In the case of (i) a Shelf Registration Statement or (ii)
Participating Broker-Dealers who have notified the Company that they will be
utilizing the Prospectus contained in the Exchange Offer Registration Statement
as provided in Section 3(t) hereof, are seeking to sell Exchange Notes and are
required to deliver copies of such Prospectus, each Holder agrees that, upon
receipt of any notice from the Company of the happening of any event of the kind
described in Section 3(e)(ii), 3(e)(iii), 3(e)(iv), 3(e)(v), 3(e)(vi) or
3(e)(vii) hereof, such Holder will forthwith discontinue disposition of
Registrable Securities
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<PAGE> 19
pursuant to a Registration Statement until such Holder's receipt of the copies
of the supplemented or amended Prospectus contemplated by Section 3(i) hereof or
until it is advised in writing by the Company that the use of the applicable
Prospectus may be resumed, and, if so directed by the Company, such Holder will
deliver to the Company (at the Company's expense) all copies in such Holder's
possession, other than permanent file copies then in such Holder's possession,
of the Prospectus covering such Registrable Securities or Exchange Notes, as the
case may be, current at the time of receipt of such notice. If the Company shall
give any such notice to suspend the disposition of Registrable Securities or
Exchange Notes, as the case may be, pursuant to a Registration Statement, the
Company shall use its best efforts to file and have declared effective (if an
amendment) as soon as practicable an amendment or supplement to the Registration
Statement and shall extend the period during which such Registration Statement
shall be maintained effective pursuant to this Agreement by the number of days
in the period from and including the date of the giving of such notice to and
including the date when the Company shall have made available to the Holders
copies of the supplemented or amended Prospectus necessary to resume such
dispositions or shall have advised the Holders in writing that the use of the
applicable Prospectus may be resumed.
4. INDEMNIFICATION AND CONTRIBUTION. (a) The Company shall indemnify
and hold harmless the Initial Purchasers, each Holder, each Participating
Broker-Dealer, each underwriter who participates in an offering of Registrable
Securities, each of their respective affiliates, each Person, if any, who
controls any of such parties within the meaning of Section 15 of the Act or
Section 20 of the Exchange Act, and each of their respective directors,
officers, partners, employees, representatives and agents, to the fullest extent
lawful as follows:
(i) from and against any and all loss, liability, claim, damage and
expense whatsoever, joint or several, as incurred, arising out of any
untrue statement or alleged untrue statement of a material fact contained
in any Registration Statement or any amendment thereto pursuant to which
the offer and sale of the Registrable Securities or Exchange Notes were
registered under the Act including all documents incorporated therein by
reference, or the omission or alleged omission therefrom of a material fact
required to be stated therein or necessary to make the statements therein
not misleading, or arising out of any untrue statement or alleged untrue
statement of a material fact contained in any Prospectus or any amendment
or supplement thereto. or the omission or alleged omission therefrom of a
material fact necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading;
(ii) from and against any and all loss, liability, claim, damage and
expense whatsoever, joint or several, to the extent of the aggregate amount
paid in settlement of any litigation, or any investigation or proceeding by
any court or governmental agency or body, ,whether commenced or threatened,
or any claim whatsoever based upon any such untrue statement or omission,
or any such alleged untrue statement or
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omission, if and only if such settlement is effected with the prior written
consent of the Company; and
(iii) from and against any and all expenses whatsoever (including
reasonable fees and disbursements of counsel chosen by the Initial
Purchasers, Holder, Participating Broker-Dealer or underwriter (except to
the extent otherwise expressly provided in Section 4(c) hereof)), as
incurred, reasonably incurred in investigating, preparing for or defending
against any litigation. or any investigation or proceeding by any court or
governmental agency or body. whether commenced or threatened, or any other
claim whatsoever based upon any such untrue statement or omission, or any
such alleged untrue statement or omission, to the extent that any such
expense is not paid under subparagraph (i) or (ii) of this Section 4(a);
PROVIDED, HOWEVER, that this indemnity does not apply to any loss, liability,
claim, damage or expense to the extent arising out of an untrue statement or
omission or alleged untrue statement or omission (i) made solely in reliance
upon and in conformity with written information furnished to the Company by the
Initial Purchasers, such Holder, such Participating Broker-Dealer or any
underwriter in writing expressly for use in the Registration Statement (or any
amendment thereto) or any Prospectus (or any amendment or supplement thereto) or
(ii) contained in any preliminary prospectus or any Prospectus if the Initial
Purchasers, such Holder, such Participating Broker-Dealer or such underwriter
failed to send or deliver a copy of the Prospectus (as then amended or
supplemented if the Company shall have timely furnished any amendments or
supplements thereto) to the Person asserting such losses, liabilities. claims or
damages on or prior to the-delivery of written confirmation of any sale of
securities covered thereby to such Person in any case where such delivery is
required by the Act and such Prospectus (as so amended or supplemented) would
have corrected such untrue statement or omission and the delivery thereof would
have eliminated such losses, claims, damages or liabilities. Any amounts
advanced by the Company to an indemnified party pursuant to this Section 4 as a
result of such losses shall be returned to the Company if it shall be determined
by a court that such indemnified party was not entitled to indemnification by
the Company.
(b) Each Holder agrees, severally and not jointly, to indemnify and
hold harmless the Company, the Initial Purchasers, each underwriter who
participates in an offering of Registrable Securities and the other selling
Holders and each of their respective directors, officers (including each officer
of the Company who signed the Registration Statement), employees,
representatives and agents, and each Person, if any, who controls the Company,
the Initial Purchasers, any underwriter or any other selling Holder within the
meaning of Section 15 of the Act or Section 20 of the Exchange Act, from and
against any and all loss, liability, claim, damage and expense whatsoever
described in the indemnity contained in Section 4(a) hereof, as reasonably
incurred, but only with respect to untrue statements or omissions, or alleged
untrue statements or omissions. made in the Registration Statement (or any
amendment thereto) or any Prospectus (or any amendment or supplement thereto)
solely in reliance upon and in conformity with written information furnished to
the
20
<PAGE> 21
Company by such selling Holder expressly for use in the Registration Statement
(or any amendment thereto) or any such Prospectus (or any amendment or
supplement thereto); PROVIDED, HOWEVER, that, in the case of a Shelf
Registration Statement, no such Holder shall be liable for any claims hereunder
in excess of the amount of net proceeds received by such Holder from the sale of
Registrable Securities pursuant to such Shelf Registration Statement.
(c) Each indemnified party shall give prompt notice to each
indemnifying party of any action commenced against it in respect of which
indemnity may be sought hereunder, enclosing a copy of all papers properly
served on such indemnified party (but failure to notify an indemnifying party
shall not relieve such indemnifying party from any liability hereunder to the
extent it is not materially prejudiced as a result thereof and in any event
shall not relieve it from any liability which it may have other than on account
of this indemnity agreement). An indemnifying party may participate, at its own
expense, in the defense of any such action. If an indemnifying party so elects
within a reasonable time after receipt of such notice, such indemnifying party,
jointly with any other indemnifying party. may assume the defense of such action
with counsel chosen by it and reasonably satisfactory to the indemnified parties
defendant in such action; PROVIDED, HOWEVER, that if any such indemnified party
reasonably determines, upon written advice of counsel, that there may be legal
defenses available to such indemnified party which are different from or in
addition to those available to such indemnifying party or that representation of
such indemnifying party and any indemnified party by the same counsel would
present a conflict of interest, then one additional counsel in each jurisdiction
for all indemnified parties having consistent interests and such different or
additional defenses or subject to such conflict shall be entitled to conduct the
defense of such indemnified parties with the fees and expenses of such counsel
to be borne by the indemnifying party or parties. If an indemnifying party
assumes the defense of an action in accordance with and as permitted by the
provisions of this Section 4(c), such indemnifying party shall not be liable for
any fees and expenses of counsel for the indemnified parties incurred thereafter
in connection with such action (except to the extent set forth in the proviso
contained in the immediately preceding sentence). In no event shall the
indemnifying party or parties be liable for the fees and expenses of more than
one counsel for all indemnified parties in connection with any one action, or
separate but similar or related actions in the same jurisdiction arising out of
the same general allegations or circumstances. No indemnifying party shall,
without the prior written consent of the indemnified parties, which consent
shall not be unreasonably withheld, settle or compromise or consent to the entry
of any judgment with respect to any litigation, or any investigation or
proceeding by any governmental agency or body, commenced or threatened, or any
claim whatsoever in respect of which indemnification or contribution could be
sought under this Section 4, unless such settlement, compromise or consent
includes an unconditional release of each indemnified party from all liability
arising out of such litigation, investigation, proceeding or claim and does not
include a statement as to or an admission of fault, culpability or a failure to
act by or on behalf of any indemnified party.
(d) Notwithstanding any payment or payments made by the Company
hereunder, the Company hereby expressly waives subrogation to, and agrees that
it shall not
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be entitled to be subrogated to, any of the rights of any indemnified party
against the Company or any other right of offset held by any indemnified party
for the payment of any amounts owed to any indemnified party pursuant to this
Section 4; PROVIDED, HOWEVER, that if any of the foregoing provisions of this
paragraph are held to be contrary to applicable law or unenforceable by a court
of competent jurisdiction, the Company hereby expressly agrees that any right of
subrogation or contribution that the Company may have as a result of such
applicable law or unenforceability, as the case may be, shall be subordinate in
right of payment to the payment in full in cash of all amounts owed to any
indemnified party pursuant to this Section 4.
(e) If the indemnification provided for in this Section 4 is for any
reason unavailable to or insufficient to hold harmless an indemnified party in
respect of any losses, liabilities, claims, damages or expenses referred to
herein, then each indemnifying party shall contribute to the aggregate amount of
such losses, liabilities, claims, damages and expenses incurred by such
indemnified party, as incurred, (i) in such proportion as is appropriate to
reflect the relative benefits received by the indemnifying party or parties on
the one hand and the indemnified party or parties on the other hand from the
offering of the Notes pursuant to the Purchase Agreement, or (ii) if the
allocation provided by clause (i) is not permitted by applicable law, in such
proportion as is appropriate to reflect not only the relative benefits referred
to in clause (i) above but also the relative fault of the indemnifying party or
parties on the one hand and of the indemnified party or parties on the other
hand in connection with the statements or omissions which resulted in such
losses, liabilities, claims, damages or expenses, as well as any other relevant
equitable considerations.
The relative benefits received by the Company on the one hand and the
Initial Purchasers on the other hand in connection with the offering of the
Notes pursuant to the Purchase Agreement shall be deemed to be in the same
respective proportions as the total net proceeds from the offering of the Notes
pursuant to the Purchase Agreement (before deducting expenses) received by the
Company and the total discount received by the Initial Purchasers bear to the
aggregate initial offering price of the Notes.
The relative fault of the Company on the one hand and the Holders on
the other hand shall be determined by reference to, among other things, whether
any such untrue or alleged untrue statement of a material fact or omission or
alleged omission to sate a material fact relates to information supplied by the
Company or by the Holders, and the respective parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission.
The Company and the Holders agree that it would not be just and
equitable if contribution pursuant to this Section 4 were determined by pro rata
allocation (even if the Holders were treated as one entity for such purpose) or
by any other method of allocation which does not take account of the equitable
considerations referred to above in this Section 4(e). The aggregate amount of
losses, liabilities, claims, damages and expenses incurred by an indemnified
party and referred to above in this Section 4(e) shall be deemed to include
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<PAGE> 23
any legal or other expenses reasonably incurred by such indemnified party in
investigating, preparing for or defending against any litigation, or any
investigation or proceeding by any governmental agency or body, commenced or
threatened, or any claim whatsoever based upon any untrue or alleged untrue
statement or omission or alleged omission referred to in Section 4(a)(i).
Notwithstanding the provisions of this Section 4(e), no Initial
Purchaser shall be required to contribute any amount in excess of the amount by
which the total discount received by such Initial Purchaser in respect of the
purchase price of the Notes purchased by it from the Company exceeds the amount
of any damages which the Initial Purchasers have otherwise been required to pay
by reason of such untrue or alleged untrue statement or omission or alleged
omission.
No person guilty of fraudulent misrepresentation (within the meaning
of Section 11(f) of the Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation.
For purposes of this Section 4(c), each person, if any, who controls
an Initial Purchaser, a Holder, a Participating Broker-Dealer, an underwriter
who participates in an offering of Registrable Securities, or the affiliates of
any of them, within the meaning of Section 15 of the Act or Section 20 of the
Exchange Act shall have the same rights to contribution as the Initial
Purchasers, and each director, officer (including each officer of the Company
who signed the Registration Statement), partner, employee, representative and
agent of the Company, the Initial Purchasers, each Holder, each Participating
Broker-Dealer, and each underwriter who participates in an offering of
Registrable Securities and each person, if any, who controls the Company within
the meaning of Section 15 of the Act or Section 20 of the Exchange Act shall
have the same rights to contribution as the Company.
5. PARTICIPATION IN UNDERWRITTEN REGISTRATIONS. No Holder may
participate in any underwritten registration hereunder unless such Holder (a)
agrees to sell such Holder's Registrable Securities on the basis provided in any
customary underwriting arrangements approved by the Holders of a majority in
aggregate principal amount of the Registrable Securities included in such
offering and (b) completes and executes all reasonable questionnaires, powers of
attorney, indemnities, underwriting agreements, lock-up letters and other
documents reasonably required in connection with such underwriting arrangements.
6. SELECTION OF UNDERWRITERS. In any underwritten offering, the
underwriter or underwriters and manager or managers that will administer the
offering will be selected by the Holders of a majority in aggregate principal
amount of the Registrable Securities included in such offering; PROVIDED,
HOWEVER, that such underwriters and managers must be reasonably satisfactory to
the Company.
23
<PAGE> 24
7. Miscellaneous.
-------------
(a) NO INCONSISTENT AGREEMENTS. The Company has not entered into nor
will the Company on or after the date of this Agreement enter into any agreement
that is inconsistent with the rights granted to the Holders of Registrable
Securities in this Agreement or otherwise conflicts with the provisions hereof.
(b) AMENDMENTS AND WAIVERS. The provisions of this Agreement,
including the provisions of this sentence, may not be amended, modified or
supplemented, and waivers or consents to departures from the provisions hereof
may not be given, unless the Company has obtained the written consent of the
Majority Holders; provided, however, that no amendment, modification or
supplement or waiver or consent to the departure with respect to the provisions
of Section 4 hereof shall be effective as against any Holder of Registrable
Securities unless consented to in writing by such Holder of Registrable
Securities.
(c) NOTICES. All notices and other communications hereunder shall be
in writing and shall be deemed to have been duly given if sent by registered or
certified mail, postage prepaid, sent by any national courier service
guaranteeing overnight delivery or transmitted by any standard form of
telecommunication, as follows: (i) if to a Holder, at the most current address
given by such Holder to the Company in accordance with the provisions of this
Section 7(c), which address, with respect to an Initial Purchaser, shall
initially be the address provided for such Initial Purchaser in the Purchase
Agreement; and (ii) if to the Company, at its address as set forth in the
Purchase Agreement, or at such other address provided in accordance with the
provisions of this Section 7(c).
All such notices and communications shall be deemed to have been duly
given at the earlier of: (i) the time of actual receipt by the addressee; or
(ii) the time delivered, if personally delivered, or five business days after
being sent by registered or certified mail, postage prepaid, if mailed, or when
answered back, if telexed, or when transmission is confirmed, if telecopied, or
on the next business day, if timely delivered to a national courier service
guaranteeing overnight delivery.
Copies of all notices, demands, or other communications shall be
concurrently delivered by the Person giving the same to the Trustee at its
address specified in the Indenture.
(d) SUCCESSORS AND ASSIGNS. This Agreement shall inure to the benefit
of and be binding upon the successors, assigns and transferees of the Initial
Purchasers, including, without limitation and without the need for an express
assignment, subsequent Holders; PROVIDED, HOWEVER, that nothing herein shall be
deemed to permit any assignment, transfer or other disposition of Registrable
Securities in violation of the terms of the Purchase Agreement or the Indenture.
If any transferee of any Holder shall acquire Registrable Securities, in any
manner, whether by operation of law or otherwise, such Registrable Securities
shall be held subject to all of the terms of this Agreement, and by taking and
24
<PAGE> 25
holding such Registrable Securities, such Person shall be conclusively deemed to
have agreed to be bound by and to perform all of the terms and provisions of
this Agreement and such Person shall be entitled to receive the benefits hereof.
(e) THIRD PARTY BENEFICIARY. The Holders shall be third party
beneficiaries of the agreements made hereunder between the Company, on the one
hand, and the Initial Purchasers, on the other hand, and the Holders shall have
the right to enforce such agreements directly to the extent they deem such
enforcement necessary or advisable to protect their rights or the rights of any
of the other Holders.
(f) HEADINGS. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
(g) GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK, WITHOUT GIVING
EFFECT TO ANY PROVISIONS RELATING TO CONFLICTS OF LAWS.
(h) SEVERABILITY. In the event that any one or more of the provisions
contained herein, or the application thereof in any circumstance, is held
invalid, illegal or unenforceable, the validity, legality and enforceability of
any such provision in every other respect and of the remaining provisions
contained herein shall not be affected or impaired thereby.
(i) NOTES HELD BY THE COMPANY OR ITS AFFILIATES. Whenever the consent
or approval of Holders of a specified percentage of Registrable Securities is
required hereunder, Registrable Securities held by the Company or any affiliate
of the Company (as such term is defined in Rule 405 under the Act) shall not be
counted in determining whether such consent or approval was given by the Holders
of such required percentage.
(j) COUNTERPARTS. This Agreement may be executed in one or more
counterparts and, when so executed, all such counterparts taken together shall
constitute one and the same agreement.
25
<PAGE> 26
IN WITNESS WHEREOF, the parties hereto have executed this Registration
Rights Agreement as of the date first written above.
NORTEK, INC.
By: /s/ Almon C. Hall
------------------------------
Name: Almon C. Hall
Title: Vice President
Accepted as of the
date first above written:
BEAR, STEARNS & CO. INC.
By: /s/
-------------------------
Name:
Title:
WASSERSTEIN PERELLA SECURITIES, INC.
By: /s/ Peter H. Rothschild
-------------------------
Name: Peter H. Rothschild
Title:
BT SECURITIES CORPORATION
By: /s/ Amelia Silver
-------------------------
Name: Amelia Silver
Title: Vice President
26
<PAGE> 27
Exhibit A
---------
Form of Opinion of Counsel
--------------------------
1. Each of the Exchange Offer Registration Statement and the
Prospectus (other than the financial statements, notes or schedules thereto and
other financial and statistical data and supplemental schedules included or
referred to therein or omitted therefrom and the Form T-1 as to which such
counsel need express no opinion), complies as to form in all material respects
with the applicable requirements of the Act and the applicable rules and
regulations promulgated under the Act.
2. In the course of such counsel's review and discussion of the
contents of the Exchange Offer Registration Statement and the Prospectus with
certain officers and other representatives of the Company and representatives of
the independent certified public accountants of the Company, but without
independent check or verification or responsibility for the accuracy,
completeness or fairness of the statements contained therein, on the basis of
the foregoing (relying as to materiality to a large extent upon representations
and opinions of officers and other representatives of the Company), no facts
have come to such counsel's attention which cause such counsel to believe that
the Exchange Offer Registration Statement (other than the financial statements,
notes and schedules thereto and other financial and statistical information
contained or referred to therein and the Form T-l, as to which such counsel need
express no belief), at the time the Exchange Offer Registration Statement became
effective, contained an untrue statement of a material fact or omitted to state
a material fact required to be stated therein or necessary to make the
statements contained therein not misleading, or that the Prospectus (other than
the financial statements, notes and schedules thereto and other financial and
statistical information contained or referred to therein, as to which such
counsel need express no belief) contains any untrue statement of a material fact
or omits to state a material fact necessary to make the statements contained
therein, in the light of the circumstances under which they were made, not
misleading.
A-1
<PAGE> 1
Exhibit 5
[Ropes & Gray Letterhead]
April 18, 1997
Nortek, Inc.
50 Kennedy Plaza
Providence, Rhode Island 02903
Ladies and Gentlemen:
This opinion is rendered to you in connection with a registration statement
(the "Registration Statement") on Form S-4 filed today with the Securities and
Exchange Commission under the Securities Act of 1933, as amended (the "Act"),
relating to the exchange offer (the "Exchange Offer") by Nortek, Inc. ("Nortek")
to exchange its $175,000,000 9 1/4% Series B Notes due 2007 (the "Exchange
Notes") for its outstanding $175,000,000 9 1/4% Series A Notes due 2007 (the
"Original Notes"). The Original Notes were, and the Exchange Notes are to be,
issued pursuant to the provisions of an indenture (the "Indenture") entered into
between Nortek and State Street Bank and Trust Company, a national banking
association, as Trustee (the "Trustee").
We have acted as special counsel for Nortek in connection with the Exchange
Offer and the preparation of the Registration Statement. For purposes of this
opinion, we have examined and relied upon the information set forth in the
Registration Statement and such other documents and records as we have deemed
necessary. We express no opinion as to the laws of any jurisdiction other than
those of the Commonwealth of Massachusetts, the General Corporation Law of the
State of Delaware and the federal laws of the Unites States of America. We call
your attention to the fact that each of the Indenture and the Exchange Notes
provides that it is to be governed by the laws of the State of New York. For
purposes of the opinion provided herein, we have assumed with your permission
that the Indenture and the Exchange Notes would be governed by and construed in
accordance with the domestic substantive laws of The Commonwealth of
Massachusetts without giving effect to any choice of law or conflict of laws
rule or provision that would cause the application of the domestic substantive
laws of any other jurisdiction.
Based upon the foregoing, we are of the opinion that, when the Exchange
Notes have been duly authorized, executed, issued and delivered as provided in
the Indenture, and delivered in exchange for the Original Notes, as described in
the Registration Statement, and assuming due authentication by the Trustee, the
Exchange Notes will constitute valid and binding obligations of Nortek,
enforceable against Nortek, in accordance with their terms, except as
enforceability (i) may be limited by bankruptcy, insolvency, reorganization or
other similar laws affecting creditors' rights generally (including, without
limitation, Section 548 of Title 11 of The United States Code and fraudulent
conveyance or similar provisions of state law) and (ii) is subject to general
principles of equity (regardless of whether such enforceability is considered in
a proceeding in equity or at law), and will be entitled to the benefits of the
Indenture.
<PAGE> 2
Nortek, Inc. -2- April 18, 1997
We hereby consent to the filing of this opinion as part of the Registration
Statement and to the use of our name therein and in the related prospectus under
the caption "Legal Matters."
It is understood that this opinion is to be used only in connection with
the Exchange Offer while the Registration Statement is in effect.
Very truly yours,
Ropes & Gray
<PAGE> 1
Exhibit 12
<TABLE>
NORTEK, INC. AND SUBSIDIARIES
CALCULATION OF EARNINGS TO FIXED CHARGES
(Dollars amounts in Millions)
<CAPTION>
PRO FORMA
1992 1993 1994 1995 1996 1996
<S> <C> <C> <C> <C> <C> <C>
Earnings (Loss) from Continuing Operations (21.0) (12.6) 17.2 15.0 22.0 18.1
Provision (Credit) for Income Taxes 3.0 1.0 10.2 9.3 14.0 12.3
--------------------------------------------------------
"Earnings" (18.0) (11.6) 27.4 24.3 36.0 30.4
========================================================
Fixed Charges:
Interest Expense including amortization of
Debt Expense and Debt Discount 29.2 26.5 26.2 24.9 30.1 42.4
Interest factor of non-capitalized leases 3.2 2.3 2.1 2.1 2.0 2.0
Interest on Indebtedness of a Former
Subsidiary guaranteed by the Company 0.8 0.0 0.0 0.0 0.0 0.0
--------------------------------------------------------
"Fixed Charges" 33.2 28.8 28.3 27.0 32.1 44.4
========================================================
Earnings Available for Fixed Charges 15.2 17.2 55.7 51.3 68.1 74.8
==== ==== ==== ==== ==== ====
Ratio of Earnings to Fixed Charges N/A N/A 1.97 1.90 2.12 1.68
==== ==== ===== ===== ===== =====
N/A % not applicable, since ratio is less than 1.0:1.
* Pro forma for Offering and Refinancing.
</TABLE>
<PAGE> 1
Exhibit 23.1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
To Nortek, Inc.:
As independent public accountants, we hereby consent to the incorporation
by reference in this Registration Statement of our report dated February 12,
1997 included in Nortek, Inc.'s Form 10-K for the year ended December 31, 1996
and to all references to our Firm included in this Registration Statement.
Arthur Andersen LLP
Boston, Massachusetts
April 14, 1997
<PAGE> 1
Exhibit 25
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM T-1
---------
STATEMENT OF ELIGIBILITY UNDER THE
TRUST INDENTURE ACT OF 1939 OF A
CORPORATION DESIGNATED TO ACT AS TRUSTEE
Check if an Application to Determine Eligibility
of a Trustee Pursuant to Section 305(b)(2) __
STATE STREET BANK AND TRUST COMPANY
(Exact name of trustee as specified in its charter)
Massachusetts 04-1867445
(Jurisdiction of incorporation or (I.R.S. Employer
organization if not a U.S. national bank) Identification No.)
225 Franklin Street, Boston, Massachusetts 02110
(Address of principal executive offices) (Zip Code)
John R. Towers, Esq. Senior Vice President and Corporate Secretary
225 Franklin Street, Boston, Massachusetts 02110
(617)654-3253
(Name, address and telephone number of agent for service)
---------------------
NORTEK, INC.
(Exact name of obligor as specified in its charter)
MASSACHUSETTS 05-0314991
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
50 KENNEDY PLAZA
PROVIDENCE, RHODE ISLAND 02903
(Address of principal executive offices) (Zip Code)
9 1/4% SERIES B SENIOR NOTES DUE 2007
(Title of indenture securities)
<PAGE> 2
GENERAL
ITEM 1. GENERAL INFORMATION.
FURNISH THE FOLLOWING INFORMATION AS TO THE TRUSTEE:
(a) NAME AND ADDRESS OF EACH EXAMINING OR SUPERVISORY AUTHORITY TO
WHICH IT IS SUBJECT.
Department of Banking and Insurance of The Commonwealth of
Massachusetts, 100 Cambridge Street, Boston, Massachusetts.
Board of Governors of the Federal Reserve System,
Washington, D.C., Federal Deposit Insurance Corporation,
Washington, D.C.
(b) WHETHER IT IS AUTHORIZED TO EXERCISE CORPORATE TRUST POWERS.
Trustee is authorized to exercise corporate trust powers.
ITEM 2. AFFILIATIONS WITH OBLIGOR.
IF THE OBLIGOR IS AN AFFILIATE OF THE TRUSTEE, DESCRIBE EACH SUCH
AFFILIATION.
The obligor is not an affiliate of the trustee or of its
parent, State Street Boston Corporation.
(See note on page 2.)
ITEM 3. THROUGH ITEM 15. NOT APPLICABLE.
ITEM 16. LIST OF EXHIBITS.
LIST BELOW ALL EXHIBITS FILED AS PART OF THIS STATEMENT OF
ELIGIBILITY.
1. A COPY OF THE ARTICLES OF ASSOCIATION OF THE TRUSTEE AS NOW IN
EFFECT.
A copy of the Articles of Association of the trustee, as now in
effect, is on file with the Securities and Exchange Commission as
Exhibit 1 to Amendment No. 1 to the Statement of Eligibility and
Qualification of Trustee (Form T-1) filed with the Registration
Statement of Morse Shoe, Inc. (File No. 22-17940) and is incorporated
herein by reference thereto.
2. A COPY OF THE CERTIFICATE OF AUTHORITY OF THE TRUSTEE TO COMMENCE
BUSINESS, IF NOT CONTAINED IN THE ARTICLES OF ASSOCIATION.
A copy of a Statement from the Commissioner of Banks of
Massachusetts that no certificate of authority for the trustee to
commence business was necessary or issued is on file with the
Securities and Exchange Commission as Exhibit 2 to Amendment No. 1 to
the Statement of Eligibility and Qualification of Trustee (Form T-1)
filed with the Registration Statement of Morse Shoe, Inc. (File No.
22-17940) and is incorporated herein by reference thereto.
3. A COPY OF THE AUTHORIZATION OF THE TRUSTEE TO EXERCISE CORPORATE
TRUST POWERS, IF SUCH AUTHORIZATION IS NOT CONTAINED IN THE DOCUMENTS
SPECIFIED IN PARAGRAPH (1) OR (2), ABOVE.
A copy of the authorization of the trustee to exercise corporate
trust powers is on file with the Securities and Exchange Commission as
Exhibit 3 to Amendment No. 1 to the Statement of Eligibility and
Qualification of Trustee (Form T-1) filed with the Registration
Statement of Morse Shoe, Inc. (File No. 22-17940) and is incorporated
herein by reference thereto.
4. A COPY OF THE EXISTING BY-LAWS OF THE TRUSTEE, OR INSTRUMENTS
CORRESPONDING THERETO.
A copy of the by-laws of the trustee, as now in effect, is on
file with the Securities and Exchange Commission as Exhibit 4 to the
Statement of Eligibility and Qualification of Trustee (Form T-1) filed
with the Registration Statement of Eastern Edison Company (File No.
33-37823) and is incorporated herein by reference thereto.
1
<PAGE> 3
5. A COPY OF EACH INDENTURE REFERRED TO IN ITEM 4. IF THE OBLIGOR IS
IN DEFAULT.
Not applicable.
6. THE CONSENTS OF UNITED STATES INSTITUTIONAL TRUSTEES REQUIRED BY
SECTION 321(b) OF THE ACT.
The consent of the trustee required by Section 321(b) of the Act
is annexed hereto as Exhibit 6 and made a part hereof.
7. A COPY OF THE LATEST REPORT OF CONDITION OF THE TRUSTEE PUBLISHED
PURSUANT TO LAW OR THE REQUIREMENTS OF ITS SUPERVISING OR EXAMINING
AUTHORITY.
A copy of the latest report of condition of the trustee published
pursuant to law or the requirements of its supervising or examining
authority is annexed hereto as Exhibit 7 and made a part hereof.
NOTES
In answering any item of this Statement of Eligibility which relates to
matters peculiarly within the knowledge of the obligor or any underwriter for
the obligor, the trustee has relied upon information furnished to it by the
obligor and the underwriters, and the trustee disclaims responsibility for the
accuracy or completeness of such information.
The answer furnished to Item 2. of this statement will be amended, if
necessary, to reflect any facts which differ from those stated and which would
have been required to be stated if known at the date hereof.
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of 1939, as
amended, the trustee, State Street Bank and Trust Company, a corporation
organized and existing under the laws of The Commonwealth of Massachusetts, has
duly caused this statement of eligibility to be signed on its behalf by the
undersigned, thereunto duly authorized, all in the City of Boston and The
Commonwealth of Massachusetts, on the April 11, 1997.
STATE STREET BANK AND TRUST COMPANY
By: /s/ Donald E. Smith
-----------------------------------------
NAME DONALD E. SMITH
TITLE VICE PRESIDENT
2
<PAGE> 4
EXHIBIT 6
CONSENT OF THE TRUSTEE
Pursuant to the requirements of Section 321(b) of the Trust Indenture Act
of 1939, as amended, in connection with the proposed issuance by {NORTEK, INC.}.
of its 9 1/4% Series B Senior Notes due 2007, we hereby consent that reports of
examination by Federal, State, Territorial or District authorities may be
furnished by such authorities to the Securities and Exchange Commission upon
request therefor.
STATE STREET BANK AND TRUST COMPANY
By: /s/ Donald E. Smith
-----------------------------------------
NAME DONALD E. SMITH
TITLE VICE PRESIDENT
DATED: APRIL 11, 1997
3
<PAGE> 5
<TABLE>
EXHIBIT 7
Consolidated Report of Condition of State Street Bank and Trust Company of
Boston, Massachusetts and foreign and domestic subsidiaries, a state banking
institution organized and operating under the banking laws of this commonwealth
and a member of the Federal Reserve System, at the close of business DECEMBER
31, 1996, published in accordance with a call made by the Federal Reserve Bank
of this District pursuant to the provisions of the Federal Reserve Act and in
accordance with a call made by the Commissioner of Banks under General Laws,
Chapter 172, Section 22(a).
<CAPTION>
Thousands of
ASSETS Dollars
<S> <C>
Cash and balances due from depository institutions:
Noninterest-bearing balances and currency and coin ......... 1,561,409
Interest-bearing balances .................................. 7,562,240
Securities .......................................................... 9,388,513
Federal funds sold and securities purchased
under agreements to resell in domestic offices
of the bank and its Edge subsidiary ........................ 5,622,962
Loans and lease financing receivables:
Loans and leases, net of unearned income .... 4,858,187
Allowance for loan and lease losses ......... 72,614
Loans and leases, net of unearned income and allowances .... 4,785,573
Assets held in trading accounts ..................................... 874,700
Premises and fixed assets ........................................... 383,955
Other real estate owned ............................................. 870
Investments in unconsolidated subsidiaries .......................... 93,621
Customers' liability to this bank on acceptances outstanding ........ 35,022
Intangible assets ................................................... 148,190
Other assets ........................................................ 932,673
----------
Total assets ........................................................ 31,389,728
==========
LIABILITIES
Deposits:
In domestic offices ........................................ 8,508,096
Noninterest-bearing ................ 6,435,131
Interest-bearing ................... 2,072,965
In foreign offices and Edge subsidiary ..................... 11,395,724
Noninterest-bearing ................ 27,508
Interest-bearing ................... 11,368,216
Federal funds purchased and securities sold under
agreements to repurchase in domestic offices of
the bank and of its Edge subsidiary ........................ 7,518,222
Demand notes issued to the U.S. Treasury and Trading Liabilities .... 733,935
Other borrowed money ................................................ 650,578
Bank's liability on acceptances executed and outstanding ............ 35,022
Other liabilities ................................................... 770,029
----------
Total liabilities ................................................... 29,611,606
----------
EQUITY CAPITAL
Common stock ........................................................ 29,931
Surplus ............................................................. 358,146
Undivided profits ................................................... 1,389,720
Cumulative foreign currency translation adjustments ................. 325
----------
Total equity capital ................................................ 1,778,122
----------
Total liabilities and equity capital ................................ 31,389,728
==========
</TABLE>
4
<PAGE> 6
I, Rex S. Schuette, Senior Vice President and Comptroller of the above named
bank do hereby declare that this Report of Condition has been prepared in
conformance with the instructions issued by the Board of Governors of the
Federal Reserve System and is true to the best of my knowledge and belief.
Rex S. Schuette
We, the undersigned directors, attest to the correctness of this Report of
Condition and declare that it has been examined by us and to the best of our
knowledge and belief has been prepared in conformance with the instructions
issued by the Board of Governors of the Federal Reserve System and is true and
correct.
David A. Spina
Marshall N. Carter
Charles F. Kaye
5
<PAGE> 1
Exhibit 99.1
LETTER OF TRANSMITTAL
- -------------------------------------------------------------------------------
THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON
______________, 1997 UNLESS EXTENDED BY NORTEK IN ITS SOLE DISCRETION (THE
"EXPIRATION DATE"). TENDERS OF ORIGINAL NOTES MAY BE WITHDRAWN AT ANY TIME PRIOR
TO 5:00 P.M. ON THE EXPIRATION DATE.
- -------------------------------------------------------------------------------
NORTEK, INC.
$175,000,000 9 1/4% NOTES DUE 2007
PLEASE READ CAREFULLY THE ATTACHED INSTRUCTIONS
If you desire to accept the Exchange Offer, this Letter of Transmittal
should be completed, signed, and submitted to the Exchange Agent, by registered
or certified mail, overnight carrier, hand delivery or facsimile transmission at
the following address, for receipt no later than the Expiration Date:
STATE STREET BANK & TRUST COMPANY, EXCHANGE AGENT
<TABLE>
<CAPTION>
By Express: By Mail: By Hand:
(insured or registered recommended)
<S> <C> <C>
State Street Bank & Trust Company State Street Bank & Trust Company State Street Bank & Trust Company
Corporate Trust Department Corporate Trust Department Corporate Trust Department
Two International Place Two International Place Two International Place
Boston, MA 02110 Boston, MA 02110 Boston, MA 02110
Attn: Lena Altomare Attn: Lena Altomare Attn: Lena Altomare
</TABLE>
FACSIMILE
(617) 664-5371
TELEPHONE
(617) 664-5607
DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS, OR TRANSMISSION VIA
TELEGRAM, TELEX OR FACSIMILE, OTHER THAN AS SET FORTH ABOVE WILL NOT
CONSTITUTE A VALID DELIVERY.
By execution hereof, the undersigned acknowledges receipt of the prospectus
dated _________, 1997 (the "Prospectus"), of Nortek, Inc., a Delaware
corporation ("Nortek"), which, together with this Letter of Transmittal and the
instructions hereto (the "Letter of Transmittal"), constitute Nortek's offer
(the "Exchange Offer") to exchange $1,000 principal amount of its 9 1/4% Series
B Notes due 2007 (the "Exchange Notes") that have been registered under the
Securities Act of 1933, as amended (the "Securities Act"), pursuant to a
registration statement of which the Prospectus constitutes a part, for each
$1,000 principal amount of its outstanding 9 1/4% Series A Notes due 2007 (the
"Original Notes"), upon the terms and subject to the conditions set forth in the
Prospectus.
This Letter of Transmittal is to be used by Holders (as defined below) if:
(i) certificates representing Original Notes are to be physically delivered to
the Exchange Agent herewith by Holders; (ii) tender of Original Notes is to be
made by book-entry transfer to the Exchange Agent's account at The Depository
Trust Company (the "Depository") pursuant to the procedures set forth in the
Prospectus under "The Exchange Offer--Procedures
<PAGE> 2
for Tendering" by any financial institution that is a participant in the
Depository and whose name appears on a security position listing as the owner of
Original Notes; or (iii) tender of Original Notes is to be made according to the
guaranteed delivery procedures set forth in the Prospectus under "The Exchange
Offer--Guaranteed Delivery Procedures." DELIVERY OF DOCUMENTS TO THE DEPOSITORY
DOES NOT CONSTITUTE DELIVERY TO THE EXCHANGE AGENT.
The term "Holder" with respect to the Exchange Offer means any person: (i)
in whose name Original Notes are registered on the books of Nortek or any other
person who has obtained a properly completed bond power from the registered
Holder; or (ii) whose Original Notes are held of record by the Depository who
desires to deliver such Original Notes by book-entry transfer at the Depository.
The undersigned has completed, executed and delivered this Letter of
Transmittal to indicate the action the undersigned desires to take with respect
to the Exchange Offer. Holders who wish to tender their Original Notes must
complete this letter in its entirety.
All capitalized terms used herein and not defined shall have the meaning
ascribed to them in the Prospectus.
The instructions included with this Letter of Transmittal must be followed.
Questions and requests for assistance or for additional copies of the
Prospectus, this Letter of Transmittal and the Notice of Guaranteed Delivery may
be directed to the Exchange Agent. See Instruction 8 herein.
HOLDERS WHO WISH TO ACCEPT THE EXCHANGE OFFER AND TENDER THEIR ORIGINAL
NOTES MUST COMPLETE THIS LETTER OF TRANSMITTAL IN ITS ENTIRETY.
-2-
<PAGE> 3
Ladies and Gentlemen:
Subject to the terms of the Exchange Offer, the undersigned hereby tenders
to Nortek the principal amount of Original Notes indicated below. Subject to and
effective upon the acceptance for exchange of the principal amount of Original
Notes tendered in accordance with this Letter of Transmittal, the undersigned
sells, assigns and transfers to, or upon the order of, Nortek all right, title
and interest in and to the Original Notes tendered hereby. The undersigned
hereby irrevocably constitutes and appoints the Exchange Agent as its agent and
attorney-in-fact (with full knowledge that the Exchange Agent also acts as the
agent of Nortek and as Trustee under the Indenture for the Original Notes and
the Exchange Notes) with respect to the tendered Original Notes with full power
of substitution to (i) deliver certificates for such Original Notes to Nortek,
or transfer ownership of such Original Notes on the account books maintained by
The Depository Trust Company ("DTC") together, in either such case, with all
accompanying evidences of transfer and authenticity to, or upon the order of,
Nortek and (ii) present such Original Notes for transfer on the books of Nortek
and receive all benefits and otherwise exercise all rights of beneficial
ownership of such Original Notes, all in accordance with the terms of the
Exchange Offer. The power of attorney granted in this paragraph shall be deemed
irrevocable and coupled with an interest.
The undersigned hereby represents and warrants that he or she has full
power and authority to tender, sell, assign and transfer the Original Notes
tendered hereby and that Nortek will acquire good and unencumbered title
thereto, free and clear of all liens, restrictions, charges and encumbrances and
not subject to any adverse claim, when the same are acquired by Nortek. The
undersigned also acknowledges that this Exchange Offer is being made in reliance
upon an interpretation by the staff of the Securities and Exchange Commission
that the Exchange Notes issued in exchange for the Original Notes pursuant to
the Exchange Offer may be offered for resale, resold and otherwise transferred
by any holder thereof (other than (i) a broker - dealer who purchased such
Original Notes directly from Nortek or any of its "affiliates" within the
meaning of Rule 405 under the Securities Act for resell pursuant to Rule 144A
or any other available exemption under the Securities Act or (ii) a person that
is such an "affiliate" of Nortek) without compliance with the registration and
prospectus delivery provisions of the Securities Act provided that the holder
is acquiring the Exchange Notes in its ordinary course of business and is not
participating, and has no arrangement or understanding with any person to
participate, in the distribution of the Exchange Notes.
The undersigned represents that (i) the Exchange Notes acquired pursuant to
the Exchange Offer are being acquired by the undersigned and any beneficial
owner thereof in the ordinary course of business of the undersigned and any such
beneficial owner, (ii) neither the undersigned nor any such beneficial owner has
any arrangement or understanding with any person to participate in the
distribution of such Exchange Notes and (iii) except as indicated below, neither
the undersigned nor any such beneficial owner is an "affiliate," as defined
under Rule 405 of the Securities Act, of Nortek. If the undersigned or any
beneficial owner for whom the undersigned is tendering securities is an
affiliate of Nortek, then such person will comply with the registration and
prospectus delivery requirements of the Securities Act to the extent applicable.
If the undersigned or any beneficial owner for whom the undersigned is tendering
securities is a broker-dealer that will receive Exchange Notes for its own
account in exchange for Original Notes that were acquired as a result of
market-making or other trading activities, it acknowledges that it will deliver
a prospectus in connection with any resale of such Exchange Notes; however, by
so acknowledging and by delivering a prospectus, the undersigned or such
beneficial owner will not be deemed to admit that it is an "underwriter" within
the meaning of the Securities Act.
The undersigned will, upon request, execute and deliver any additional
documents deemed by the Exchange Agent or Nortek to be necessary or desirable to
complete the assignment and transfer of the Original Notes tendered hereby.
For purposes of the Exchange Offer, Nortek shall be deemed to have accepted
validly tendered Original Notes when Nortek has given oral or written notice
thereof to the Exchange Agent. If any tendered Original Notes are not accepted
for exchange pursuant to the Exchange Offer for any reason, certificates for any
such unaccepted Original Notes will be returned (except as noted below with
respect to tenders through DTC), without expense, to the undersigned at the
address shown below or
-3-
<PAGE> 4
at a different address as may be indicated under "Special Issuance
Instructions" as promptly as practicable after the Expiration Date.
All authority conferred or agreed to be conferred by this Letter of
Transmittal shall survive the death, incapacity or dissolution of the
undersigned and every obligation under this Letter of Transmittal shall be
binding upon the undersigned's heirs, personal representatives, successors and
assigns.
The undersigned understands that tenders of Original Notes pursuant to the
procedures described under the caption "The Exchange Offer -- Procedures for
Tendering" in the Prospectus and in the instructions hereto will constitute a
binding agreement between the undersigned and Nortek upon the terms and subject
to the conditions of the Exchange Offer.
Unless otherwise indicated under "Special Issuance Instructions," please
issue the certificates representing the Exchange Notes issued in exchange for
the Original Notes accepted for exchange and return any Original Notes not
tendered or not exchanged, in the name(s) of the undersigned (or in either such
event in the case of Original Notes tendered by DTC, by credit to the account at
DTC). Similarly, unless otherwise indicated under "Special Delivery
Instructions," please send the certificates representing the Exchange Notes
issued in exchange for the Original Notes accepted for exchange and any
certificates for Original Notes not tendered or not exchanged (and accompanying
documents, as appropriate) to the undersigned at the address shown below the
undersigned's signatures, unless, in either event, tender is being made through
DTC. In the event that both "Special Issuance Instructions" and "Special
Delivery Instructions" are completed, please issue the certificates representing
the Exchange Notes issued in exchange for the Original Notes accepted for
exchange and return any Original Notes not tendered or not exchanged in the
name(s) of, and send said certificates to, the person(s) so indicated. The
undersigned recognizes that Nortek has no obligation pursuant to the "Special
Issuance Instructions" and "Special Delivery Instructions" to transfer any
Original Notes from the name of the registered holder(s) thereof if Nortek does
not accept for exchange any of the Original Notes so tendered.
-4-
<PAGE> 5
<TABLE>
<S> <C>
=============================================================================================================
DESCRIPTION OF ORIGINAL NOTES TENDERED
- --------------------------------------------------------------- ----------------------- ---------------------
Certificate Aggregate
Number(s)* (Attach Principal Amount
Name(s) and Address(es) of Holder(s) signed list if Tendered (if less
(Please fill in, if blank) necessary) than all)**
- ---------------------------------------------------------------
----------------------- ---------------------
----------------------- ---------------------
----------------------- ---------------------
----------------------- ---------------------
----------------------- ---------------------
----------------------- ---------------------
----------------------- ---------------------
- --------------------------------------------------------------- ----------------------- ---------------------
TOTAL PRINCIPAL AMOUNT OF ORIGINAL
NOTES TENDERED
=============================================================================================================
* Need not be completed by Holders tendering by book-entry transfer.
** Need not be completed by Holders who wish to tender with respect to all Original
Notes listed. See Instruction 2.
- -------------------------------------------------------------------------------------------------------------
=============================================================================================================
=============================================================================================================
BENEFICIAL OWNER(S)
- ------------------------------------------------- -----------------------------------------------------------
STATE OF PRINCIPAL RESIDENCE OF EACH BENEFICIAL PRINCIPAL AMOUNT OF TENDERED ORIGINAL
OWNER OF TENDERED ORIGINAL NOTES NOTES HELD FOR ACCOUNT OF BENEFICIAL OWNER
- ------------------------------------------------- -----------------------------------------------------------
- ------------------------------------------------- -----------------------------------------------------------
- ------------------------------------------------- -----------------------------------------------------------
- ------------------------------------------------- -----------------------------------------------------------
- ------------------------------------------------- -----------------------------------------------------------
- ------------------------------------------------- -----------------------------------------------------------
=============================================================================================================
</TABLE>
-5-
<PAGE> 6
================================================================================
USE OF BOOK ENTRY TRANSFER
[ ] CHECK HERE IF TENDERED ORIGINAL NOTES ARE BEING DELIVERED BY DTC TO THE
EXCHANGE AGENT'S ACCOUNT AT DTC AND COMPLETE THE FOLLOWING:
Name of Tendering Institution:
------------------------------------------
DTC Book-Entry Account No.:
---------------------------------------------
Transaction Code No.:
--------------------------------------------------
================================================================================
================================================================================
USE OF GUARANTEED DELIVERY
If Holders desire to tender Original Notes pursuant to the Exchange Offer and
(i) certificates representing such Original Notes are not immediately available,
(ii) time will not permit this Letter of Transmittal, certificates representing
such Original Notes or other required documents to reach the Exchange Agent
prior to the Expiration Date or (iii) the procedures for book-entry transfer
cannot be completed prior the Expiration Date, such Holders may effect a tender
of such Original Notes in accordance with the guaranteed delivery procedures set
forth in the Prospectus under "The Exchange Offer -- Guaranteed Delivery
Procedures."
[ ] CHECK HERE IF TENDERED ORIGINAL NOTES ARE BEING DELIVERED PURSUANT TO THE
NOTICE OF GUARANTEED DELIVERY PREVIOUSLY DELIVERED TO THE EXCHANGE AGENT
AND COMPLETE THE FOLLOWING:
Name(s) of Holder(s) of Original Notes:
----------------------------
----------------------------------------------------------------------
Window Ticket No. (if any):
-------------------------------------------
Date of Execution of
Notice of Guaranteed Delivery:
----------------------------------------
Name of Eligible Institution that Guaranteed Delivery:
----------------------------------------------------------------------
If Delivered by Book-Entry Transfer:
Name of Tendering Institution:
----------------------------------------
DTC Book-Entry Account No.:
-------------------------------------------
Transaction Code No.:
-------------------------------------------------
================================================================================
================================================================================
BROKER-DEALER COPIES OF PROSPECTUS
[ ] CHECK HERE IF YOU ARE A BROKER-DEALER AND WISH TO RECEIVE 10 ADDITIONAL
COPIES OF THE PROSPECTUS AND 10 COPIES OF ANY AMENDMENTS OR SUPPLEMENTS
THERETO.
Name:
-----------------------------------------------------------------
Address:
--------------------------------------------------------------
----------------------------------------------------------------------
================================================================================
================================================================================
FOR USE BY AFFILIATES
[ ] CHECK HERE IF YOU OR ANY BENEFICIAL OWNER FOR WHOM YOU ARE TENDERING
SECURITIES IS AN AFFILIATE OF NORTEK.
================================================================================
-6-
<PAGE> 7
================================================================================
PLEASE SIGN HERE
(TO BE COMPLETED BY ALL TENDERING HOLDERS OF ORIGINAL NOTES REGARDLESS
OF WHETHER ORIGINAL NOTES ARE BEING PHYSICALLY DELIVERED HEREWITH)
This Letter of Transmittal must be signed by the Holder(s) of Original
Notes exactly as their name(s) appear(s) on certificate(s) for Original Notes
or, if tendered by a participant in DTC, exactly as such participant's name
appears on a security position listing as the owner of Original Notes, or by
person(s) authorized to become registered Holder(s) by endorsements and
documents transmitted with this Letter of Transmittal. If signature is by a
trustee, executor, administrator, guardian, attorney-in-fact, officer or other
person acting in a fiduciary or representative capacity, such person must set
forth his or her full title below under "Capacity" and submit evidence
satisfactory to Nortek of such person's authority to so act. See Instruction 3
herein.
If the signature appearing below is not of the registered Holder(s) of the
Original Notes, then the registered Holder(s) must sign a valid proxy.
X Date:
------------------------------------- ----------------------
X Date:
------------------------------------- ----------------------
Signature(s) of Holder(s) or
Authorized Signatory
Name(s): Address:
----------------------------- -----------------------------
----------------------------- -----------------------------
(Please Print) (Including Zip Code)
Capacity: Area Code and Telephone No.:
----------------------------- ---------
Social Security No.:
------------------
PLEASE COMPLETE SUBSTITUTE FORM W-9 HEREIN
SIGNATURE GUARANTEE (SEE INSTRUCTION 3 HEREIN)
CERTAIN SIGNATURES MUST BE GUARANTEED BY AN ELIGIBLE INSTITUTION
- --------------------------------------------------------------------------------
(Name of Eligible Institution Guaranteeing Signatures)
- --------------------------------------------------------------------------------
(Address (including zip code) and Telephone Number
(including area code) of Firm)
- --------------------------------------------------------------------------------
(Authorized Signature)
- --------------------------------------------------------------------------------
(Printed Name)
- -------------------------------------------------------------------------------
(Title)
Date:
----------------
================================================================================
-7-
<PAGE> 8
================================================================================
SPECIAL ISSUANCE INSTRUCTIONS
(SEE INSTRUCTION 4 HEREIN)
To be completed ONLY if certificates for Original Notes in a principal amount
not tendered are to be issued in the name of, or the Exchange Notes issued
pursuant to the Exchange Offer are to be issued to the order of, someone other
than the person or persons whose signature(s) appear(s) within this Letter of
Transmittal or issued to an address different from that shown in the box
entitled "Description of Original Notes Tendered" within this Letter of
Transmittal, or if Original Notes tendered by book-entry transfer that are not
accepted for purchase are to be credited to an account maintained at DTC.
Name:
-------------------------------------------------------------------
(Please Print)
Address:
----------------------------------------------------------------
(Please Print)
- ------------------------------------------------------------------------
Zip Code
- ------------------------------------------------------------------------
Taxpayer Identification or Social Security Number
(See Substitute Form W-9 herein)
================================================================================
================================================================================
SPECIAL DELIVERY INSTRUCTIONS
(SEE INSTRUCTION 4 HEREIN)
To be completed ONLY if certificates for Original Notes in a principal amount
not tendered or not accepted for purchase or the Exchange Notes issued pursuant
to the Exchange Offer are to be sent to someone other than the person or persons
whose signature(s) appear(s) within this Letter of Transmittal or issued to an
address different from that shown in the box entitled "Description of Original
Notes Tendered" within this Letter of Transmittal.
Name:
-------------------------------------------------------------------
(Please Print)
Address:
----------------------------------------------------------------
(Please Print)
- ------------------------------------------------------------------------
Zip Code
- ------------------------------------------------------------------------
Taxpayer Identification or Social Security Number
(See Substitute Form W-9 herein)
================================================================================
-8-
<PAGE> 9
<TABLE>
PAYER'S NAME:
--------------------------------
<S> <C> <C>
====================================================================================================================
SUBSTITUTE PART 1--PLEASE PROVIDE YOUR TIN IN THE BOX AT
RIGHT AND CERTIFY BY SIGNING AND DATING BELOW
FORM W-9 ------------------------
Social Security Number
DEPARTMENT OF THE TREASURY OR
INTERNAL REVENUE SERVICE ----------------------
Employer Identification
Number
PAYER'S REQUEST FOR TAXPAYER
IDENTIFICATION NUMBER (TIN)
------------------------------------------------- -----------------------------
PART 2--Certification--Under Penalties PART 3-
of Perjury, I certify that:
Awaiting TIN [ ]
(1) The number shown on this form is my
correct Taxpayer Identification Number
(or I am waiting for a number to be
issued to me) and
(2) I am not subject to backup
withholding either because I have not
been notified by the Internal Revenue
Services ("IRS") that I am subject to
backup withholding as a result of
failure to report all interest or
dividends, or the IRS has notified me
that I am no longer subject to backup
withholding.
-------------------------------------------------------------------------------
Certificate instructions-- You must cross out item (2) in Part 2 above if
you have been notified by the IRS that you are subject to backup withholding
because of underreporting interest or dividends on your tax returns. However,
if after being notified by the IRS that you were subject to backup withholding,
you received another notification from the IRS stating that you are no longer
subject to backup withholding, do not cross out item (2).
SIGNATURE DATE
------------------------------- -------------------------
====================================================================================================================
</TABLE>
NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP WITHHOLDING
OF 31% OF ANY PAYMENTS MADE TO HOLDERS OF EXCHANGE NOTES PURSUANT TO THE
EXCHANGE OFFER. PLEASE REVIEW THE ENCLOSED GUIDELINES FOR CERTIFICATION OF
TAXPAYER IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9 FOR ADDITIONAL
DETAILS.
YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU CHECKED THE BOX IN PART
3 OF SUBSTITUTE FORM W-9.
-9-
<PAGE> 10
================================================================================
CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER
I certify under penalties of perjury that a taxpayer identification number
has not been issued to me, and either (a) I have mailed or delivered an
application to receive a taxpayer identification number to the appropriate
Internal Revenue Service Center or Social Security Administration Office or (b)
I intend to mail or deliver an application in the near future. I understand that
if I do not provide a taxpayer identification number within 60 days, 20 percent
of all reportable payments made to me thereafter will be withheld until I
provide a number.
- ---------------------------------------- -------------------------
Signature Date
================================================================================
-10-
<PAGE> 11
INSTRUCTIONS
FORMING PART OF THE TERMS AND CONDITIONS
OF THE EXCHANGE OFFER AND THE SOLICITATION
1. DELIVERY OF THIS LETTER OF TRANSMITTAL AND ORIGINAL NOTES. The
certificates for the tendered Original Notes (or a confirmation of a book-entry
transfer into the Exchange Agent's account at DTC of all Original Notes
delivered electronically), as well as a properly completed and duly executed
copy of this Letter of Transmittal or facsimile hereof and any other documents
required by this Letter of Transmittal must be received by the Exchange Agent at
its address set forth herein prior to 5:00 P.M., New York City time, on the
Expiration Date. The method of delivery of the tendered Original Notes, this
Letter of Transmittal and all other required documents to the Exchange Agent is
at the election and risk of the Holder and, except as otherwise provided below,
the delivery will be deemed made only when actually received by the Exchange
Agent. Instead of delivery by mail, it is recommended that the Holder use an
overnight or hand delivery service. In all cases, sufficient time should be
allowed to assure timely delivery. No Letter of Transmittal or Original Notes
should be sent to Nortek.
Holders who wish to tender their Original Notes and (i) whose Original
Notes are not immediately available or (ii) who cannot deliver their Original
Notes, this Letter of Transmittal or any other documents required hereby to the
Exchange Agent prior to the Expiration Date must tender their Original Notes and
follow the guaranteed delivery procedures set forth in the Prospectus. Pursuant
to such procedures: (i) such tender must be made by or through an Eligible
Institution; (ii) prior to the Expiration Date, the Exchange Agent must have
received from the Eligible Institution a properly completed and duly executed
Notice of Guaranteed Delivery (by facsimile transmission, mail or hand delivery)
setting forth the name and address of the Holder of the Original Notes, the
certificate number or numbers of such Original Notes and the principal amount of
Original Notes tendered, stating that the tender is being made thereby and
guaranteeing that, within five business days after the Expiration Date, this
Letter of Transmittal (or facsimile hereof) together with the certificate(s)
representing the Original Notes (or a confirmation of electronic delivery of
book-entry delivery into the Exchange Agent's account at DTC) and any of the
required documents will be deposited by the Eligible Institution with the
Exchange Agent; and (iii) such properly completed and executed Letter of
Transmittal (or facsimile hereof), as well as all other documents required by
this Letter of Transmittal and the certificate(s) representing all tendered
Original Notes in proper form for transfer (or a confirmation of electronic mail
delivery of book-entry delivery into the Exchange Agent's account at DTC), must
be received by the Exchange Agent within five business days after the Expiration
Date, all as provided in the Prospectus under the caption "Exchange Offers --
Guaranteed Delivery Procedures." Any Holder of Original Notes who wishes to
tender his Original Notes pursuant to the guaranteed delivery procedures
described above must ensure that the Exchange Agent receives the Notice of
Guaranteed Delivery prior to 5:00 P.M., New York City time, on the Expiration
Date.
All questions as to the validity, form, eligibility (including time of
receipt), acceptance and withdrawal of tendered Original Notes will be
determined by Nortek in its sole discretion, which determination will be final
and binding. Nortek reserves the absolute right to reject any and all Original
Notes not properly tendered or any Original Notes Nortek's acceptance of which
would, in the opinion of counsel for Nortek, be unlawful. Nortek also reserves
the right to waive any irregularities or conditions of tender as to particular
Original Notes. Nortek's interpretation of the terms and conditions of the
Exchange Offer (including the instructions in this Letter of Transmittal) will
be final and binding on all parties. Unless waived, any defects or
irregularities in connection with tenders of Original Notes must be cured within
such time as Nortek shall determine. Neither Nortek, the Exchange Agent nor any
other person shall be under any duty to give notification of defects or
irregularities with respect to tenders of Original Notes, nor shall any of them
incur any liability for failure to give such notification. Tenders of Original
Notes will not be deemed to have been made until such defects or irregularities
have been cured or waived. Any Original Notes received by the Exchange Agent
that are not properly tendered and as to which the defects or irregularities
have not been cured or waived will be returned without cost by the Exchange
Agent to the tendering Holders of Original Notes, unless otherwise provided in
this Letter of Transmittal, as soon as practicable following the Expiration
Date.
2. PARTIAL TENDERS. Tenders of Original Notes will be accepted in all
denominations of $1,000 principal amount and integral multiples in excess
thereof. If less than the entire principal amount of any Original Note is
tendered, the tendering Holder should fill in the principal amount tendered in
the third column
-11-
<PAGE> 12
of the chart entitled "Description of Original Notes Tendered." The entire
principal amount of Original Notes delivered to the Exchange Agent will be
deemed to have been tendered unless otherwise indicated. If the entire principal
amount of all Original Notes is not tendered, Original Notes for the principal
amount of Original Notes not tendered and a certificate or certificates
representing Exchange Notes issued in exchange for any Original Notes accepted
will be sent to the Holder at his or her registered address, unless a different
address is provided in the appropriate box on this Letter of Transmittal or
unless tender is made through DTC, promptly after the Original Notes are
accepted for exchange.
3. SIGNATURES ON THE LETTER OF TRANSMITTAL; BOND POWERS AND ENDORSEMENTS;
GUARANTEE OF SIGNATURES. If this Letter of Transmittal (or facsimile hereof) is
signed by the registered Holder(s) of the Original Notes tendered hereby, the
signature must correspond with the name(s) as written on the face of the
Original Notes without alteration, enlargement or any change whatsoever.
If this Letter of Transmittal (or facsimile hereof) is signed by the
registered Holder(s) of Original Notes tendered and the certificate(s) for
Exchange Notes issued in exchange therefor is to be issued (or any untendered
principal amount of Original Notes is to be reissued) to the registered Holder,
such Holder need not and should not endorse any tendered Original Note, nor
provide a separate bond power. In any other case, such Holder must either
properly endorse the Original Notes tendered or transmit a properly completed
separate bond power with this Letter of Transmittal, with the signatures on the
endorsement or bond power guaranteed by an Eligible Institution.
If this Letter of Transmittal (or facsimile hereof) is signed by a person
other than the registered Holder(s) of any Original Notes listed, such Original
Notes must be endorsed or accompanied by appropriate bond powers signed as the
name of the registered Holder(s) appears on the Original Notes.
If this Letter of Transmittal (or facsimile hereof) or any Original Notes
or bond powers are signed by trustees, executors, administrators, guardians,
attorneys-in-fact, or officers of corporations or other acting in a fiduciary or
representative capacity, such persons should so indicate when signing, and
unless waived by Nortek, evidence satisfactory to of their authority so to act
must be submitted with this Letter of Transmittal.
Endorsements on Original Notes or signatures on bond powers required by
this Instruction 3 must be guaranteed by an Eligible Institution.
Signatures on this Letter of Transmittal (or facsimile hereof) must be
guaranteed by an Eligible Institution unless the Original Notes tendered
pursuant thereto are tendered (i) by a registered Holder (including any
participant in DTC whose name appears on a security position listing as the
owner of Original Notes) who has not completed the box set forth herein entitled
"Special Issuance Instructions" or the box entitled "Special Delivery
Instructions" or (ii) for the account of an Eligible Institution.
4. SPECIAL ISSUANCE AND DELIVERY INSTRUCTIONS. Tendering Holders should
indicate, in the applicable spaces, the name and address to which Exchange Notes
or substitute Original Notes for principal amounts not tendered or not accepted
for exchange are to be issued or sent, if different from the name and address of
the person signing this Letter of Transmittal (or in the case of tender of the
Original Notes through DTC, if different from DTC). In the case of issuance in a
different name, the taxpayer identification or social security number of the
person named must also be indicated.
5. TRANSFER TAXES. Nortek will pay all transfer taxes, if any, applicable
to the exchange of Original Notes pursuant to the Exchange Offer. If, however,
certificates representing Exchange Notes or Original Notes for principal amounts
not tendered or accepted for exchange are to be delivered to, or are to be
registered or issued in the name of, any person other than the registered Holder
of the Original Notes tendered hereby, or if tendered Original Notes are
registered in the name of any person other than the person signing this Letter
of Transmittal, or if a transfer tax is imposed for any reason other than the
exchange of Original Notes pursuant to the Exchange Offer, then the amount of
any such transfer taxes (whether imposed on the registered Holder or any other
person) will be payable by the tendering Holder. If satisfactory evidence of
payment of such taxes or exemption therefrom is not submitted with this Letter
of Transmittal, the amount of such transfer taxes will be billed directly to
such tendering Holder.
Except as provided in this Instruction 5, it will not be necessary for
transfer tax stamps to be affixed to the Original Notes listed in this Letter of
Transmittal.
-12-
<PAGE> 13
6. WAIVER OF CONDITIONS. Nortek reserves the absolute right to amend, waive
or modify specified conditions in the Exchange Offer in the case of any Original
Notes tendered.
7. MUTILATED, LOST, STOLEN OR DESTROYED ORIGINAL SENIOR SUBORDINATED NOTES.
Any tendering Holder whose Original Notes have been mutilated, lost, stolen or
destroyed should contact the Exchange Agent at the address indicated herein for
further instruction.
8. REQUESTS FOR ASSISTANCE OR ADDITIONAL COPIES. Questions and requests for
assistance and requests for additional copies of the Prospectus or this Letter
of Transmittal may be directed to the Exchange Agent at the address specified in
the Prospectus and herein. Holders may also contact their broker, dealer,
commercial bank, trust company or other nominee for assistance concerning the
Exchange Offer.
-13-
<PAGE> 14
(DO NOT WRITE IN SPACE BELOW)
===============================================================================
Certificate Surrendered Original Notes Tendered Original Notes Accepted
- ------------------------- --------------------------- -------------------------
- ------------------------- --------------------------- -------------------------
- ------------------------- --------------------------- -------------------------
- ------------------------- --------------------------- -------------------------
- ------------------------- --------------------------- -------------------------
Delivery Prepared by Checked by Date
-------------- -------------- ------------
===============================================================================
-14-
<PAGE> 15
IMPORTANT TAX INFORMATION
Under federal income tax laws, a Holder whose tendered Original Notes are
accepted for payment is required to provide the Exchange Agent (as payer) with
such Holder's correct TIN on Substitute Form W-9 below or otherwise establish a
basis for exemption from backup withholding. If such Holder is an individual,
the TIN is his social security number. If the Exchange Agent is not provided
with the correct TIN, a $50 penalty may be imposed by the Internal Revenue
Service, and payments made with respect to Original Notes purchased pursuant to
the Exchange Offer may be subject to backup withholding.
Certain Holders (including, among others, all corporations and certain foreign
persons) are not subject to these backup withholding and reporting requirements.
Exempt Holders should indicate their exempt status on Substitute Form W-9. A
foreign person may qualify as an exempt recipient by submitting to the Exchange
Agent a properly completed Internal Revenue Service Form W-8, signed under
penalties of perjury, attesting to that Holder's exempt status. A Form W-8 can
be obtained from the Exchange Agent. See the enclosed "Guidelines for
Certification of Taxpayer Identification Number on Substitute Form W-9" for
additional instructions.
If backup withholding applies, the Exchange Agent is required to withhold 31% of
any payments made to the Holder or other payee. Backup withholding is not an
additional federal income tax. Rather, the federal income tax liability of
persons subject to backup withholding will be reduced by the amount of tax
withheld. If withholding results in an overpayment of taxes, a refund may be
obtained from the Internal Revenue Service.
PURPOSE OF SUBSTITUTE FORM W-9
To prevent backup withholding on payments made with respect to the Exchange
Offer, the Holder is required to provide the Exchange Agent with either: (i) the
Holder's correct TIN by completing the form above, certifying that the TIN
provided on Substitute Form W-9 is correct (or that such Holder is awaiting a
TIN) and that (A) the Holder has not been notified by the Internal Revenue
Service that the Holder is subject to backup withholding as a result of failure
to report all interest or dividends or (B) the Internal Revenue Service has
notified the Holder that the Holder is no longer subject to backup withholding;
or (ii) an adequate basis for exemption.
WHAT NUMBER TO GIVE THE EXCHANGE AGENT
The Holder is required to give the Exchange Agent the TIN (e.g., social security
number or employer identification number) of the registered Holder of the
Original Notes. If the Original Notes are held in more than one name or are held
not in the name of the actual owner, consult the enclosed "Guidelines for
Certification of Taxpayer Identification Number on Substitute Form W-9" for
additional guidance on which number to report.
-15-
<PAGE> 16
The Exchange Agent for the Exchange Offer is:
STATE STREET BANK AND TRUST COMPANY
<TABLE>
<CAPTION>
By Express: By Mail: By Hand:
(insured or registered recommended)
<S> <C> <C>
State Street Bank & Trust Company State Street Bank & Trust Company State Street Bank & Trust Company
Corporate Trust Department Corporate Trust Department Corporate Trust Department
Two International Place Two International Place Two International Place
Boston, MA 02110 Boston, MA 02110 Boston, MA 02110
Attn: Lena Altomare Attn: Lena Altomare Attn: Lena Altomare
</TABLE>
FACSIMILE
(617) 664-5371
TELEPHONE
(617) 664-5607
-16-
<PAGE> 1
Exhibit 99.2
NOTICE OF GUARANTEED DELIVERY
for
$175,000,000 9 1/4% Senior Note due 2007
of
NORTEK, INC.
As set forth in the Prospectus, dated ________, 1997 (the "Prospectus"), of
Nortek, Inc. ("Nortek") and in the accompanying Letter of Transmittal and
instructions thereto (the "Letter of Transmittal"), holders who wish to tender
their 9 1/4% Series A Senior Notes due 2007 ("Original Notes") and (i) whose
Original Notes are not immediately available, or (ii) who cannot deliver their
Original Notes, the Letter of Transmittal or any other required documents to the
Exchange Agent prior to the Expiration Date (as hereinafter defined), may effect
a tender if: (1) The tender is made through an Eligible Institution; (2) Prior
to the Expiration Date, the Exchange Agent receives from such Eligible
Institution this properly completed and duly executed Notice of Guaranteed
Delivery (by mail, hand delivery or facsimile transmission) setting forth the
name and address of the holder, the certificate number(s) of such Original Notes
and the principal amount of the Original Notes being tendered, stating that the
tender is being made thereby and guaranteeing that, within five business days
after the Expiration Date, the Letter of Transmittal together with the
certificate(s) representing the Original Notes (or a Book-Entry Confirmation)
and any other documents required by the applicable Letter of Transmittal will be
delivered by the Eligible Institution to the Exchange Agent; and (3) Such
properly completed and executed Letter of Transmittal, as well as the
certificate(s) representing all tendered Original Notes in proper form for
transfer (or a Book-Entry Confirmation) and all other documents required by the
applicable Letter of Transmittal are received by the Exchange Agent within five
business days after the Expiration Date. This form may be delivered by an
Eligible Institution by mail or hand delivery or transmitted, via facsimile,
to the Exchange Agent as set forth below. All capitalized terms used herein but
not defined herein shall have the meanings ascribed to
them in the Prospectus.
- --------------------------------------------------------------------------------
THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON ___________,
1997 UNLESS THE OFFER IS EXTENDED BY NORTEK IN ITS SOLE DISCRETION (THE
"EXPIRATION DATE"). TENDERS OF ORIGINAL NOTES MAY BE WITHDRAWN AT ANY TIME PRIOR
TO 5:00 P.M. ON THE EXPIRATION DATE.
- --------------------------------------------------------------------------------
<TABLE>
EXCHANGE AGENT:STATE STREET BANK & TRUST COMPANY
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By Express: By Mail: By Hand:
(insured or registered recommended)
<S> <C> <C>
State Street Bank & Trust Company State Street Bank & Trust Company State Street Bank & Trust Company
Corporate Trust Department Corporate Trust Department Corporate Trust Department
Two International Place Two International Place Two International Place
Boston, MA 02110 Boston, MA 02110 Boston, MA 02110
Attn: Lena Altomare Attn: Lena Altomare Attn: Lena Altomare
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FACSIMILE
(617) 664-5371
TELEPHONE
(617) 664-5607
DELIVERY OF THIS INSTRUMENT TO AN ADDRESS, OR A TRANSMISSION, OTHER THAN
AS SET FORTH ABOVE WILL NOT CONSTITUTE A VALID DELIVERY.
This form is not to be used to guarantee signatures. If a signature on the
Letter of Transmittal is required to be guaranteed by an "Eligible Institution"
under the instructions thereto, such signature guarantee must appear in the
applicable space provided in the signature box on the Letter of Transmittal.
<PAGE> 2
LADIES AND GENTLEMEN:
The undersigned hereby tender(s) to Nortek, upon the terms and subject to
the conditions set forth in the Exchange Offer and the Letter of Transmittal,
receipt of which is hereby acknowledged, the aggregate principal amount of
Original Notes set forth below pursuant to the guaranteed delivery procedures
set forth in the Prospectus.
The undersigned understands that tenders of Original Notes will be accepted
only in principal amounts equal to $1,000 or integral multiples thereof. The
undersigned understands that tenders of Original Notes pursuant to the Exchange
Offer may not be withdrawn after 5:00 p.m., New York City time, on the
Expiration Date. Tenders of Original Notes may be withdrawn if the Exchange
Offer is terminated without any such Original Notes being purchased thereunder
or as otherwise provided in the Prospectus.
All authority herein conferred or agreed to be conferred by this Notice of
Guaranteed Delivery shall survive the death or incapacity of the undersigned and
every obligation of the undersigned under this Notice of Guaranteed Delivery
shall be binding upon the heirs, personal representatives, executors,
administrators, successors, assigns, trustees in bankruptcy and other legal
representatives of the undersigned.
PLEASE COMPLETE AND SIGN
Signature(s) of Registered Owner(s) or Authorized
Signatory:
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Principal Amount of Original Notes tendered:
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Certificate No(s). of Original Notes (if available):
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Date:
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Name(s) of Registered Holder(s):
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Address:
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Area Code and Telephone No.:
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If Original Notes will be delivered by book-entry transfer at The Depository
Trust Company, insert Depository Account No.:
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This Notice of Guaranteed Delivery must be signed by the registered holder(s) of
Original Notes exactly as its (their) name(s) appear on certificates for
Original Notes or on a security position listing as the owner of Original Notes,
or by person(s) authorized to become registered holder(s) by endorsements and
documents transmitted with this Notice of Guaranteed Delivery. If signature is
by a trustee, executor, administrator, guardian, attorney-in-fact, officer or
other person acting in a fiduciary or representative capacity, such person must
provide the following information.
Please print name(s) and address(es)
Name(s):
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Capacity:
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Address(es):
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Do not send Original Notes with this form. Original Notes should be sent to the
Exchange Agent together with a properly completed and duly executed Letter of
Transmittal.
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GUARANTEE
(Not to be used for signature guarantee)
The undersigned, a participant in a recognized signature guarantee
medallion program within the meaning of Rule 17Ad-15 under the Exchange Act,
hereby (a) represents that each holder of Original Notes on whose behalf this
tender is being made "own(s)" the Original Notes covered hereby within the
meaning of Rule 14e-4 under the Securities Exchange Act of 1934, as amended, (b)
represents that such tender of Original Notes complies with such Rule 14e-4, and
(c) guarantees that, within five New York Stock Exchange trading days from the
date of this Notice of Guaranteed Delivery, a properly completed and duly
executed Nortek Letter of Transmittal (or a facsimile thereof), together with
certificates representing the Original Notes covered hereby in proper form for
transfer (or confirmation of the book-entry transfer of such Original Notes into
the Exchange Agent's account at The Depository Trust Company, pursuant to the
procedure for book-entry transfer set forth in the Prospectus) and required
documents will be deposited by the undersigned with the Exchange Agent.
The undersigned acknowledges that it must deliver the Letter of Transmittal
and Original Notes tendered hereby to the Exchange Agent within the time period
set forth above and that failure to do so could result in financial loss to the
undersigned.
Name of Firm:
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Authorized Signature
Address: Name:
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Title:
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Area Code and Telephone No.: Date:
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