<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 13D
UNDER THE SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO.__)*
REALCO, INC.
----------------------------------------------------------------
(Name of Issuer)
Common Stock, no par value per share
----------------------------------------------------------------
(Title of Class of Securities)
756033106
-----------------------------
(CUSIP Number)
Kevin W. Donnelly COPY TO: Douglass N Ellis, Jr., Esq.
c/o Nortek, Inc. Ropes & Gray
50 Kennedy Plaza One International Place
Providence, RI 02903 Boston, MA 02110
(401) 751-1600 (617) 951-7000
-------------------------------------------------------------------------------
(Name, Address and Telephone Number of Person Authorized to Receive Notices and
Communications)
August 26, 1997
------------------------------------------------------
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-1(b)(3) or (4), check the following box
NOTE: Six copies of this statement, including all exhibits, should be filed with
the Commission. See Rule 13d-1(a) for other parties to whom copies are to be
sent.
*The remainder of this cover page shall be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities, and
for any subsequent amendment containing information which would alter
disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be deemed
to be "filed" for the purpose of Section 18 of the Securities Exchange Act of
1934 ("Act") or otherwise subject to the liabilities of that section of the Act
but shall be subject to all other provisions of the Act (however, see the
Notes).
Page 1 of 307 Pages
<PAGE> 2
CUSIP NO. 756033106 SCHEDULE 13D
1. NAME OF REPORTING PERSONS
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSONS
Nortek, Inc.
2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) / /
(b) / /
3. SEC USE ONLY
4. SOURCE OF FUNDS*
WC, AF, OO
5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEM 2(d) or 2(e) / /
6. CITIZENSHIP OR PLACE OF ORGANIZATION
U.S.A Delaware
7. SOLE VOTING POWER
NUMBER OF 200,000 shares of Common Stock
SHARES
BENEFICIALLY 8. SHARED VOTING POWER
OWNED BY 0
EACH
REPORTING 9. SOLE DISPOSITIVE POWER
PERSON 200,000 shares of Common Stock
WITH
10. SHARED DISPOSITIVE POWER
0
11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
200,000 shares of Common Stock
12. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES* / /
13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
7.1% of Common Stock
14. TYPE OF REPORTING PERSON*
CO
Page 2 of 307 Pages
-2-
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Item 1. SECURITY ISSUER.
The class of equity securities to which this Statement on Schedule
13D (the "Statement") relates is the Common Stock, no par value per share (the
"Common Stock"), of Realco, Inc. ("Realco"), a New Mexico corporation (the
"Issuer"). The principal executive offices of the Issuer are located at 1650
University Boulevard, N.E., Suite 100, Albuquerque, New Mexico 87102.
Item 2. IDENTITY AND BACKGROUND.
The person filing this statement is Nortek, Inc., a Delaware
corporation ("Nortek"). Nortek's principal business and office address is 50
Kennedy Plaza, Providence, Rhode Island 02903.
Nortek is a manufacturer and distributor of products and systems for
residential and commercial building and remodeling. Its principal businesses
include residential ventilation products, indoor air quality systems, other
building products and HVAC systems.
On July 29, 1997, Nortek commenced a tender offer (the "Tender
Offer") for all of the issued and outstanding shares of common stock (the
"Shares") of Ply Gem Industries, Inc., a Delaware corporation ("Ply Gem"). On
August 26, 1997, the tender offer expired and Nortek accepted for payment
12,979, 496 Shares (88.8% of the outstanding Shares). The Shares tendered,
together with Shares already owned by Nortek and its affiliates, represented
approximately 93.1% of the outstanding Shares of Ply Gem. On September 4, 1997,
as a result of a subsidiary merger (together with the Tender Offer, the
"Acquisition"), Ply Gem became a wholly owned subsidiary of Nortek. Ply Gem owns
200,000 shares of Common Stock.
During the last five years, Nortek has not been convicted in any
criminal proceeding (excluding traffic violations or similar misdemeanors).
During the last five years, Nortek has not been a party to a civil
proceeding of a judicial or administrative body of competent jurisdiction
resulting in their being subject to a judgment, decree or final order enjoining
future violations of, or prohibiting or mandating activities subject to, federal
or state securities laws or finding any violation with respect to such laws.
Item 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
Nortek used various sources to finance the Acquisition, including:
cash, funds raised pursuant the sale of $310,000,000 of 9 1/8% Senior Notes due
2007 pursuant to Rule 144A under the Securities Act of 1933 and refinancing of
$108,900,000 of outstanding indebtedness of Ply Gem. Refinancing of Ply Gem's
outstanding indebtedness was effected through an
Page 3 of 307 Pages
<PAGE> 4
extension of credit by a syndicate of lenders and Fleet National Bank, as sole
administrative agent for itself and the other lenders.
See also answer to Item 2.
Item 4. PURPOSE OF TRANSACTION.
Nortek's sole purpose was to acquire the Shares and control of Ply
Gem.
Nortek indirectly acquired beneficial ownership of the Common Stock
held by Ply Gem as a result of the Acquisition. Its acquisition of beneficial
ownership of the Common Stock was merely incidental to and not a purpose of the
Acquisition. Nortek has no current plans or proposals which relate to or would
result in any of the events or actions set forth in (a) though (i) of Item 4 of
the instructions to Schedule 13D.
Item 5. INTEREST IN SECURITIES OF THE ISSUER.
Nortek has an indirect beneficial interest in 200,000 shares of
Common Stock, which is held directly by its wholly owned subsidiary, Ply Gem. As
such, Nortek has an indirect beneficial interest in approximately 7.1% of the
Common Stock. Nortek has sole voting and dispositive power over the 200,000
shares of Common Stock held by its wholly owned subsidiary, Ply Gem, arising
solely from its control over Ply Gem.
Item 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT
TO SECURITIES OF THE ISSUER.
None.
Item 7. MATERIAL TO BE FILED AS EXHIBITS.
Exhibit (1)(a) Amended and Restated Credit Agreement dated as of August 26,
1997 among certain lenders and Fleet National Banks, as sole
administrative agent for itself and the other lenders.
Exhibit (1)(b) Purchase Agreement dated August 21, 1997 between Nortek, Inc.,
Wasserstein Perella Securities, Inc. and Bear Stearns & Co.
Inc.
Exhibit (1)(c) Indenture dated as of August 26, 1997 between Nortek, Inc. and
State Street Bank & Trust Company, as Trustee.
Page 4 of 307 Pages
<PAGE> 5
SIGNATURES
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
Dated: December 5, 1997
NORTEK, INC.
By: /s/ Almon C. Hall
-----------------------------------
Name: Almon C. Hall
Title: Vice President, Controller
and Chief Accounting Officer
Page 5 of 307 Pages
<PAGE> 6
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit Page
- ------- ----
<S> <C> <C>
Exhibit (1)(a) Amended and Restated Credit Agreement dated as of August 26,
1997 among certain lenders and Fleet National Banks, as sole
administrative agent for itself and the other lenders. 8
Exhibit (1)(b) Purchase Agreement dated August 21, 1997 between Nortek, Inc.,
Wasserstein Perella Securities, Inc. and Bear Stearns & Co.
Inc. 111
Exhibit (1)(c) Indenture dated as of August 26, 1997 between Nortek, Inc. and
State Street Bank & Trust Company, as Trustee. 195
</TABLE>
Page 6 of 307 Pages
<PAGE> 7
SCHEDULE A
Officers and Directors of Nortek, Inc.
Name Position
- ---- --------
Richard L. Bready Chairman of the Board, Chief
Executive Officer
Philip L. Cohen Director
Richard J. Harris Director, Treasurer and Vice
President
William I. Kelly Director
J. Peter Lyons Director
Almon C. Hall Vice President, Controller and
Chief Accounting Officer
Kenneth J. Ortman Senior Vice President (Group
Operations)
Siegfried Molnar Senior Vice President (Group
Operations)
Kevin W. Donnelly Vice President, General Counsel
and Secretary
Page 7 of 307 Pages
<PAGE> 1
EXHIBITS (1)(a)
COPY AS EXECUTED, TOGETHER
WITH EXHIBIT B THERETO AND
THE SECURITY AGREEMENT AND
GUARANTY REFERRED THEREIN,
EACH AS SEPARATELY
EXECUTED
PLY GEM INDUSTRIES, INC.
------------------------------------------------
AMENDED AND RESTATED CREDIT AGREEMENT
Dated as of August 26, 1997
------------------------------------------------
FLEET NATIONAL BANK, as Agent,
and
THE BANKS SIGNATORY HERETO
<PAGE> 2
TABLE OF CONTENTS
Page
----
SECTION 1. DEFINITIONS ................................................ 2
1.1 Defined Terms ................................................... 2
1.2 Other Definitional Provisions ................................... 24
SECTION 2. AMOUNTS AND TERMS OF COMMITMENTS ........................... 24
2.1 Commitments ..................................................... 24
2.2 Notes ........................................................... 26
2.3 Procedure for Loan Borrowings ................................... 26
2.4 Intentionally Omitted ........................................... 28
2.5 Intentionally Omitted ........................................... 28
2.6 Termination or Reduction of Commitments ......................... 28
2.7 Fees ............................................................ 29
2.8 Optional and Mandatory Prepayments .............................. 29
2.9 Repayment of Loans .............................................. 30
2.10 Interest Rates and Payment Dates ................................ 31
2.11 Computation of Interest and Fees ................................ 32
2.12 Inability to Determine Interest Rate ............................ 32
2.13 Taxes ........................................................... 33
2.14 Illegality ...................................................... 34
2.15 Increased Costs ................................................. 35
2.16 Indemnity ....................................................... 36
2.17 Maximum Number of Tranches ...................................... 37
2.18 Use of Proceeds ................................................. 37
2.19 Pro Rata Treatment and Payments; L/C Participation .............. 37
2.20 Guaranties ...................................................... 39
2.21 Security ........................................................ 39
2.22 Additional L/C Provisions ....................................... 40
2.23 Several Obligations ............................................. 43
SECTION 3. REPRESENTATIONS AND WARRANTIES ............................. 43
3.1 Financial Condition ............................................. 43
3.2 No Change ....................................................... 44
3.3 Corporate Existence; Compliance with the Law .................... 44
3.4 Corporate Power; Authorization; Enforceable Obligations ......... 44
3.5 No Legal Bar .................................................... 45
3.6 No Litigation ................................................... 45
3.7 Federal Regulations ............................................. 45
3.8 Investment Company Act .......................................... 45
3.9 Disclosure ...................................................... 45
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ii
Page
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3.10 No Default ...................................................... 46
3.11 Taxes ........................................................... 46
3.12 Subsidiaries .................................................... 46
3.13 Ownership of Property; Liens .................................... 46
3.14 ERISA ........................................................... 46
3.15 Nortek Indentures ............................................... 48
3.16 SEC Reports ..................................................... 48
3.17 Intangible Assets ............................................... 48
3.18 Name Changes, Mergers, Acquisitions ............................. 48
3.19 Licenses and Approvals .......................................... 49
3.20 Labor Disputes; Collective Bargaining Agreements; Employee
Grievances ...................................................... 49
3.21 Solvency ........................................................ 49
3.22 Outstanding Indebtedness for Borrowed Money ..................... 49
3.23 Hazardous Materials ............................................. 49
SECTION 4. CONDITIONS PRECEDENT ....................................... 49
4.1 Conditions to Initial Loans and L/Cs ............................ 49
(a) Tender Offer and Merger .................................... 50
(b) Corporate Structure ........................................ 50
(c) No Material Adverse Change ................................. 50
(d) Pre-Commitment Information ................................. 50
(e) Capital Structure .......................................... 50
(f) Compliance; No Litigation .................................. 50
(g) Insurance .................................................. 51
(h) Fees and Expenses .......................................... 51
(i) Consents and Approvals ..................................... 51
(j) Agreement .................................................. 51
(k) Notes ...................................................... 51
(l) Guaranty ................................................... 51
(m) Collateral ................................................. 51
(n) Borrowing Certificates ..................................... 52
(o) Notice of Borrowing ........................................ 52
(p) Legal Opinions ............................................. 52
(q) Related Agreements ......................................... 53
(r) Corporate Proceedings ...................................... 53
(s) Related Documents and Nortek Indentures .................... 53
(t) Consents ................................................... 53
(u) Other Fees ................................................. 54
(v) Good Standings ............................................. 54
(w) Incumbency Certificates .................................... 54
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iii
Page
----
(x) Solvency Certificate ....................................... 54
(y) Ownership, Liens ........................................... 54
(z) Projections ................................................ 54
(aa) Other Documentation ........................................ 54
4.2 Conditions to All Loans ......................................... 54
(a) Representations and Warranties ............................. 55
(b) No Default or Event of Default ............................. 55
(c) No Violations of Law ....................................... 55
(d) Other ...................................................... 55
4.3 Conditions to Loans to New Designated Subsidiaries .............. 55
SECTION 5. AFFIRMATIVE COVENANTS ...................................... 56
5.1 Financial Statements ............................................ 56
5.2 Certificates; Other Information ................................. 57
5.3 Payment of Obligations .......................................... 57
5.4 Material Operating Subsidiaries ................................. 58
5.5 Conduct of Business and Maintenance of Existence ................ 58
5.6 Maintenance of Property; Insurance .............................. 58
5.7 Inspection of Property; Books and Records; Discussions .......... 58
5.8 Notices ......................................................... 59
5.9 Copies of Corporate Documents ................................... 60
5.10 Conditions Subsequent ........................................... 60
5.11 Hazardous Material .............................................. 60
5.12 Further Assurances .............................................. 61
5.13 Compliance with Terms of Leaseholds ............................. 61
5.14 Performance of Related Documents ................................ 62
5.15 Hedge Agreements ................................................ 62
5.16 Conditions Subsequent to Closing Date ........................... 62
SECTION 6. NEGATIVE COVENANTS ......................................... 63
6.1 Limitation on Indebtedness ...................................... 63
6.2 Limitation on Liens ............................................. 64
6.3 Limitation on Contingent Obligations ............................ 66
6.4 Limitation on Fundamental Changes ............................... 67
6.5 Distributions ................................................... 68
6.6 Limitation on Dividend Restrictions Regarding Subsidiaries ...... 68
6.7 Prohibition on Investments, Acquisitions, Loans and Advances .... 68
6.8 Prohibition on Optional Prepayments ............................. 70
6.9 Consolidated Net Worth .......................................... 71
6.10 Leverage Ratio .................................................. 71
6.11 Interest Coverage Ratio ......................................... 71
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iv
Page
----
6.12 Current Ratio ................................................... 71
6.13 Intentionally Omitted ........................................... 71
6.14 Amendment, Etc. of Related Documents ............................ 71
6.15 Fiscal Year ..................................................... 72
6.16 Transactions with Affiliates .................................... 72
6.17 Ownership of Designated Subsidiaries ............................ 72
6.18 Limitation on Capital Expenditures .............................. 72
6.19 Financing Leases ................................................ 72
6.20 Change in Nature of Business .................................... 73
6.21 Charter Amendments .............................................. 73
6.22 Accounting Changes .............................................. 73
6.23 Intentionally Omitted ........................................... 73
6.24 Negative Pledge ................................................. 73
6.25 Formation of Subsidiaries ...................................... 73
SECTION 7. EVENTS OF DEFAULT ............................................. 73
SECTION 8. THE AGENT .................................................. 77
8.1 Appointment ..................................................... 77
8.2 Delegation of Duties ............................................ 77
8.3 Exculpatory Provisions ......................................... 77
8.4 Reliance by Agent ............................................. 78
8.5 Notice of Default ............................................... 78
8.6 Non-Reliance on Agent and Other Banks ........................... 78
8.7 Indemnification ................................................. 79
8.8 Agent in Its Individual Capacity ................................ 79
8.9 Successor Agent ................................................. 79
8.10 Failure to Act .................................................. 80
SECTION 9. MISCELLANEOUS .............................................. 80
9.1 Amendments and Waivers .......................................... 80
9.2 Notices ......................................................... 81
9.3 No Waiver; Cumulative Remedies .................................. 83
9.4 Survival of Representations and Warranties ...................... 83
9.5 Payment of Expenses, Etc. ....................................... 83
9.6 Binding Effect; No Assignment or Delegation by Company or
any Designated Subsidiary ....................................... 84
9.7 Assignments and Participations by Banks; Pledge to
Federal Reserve Bank ............................................ 85
9.8 Further Assurances .............................................. 88
9.9 Adjustments; Set-off ............................................ 88
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v
Page
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9.10 Severability .................................................... 89
9.11 Confidentiality ................................................. 89
9.12 Counterparts .................................................... 90
9.13 GOVERNING LAW; CONSENT TO JURISDICTION; WAIVER OF TRIAL
BY JURY ......................................................... 90
SCHEDULES
I Initial Commitments and Loans
2.1 Existing Letters of Credit
2.20 Material Operating Subsidiaries
3.11 Taxes
3.12 Subsidiaries, including Non-Core Subsidiaries
3.14 Contingent Liability relating to Post- Retirement Benefit
3.18 Name Changes, Mergers, Acquisitions
3.20 Labor Disputes; Collective Bargaining Agreements; Employee Grievances
3.22 Indebtedness
6.2 Liens
6.3 Contingent Obligations
EXHIBITS
A Form of Note
B Form of Assignment and Agreement
C Form of Notice of Borrowing/Conversion
D-1 Form of Borrowing Certificate for the Company
D-2 Form of Borrowing Certificate for Subsidiaries
E Form of Assignment and Acceptance
F-1 Form of Legal Opinion of Charles M. Modlin
F-2 Form of Legal Opinion of Ropes & Gray
G Forms of Solvency Certificate
<PAGE> 7
AMENDED AND RESTATED CREDIT AGREEMENT, dated as of August 26, 1997,
among PLY GEM INDUSTRIES, INC., a Delaware corporation (the "Company");
the Designated Subsidiaries from time to time party hereto;
the Banks from time to time party hereto; and
FLEET NATIONAL BANK ("Fleet"), as agent for the Banks (in such
capacity, together with its successors in such capacity, the "Agent").
W I T N E S S E T H :
WHEREAS, the Company and certain of the Designated Subsidiaries (the
"Existing Designated Subsidiaries") are borrowers under a Credit Agreement,
dated February 24, 1994 (as heretofore amended, the "Existing Credit
Agreement"), with the lenders party thereto (the "Existing Banks"), the
Co-Agents named therein and Fleet, as successor to National Westminster Bank
USA, as agent for the Existing Banks, which provides, among other things, for
the making of revolving credit loans to the Company and the Existing Designated
Subsidiaries in an aggregate principal amount not to exceed $200,000,000 at any
time outstanding;
WHEREAS, Nortek, Inc., a Delaware corporation ("Nortek"), has organized
a single-purpose, wholly-owned subsidiary (the "Purchaser") that, pursuant to a
merger agreement entered into with the Company (as amended, supplemented or
otherwise modified from time to time in accordance with its terms, to the extent
permitted in accordance with the Loan Documents, the "Merger Agreement"), will
purchase, pursuant to a tender offer (the "Tender Offer"), a majority of the
outstanding common stock of the Company for $19.50 per share, and subsequently
will be merged (the "Merger") with and into the Company, with the Company being
the surviving corporation;
WHEREAS, the Company has requested that the Existing Credit Agreement
be amended and restated in connection with the closing of the Tender Offer to
provide, among other things, for a term loan and letters of credit;
WHEREAS, the proceeds of the term loan will be used to refinance
certain existing debt of the Company and the Existing Designated Subsidiaries
under the Existing Credit Agreement;
WHEREAS, the Banks have agreed to amend and restate the Existing Credit
Agreement and to make the requested term loan and to maintain certain letters of
credit, in each case on the terms and conditions of this Agreement;
<PAGE> 8
2
WHEREAS, this Agreement shall constitute the "Ply Gem Credit Facility"
for purposes of that certain Nortek Indenture described in clause (c) of the
definition thereof in subsection 1.1;
WHEREAS, simultaneously with the execution hereof the Existing Banks
have entered into an Assignment and Agreement in the form of Exhibit B attached
hereto dated as of the date hereof (the "Assignment Agreement"), with the Agent
and the Banks hereunder pursuant to which such Existing Banks have agreed to
sell and assign to the Banks and the Banks have agreed to purchase and assume,
as of the Closing Date, all of the Existing Banks' rights and obligations under
the Existing Credit Agreement as of the Closing Date on the terms set forth in
the Assignment Agreement; and
WHEREAS, after giving effect to the Assignment Agreement, the
Commitments and Commitment Percentages of, and the amount of Loans owing to,
each of the Banks will be as set forth on Schedule I.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants herein contained, the parties to this Agreement hereby agree as
follows:
SECTION 1. DEFINITIONS
1.1 Defined Terms. As used in this Agreement, the following terms shall
have the following respective meanings (such definitions to be equally
applicable to the singular and plural forms thereof):
"Additional Subsidiary Grantors" shall mean each of (a) Continental
Wood Preservers, Inc., a Michigan corporation, (b) SNE Enterprises Texas, Inc.,
a Delaware corporation, (c) SNE Special Services, Inc., a Delaware corporation,
and (d) SNE Transportation Company, Inc., a Wisconsin corporation.
"Account Party" shall mean with respect to each L/C, the Company or any
Designated Subsidiary, as the case may be, in its capacity as the Person for the
account of which such L/C is issued or deemed issued.
"Affiliate" of any Person shall mean (a) any other Person (other than a
Subsidiary) which, directly or indirectly, is in control of, is controlled by,
or is under common control with such Person, or (b) any other Person who is a
director or officer (i) of such Person, (ii) of any Subsidiary of such Person or
(iii) of any Person described in clause (a) above. For purposes of this
definition, control of a Person shall mean the power, direct or indirect, (i) to
vote 10% or more of the securities having ordinary voting power for the election
of directors of such Person, or (ii) to direct or cause the direction of the
management and policies of such Person, whether by contract or otherwise.
<PAGE> 9
3
"Agent" shall have the meaning ascribed thereto in the preamble hereto.
"Agreement" shall mean this Amended and Restated Credit Agreement, as
amended, supplemented or otherwise modified from time to time.
"Applicable Margin" shall mean, for any day for any Type of Loan, the
relevant rate per annum for such Type of Loan as determined by reference to the
applicable ratio of Senior Funded Debt to Consolidated EBITDA set forth in the
table below:
<TABLE>
<CAPTION>
Ratio Prime Rate Loans Eurodollar Loans
----- ---------------- ----------------
<S> <C> <C> <C>
Level I 3.25:1.00 or greater 0.0% 0.950%
Level II 3.00:1.00 or greater
but less than
3.25:1.00 0.0% 0.725%
Level III 2.50:1.00 or greater
but less than
3.00:1.00 0.0% 0.625%
Level IV 2.00:1.00 or greater
but less than
2.50:1.00 0.0% 0.525%
Level V 1.50:1.00 or greater
but less than
2.00:1.00 0.0% 0.400%
Level VI less than 1.50:1.00 0.0% 0.300%
</TABLE>
The determination of the Applicable Margin pursuant to the table set
forth above shall be made on a quarterly basis based on an examination of the
consolidated financial statements of the Company and its Subsidiaries delivered
pursuant to and in compliance with subsection 5.1; provided, however, that the
initial Applicable Margin shall be at Level II in such table from the date
hereof until such time as audited annual consolidated financial statements of
the Company and its Subsidiaries indicating an Applicable Margin at a different
Level in such table are first delivered to the Agent and the Banks pursuant to
and in compliance with subsection 5.1. Each change in the Applicable Margin
shall be effective as of the first day of the calendar month following the date
of the Company's financial statements reflecting any change in the ratio of
Senior Funded Debt to Consolidated EBITDA. In the event that financial
statements for the four fiscal quarters most recently completed prior to such
date of determination either: (a) have not been
<PAGE> 10
4
delivered to the Agent in compliance with subsection 5.1, or (b) if delivered,
do not comply in form or substance with subsection 5.1, then the Agent may
determine, in its reasonable judgment, the ratio of Senior Funded Debt to
Consolidated EBITDA referred to above that would have been in effect as at such
date, and, consequently, the Applicable Margin in effect for the period
commencing on such date.
"Application" shall mean any agreement in form and substance
satisfactory to Fleet between Fleet, as issuing bank, and any Account Party in
respect of the issuance of an L/C.
"Asset Sale" shall mean any sale or other disposition by the Company or
any of the Subsidiaries (whether in one sale or a series of related sales) of
any business unit or units (including, without limitation, any Non-Core
Subsidiary) or any product line or group of product lines (whether pursuant to a
sale of stock or sale of assets).
"Assignment Agreement" shall have the meaning ascribed thereto in the
preamble hereto.
"Assignment and Acceptance" shall mean an agreement in the form of
Exhibit E hereto.
"Available Commitment" shall mean, as to each Bank, at a particular
time, an amount equal to the difference between (a) the amount of such Bank's
Commitment at such time and (b) the aggregate unpaid principal amount at such
time of (i) all Loans made by such Bank pursuant to subsection and (ii) such
Bank's Commitment Percentage of Bank L/C Obligations.
"Available L/C Commitment" at any date shall mean the lesser of (a) the
difference between the L/C Sublimit and the Specified L/C Obligations at such
date and (b) the Available Commitments.
"Banks" shall mean the Initial Banks and each Person that shall become
a Bank hereunder pursuant to subsection 9.7.
"Bank L/C Obligations" at any date shall mean the sum of (a) the
aggregate undrawn amount at such date of all L/Cs issued or deemed issued by
Fleet pursuant to this Agreement, plus (b) the amount of all Unpaid Drawings
relating to such L/Cs.
"Business Day" shall mean a day other than a Saturday, Sunday or other
day on which commercial banks in Boston, Massachusetts are authorized or
required by law to close.
<PAGE> 11
5
"Business of the Company" shall mean (a) the businesses described in
the Company's Form 10-K for the year ended December 31, 1996 and the Company's
1996 Annual Report to Stockholders and (b) other businesses related to, or
growing out of, such businesses.
"Capital Expenditures" shall mean, during any period, the amount of
additions to property, plant and equipment for such period as shown on the
consolidated financial statements of the Company and its Subsidiaries for such
period prepared in accordance with GAAP, net of Financing Leases.
"Cash Equivalents" shall mean (a) securities with maturities of one
year or less from the date of acquisition issued or directly and fully
guaranteed or insured by the United States Government or any agency or
instrumentality thereof, (b) certificates of deposit, acceptances and Eurodollar
time deposits with maturities of one year or less from the date of acquisition
and overnight or demand bank deposits of any Bank and certificates of deposit
with maturities of one year or less from the date of acquisition and overnight
or demand bank deposits of any other commercial bank having capital and surplus
in excess of $500,000,000, the holding company of which has a commercial paper
rating meeting the requirements specified in clause (d) below, (c) repurchase
obligations with a term of not more than 7 days for underlying securities of the
types described in clauses (a) and (b) entered into with any bank meeting the
qualifications specified in clause (b) above, and (d) commercial paper of a
domestic issuer rated at least A- 2 or the equivalent thereof by Standard &
Poor's, a division of The McGraw-Hill Companies, Inc. or P-2 or the equivalent
thereof by Moody's Investors Service, Inc.
"CERCLA" shall mean the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, 42 U.S.C. Section 9601, et seq., as
amended from time to time.
"Change of Control" shall occur when (a) any person or group of related
persons, excluding Permitted Shareholders, gains beneficial ownership of a
majority in voting interest of the outstanding voting stock of the Company or
has caused to be elected a majority of the Board of Directors of the Company
against the wishes of a majority of the voting interest held by Permitted
Shareholders; or (b) all or substantially all of the assets of the Company are
sold or liquidated.
"Closing Date" shall mean the date on which each of the conditions
precedent in Section 4 shall have been satisfied or duly waived.
"Code" shall mean the Internal Revenue Code of 1986, as amended from
time to time.
<PAGE> 12
6
"Collateral Grantor" shall have the meaning ascribed thereto in
subsection 2.21.
"Commitment" shall mean, as to any Bank, its obligation to make Loans
pursuant to subsection 2.1 and participate in L/Cs in an aggregate amount not to
exceed at any one time outstanding the amount set forth on Schedule I under the
heading "Commitment", as such amount may be adjusted from time to time pursuant
to subsection 2.6, 2.8 or 9.7; and, as to Fleet in its capacity as issuing bank,
its obligation to maintain L/Cs in an aggregate amount not to exceed at any time
outstanding the L/C Sublimit, as such amount may be reduced from time to time
pursuant to subsection 2.6.
"Commitment Percentage" as to any Bank, shall mean the percentage set
forth on Schedule I under the heading "Commitment Percentage" as such percentage
may increase or decrease from time to time pursuant to subsection 9.7.
"Commonly Controlled Entity" shall mean an entity, whether or not
incorporated, which is under common control with the Company or any Subsidiary
within the meaning of Section 4001(a)(14) of ERISA or Code Section 414(m) or
414(o).
"Company" shall have the meaning ascribed thereto in the preamble
hereto.
"Consolidated Current Assets" shall mean, at any date, the amount
which, in conformity with GAAP, would be set forth opposite the caption "total
current assets" (or any like caption) on a consolidated balance sheet of the
Company and its consolidated Subsidiaries as at such date.
"Consolidated Current Liabilities" shall mean, at any date, the amount
which, in conformity with GAAP, would be set forth opposite the caption "total
current liabilities" (or any like caption) on a consolidated balance sheet of
the Company and its consolidated Subsidiaries as at such date; provided,
however, that the Loans, the L/Cs and any current liabilities resulting from the
transactions contemplated by the Merger Agreement shall at all times be excluded
from the definition of Consolidated Current Liabilities.
"Consolidated EBIT" shall mean, for any period, the sum of (a)
Consolidated Net Income for such period, plus (b) all taxes based upon income
deducted in calculating such Consolidated Net Income plus (c), to the extent
deducted in calculating Consolidated Net Income, Consolidated Interest Expense
and consolidated amortization of Debt Discount and of expenses incurred in
connection with the incurrence of Indebtedness for such period, plus (d) all
extraordinary losses and the unusual losses set forth in clauses (i) through
(ix) below in each case to the extent deducted in calculating Consolidated Net
Income, minus (e) all extraordinary gains and the unusual gains set forth in
clauses (i) through (ix) below in each case to the extent included in
calculating Consolidated Net Income: (i) gain or loss
<PAGE> 13
7
arising from the sale, abandonment or other disposition of any property or asset
outside of the ordinary course of business or realized on the disposition of a
segment of a business; (ii) gain or loss resulting from any extinguishments of
debt; (iii) gain or loss resulting from a casualty, including but not limited to
fire, earthquake or hurricane; (iv) loss resulting from write-off of intangible
assets; (v) gain arising from the write-up in the book value of any asset; (vi)
provisions for plant closings and realignment of operations or restructuring
costs; (vii) cumulative effects of changes in accounting principles; (viii)
losses from expropriation or condemnation; and (ix) gain or loss arising from a
change from FIFO to LIFO inventory accounting.
"Consolidated EBITDA" shall mean, for any period, the sum of (a)
Consolidated EBIT, plus (b) depreciation expense plus (c) amortization expense,
in each case of the Company and its Subsidiaries determined on a consolidated
basis in accordance with GAAP for such period.
"Consolidated Interest Expense" shall mean, for any period, (a) the
aggregate amount of all interest charges paid or accrued during such period
(including imputed interest on obligations consisting of Financing Leases and
all amounts accrued or paid pursuant to Hedge Agreements but excluding
amortization of Debt Discount and of expenses incurred in connection with the
incurrence of Indebtedness) on Indebtedness of the Company and its consolidated
Subsidiaries, minus (b) the sum of (i) interest income and (ii) all amounts
received or receivable pursuant to Hedge Agreements, in each case of the Company
and its Subsidiaries determined on a consolidated basis.
"Consolidated Net Income" shall mean, for any period, the amount which,
in conformity with GAAP, would be set opposite the caption "net income" (or any
like caption) on a consolidated statement of income of the Company and its
consolidated Subsidiaries for such period.
"Consolidated Net Worth" shall mean, at a particular date, (a) all
amounts which would, in conformity with GAAP, be included under stockholders'
equity on a consolidated balance sheet of the Company and its consolidated
Subsidiaries at such date, plus (b) any unrealized losses to the extent
reflected in the calculation of stockholders' equity, minus (c) the sum of (i)
any unrealized gains to the extent reflected in the calculation of shareholders'
equity, and (ii) any investments made by the Company or any of its Subsidiaries
in Nortek or any of its Subsidiaries (other than Subsidiaries consisting of the
Company or any of its Subsidiaries).
"Contingent Obligation" as to any Person shall mean any obligation of
such Person guaranteeing or in effect guaranteeing any Indebtedness, leases,
dividends or other contractual obligations ("primary obligations") of any other
Person (the "primary obligor") in any manner, whether directly or indirectly,
including, without limitation, any obligation of
<PAGE> 14
8
such Person, whether or not contingent, (a) to purchase any such primary
obligation or any property constituting direct or indirect security therefor,
(b) to advance or supply funds (i) for the purchase or payment of any such
primary obligation or (ii) to maintain working capital or equity capital of the
primary obligor or otherwise to maintain the net worth or solvency of the
primary obligor, (c) to purchase property, securities or services primarily for
the purpose of assuring the owner of any such primary obligation of the ability
of the primary obligor to make payment of such primary obligation or (d)
otherwise to assure or hold harmless the owner of such primary obligation
against loss in respect thereof; provided, however, that the term Contingent
Obligation shall not include endorsements of instruments for deposit or
collection in the ordinary course of business. The amount of any Contingent
Obligation shall be deemed to be an amount equal to the stated or determinable
amount of the primary obligation in respect of which such Contingent Obligation
is made or, if not stated or determinable, the maximum reasonably anticipated
liability in respect thereof as determined by such Person in good faith.
"Contractual Obligation" of any Person shall mean any provision of any
security issued by such Person or of any agreement, instrument or undertaking to
which such Person is a party or by which it or any of its property is bound
(including, without limitation, in the case of each of the Loan Parties and
their respective Subsidiaries, the Nortek Indentures).
"Debt Discount" shall mean debt discount with respect to Subordinated
Indebtedness permitted by the provisions hereof.
"Default" shall mean any of the events specified in Section 7, whether
or not any requirement for the giving of notice, the lapse of time, or both, or
any other condition, has been satisfied.
"Designated Subsidiary" shall mean, initially, each of the following
Subsidiaries: Sagebrush Sales, Inc., a New Mexico corporation; SNE Enterprises,
Inc., a Delaware corporation; Variform, Inc., a Missouri corporation; and Great
Lakes Window, Inc., an Ohio corporation. Subject to the reasonable approval of
the Agent and all of the Banks with respect to the financial condition and
maximum borrowing limit of a Subsidiary, the Company may at any time designate
as a Designated Subsidiary any wholly-owned Material Operating Subsidiary which
is not then a Designated Subsidiary by notice to the Agent, provided that the
Company contemporaneously delivers to the Agent a Solvency Certificate with
respect to such Subsidiary and causes such Subsidiary to deliver to the Agent
duly executed Notes payable to the order of the Banks, a duly executed Guaranty
and a duly executed Security Agreement supplement, each in form and substance
satisfactory to the Agent, and provided further that each Designated Subsidiary
shall be a wholly-owned Subsidiary of the Company so long as it is a Designated
Subsidiary. The Company may at any time remove any Subsidiary from the list of
Designated Subsidiaries by notice to the
<PAGE> 15
9
Agent, effective, however, only upon (a) payment in full of any Obligations owed
to the Agent and the Banks hereunder by such Designated Subsidiary and the
expiration or other termination of any L/C with respect to which such Designated
Subsidiary is the Account Party or (b) subject to the consent of the Agent and
the Required Banks (such consent not to be unreasonably withheld), the
assumption, in a writing satisfactory in form and substance to the Agent, by the
Company or another Designated Subsidiary of any obligations not so paid, so long
as such assumption shall not violate any provision of the Nortek Indentures or
any other indenture or agreement binding upon the Company or any of its
Subsidiaries, provided that, concurrently with such assumption, the Company
shall certify, and shall furnish an opinion of counsel, in each case to the
Agent and the Banks, to the effect that such assumption does not violate the
Nortek Indentures or any other indenture or agreement binding on the Company or
any of its Subsidiaries and otherwise in form and substance satisfactory to the
Agent. Any representation, warranty or covenant in this Agreement applicable at
any time to the Designated Subsidiaries shall be deemed applicable to those
Subsidiaries which, at such time, are Designated Subsidiaries as defined herein.
"Designated Subsidiary Borrowing Limit" shall mean, initially, the
following amounts for the indicated Subsidiaries:
<TABLE>
<CAPTION>
Designated Subsidiaries Borrowing Limit
----------------------- ---------------
<S> <C>
Sagebrush Sales, Inc. $ 6,000,000
SNE Enterprises, Inc. $ 45,000,000
Variform, Inc. $ 49,000,000
Great Lakes Window, Inc. $ 30,000,000
</TABLE>
The Designated Subsidiary Borrowing Limit for any Designated Subsidiary may be
increased from time to time up to an amount not to exceed the aggregate amount
of the Commitments at such time, subject to the consent of the Company and the
Agent and so long as such increase shall not violate any provision of the Nortek
Indentures or any other indenture or agreement binding upon the Company or any
of its Subsidiaries, provided that, concurrently with such increase, the Company
shall certify, and shall furnish an opinion of counsel, in each case to the
Agent and the Banks, to the effect that such increase does not violate the
Nortek Indentures or any other indenture or agreement binding on the Company or
any of its Subsidiaries and otherwise in form and substance satisfactory to the
Agent.
"Disposal" shall mean the discharge, deposit, injection, dumping,
spilling, leaking or placing of any hazardous materials into or on any land or
water so that such hazardous materials or constituent thereof may enter the
environment or be emitted into the air or discharged into any waters, including
ground waters.
<PAGE> 16
10
"Dollars" and "$" shall mean dollars in lawful currency of the United
States of America.
"Domestic Lending Office," shall mean, initially, the office of each
Bank designated as such on Schedule I under the heading "Domestic Lending Office
and Address for Notices"; thereafter, such other office of such Bank, if any,
which shall be making or maintaining Loans.
"Drawing Fee" shall have the meaning ascribed thereto in subsection
2.1(c)(v).
"Eligible Assignee" shall mean (a) any Bank and any entity controlled
by or under common control with such Bank and (b) a commercial bank having a
combined capital and surplus of at least $500,000,000, in either case which does
not, either directly or indirectly, engage in business competitive with the
business of the Company or any of its Subsidiaries and to which the Company and
the Agent shall have consented, such consent not to be unreasonably withheld.
"Eligible Participant" shall mean (a) any entity controlled by or under
common control with any Bank and (b) a commercial bank having a combined capital
and surplus of at least $200,000,000, in either case, which does not, either
directly or indirectly, engage in business competitive with the business of the
Company or any of its Subsidiaries.
"Environmental Laws and Regulations" shall mean all federal, state and
local, environmental, health and safety laws, regulations, ordinances, orders,
judgments and decrees applicable to the Company or any Subsidiary, or any of
their respective assets or properties.
"Environmental Liability" shall mean any liability under any applicable
Environmental Laws and Regulations for any Disposal, Release or threatened
Release of a Hazardous Substance, pollutant or contaminant as those terms are
defined under CERCLA and any liability which would require a removal, remedial
or response action, as those terms are defined under CERCLA, by any Person or
any environmental regulatory body having jurisdiction over the Company or any
other Subsidiary, and/or any liability arising under any Environmental Laws and
Regulations for the Company's or any other Subsidiary's failure to comply with
such laws and regulations including, without limitation, the failure to comply
with or obtain any applicable environmental permit.
"Environmental Proceeding" shall mean any judgment, action or
proceeding pending before any court or other Governmental Authority or any
notice, demand or order, with respect to the Company or any Subsidiary and
arising under or relating to any Environmental Laws and Regulations.
<PAGE> 17
11
"ERISA" shall mean the Employee Retirement Income Security Act of 1974,
as amended from time to time.
"Eurocurrency Reserve Requirements" for any day after the Closing Date
as applied to a Eurodollar Loan shall mean the aggregate (without duplication)
of the rates (expressed as a decimal) of reserve requirements in effect on such
day (including, without limitation, basic, supplemental, marginal and emergency
reserves under any regulations of the Board of Governors of the Federal Reserve
System or other Governmental Authority having jurisdiction with respect
thereto), dealing with reserve requirements prescribed for eurocurrency funding
(currently referred to as "Eurocurrency Liabilities" in Regulation D) maintained
by a member bank of such System. The Banks confirm to the Company and the
Designated Subsidiaries that no Eurocurrency Reserve Requirements exist as of
the date hereof.
"Eurodollar Rate" shall mean, for any day during the Interest Period
for any Eurodollar Loan, an interest rate per annum equal to the rate per annum
(rounded upward, if necessary, to the nearest l/100 of one percent) obtained by
dividing (a) the rate per annum at which deposits in U.S. dollars are offered in
London, England to prime banks in the London interbank market, as set forth on
the "LIBO" page on the Reuters Monitor Money Rates Service screen, at 11:00 A.M.
(London time) two Business Days before the first day of such Interest Period in
an amount substantially equal to Fleet's Eurodollar Loan to be outstanding
during such Interest Period (or, if Fleet shall not have such a Eurodollar Loan,
$1,000,000) and for a period equal to such Interest Period by (b) a percentage
equal to one minus the Eurocurrency Reserve Requirements for such day.
"Eurodollar Lending Office" shall mean, with respect to each Bank,
initially, the office of such Bank designated as such on Schedule I under the
heading "Eurodollar Lending Office"; thereafter, such other office of such Bank,
if any, which shall be making or maintaining Eurodollar Loans.
"Eurodollar Loans" shall mean Loans hereunder at such time as they bear
interest based upon the Eurodollar Rate.
"Event of Default" shall mean any of the events specified in Section 7,
provided that any requirement for the giving of notice, the lapse of time, or
both, or any other condition, has been satisfied.
"Existing Banks" shall have the meaning ascribed thereto in the
preamble hereto.
"Existing Designated Subsidiaries" shall have the meaning ascribed
thereto in the preamble hereto.
<PAGE> 18
12
"Facility Fee" shall mean at any time of determination a fee equal to
the relevant annual fee percentage determined by reference to the applicable
ratio of Senior Funded Debt to Consolidated EBITDA set forth in the table below
multiplied by the aggregate amount of the Commitments at such time (whether used
or unused):
Ratio Annual Percentage Fee
Level I 3.25:1.00 or greater 0.300%
Level II 3.00:1.00 or greater but less
than 3.25:1.00 0.275%
Level III 2.50:1.00 or greater but less
than 3.00:1.00 0.250%
Level IV 2.00:1.00 or greater but less
than 2.50:1.00 0.225%
Level V 1.50:1.00 or greater but less
than 2.00:1.00 0.225%
Level VI less than 1.50:1.00 0.200%
The determination of the applicable fee pursuant to the table set forth
above shall be made on a quarterly basis based on an examination of the
consolidated financial statements of the Company and its Subsidiaries delivered
pursuant to and in compliance with subsection 5.1; provided, however, that the
initial Facility Fee shall be at Level II in such table until such time as
audited annual consolidated financial statements of the Company and its
Subsidiaries indicating a Facility Fee at a different Level in such table are
first delivered to the Agent and the Banks pursuant to and in compliance with
subsection 5.1. Each change in the Facility Fee shall be effective as of the
first day of the calendar month following the date of the Company's financial
statements reflecting any change in the ratio of Senior Funded Debt to
Consolidated EBITDA. In the event that financial statements for the four fiscal
quarters most recently completed prior to such date of determination either: (a)
have not been delivered to the Agent in compliance with subsection 5.1, or (b)
if delivered, do not comply in form or substance with subsection 5.1, then the
Agent may determine, in its reasonable judgment, the ratio of Senior Funded Debt
to Consolidated EBITDA referred to above that would have been in effect as at
such date, and, consequently, the Facility Fee in effect for the period
commencing on such date.
"Federal Funds Rate" means, for any period, a fluctuating interest rate
per annum equal for each day during such period to the weighted average of the
rates on overnight Federal funds transactions with members of the Federal
Reserve System arranged
<PAGE> 19
13
by Federal funds brokers, as published for such day (or, if such day is not a
Business Day, for the next preceding Business Day) by the Federal Reserve Bank
of New York, or, if such rate is not so published for any day that is a Business
Day, the average of the quotations for such day for such transactions received
by the Agent from three Federal funds brokers of recognized standing selected by
it.
"Fee Letter" shall mean the letter agreement between the Agent and
Nortek (on its behalf and on behalf of the Company) dated August 14, 1997.
"Fifth Third Letters of Credit" shall mean the existing letters of
credit issued by Fifth Third Bank as to which the Company or Great Lakes Window,
Inc. is the account party.
"Financing Lease" shall mean (a) any lease of property, real or
personal, the then present value of the minimum rental commitment of which
should, in accordance with GAAP, be capitalized on a balance sheet of the
lessee, and (b) any other such lease the obligations under which are capitalized
on a consolidated balance sheet of the Company and its Subsidiaries.
"First American Letter of Credit" shall mean the existing letter of
credit issued by M&I First American Bank as to which SNE Transportation Company,
Inc. is the account party.
"Fleet" shall have the meaning ascribed thereto in the preamble hereto.
"GAAP" shall mean generally accepted accounting principles in the
United States of America as in effect and applied in the Company's certified
financial statements as at December 31, 1996.
"Governmental Authority" shall mean any nation or government, any state
or other political subdivision thereof and any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or pertaining
to government.
"Guarantor" shall have the meaning ascribed thereto in subsection 2.20
hereof.
"Guaranty" shall have the meaning ascribed thereto in subsection 2.20
hereof.
"Hazardous Materials" shall mean any Toxic Chemical, Hazardous
Substances, contaminants or pollutants, medical wastes, infectious wastes or
Hazardous Wastes.
<PAGE> 20
14
"Hazardous Substance" shall have the same meaning as set forth in
Section 101(14) of the Comprehensive Environmental Response, Compensation and
Liability Act, 42 U.S.C. Section 9601(14) or state or local law.
"Hazardous Waste" shall have the same meaning as set forth by the
Resource Conservation and Recovery Act, 42 U.S.C. Section 6903(5), and the
Environmental Protection Agency's implementing regulations, or state or local
law.
"Hedge Agreement" shall mean any interest rate swap, cap or collar
agreement, interest rate future or option contract and any or other similar
agreement.
"Hedge Bank" shall mean any Bank or any of its Affiliates or any other
financial institution acceptable to the Required Banks that has become a party
to the Security Agreement and has appointed Fleet as its custodian thereunder,
in each case, in its capacity as a party to a Hedge Agreement with a Loan Party.
"Indebtedness" of a Person, at a particular date, shall mean the sum
(without duplication) at such date of (a) indebtedness of such Person for
borrowed money or evidenced by notes, bonds, debentures or like instruments, (b)
indebtedness of such Person for the deferred purchase price of property or
services, except (i) accounts payable and accrued expenses arising in the
ordinary course of business, (ii) obligations incurred in connection with
additions to property, plant or equipment which are deferred for no more than
100 days after the later of the acquisition or completion of installation of
such additions, (iii) other obligations (not including taxes) which are deferred
for no more than 100 days after the date on which they would first be reflected
as liabilities on a balance sheet of such Person and (iv) obligations to pay for
services of officers, directors or employees of the Company or any Subsidiary,
(c) obligations of such Person under any Financing Lease and (d) indebtedness of
such Person arising under acceptance facilities. Without limitation,
Indebtedness shall include undrawn letters of credit and unreimbursed draws on
letters of credit.
"Initial Banks" shall mean the financial institutions that have
executed the signature pages hereto.
"Insolvency" or "Insolvent", as to any Multiemployer Plan, shall have
the respective meanings assigned to such terms in Section 4245 of ERISA.
"Interest Payment Date" shall mean (a) as to any Prime Rate Loan, each
of (i) the date on which such Loan is paid, refinanced or converted and (ii) the
last day of each March, June, September and December after the date such Prime
Rate Loan is made and (b) as to any Eurodollar Loan, each of (i) the date on
which such Loan is paid, refinanced or converted and (ii) in the case of any
Eurodollar Loan in respect of which the Company or
<PAGE> 21
15
any Designated Subsidiary (as applicable) has selected an Interest Period of
one, two or three months, the last day of such Interest Period, and, in the case
of any Eurodollar Loan in respect of which the Company or any Designated
Subsidiary (as applicable) has selected an Interest Period of duration of more
than three months, each date which is three months from the first day of such
Interest Period.
"Interest Period" shall mean, with respect to any Eurodollar Loan, the
period commencing on the date of the making of such Eurodollar Loan or the date
of the conversion of any Prime Rate Loan into such Eurodollar Loan, and ending
one, two, three or six months (or, to the extent permitted by subsection 2.3(c),
one week) thereafter as selected by the Company or a Designated Subsidiary, as
applicable, in its notice of borrowing as provided in subsection 2.3 and,
thereafter, each subsequent period commencing on the last day of the immediately
preceding Interest Period and ending on the last day of the period selected by
the Company or a Designated Subsidiary, as applicable, in its notice of
conversion as provided in subsection 2.3; provided, however, that the foregoing
provision relating to Interest Periods is subject to the following:
(a) if the Interest Period in respect of any Eurodollar Loan would
otherwise end on a day which is not a Working Day, that Interest Period
shall be extended to the next succeeding Working Day unless the result of
such extension would be to carry such Interest Period into another calendar
month in which event such Interest Period shall end on the immediately
preceding Working Day;
(b) any Interest Period pertaining to a Eurodollar Loan that would
otherwise extend beyond the Termination Date shall end on the Termination
Date;
(c) any Interest Period in respect of a Eurodollar Loan that begins on
the last Working Day of a calendar month (or on a day for which there is no
numerically corresponding day in the succeeding calendar month at the end of
such Interest Period) shall end on the last Working Day of such succeeding
calendar month; and
(d) the number of Eurodollar Loan Tranches in effect at the same time
shall not be in excess of the Tranche Limit.
In the event that the Company or the Designated Subsidiary, as applicable, fails
to select the duration of an Interest Period for any Eurodollar Loan within the
time period and otherwise as provided in subsection 2.3, such Eurodollar Loan
will be automatically converted into a Prime Rate Loan on the last day of the
current Interest Period for such Eurodollar Loan.
"investments" shall have the meaning ascribed thereto in subsection
6.7.
<PAGE> 22
16
"Issuance Fee" shall mean at any time of determination a fee at an
annual rate determined by reference to the applicable ratio of Senior Funded
Debt to Consolidated EBITDA set forth in the table below payable on the undrawn
amount of each stand-by L/C issued or deemed issued by Fleet:
Ratio Annual Fee
Level I 3.25:1.00 or greater 0.950%
Level II 3.00:1.00 or greater but less
than 3.25:1.00 0.725%
Level III 2.50:1.00 or greater but less
than 3.00:1.00 0.625%
Level IV 2.00:1.00 or greater but less
than 2.50:1.00 0.525%
Level V 1.50:1.00 or greater but less
than 2.00:1.00 0.400%
Level VI less than 1.50:1.00 0.300%
The determination of the applicable fee pursuant to the table set forth above
shall be made on a quarterly basis based on an examination of the consolidated
financial statements of the Company and its Subsidiaries delivered pursuant to
and in compliance with subsection 5.1; provided, however, that the initial
Issuance Fee shall be at Level II in such table until such time as audited
annual consolidated financial statements of the Company and its Subsidiaries
indicating an Issuance Fee at a different Level in such table are first
delivered to the Agent and the Banks pursuant to and in compliance with
subsection 5.1. Each change in the Issuance Fee shall be effective as of the
first day of the calendar month following the date of the Company's financial
statements reflecting any change in the ratio of Senior Funded Debt to
Consolidated EBITDA. In the event that financial statements for the four fiscal
quarters most recently completed prior to such date of determination either: (a)
have not been delivered to the Agent in compliance with subsection 5.1 or (b) if
delivered, do not comply in form or substance with subsection 5.1, then the
Agent may determine, in its reasonable judgment, the ratio of Senior Funded Debt
to Consolidated EBITDA referred to above that would have been in effect as at
such date, and, consequently, the Issuance Fee in effect for the period
commencing on such date.
"L/C Participant" shall have the meaning ascribed thereto in subsection
2.19(c).
<PAGE> 23
17
"L/C Sublimit" shall mean initially the aggregate face amount of all
L/Cs outstanding on the Closing Date, as such amount may be permanently reduced
from time to time pursuant to subsection 2.6.
"L/Cs" shall have the meaning ascribed thereto in subsection 2.1(c)(i).
"Leverage Ratio" shall have the meaning ascribed thereto in subsection
6.10.
"Lien" shall mean any mortgage, deed of trust, pledge, hypothecation,
assignment or deposit by way of security, encumbrance, lien (statutory or
other), or preference, priority or other security interest or security agreement
or preferential arrangement of any kind or nature whatsoever (including, without
limitation, any conditional sale or other title retention agreement, any
Financing Lease and the filing of any financing statement under the Uniform
Commercial Code or comparable law of any jurisdiction).
"Loan Documents" shall mean (a) for purposes of this Agreement and the
Notes and any amendment, supplement or modification hereof or thereof and for
all other purposes (other than for purposes of the Guaranties and the Security
Documents), (i) this Agreement, (ii) the Notes, (iii) the Guaranties, (iv) the
Security Documents and (v) each Application and (b) for purposes of the
Guaranties and the Security Documents, (i) this Agreement, (ii) the Notes, (iii)
the Guaranties, (iv) the Security Documents, (v) each Application and (vi) each
Hedge Agreement to which a Hedge Bank is a party, in each case as amended,
supplemented or otherwise modified from time to time.
"Loan Parties" means the Company, the Designated Subsidiaries, the
Guarantors and the Collateral Grantors.
"Loans" shall have the meaning ascribed thereto in subsection 2.1(a)(i)
hereof.
"Material Adverse Effect" shall mean a material adverse effect on (i)
the business, condition (financial or otherwise), operations, performance or
properties of Company and its Subsidiaries, taken as a whole, (ii) the ability
of the Company, individually, or the Company and the other Loan Parties, taken
as a whole, to perform its or their respective obligations in any material
respect under any Loan Document or Related Document to which the Company or such
other Loan Party is a party or (iii) the rights and remedies of the Agent and
the Banks under any Loan Document or Related Document.
"Material Operating Subsidiaries" shall mean (a) each Designated
Subsidiary; (b) any Subsidiary of the Company which conducts business operations
and is material to the operations of the business of the Company and its
Subsidiaries, taken as a whole; and (c) each Subsidiary of the Company which the
Company designates as a Material Operating Subsidiary.
<PAGE> 24
18
"Merger" and "Merger Agreement" shall have the respective meanings
ascribed thereto in the preamble hereto.
"Multiemployer Plan" shall mean a Plan which is a multiemployer plan as
defined in Section 4001(a)(3) of ERISA.
"Net Proceeds" shall mean the aggregate cash proceeds received from
time to time (whether as initial consideration or through payment or disposition
of any deferred payment obligation) by the Company or any Subsidiary in respect
of any sale or other disposition of its assets (whether at the time of any such
sale or disposition or at any time thereafter), in each case net of (a) the
reasonable expenses (including legal fees and brokers' and underwriters'
commissions paid to third parties) incurred in effecting such asset sale or
other disposition, (b) any taxes reasonably attributable to such asset sale or
other disposition, (c) the amount of any Indebtedness (other than the
Obligations) secured by a Lien on any such asset that, by the terms of the
instrument evidencing such Indebtedness, is required to be repaid upon such sale
or other disposition and (d) to the extent the Company or such Subsidiary is
required to maintain reserves for liabilities resulting from such asset sale or
other disposition, reasonable reserves so long as such reserves are required to
be so maintained; provided, however, that (i) the amount of any liabilities
existing at the time of an asset sale or disposition which relate to the assets
sold, which are not assumed by the purchaser and which the seller remains
obligated to pay, shall be deducted from the aggregate cash proceeds of such
sale or disposition; (ii) if any deferred payment obligation is evidenced by any
note or other obligation of the purchaser or any third party, then any document
or instrument evidencing such obligation shall be pledged by the Company or the
Subsidiary involved to the Agent for the benefit of the Banks pursuant to the
Security Agreement or a security agreement similar to the Security Agreement but
only as collateral for the obligation to prepay pursuant to subsection 2.8(d)
with respect to the asset sale or disposition to which such document or
instrument relates (but subject to release if any such document is sold by the
Company or the Subsidiary involved so long as the proceeds are applied in
accordance with such subsection 2.8(d)); and provided that the Company will be
entitled, except after the occurrence and during the continuance of an Event of
Default, to receive all payments with respect to such instruments, subject to
the prepayment obligations in subsection 2.8(d); and (iii) Net Proceeds shall
not include cash proceeds of (A) asset sales permitted by subsections 6.4(a),
(c) and (g) and (B) mergers permitted by subsections 6.4(b) and (f).
"Non-Core Subsidiaries" shall mean each Subsidiary of the Company
identified as such on Schedule 3.12.
"Nortek" shall have the meaning ascribed thereto in the preamble
hereto.
<PAGE> 25
19
"Nortek Indentures" shall mean (a) the Indenture dated as of February
14, 1994 between Nortek and State Street Bank and Trust Company (the "Trustee")
pursuant to which Nortek's 9-7/8% Senior Subordinated Notes due March 1, 2004
were issued, (b) the Indenture dated as of March 17, 1997 between Nortek and the
Trustee pursuant to which Nortek's 9-1/4% Senior Notes due March 15, 2007 were
issued and (c) the Indenture dated as of August 26, 1997 between Nortek and the
Trustee pursuant to which Nortek's 9-1/8% Senior Notes due September 1, 2007
will be issued, in each case as amended, supplemented or otherwise modified from
time to time in accordance with its terms.
"Notes" shall have the meaning ascribed to such term in subsection 2.2.
"Notice of Borrowing/Conversion" shall have the meaning ascribed to
such term in subsection 2.3.
"Obligations" shall mean the unpaid principal of and interest on the
Notes and all other obligations and liabilities of the Company and the other
Loan Parties to the Agent or to the Banks, whether direct or indirect, absolute
or contingent, due or to become due, or now existing or hereafter incurred,
which may arise under, out of, or in connection with, the Credit Agreement, the
other Loan Documents and any other document made, delivered or given in
connection therewith or herewith, whether on account of principal, interest,
reimbursement obligations, fees, indemnities, costs, expenses (including,
without limitation: (a) any interest accruing thereon after the date of filing
any petition by or against the Company or any Subsidiary in connection with any
bankruptcy or other proceeding, whether or not a claim by the Agent or any of
the Banks is enforceable in such proceeding; and (b) all fees and disbursements
of counsel to the Agent or to the Banks that are required to be paid by the
Company pursuant to the terms of the Credit Agreement) or otherwise.
"Participant" shall have the meaning ascribed thereto in subsection
9.7(d).
"Participating Interest" shall have the meaning ascribed thereto in
subsection 9.7(d).
"Patent Rights" shall have the meaning ascribed thereto in subsection
3.17.
"PBGC" shall mean the Pension Benefit Guaranty Corporation (or any
successor) established pursuant to Subtitle A of Title IV of ERISA.
"Permitted Shareholders" means Nortek and the Purchaser, so long as it
is a wholly-owned Subsidiary of Nortek.
"Person" shall mean an individual, a partnership, a corporation, a
limited liability company, a business trust, a joint stock company, a trust, an
unincorporated
<PAGE> 26
20
association, a joint venture, a Governmental Authority or any other entity of
whatever nature.
"Plan" shall mean at any particular time, any employee benefit plan
which is covered by ERISA and in respect of which the Company, any Subsidiary or
a Commonly Controlled Entity is (or, if such Plan were terminated at such time,
would under Section 4069 of ERISA be deemed to be) an "employer" as defined in
Section 3(5) of ERISA.
"Post-Default Rate" shall have the meaning ascribed thereto in
subsection 2.10(d).
"Pre-Commitment Information" shall mean all of the information relating
to Nortek, the Company or any of their respective Subsidiaries furnished to the
Agent by Nortek or the Company on or before August 14, 1997.
"Prime Rate" shall mean a fluctuating interest rate per annum in effect
from time to time, which rate shall at all times be equal to the higher of (a)
the rate of interest publicly announced by Fleet in Boston, Massachusetts from
time to time as its prime rate and (b) one half of one percent (1/2%) per annum
above the Federal Funds Rate. The Prime Rate is not intended to be the lowest
rate of interest charged by Fleet in connection with extensions of credit to
debtors. Each change in any interest rate provided for herein based upon the
Prime Rate shall take effect at the time of such change in the Prime Rate.
"Prime Rate Loans" shall mean Loans hereunder at such time as they bear
interest based upon the Prime Rate.
"Purchaser" shall have the meaning ascribed thereto in the preamble
hereto.
"Regulation A", "Regulation D", "Regulation G", "Regulation U" and
"Regulation X" shall mean, respectively, Regulation A, Regulation D, Regulation
G, Regulation U and Regulation X of the Board of Governors of the Federal
Reserve System, as from time to time in effect.
"Regulatory Change" shall mean the introduction of, or any change in,
United States federal, state or local laws or regulations (including Regulation
D) or treaties or foreign laws or regulations after the date of this Agreement
or the adoption or making after such date of any interpretations, directives,
guidelines or requests applying generally to a class of banks of or under any
United States federal, state or local laws or regulations or any treaties or
foreign laws or regulations (whether or not having the force of law) by any
court or governmental or monetary authority charged with the interpretation or
administration thereof.
<PAGE> 27
21
"Related Documents" shall mean the Merger Agreement and each of the
documents evidencing Subordinated Indebtedness.
"Release" shall have the same meaning as set forth in Section 101(22)
of the Comprehensive Environmental Response, Compensation and Liability Act, 42
U.S.C. Section 9601(22), or state or local law.
"Reorganization", as to any Multiemployer Plan, shall have the meaning
assigned to such term in Section 4241 of ERISA.
"Reportable Event" shall mean any of the events set forth in Section
4043(c) of ERISA other than those events as to which the 30-day notice period is
waived.
"Required Banks" shall mean, at any date, Banks having at least 51% of
the aggregate amount of the Commitments, and, if the Commitments are terminated
and Loans and/or Bank L/C Obligations are outstanding, Banks holding at least
51% of the aggregate principal amount of outstanding Loans and/or Commitment
Percentages relating to Bank L/C Obligations, as the case may be.
"Requirement of Law" for any Person shall mean the Certificate of
Incorporation and By-Laws or other organizational or governing documents of such
Person, and any law, treaty, rule or regulation or guideline, or determination
of an arbitrator or a court or other Governmental Authority, in each case
applicable to or binding upon such Person or any of its property or to which
such Person or any of its property is subject.
"Responsible Officer" shall mean the chief executive officer,
president, chief financial officer or treasurer, or any executive vice
president, of the Company.
"SEC Reports" shall mean the Company's annual report on Form 10-K for
the fiscal year ended December 31, 1996 and other documents filed by the Company
with the Securities and Exchange Commission during 1996.
"Secured Parties" shall mean the Agent, the Banks, Fleet in its
capacity as issuer of L/Cs hereunder and the Hedge Banks.
"Security Agreement" shall have the meaning ascribed thereto in
subsection 2.21.
"Security Documents" shall mean, collectively, the Security Agreement
and any other agreement that creates or purports to create a Lien in favor of
the Agent for the benefit of the Secured Parties.
<PAGE> 28
22
"Senior Funded Debt" shall mean, at any time of determination, the
average (calculated for the two most recent consecutive full fiscal quarters of
the Company for which consolidated financial statements of the Company and its
Subsidiaries have been delivered to the Agent and the Banks pursuant to and in
compliance with subsection 5.1) (a) aggregate Indebtedness of the Company and
its Subsidiaries less (b) the aggregate Subordinated Indebtedness of the Company
and its Subsidiaries, in each case calculated on a consolidated basis in
accordance with GAAP.
"Single Employer Plan" shall mean any Plan which is covered by Title IV
of ERISA, but which is not a Multiemployer Plan.
"Solvency Certificate" shall mean a certificate substantially in the
form of Exhibit G hereto.
"Solvent" and "Solvency" shall mean with respect to any Person at the
time of determination:
(a) the then fair market value of its assets is greater than its
probable liability on its existing debts (including contingent debts) as
such debts become absolute and matured;
(b) the then present fair saleable value of its assets is not less than
the amount that will be required to pay its probable liability on its
existing debts (including contingent debts) as such debts become absolute
and matured;
(c) it is then able and expects to be able to pay its debts (including,
without limitation, contingent debts and other commitments) as they mature;
and
(d) it has capital sufficient to carry on its business as conducted and
as proposed to be conducted.
The amount of contingent debts and other commitments at any time shall be
computed as that amount that represents the maximum reasonably anticipated
liability in respect thereof as determined by such Person in good faith.
"Special Subsidiary Loans" shall mean loans by the Company and/or any
of its Subsidiaries to Subsidiaries which are not, directly or indirectly,
wholly-owned Subsidiaries.
"Specified L/C Obligations" at any date shall mean the sum of (a) the
aggregate undrawn amount of all L/Cs as to which the Company or any Subsidiary
is an account party at such date (excluding (i) the Fifth Third Letters of
Credit and the First American Letter of Credit and (ii) any renewals, extensions
and replacements of any of the
<PAGE> 29
23
Fifth Third Letters of Credit or the First American Letter of Credit), plus (b)
the amount of all Unpaid Drawings.
"Subordinated Indebtedness" shall mean the Indebtedness permitted
pursuant to subsection 6.1(f).
"Subsidiary" of any Person shall mean a corporation or other entity of
which shares of stock or other ownership interests having ordinary voting power
(other than stock or other ownership interests having such power only by reason
of the happening of a contingency) to elect a majority of the directors of such
corporation, or other Persons performing similar functions for such entity, are
owned, directly or indirectly, by such Person. Unless otherwise qualified, all
references to a "Subsidiary" or to "Subsidiaries", in this Agreement shall refer
to a Subsidiary or Subsidiaries of the Company.
"Taxes" shall have the meaning ascribed thereto in subsection 2.13.
"Tender Offer" shall have the meaning ascribed thereto in the preamble
hereto.
"Termination Date" shall mean August 26, 2002 or, if such day is not a
Business Day, the Business Day next preceding such day.
"Toxic Chemical" shall mean any substance on the list described in
Section 313(c) of the Emergency Planning and Community Right-to-Know Act, 42
U.S.C. Section 11023(c).
"Tranche" shall mean all Eurodollar Loans of the same borrower with the
same Interest Period, which Interest Period ends on the same day.
"Tranche Limit" at any time shall mean a number equal to the sum of the
number of Designated Subsidiaries at such time plus six; provided that the
Tranche Limit shall not be less than 10.
"Type" shall mean, as to any Loan, its nature as a Prime Rate Loan or
Eurodollar Loan, as the case may be.
"Unpaid Drawings" shall have the meaning ascribed thereto in subsection
2.1(c)(i) hereof.
"Working Day" shall mean any Business Day on which dealings in foreign
currency and exchange between banks may be carried on in London, England and
Boston, Massachusetts.
<PAGE> 30
24
1.2 Other Definitional Provisions. (a) All terms defined in this
Agreement shall have such defined meanings when used in the Loan Documents or
any certificate or other document made or delivered pursuant hereto unless
otherwise defined therein.
(b) As used herein, in the Loan Documents and in any certificate or
other document made or delivered pursuant hereto, accounting terms not defined
in subsection 1.1, and accounting terms partly defined in subsection 1.1 to the
extent not defined, shall have the respective meanings given to them under GAAP.
(c) The words "hereof", "herein" and "hereunder" and words of similar
import when used in this Agreement, shall refer to this Agreement as a whole and
not to any particular provision of this Agreement; and Section, subsection,
Schedule and Exhibit references contained in this Agreement are references to
Sections, subsections, Schedules and Exhibits in or to this Agreement unless
otherwise specified.
(d) In this Agreement in the computation of periods of time from a
specified date to a later specified date, the word "from" means "from and
including" and the words "to" and "until" each mean "to but excluding".
SECTION 2. AMOUNTS AND TERMS OF COMMITMENTS
2.1 Commitments. (a) (i) Subject to the terms and conditions of this
Agreement, each Bank severally agrees to make a single term loan (individually,
a "Loan", collectively, the "Loans") to each of the Company and the Designated
Subsidiaries on the Closing Date in an aggregate principal amount which, when
added to such Bank's Commitment Percentage of the Bank L/C Obligations which are
to be outstanding immediately after giving effect to the borrowing and
application of such Loans, will not exceed the amount of its Commitment set
forth on Schedule I, as such amount may be reduced from time to time as provided
herein. Amounts borrowed under this subsection 2.1(a) and repaid or prepaid may
not be reborrowed.
(ii) Intentionally omitted.
(b) The Loans may be made as (i) Eurodollar Loans, (ii) Prime Rate
Loans or (iii) subject to the other provisions hereof, any combination thereof,
as determined by the Company and notified to the Agent in accordance with
subsection 2.3, provided that Loans made on the Closing Date shall be made as
Prime Rate Loans and shall be made in an amount not to exceed the amount by
which the Commitments on the Closing Date exceed the L/C Sublimit on the Closing
Date.
(c) (i) Effective as of the Closing Date, (A) the "L/Cs" issued for the
account of any Account Party by Fleet pursuant to the Existing Credit Agreement
(such
<PAGE> 31
25
"L/Cs" as are outstanding thereunder on the date hereof and set forth on
Schedule 2.1 being, collectively, the "L/Cs", and individually, an "L/C"), will
be deemed to be L/Cs hereunder for the account of such Account Party, (B) the
L/Cs will no longer be Obligations outstanding under the Existing Credit
Agreement and (C) Fleet will be deemed to have sold and transferred an undivided
interest and participation in respect of each L/C issued by it and each Bank
hereunder will be deemed to have purchased and received, without further action
on the part of any party, an undivided interest and participation in such L/C,
based on such Bank's Commitment Percentage of such L/C. Fleet shall notify the
Company of any payment or disbursement made by Fleet under any L/C in accordance
with its customary practice. The applicable Account Party shall reimburse Fleet
in immediately available funds at its office indicated on its Schedule I on the
same day as any draw is paid by Fleet under the L/Cs (all such amounts so paid
or disbursed until paid, are hereinafter referred to as "Unpaid Drawings").
(ii) Intentionally omitted.
(iii) If, notwithstanding the other provisions of this subsection
2.1(c), on the Termination Date there are outstanding any L/Cs which have not
expired or been terminated with the consent of the Company and the respective
beneficiaries thereof, then this Agreement (including, without limitation, this
subsection 2.1(c) and subsection 2.22) and the respective rights, obligations
and covenants of the Company, and the Designated Subsidiaries, Fleet and the
Banks under this Agreement shall remain in full force and effect until the date
on which the last of the L/Cs expire or is terminated with the consent of the
Company and the respective beneficiaries thereof and all payments made by Fleet
under the L/Cs are reimbursed in full by the Company or one or more of the
Designated Subsidiaries, except that the Commitment shall terminate on the
Termination Date.
(iv) Intentionally omitted.
(v) Upon the presentation for payment of any draft drawn under a trade
L/C, the Company shall pay to Fleet for the ratable benefit of the Banks a
payment commission or fee (each a "Drawing Fee") equal to one quarter of one
percent (1/4%) of the face amount of the draft.
(vi) The Company shall pay to the Agent for the ratable benefit of the
Banks an Issuance Fee for each stand-by L/C, on the undrawn amount of such L/C,
at an annual rate equal to the percentage set forth in the definition of
Issuance Fee, and payable on the date of issuance and thereafter in advance on
the first day of each January, April, July and October so long as such L/C is
outstanding; provided, however, that such Issuance Fee shall be pro rated for
the portion of any quarter during which the undrawn amount of such L/C is
reduced or the L/C is terminated and the Agent and the Banks shall refund to the
Company any unearned portion of such Issuance Fee.
<PAGE> 32
26
(vii) In the event that at any time when a draft is drawn under an L/C,
there are not sufficient funds in any account of the Account Party with Fleet or
sufficient Available Commitments to permit creation of a Loan sufficient to fund
payment of such draft, any funds advanced by Fleet, in payment thereof shall be
due and payable immediately and shall bear interest until paid in full at the
Post-Default Rate. In the event of any conflict, discrepancy or any omission of
terms provided herein between the terms established by Fleet in its Application
or otherwise and this Agreement, the terms provided herein shall prevail.
(viii) The obligations of each Account Party under this subsection
2.1(c) to reimburse Fleet with respect to Unpaid Drawings (including interest
thereon) shall, subject to the other provisions of this Agreement, including
without limitation subsection 2.22, be absolute and unconditional under any and
all circumstances and (but as so subject) irrespective of any setoff,
counterclaim or defense to payment which the Company or any Designated
Subsidiary may have or have had against Fleet, including (without limitation,
but as so subject) any defense based on the failure of any drawing under the L/C
to conform to the terms of such L/C or any non-application or misapplication by
the beneficiary of the L/C of the proceeds of such drawing.
2.2 Notes. The Loans made by each Bank shall be evidenced by promissory
notes, substantially in the form of Exhibit A with appropriate insertions as to
date, name of Bank and principal amount (individually, a "Note" and,
collectively, the "Notes"), payable to the order of such Bank and evidencing the
obligation of the Company or the applicable Designated Subsidiary, as the case
may be, to pay the outstanding principal amount thereof with interest on the
unpaid principal amount from time to time outstanding of such Note as prescribed
in subsection 2.10. Each Bank is hereby authorized to record the date, Type and
amount of each Loan, the maturity date therefor and the date and amount of each
repayment of principal thereof, and, in the case of Eurodollar Loans, the
interest rate with respect thereto, either on its own books and records or on
the schedule (or any continuations thereof) annexed to and constituting a part
of its Note, and any such recordation shall constitute prima facie evidence of
the accuracy of the information so recorded; provided that the failure to make
any such recordation shall not in any way affect the obligation of the Company
and the Designated Subsidiaries to repay the Loans. Each Note shall (a) be dated
the date hereof, (b) be payable with respect to principal as set forth in
subsection 2.9, and (c) bear interest on the unpaid principal amount thereof
from time to time outstanding until payment in full of the principal amount
thereof at the applicable interest rate per annum determined as provided in
subsection 2.10. Interest on the Notes shall be payable on the dates specified
in subsection 2.10.
2.3 Procedure for Loan Borrowings. (a) The Company may request for
itself or any Designated Subsidiary a borrowing under the Commitments on the
Closing Date, by giving irrevocable notice to the Agent (which notice must be
received by the Agent prior to 2:00 p.m., Boston, Massachusetts time) one
Business Day prior to the Closing Date;
<PAGE> 33
27
provided, however, that from time to time the Company may request for itself or
on behalf of any Designated Subsidiary that all or any portion of the Loans of
one Type be converted into Loans of the other Type by giving irrevocable notice
to the Agent, three Working Days prior to the requested conversion date, in the
case of Eurodollar Loans, and one Business Day prior to the requested conversion
date, in the case of Prime Rate Loans, provided that (i) in the case of any
conversion from a Prime Rate Loan to a Eurodollar Loan, (A) the Interest Period
available for such Eurodollar Loan shall be subject to subsection 2.3(c), (B)
the obligation of the Banks to make Eurodollar Loans shall not then be suspended
pursuant to subsection 2.12 or 2.14 and (C) the number of Eurodollar Loan
Tranches in effect after giving effect to such conversion shall not exceed the
Tranche Limit then in effect and (ii) in the case of any conversion from a
Eurodollar Loan to a Prime Rate Loan, (A) such conversion shall only be made on
the last day of an Interest Period for such Eurodollar Loan and (B) after giving
effect to such conversion, the aggregate amount of all Eurodollar Loans having
the same Interest Period ending on the same date is at least $1,000,000. Each
such notice of borrowing or conversion (a "Notice of Borrowing/Conversion")
shall specify: (1) the borrower and the amount to be borrowed or converted, (2)
the requested borrowing or conversion date, (3) whether the Type of Loan to be
borrowed, or into which a Loan shall be converted, is to be a Eurodollar Loan,
Prime Rate Loan or a combination thereof and, if a combination, the respective
amount of each Type of borrowing and (4) in the case of Eurodollar Loans, the
length of the Interest Period with respect thereto. The aggregate borrowings
under the Commitments on the Closing Date shall be in an aggregate principal
amount of not more than the then Available Commitments. The aggregate amount of
Loans to any Designated Subsidiary at any time outstanding shall not exceed the
Designated Subsidiary Borrowing Limit for such Designated Subsidiary in effect
at such time. Each Bank will make the amount of its pro rata share of each
borrowing available to the Agent for the account of the Company at the office of
the Agent in Boston, Massachusetts as set forth in subsection 9.2 by 11:00 a.m.,
Boston, Massachusetts time, on the Closing Date in funds immediately available
to the Agent. The proceeds of all such Loans will then be made available to the
Company or the applicable Designated Subsidiary, as the case may be, by the
Agent at such office of the Agent by crediting the account of the Company or
such Designated Subsidiary on the books of such office with the aggregate of the
amounts made available to the Agent by the Banks and in like funds as received
by the Agent.
(b) The provisions of subsection 2.3(a) notwithstanding, if the Company
shall not have given a timely notice of the next Interest Period for any
outstanding Eurodollar Loan, then unless the Agent shall have received notice
that the Company elects not to continue such Loan on the last day of such
Interest Period as a Eurodollar Loan (such notice to have been received at least
one Business Day prior to the last day of such Interest Period) the Company
shall be deemed irrevocably to have requested that Prime Rate Loans be made by
the Banks on the last day of such Interest Period in the same aggregate amount
as the Eurodollar Loans the last day of the Interest Period of which is on such
day (subject,
<PAGE> 34
28
however, to the requirement that the aggregate amount of the Loans outstanding
at any time pursuant to subsection 2.1 may not exceed the amounts of the
Available Commitments then in effect).
(c) Anything in subsection 2.3 (a) above to the contrary
notwithstanding, (i) during the period from the Closing Date to the date that is
the earlier of 30 days after the Closing Date and the date on which the Agent
notifies the Company and the Banks that the Commitments are fully syndicated,
the Company may request for itself or any Designated Subsidiary that (A) any
Prime Rate Loan hereunder be converted into a Eurodollar Loan having an initial
Interest Period of one week or (B) the next Interest Period for any outstanding
Eurodollar Loan be one week, and (ii) thereafter, the Company may, in accordance
with the provisions in the definition of "Interest Period," request Interest
Periods for any Eurodollar Loan if the aggregate amount of all Eurodollar Loans
having the same Interest Period is at least $1,000,000 and if the obligation of
the Banks to make Eurodollar Loans shall not then be suspended pursuant to
subsection 2.12 or subsection 2.14.
(d) The proceeds of the Loans hereunder shall be applied to the payment
in full of the principal and interest payable with respect to the Indebtedness
under the Existing Credit Agreement.
2.4 Intentionally Omitted.
2.5 Intentionally Omitted.
2.6 Termination or Reduction of Commitments. (a) Optional. The Company
shall have the right, upon not less than three Business Days' notice to the
Agent, to terminate the Commitments or, from time to time, to reduce the amount
of the Commitments, provided that no such reduction or termination shall be
permitted if, after giving effect thereto, and to any prepayments of the Loans
made on the effective date thereof, the then outstanding principal amount of the
Loans and Bank L/C Obligations would exceed the amount of the Commitments then
in effect. Any such reduction shall be in an amount of $5,000,000 or a whole
multiple of $1,000,000 in excess thereof and shall reduce permanently the amount
of the Commitments then in effect. The Commitments once terminated or reduced
may not be reinstated.
(b) Mandatory. After giving effect to the Loans made on the Closing
Date and the L/Cs outstanding on the Closing Date, upon each repayment or
prepayment of the Loans or of Unpaid Drawings and upon each expiration or
termination of an L/C (without any drawing in connection therewith), (i) the
aggregate Commitments of the Banks shall be automatically and permanently
reduced, on a pro rata basis, by an amount equal to the amount by which the
aggregate Commitments immediately prior to such reduction exceed the aggregate
unpaid principal amount or face amount, as the case may be, of the Loans, Unpaid
<PAGE> 35
29
Drawings and L/Cs then outstanding and (ii) the L/C Sublimit shall be
automatically and permanently reduced to an amount equal to the principal amount
or face amount of the Unpaid Drawings and L/Cs outstanding immediately after
such repayment, expiration or termination. The Commitments once terminated or
reduced may not be reinstated.
2.7 Fees. (a) The Company agrees to pay to the Agent for the account of
each Bank the Facility Fee for the period commencing on the date hereof
extending to but not including the earlier of (i) the date the Commitments are
terminated or (ii) the Termination Date. The accrued Facility Fee shall be
payable on the last day of each March, June, September or December and on the
Termination Date or such earlier date as the Commitments shall terminate as
provided herein, commencing on the first of such dates to occur after the date
hereof.
(b) The Company agrees to pay to the Agent the additional fees in the
amounts and upon the terms set forth in the Fee Letter.
2.8 Optional and Mandatory Prepayments. (a) The Company and each
Designated Subsidiary may at any time and from time to time prepay the Loans
then outstanding, in whole or in part, without premium or penalty, provided,
however, that if the Company or any Designated Subsidiary prepays any
Eurodollar Loans on any day other than the last day the Interest Period
therefor, the Company or such Designated Subsidiary shall concurrently pay any
amounts due under subsection 2.16 incurred in connection therewith. Optional
prepayments pursuant to this subsection 2.8(a) shall be made upon at least
three Working Days' prior irrevocable notice to the Agent in the case of
Eurodollar Loans, and one Business Day's prior irrevocable notice to the Agent
in the case of Prime Rate Loans, specifying (i) the date and amount of such
prepayment, (ii) whether the prepayment is of Eurodollar Loans, Prime Rate Loans
or a combination thereof, and, if of a combination thereof, the amount of
prepayment allocable to each Type and (iii) in the case of Eurodollar Loans, the
Interest Periods affected. If any such notice is given, the Company or the
Designated Subsidiary involved will make the prepayment specified therein, and
such prepayment shall be due and payable on the date specified therein, together
with accrued interest to such date on the amount prepaid. Each prepayment of the
Loans pursuant to this paragraph (a) shall be in an amount equal to $5,000,0000
or any whole multiple of $1,000,000 in excess thereof or the amount of all Loans
then outstanding, provided that prepayments of Eurodollar Loans pursuant to this
paragraph (a) shall be made in such a manner that, after giving effect to such
prepayments, no Eurodollar Loans having the same Interest Period shall be
maintained in an amount less than $1,000,000.
(b) Intentionally omitted.
(c) Intentionally omitted.
<PAGE> 36
30
(d) The Company shall prepay the Loans then outstanding and reduce the
Commitments as set forth in subsection 2.6(b) upon the receipt by the Company or
any Subsidiary of Net Proceeds of any sale or other disposition of any of its
assets to the extent set forth below:
(i) during such time as the Leverage Ratio (calculated based on the
financial statements most recently delivered to the Agent and the Banks pursuant
to and in compliance with subsection 5.1) is greater than or equal to 2.50:1.00,
75% of all such Net Proceeds shall be applied to prepay the installments
required to be made on the Loans pursuant to subsection 2.9 in direct order of
the maturity thereof; and
(ii) during such time as the Leverage Ratio (calculated based on the
financial statements most recently delivered to the Agent and the Banks pursuant
to and in compliance with subsection 5.1) is less than 2.50:1.00, 50% of all
such Net Proceeds shall be applied to prepay the installments required to be
made on the Loans pursuant to subsection 2.9 in direct order of the maturity
thereof.
(e) Any payment of the Loans pursuant to this subsection 2.8 or to
subsection 2.9 shall be applied first to the Prime Rate Loans then outstanding,
and the balance of any payment shall be applied to the Eurodollar Loans in
chronological order of the respective maturities thereof (or as the Company may
otherwise specify in writing to the Agent), together with any payments required
by subsection 2.16.
2.9 Repayment of Loans. The Company shall, and shall cause each
Designated Subsidiary to, repay to the Agent for the ratable account of the
Banks the aggregate outstanding principal amount of the Loans owing by the
Company or such Designated Subsidiary, as the case may be, on the following
dates in the aggregate amounts indicated for all such Loans being repaid on such
date (which amounts shall be reduced as a result of the application of
prepayments in accordance with the order of priority set forth in subsection
2.8(d)):
<TABLE>
<CAPTION>
Date Amount
---- ------
<S> <C>
March 31, 1998 $1,000,000
June 30, 1998 $1,000,000
September 30, 1998 $1,000,000
December 31, 1998 $1,000,000
March 31, 1999 $1,000,000
June 30, 1999 $1,000,000
September 30, 1999 $1,000,000
December 31, 1999 $1,000,000
March 31, 2000 $1,250,000
June 30, 2000 $1,250,000
</TABLE>
<PAGE> 37
31
<TABLE>
<S> <C>
September 30, 2000 $1,250,000
December 31, 2000 $1,250,000
March 31, 2001 $1,500,000
June 30, 2001 $1,500,000
September 30, 2001 $1,500,000
December 31, 2001 $1,500,000
March 31, 2002 $3,000,000
June 30, 2002 $3,000,000
August 26, 2002 $96,728,225
</TABLE>
provided, however, that the final principal installment shall be repaid on the
earlier of the Termination Date and the date of the termination in full of the
Commitments pursuant to subsection 2.6 or Section 7 and in any event shall be in
an amount equal to the aggregate principal amount of the Loans, Unpaid Drawings
and L/Cs outstanding on such date.
2.10 Interest Rates and Payment Dates. (a) Each Eurodollar Loan shall
bear interest for the Interest Period with respect thereto on the unpaid
principal amount thereof at a rate per annum equal to the Eurodollar Rate for
such Interest Period plus the Applicable Margin in effect from time to time.
(b) The Unpaid Drawings and each Prime Rate Loan shall bear interest on
the aggregate unpaid principal amount thereof at a rate per annum equal to the
Prime Rate in effect from time to time plus the Applicable Margin in effect from
time to time.
(c) Intentionally omitted.
(d) If all or a portion of the principal amount of any of the Loans or
Unpaid Drawings shall not be paid when due (whether at the stated maturity, by
acceleration or otherwise), such overdue principal amount shall, without
limiting the rights of the Banks under Section 7, bear interest at a rate per
annum which is two percent (2%) above the otherwise applicable rate (the
"Post-Default Rate"), from the date of such non-payment until paid in full
(before, as well as after, judgment); provided that if such overdue principal
amount is of Eurodollar Loans, then, at the end of the Interest Period relating
thereto, such Eurodollar Loans may be continued only as Prime Rate Loans and
shall bear interest at a rate per annum which is two percent (2%) above the rate
required to be paid on Prime Rate Loans pursuant to subsection 2.10(b) until
paid in full (before as well as after judgment).
(e) Interest on each Loan shall be payable in arrears on each Interest
Payment Date applicable thereto.
(f) Anything herein to the contrary notwithstanding, the obligation of
the Company and each Designated Subsidiary to make payments of interest shall be
subject to
<PAGE> 38
32
the limitation that payments of interest shall not be required to be made to any
Bank to the extent that such Bank's receipt thereof would not be permissible
under the law or laws applicable to such Bank limiting rates of interest which
may be charged or collected by such Bank; provided that nothing in this
subsection 2.10(f) shall release the Company or any Designated Subsidiary, as
applicable, from paying any portion of interest then payable to the extent that
such Bank's receipt thereof would be permissible under such law or laws. Any
such payments of interest which are not made to any Bank as a result of the
limitation referred to in the preceding sentence shall be made by the Company
and each Designated Subsidiary to such Bank on the earliest Interest Payment
Date or Dates on which the receipt thereof would be permissible under the laws
applicable to such Bank limiting rates of interest which may be charged or
collected by the Agent.
2.11 Computation of Interest and Fees. (a) The Facility Fee and
interest in respect of Prime Rate Loans shall be calculated on the basis of a
365 (or 366, as the case may be) day year for the actual days elapsed. Interest
on all Eurodollar Loans and Issuance Fees and the fees payable pursuant to
subsection 2.7(b) shall be calculated on the basis of a 360-day year for the
actual days elapsed. The Agent shall as soon as practicable, but not later than
the close of business on the date of determination, notify the Company and the
Designated Subsidiaries and the Banks of each determination of a Eurodollar
Rate. Any change in the interest rate on the Loans resulting from a change in
the Prime Rate or the Eurocurrency Reserve Requirements shall become effective
as of the opening of business on the day on which such change in the Prime Rate
is announced, or such change in the Eurocurrency Reserve Requirements shall
become effective, as the case may be. The Agent shall as soon as practicable,
but not later than three Business Days before the close of business on the
effective date, notify the Company and the Designated Subsidiaries and the Banks
of the effective date and the amount of each such change.
(b) Each determination of an interest rate by the Agent pursuant to any
provision of this Agreement shall be prima facie evidence of the accuracy of the
facts so determined.
2.12 Inability to Determine Interest Rate. Notwithstanding any other
provision of this Agreement, in the event that the Required Banks shall
reasonably have determined (which determination shall be prima facie evidence of
the facts so deter-mined) that the rates quoted by Fleet for the purpose of
computing the Eurodollar Rate do not adequately and fairly reflect the cost to
the Banks of funding any Loans that the Company or any Designated Subsidiary has
requested be converted into Eurodollar Loans, such Banks shall notify the Agent
thereof and the Agent shall promptly give telecopier or telephonic notice of
such determination, confirmed in writing to the Company or such Designated
Subsidiary and the Banks at least one Business Day prior to the requested
conversion date for such Eurodollar Loans. Unless the Company or such Designated
Subsidiary shall have notified the Agent promptly after receipt of such
telecopier or telephonic notice that it wishes
<PAGE> 39
33
to rescind or modify its request regarding such Eurodollar Loans, any requested
Eurodollar Loans shall be made as Prime Rate Loans. Until any such notice has
been withdrawn by the Agent, no further Eurodollar Loans shall be made. The
Agent shall withdraw such notice promptly after it determines that the
circumstances giving rise to the delivery of such notice no longer exist.
2.13 Taxes. (a) All payments made by the Company and each Designated
Subsidiary under this Agreement shall be made free and clear of, and without
reduction for or on account of, any present or future income, stamp or other
taxes, levies, imposts, duties, charges, fees, deductions or withholdings, now
or hereafter imposed, levied, collected, withheld or assessed by any
Governmental Authority excluding, in the case of the Agent and each Bank, net
income and franchise taxes imposed on the Agent and such Bank by the
jurisdiction under the laws of which such Agent or such Bank is organized or any
political subdivision or taxing authority thereof or therein or by any
jurisdiction in which such Bank's Domestic Lending Office or Eurodollar Lending
Office, as the case may be, is located or any political subdivision or taxing
authority thereof or therein (all such non-excluded taxes, levies, imposts,
deductions, charges or withholdings being hereinafter called "Taxes"). If any
Taxes are required to be withheld from any amounts payable to any Bank hereunder
or under the Notes, the amounts so payable to such Bank shall be increased to
the extent necessary to yield to such Bank (after payment of all Taxes,
including Taxes on such increased amount) interest or any such other amounts
payable hereunder at the rates or in the amounts specified in this Agreement and
the Notes. Whenever any Taxes are payable by the Company or any Designated
Subsidiary, as promptly as possible thereafter, the Company or such Designated
Subsidiary shall send to the Agent for the account of such Bank a certified copy
of an original official receipt received by the Company or such Designated
Subsidiary showing payment thereof. If the Company or any Designated Subsidiary
fails to pay any Taxes when due to the appropriate taxing authority or fails to
remit to the Agent the required receipts or other required documentary evidence,
the Company or such Designated Subsidiary shall indemnify the Agent and the
Banks for any incremental taxes, interest or penalties that may become payable
by the Agent or any Bank as a result of any such failure. Each Bank confirms to
the Company and the Designated Subsidiaries that tax withholding requirements do
not currently apply to payments to be made to it hereunder.
(b) If the Company or any Designated Subsidiary shall at any time be
required to withhold any Taxes in respect of any amount payable to any Bank
hereunder or under the Notes, the Company or such Designated Subsidiary shall be
entitled to prepay the Loans allocable to such Bank, and the Company or such
Designated Subsidiary shall be entitled to terminate the Commitment of such
Bank (such prepayment to be made together with all other amounts due to such
Bank hereunder and under the Notes, including, without limitation, interest,
fees and any amounts payable pursuant to subsection 2.16).
<PAGE> 40
34
(c) Each Bank agrees to use reasonable efforts (including reasonable
efforts to change its Domestic Lending Office or Eurodollar Lending Office, as
the case may be) to avoid the imposition of any Taxes on payments hereunder or
to minimize any amounts which might otherwise be payable pursuant to this
subsection 2.13; provided, however, that such efforts shall not cause the
imposition on such Bank of any additional costs or legal or regulatory burden
deemed by such Bank to be material.
(d) If the Company or any Designated Subsidiary makes any additional
payment to the Agent or any Bank pursuant to this subsection 2.13 in respect of
any Taxes, and the Agent or such Bank determines that it has received (i) a
refund of such Taxes or (ii) a credit against or relief or remission for, or a
reduction in the amount of, any tax or other governmental charge solely as a
result of any deduction or credit for any Taxes with respect to which it has
received payments under this subsection 2.13, the Agent and such Bank shall, to
the extent that they can do so without prejudice to the retention of such
refund, credit, relief, remission or reduction, pay to the Company or such
Designated Subsidiary such amount as the Agent and such Bank shall have
determined to be attributable to the deduction or withholding of such Taxes. If
the Agent or such Bank later determines that it was not entitled to such refund,
credit, relief, remission or reduction to the full extent of any payment made
pursuant to the first sentence of this subsection 2.13(d), the Company or such
Designated Subsidiary shall upon demand of the Agent or such Bank promptly repay
the amount of such overpayment. Any determination made by the Agent or such Bank
pursuant to this subsection 2.13(d) shall constitute prima facie evidence of the
accuracy thereof, and nothing in this subsection 2.13(d) shall be construed as
requiring the Agent or any Bank to conduct its respective business or to arrange
or alter in any respect its respective tax or financial affairs so that it is
entitled to receive such a refund, credit or reduction or as allowing any person
to inspect any records, including tax returns, of the Agent or any Bank.
2.14 Illegality. Notwithstanding any other provision herein, if any
Regulatory Change shall make it unlawful for any Bank to make or maintain
Eurodollar Loans as contemplated by this Agreement or to accept deposits in
order to make or maintain such Eurodollar Loans, (a) the agreements of such Bank
hereunder to make Eurodollar Loans shall forthwith be suspended for the duration
of such illegality and (b) each Eurodollar Loan then outstanding, if any, shall
be converted into a Prime Rate Loan on the last day of the Interest Period
therefor or within such earlier period as required by law for the duration of
such illegality. If any such conversion of a Eurodollar Loan is made on a day
which is not the last day of the Interest Period therefor, the Company and each
Designated Subsidiary hereby agrees to pay promptly to any Bank, upon its
demand, any amounts required to be paid by the Company and each Designated
Subsidiary pursuant to subsection 2.16 (such Bank's reasonable notice of such
costs and the manner in which they were calculated, as certified to the Company,
shall constitute prima facie evidence of the accuracy of the amounts set forth
therein). This agreement shall survive termination of this Agreement and the
payment of the outstanding Notes. Each Bank shall use its reasonable efforts to
promptly
<PAGE> 41
35
notify the Company as soon as practicable as to any Regulatory Change described
in this subsection 2.14.
2.15 Increased Costs. (a) In the event that any Regulatory Change:
(i) subjects any Bank to any tax of any kind whatsoever with respect to
this Agreement, its Notes or any Loans made by it, or changes the
basis of taxation of payments to such Bank of principal, interest,
fees or any other amount payable hereunder (except for changes in
Taxes and except for taxes measured by the net income of such Bank);
(ii) imposes, modifies or holds applicable to such Bank any reserve,
Federal Deposit Insurance Corporation premium or assessment, special
deposit, compulsory loan or similar requirement against any
Eurodollar Loans made, or assets held by, or credit extended by, or
deposits or other liabilities in or for the account of, or
acquisition of funds by or for the account of, any office of such
Bank (or any Person controlling such Bank) (but only to the extent
not otherwise included in the determination of the Eurodollar Rate);
or
(iii) imposes on such Bank any other condition affecting this Agreement or
any Loans made hereunder;
and the result of any of the foregoing is to increase the cost to such Bank of
making or maintaining Loans or Commitments or to reduce any amount receivable by
it in respect of Loans or Commitments, then, in any such case, the Company or
the applicable Designated Subsidiary shall promptly pay the Bank, upon its
demand pursuant to subsection 2.15(c), any additional amounts necessary to
compensate such Bank (or any Person controlling such Bank) for such additional
cost or reduced amount receivable plus interest thereon at the Prime Rate, for
five (5) Business Days from the date demanded and thereafter, at the
Post-Default Rate, in each case until payment in full thereof.
(b) In the event that any Bank (or any Person controlling such Bank) shall
have reasonably determined that any Regulatory Change does or shall have the
effect of reducing the rate of return on such Bank's (or such Person's) capital
as a consequence of its obligations hereunder to a level below that which such
Bank (or such Person) could have achieved on the date hereof but for such
Regulatory Change (taking into consideration such Bank's policies with respect
to capital adequacy) by any amount reasonably deemed by such Bank to be
material, then from time to time, within 15 days after demand by such Bank
pursuant to subsection 2.15(c), the Company or the applicable Designated
Subsidiary shall promptly pay the Bank such additional amount or amounts as will
compensate such Bank (or such Person) for such reduction.
<PAGE> 42
36
(c) If any Bank (or any Person controlling such Bank) becomes entitled to
claim any additional amounts pursuant to this subsection 2.15, it shall promptly
after becoming aware thereof notify the Company of the event by reason of which
it has become so entitled. Any such claim for additional amounts by such Bank
shall be accompanied by a certificate setting forth in reasonable detail the
calculation thereof (provided, however, that such Bank shall not be required to
disclose proprietary or confidential information in such certificate), submitted
by such Bank to the Company, and such certificate shall constitute prima facie
evidence of the accuracy of the amount of such claim. This agreement shall
survive termination of the Commitments and the payment in full of the
outstanding Notes for 180 days (but not longer).
(d) If the Company or any Designated Subsidiary shall at any time be
required to pay amounts pursuant to this subsection 2.15 to any Bank (or any
Person controlling such Bank), the Company or such Designated Subsidiary shall
be entitled to prepay the Loans allocable to such Bank, and thereupon the
Company or such Designated Subsidiary shall be entitled to terminate the
Commitment of such Bank (such prepayment to be made together with all other
amounts due to such Bank hereunder and under the Notes, including, without
limitation, interest, fees and any amounts payable pursuant to subsection 2.16).
2.16 Indemnity. Each of the Company and each Designated Subsidiary agrees
to indemnify each Bank for, and to hold such Bank harmless from, any loss or
expense (but not including loss of Applicable Margin) which such Bank may
sustain or incur as a consequence of (a) any default by the Company or any
Designated Subsidiary in borrowing or failure to borrow for any reason such
Eurodollar Loans after the Company or such Designated Subsidiary has given a
notice in respect thereof in accordance with subsection 2.3, (b) receipt by such
Bank of any prepayment (whether optional or mandatory) of any Eurodollar Loan on
a day which is not the last day of an Interest Period applicable to such
Eurodollar Loan, (c) default by the Company or any Designated Subsidiary in
making any prepayment of a Eurodollar Loan after it has given a notice in
accordance with subsection 2.8(a) or (d) acceleration of any Eurodollar Loans,
and each Bank shall use reasonable efforts to minimize any amounts due to such
Bank pursuant to this subsection 2.16. The Company and each Designated
Subsidiary shall promptly pay to each Bank, upon its demand (accompanied by the
certificate described below), any amounts necessary to compensate such Bank for
such losses or expenses incurred by such Bank in making or maintaining any Loans
in accordance with this subsection 2.16, including, without limitation, any
interest or fees payable by such Bank to lenders of funds obtained by it in
order to make or maintain its Eurodollar Loans. Any claim for additional amounts
pursuant to the foregoing sentence by such Bank shall be accompanied by a
certificate setting forth in reasonable detail the calculation thereof
(provided, however, that such Bank shall not be required to disclose proprietary
or confidential information in such certificate), submitted by such Bank to the
Company or such Designated Subsidiary, and such certificate shall
<PAGE> 43
37
constitute prima facie evidence of the accuracy of the amount of such claim,
provided that the determination of such amount is made on a reasonable basis.
This subsection 2.16 shall survive termination of the Commitments and the
payment in full of the outstanding Notes for 180 days (but not longer).
2.17 Maximum Number of Tranches. Notwithstanding any other provision
hereof, there shall not at any time be outstanding hereunder Tranches in excess
of the Tranche Limit.
2.18 Use of Proceeds. The proceeds of the Loans may only be used to
refinance existing Indebtedness of the Company and/or its Subsidiaries under the
Existing Credit Agreement.
2.19 Pro Rata Treatment and Payments; L/C Participation. (a) Each
borrowing of Loans by the Company or any Designated Subsidiary from the Banks,
each payment by the Company on account of any fees hereunder (including, without
limitation, any Issuance Fees and Drawing Fees in respect of L/Cs (but excluding
fees payable pursuant to subsection 2.7(b))), and any reduction of the
Commitments of the Banks hereunder shall be made pro rata according to the
respective Commitment Percentages of the Banks. Each payment (including each
prepayment) by the Company or any Designated Subsidiary on account of principal
of and interest on the Loans and other amounts due hereunder (other than
payments made pursuant to subsection 2.13, 2.14, 2.15 or 2.16) shall be made pro
rata according to the respective outstanding principal amounts of the Loans held
by each Bank. All payments (including prepayments) to be made by the Company or
any Designated Subsidiary on account of principal and interest on the Notes or
on account of any fees or other amounts due hereunder shall be made without
set-off or counterclaim and shall be made to the Agent, for the account of the
Banks, at the Agent's office in Boston, Massachusetts as set forth in subsection
9.2, in lawful money of the United States of America and in immediately
available funds not later than 11:00 a.m. Boston, Massachusetts time, on the
date on which such payment shall become due. The Agent shall distribute such
payments to the Banks promptly upon receipt in like funds as received. If any
payment hereunder (other than payments on Eurodollar Loans) becomes due and
payable on a day other than a Business Day, such payment shall be extended to
the next succeeding Business Day, and, with respect to payments of principal,
interest thereon shall be payable at the then applicable rate during such
extension. If any payment on a Eurodollar Loan becomes due and payable on a day
other than a Working Day, the maturity thereof shall be extended to the next
succeeding Working Day unless the result of such extension would be to extend
such payment into another calendar month in which event such payment shall be
made on the immediately preceding Working Day and with respect to payments of
principal interest thereon shall be payable at the then applicable rate during
such extension.
<PAGE> 44
38
(b) Unless the Agent shall have been notified in writing by any Bank prior
to a borrowing date that such Bank will not make the amount which would
constitute its Commitment Percentage of the Loans on such date available to the
Agent, the Agent may assume that such Bank has made such amount available to the
Agent on such borrowing date, and the Agent may, in reliance upon such
assumption, make available to the Company or a Designated Subsidiary, as
applicable, a corresponding amount. If such amount is made available to the
Agent on a date after such borrowing date, such Bank shall pay to the Agent on
demand an amount equal to the product of (i) the daily Federal Funds Rate during
such period, times (ii) the amount of such Bank's Commitment Percentage of such
borrowing, times (iii) a fraction the numerator of which is the number of days
that elapse from and including such borrowing date to the date on which such
Bank's Commitment Percentage of such borrowing shall have become immediately
available to the Agent and the denominator of which is 365. A certificate of the
Agent submitted to any Bank with respect to any amounts owing under this
subsection 2.19(b) shall be conclusive, absent manifest error. If such Bank's
Commitment Percentage of such borrowing is not in fact made available to the
Agent by such Bank within three Business Days of such borrowing date, the Agent
shall be entitled to recover such amount with interest thereon at the rate per
annum applicable to the Loans hereunder, on demand, from the Company or a
Designated Subsidiary, as applicable. Except as set forth in the immediately
preceding sentence, neither the Company nor the Subsidiaries shall have any
liability to any Person under this subsection 2.19(b).
(c) (i) Fleet, as the issuing bank with respect to each L/C, irrevocably
agrees to grant and hereby grants to each Bank (each Bank, in such capacity, an
"L/C Participant") and, to induce Fleet to maintain L/Cs hereunder, each L/C
Participant irrevocably agrees to accept and purchase and hereby accepts and
purchases from Fleet, on the terms and conditions hereinafter stated, for such
L/C Participant's own account and risk an undivided interest equal to such L/C
Participant's Commitment Percentage in Fleet's obligations and rights under each
L/C issued or deemed issued by it hereunder and the amount of Unpaid Drawings
with respect to any draft paid by Fleet thereunder, effective on the Closing
Date. Each L/C Participant unconditionally and irrevocably agrees with Fleet
with respect to any L/C that, if a draft is paid under such L/C for which Fleet
is not reimbursed in full by the relevant Account Party on the date required by
subsection 2.1(c)(vii), such L/C Participant shall pay to Fleet upon
notification or demand at Fleet's address for notices specified herein an amount
equal to such L/C Participant's Commitment Percentage of the amount of such
draft, or any part thereof, which is not so reimbursed.
(ii) If any amount required to be paid by any L/C Participant to Fleet
with respect to any L/C pursuant to subsection 2.19(c)(i) in respect of any
unreimbursed portion of any payment made by Fleet under such L/C is paid to
Fleet within three Business Days after the date such payment is due by such L/C
Participant, such L/C Participant shall pay to Fleet on demand an amount equal
to the product of (A) such amount, times (B) the daily average Federal Funds
Rate during the period from and including the date such payment is
<PAGE> 45
39
required to the date on which such payment is immediately available to Fleet,
times (C) a fraction the numerator of which is the number of days that elapse
during such period and the denominator of which is 365. If any such amount
required to be paid by any L/C Participant pursuant to subsection 2.19(c)(i) is
not in fact made available to Fleet by such L/C Participant within three
Business Days after the date such payment is due by such L/C Participant, Fleet
shall be entitled to recover from such L/C Participant, on demand, such amount
with interest thereon calculated from such due date at the rate per annum
applicable to Prime Rate Loans hereunder. A certificate of Fleet submitted to
any L/C Participant with respect to any amounts owing under this subsection
shall be conclusive in the absence of manifest error.
(iii) Whenever, at any time after Fleet has made payment under any L/C
and has received from any L/C Participant its pro rata share of such payment in
accordance with subsection 2.19(c)(i), Fleet receives any payment related to
such L/C (whether directly from the Company, a Designated Subsidiary or
otherwise, including by means of set-off or the proceeds of collateral applied
thereto by Fleet), or any payment of interest on account thereof, Fleet will
distribute to such L/C Participant its pro rata share thereof; provided,
however, that in the event that any such payment received by Fleet shall be
required to be returned by it, such L/C Participant shall return to Fleet the
portion thereof previously distributed by Fleet to it. Neither the Company nor
any Subsidiary shall have any liability or obligation to any person under this
subsection 2.19(c).
2.20 Guaranties. The due payment and performance of the Obligations
shall be guaranteed to the Banks and the Agent by the Company and each of the
Material Operating Subsidiaries listed on Schedule 2.20 hereto (hereinafter,
together with any other Material Operating Subsidiary that executes and delivers
a Guaranty, referred to, individually, as a "Guarantor" and, collectively, as
the "Guarantors"), by the execution and delivery to the Agent, simultaneously
with the execution and delivery of this Agreement, by each Guarantor of a
Guaranty in form and substance satisfactory to the Agent (as amended,
supplemented or otherwise modified from time to time with its terms,
individually, a "Guaranty" and, collectively, as to all the Guarantors, the
"Guaranties"). In addition, each Material Operating Subsidiary that becomes a
Material Operating Subsidiary after the date hereof shall, concurrently with
becoming a Material Operating Subsidiary, execute and deliver to the Agent a
Guaranty, in form and substance satisfactory to the Agent, and upon such
execution and delivery, such Material Operating Subsidiary shall become a
Guarantor under the Loan Documents.
2.21 Security. In order to secure the due payment and performance by
the Company and each Designated Subsidiary of its respective Obligations,
simultaneously with the execution and delivery of this Agreement, each of the
Company, each other Guarantor and each Additional Subsidiary Grantor
(collectively, together with any other Subsidiary that executes and delivers a
Security Agreement or otherwise becomes a party to a Security
<PAGE> 46
40
Agreement, being referred to herein as "Collateral Grantors" and, individually,
a "Collateral Grantor") shall, pursuant to an amended and restated security
agreement in form and substance satisfactory to the Agent and the Banks dated as
of the Closing Date (as amended, supplemented or otherwise modified from time to
time in accordance with its terms, the "Security Agreement"), grant to the Agent
for the ratable benefit of the Secured Parties a first priority lien on and
security interest in the following:
(a) all of the issued and outstanding shares of capital stock of
each Guarantor (other than the Company);
(b) all present and future accounts receivable and inventory of such
Collateral Grantor; and
(c) all proceeds and products of the property and assets described
in clauses (a) and (b) above.
Each Collateral Grantor shall execute and deliver or cause to be
executed and delivered such other agreements, instruments and documents as the
Agent may reasonably require in order to effect the purposes of the Security
Agreement, this subsection 2.21 and this Agreement. In addition, each Material
Operating Subsidiary that becomes a Material Operating Subsidiary after the date
hereof shall, concurrently with becoming a Material Operating Subsidiary,
execute and deliver a Security Agreement supplement, in form and substance
satisfactory to the Agent, pursuant to which such Material Operating Subsidiary
will grant to the Agent for the ratable benefit of the Secured Parties a first
priority lien on and security interest in the assets described in clauses (b)
and (c) above, and upon such execution and delivery, such Material Operating
Subsidiary shall become a Collateral Grantor under the Loan Documents.
2.22 Additional L/C Provisions. (a) Without limiting the generality
of subsection 2.15, if:
(i) any Regulatory Change shall (A) impose, modify or deem applicable
any reserve, special deposit, capital maintenance, deposit insurance premium or
assessment, or similar requirement against letters of credit issued or deemed
issued by, or assets held by, or deposits made with or for the account of,
Fleet, (B) impose on Fleet any other condition regarding the L/Cs or (C) subject
Fleet to any tax, charge, fee, deduction or withholding of any kind whatsoever
(except for changes in Taxes and except for taxes measured by the net income of
Fleet); and
(ii) the result of any such event shall be to increase the cost to
Fleet of the issuance or maintenance of the L/Cs, or reduce the amount of
principal, interest, or any fee or compensation receivable by Fleet in respect
of the L/Cs;
<PAGE> 47
41
then, upon demand of Fleet, the Company or the applicable Designated Subsidiary
shall pay to Fleet, from time to time as specified by Fleet, all additional
amounts which are necessary to compensate Fleet for such increased cost or
reduction incurred by Fleet, accruing from and after the date initially demanded
by Fleet. All payments of compensation for such increased cost or reduction
shall be accompanied by interest thereon, at the Prime Rate from the date
demanded for five (5) Business Days, and thereafter, at the Post-Default Rate,
in each case until payment in full thereof. A certificate as to such increased
cost incurred by Fleet showing in reasonable detail the calculation thereof
shall be submitted by Fleet to the Company and shall constitute prima facie
evidence of the accuracy of the amounts set forth therein. For purposes of this
subsection 2.22, all references to L/Cs shall be deemed to refer to
participations in L/Cs, and all references to "Fleet" shall be deemed to include
any L/C Participant, except that amounts payable by the Company and the
Designated Subsidiaries shall only be paid to Fleet and then delivered to any
L/C Participant having such cost. In the event of any inconsistency between the
terms of this subsection 2.22 and subsection 2.15, the provisions of subsection
2.15 shall govern. This Agreement shall survive termination of the Commitment
and payment of the outstanding Notes for 180 days (but not longer).
(b) The obligations of the Company and each Designated Subsidiary under
this Agreement with respect to the L/Cs shall, absent gross negligence or
willful misconduct by Fleet, (x) be absolute, unconditional and irrevocable and
(y) be performed strictly in accordance with the terms of this Agreement, under
all circumstances whatsoever, including, without limitation, the following
circumstances:
(i) the L/Cs, the Notes, this Agreement or any other Loan Documents or
agreements, instruments or documents relating thereto proving to be forged,
fraudulent, invalid, unenforceable or insufficient in any respect;
(ii) any amendment or waiver of, or any consent to the departure from, all
or any of the Security Documents and any subsequent such agreements;
(iii) the existence of any claim, setoff, defense or other rights which
the Company or any Designated Subsidiary may have at any time against any
beneficiary or any transferee of any beneficiary (or any Persons or entities for
whom any beneficiary or any such transferee may be acting);
(iv) any demand presented under any L/C (or any endorsement thereon)
proving to be forged, fraudulent, invalid, unenforceable or insufficient in any
respect or any statement therein being inaccurate in any respect whatsoever;
(v) the failure of any document to bear reference, or to bear adequate
reference, to the applicable L/C;
<PAGE> 48
42
(vi) the use to which the L/Cs may be put or any acts or omissions of the
Company or any Designated Subsidiary or beneficiaries in connection therewith;
or
(vii) any other similar circumstances, provided that such circumstances or
happening shall not have constituted gross negligence or willful misconduct of
Fleet.
(c) Fleet shall not be responsible: (i) for the validity or insufficiency
of any instrument transferring or assigning or purporting to transfer or assign
the L/Cs or the rights or benefits thereunder or proceeds thereof in whole or in
part, which may prove to be invalid or ineffective for any reason; (ii) for
errors, omissions, interruptions or delays in transmission or delivery of any
messages, by mail, cable telegraph, telex or otherwise, whether or not they be
in cipher; (iii) for any loss or delay in the transmission or otherwise of any
document or draft required in order to make a draw under the L/Cs or of proceeds
thereof; and (iv) for any consequence arising from causes beyond the control of
Fleet provided that this paragraph (c) shall not apply to the gross negligence
or willful misconduct of Fleet. None of the above shall affect, impair or
prevent the vesting of any of Fleet's rights or powers hereunder.
(d) In furtherance and extension and not in limitation of the specific
provisions hereinabove set forth, any action taken or omitted by Fleet under or
in connection with the L/Cs or the related drafts or documents, unless
constituting gross negligence or willful misconduct, shall be binding upon the
Company and the Designated Subsidiaries and shall not put Fleet under any
resulting liability to the Company and the Designated Subsidiaries.
(e) The Company and each Designated Subsidiary shall at all times protect,
indemnify and save harmless Fleet and each Bank from and against any and all
claims, actions, suits and other legal proceedings, and from and against any and
all losses, claims, demands, liabilities, damages, costs, charges, counsel fees
and other expenses which Fleet or any Bank may, at any time, sustain or incur by
reason of or in consequence of or arising out of the issuance of the L/Cs; it
being the intention of the parties that this Agreement shall be construed and
applied to protect and indemnify Fleet and each Bank against any and all risk
involved in the issuance of the L/Cs, all of which risks are hereby assumed by
the Company and each Designated Subsidiary, including, without limitation, any
and all risks of the acts or omissions, whether rightful or wrongful, of any
present or future Governmental Authority (all such acts and omissions, herein
called the "Governmental Acts"); provided, however, that the Company and each
Designated Subsidiary shall not be required to indemnify Fleet or any Bank for
(i) any claims, damages, losses, liabilities, costs or expenses to the extent,
but only to the extent, caused by the willful misconduct or gross negligence of
Fleet (with respect to which, however, Fleet shall be liable to the other Banks)
or (ii) any breach of
<PAGE> 49
43
obligations of Fleet to other Banks. Notwithstanding any other provision
contained in this Agreement, the obligations of the Company and each Designated
Subsidiary under this subsection 2.22 shall survive the termination of this
Agreement.
(f) In the event that the credit rating of Fleet is downgraded to less
than "A-" by Standard & Poor's, a division of The McGraw-Hill Companies, Inc. or
any successor to the rating agency business thereof and such down-grading will
cause the Company or any Designated Subsidiary to incur any additional expense
or otherwise be adversely affected, the Company or any Designated Subsidiary may
replace any L/C issued or deemed issued by Fleet with an L/C issued by any Bank
or any other bank, in each case with a credit rating of "A-" or better, provided
that any such letter of credit shall not be entitled to the benefits of this
Agreement, and shall constitute Specified L/C Obligations (to the extent
provided in the definition thereof) with the effect of reducing the Available
L/C Commitment (in accordance with the definition thereof).
2.23 Several Obligations. The failure of any Bank to make any Loan or fund
the L/C participation to be made or funded by it on the date specified therefor
shall not relieve the other Banks of their respective obligations to make their
Loans or fund their L/C participations on such date, but no Bank shall be
responsible for the failure of the other Banks to make the Loans or fund the L/C
participations to be made by such other Banks.
SECTION 3. REPRESENTATIONS AND WARRANTIES
To induce (a) each Bank to enter into this Agreement and to make the Loans
and (b) Fleet to maintain L/Cs hereunder, the Company and each Designated
Subsidiary, as applicable, hereby represents and warrants to such Bank that,
except as disclosed in the SEC Reports:
3.1 Financial Condition. The consolidated balance sheet of the Company and
its consolidated Subsidiaries as at December 31, 1996 and the related
consolidated statements of income, stockholders' equity and cash flows for the
fiscal year ended on such date, certified by Grant Thornton, copies of which
have heretofore been furnished to each Bank, and the unaudited consolidated
balance sheet and related consolidated statements of income, stockholders equity
and cash flow of the Company and its consolidated Subsidiaries for the ending
quarter June 30, 1997 present fairly, in conformity with GAAP, the consolidated
financial condition of the Company and its consolidated Subsidiaries as at such
date, and the consolidated results of their operations and cash flows for the
period then ended (subject to normal year-end adjustments as to such June 30,
1997 financial statements). All such financial statements have been prepared in
accordance with GAAP applied consistently throughout the periods involved
(except as approved by such accountants and as disclosed therein). Neither the
Company nor any of its consolidated Subsidiaries had, at the dates of the
balance sheets referred to above, any Contingent Obligation, contingent
liability or
<PAGE> 50
44
liability for taxes, long-term lease or unusual forward or long-term commitment,
required to be reflected under GAAP which is not reflected in the foregoing
statements or in the notes thereto and which was material to the Company and its
consolidated Subsidiaries taken as a whole (including, without limitation, any
Environmental Liability).
3.2 No Change. Since December 31, 1996 there has been no material adverse
change in the business, operations, property, performance or condition
(financial or otherwise) of the Company and its Subsidiaries taken as a whole.
3.3 Corporate Existence; Compliance with the Law. Each of the Company and
its Subsidiaries (a) is duly organized, validly existing and in good standing
under the laws of the jurisdiction of its incorporation, (b) has the corporate
power and authority and the legal right to own and operate its property, to
lease the property it operates as lessee and to conduct the business in which it
is currently engaged, (c) is duly qualified as a foreign corporation and in
good standing under the laws of each jurisdiction where qualification is
required by the nature of its business or the character and location of its
property or business and in which the failure to so qualify could have a
Material Adverse Effect and (d) is in compliance with all Requirements of Law,
including, without limitation, all applicable Environmental Laws and
Regulations, except to the extent that the failure to comply therewith could
not, in the aggregate, reasonably be expected to have a Material Adverse Effect.
3.4 Corporate Power; Authorization; Enforceable Obligations. Each of the
Company and its Subsidiaries has the corporate power and authority to make,
deliver and perform each of this Agreement, the Notes, the other Loan Documents,
the Related Documents and the other documents contemplated hereby to which it is
a party and to consummate (a) the transactions contemplated by the Loan
Documents and Related Documents to which it is a party and (b) in the case of
the Company, the Merger and the other transactions contemplated thereby. Each of
the Company and its Subsidiaries has taken all necessary corporate action to
authorize the execution, delivery and performance of each of this Agreement, the
Notes, the other Loan Documents and the other documents contemplated hereby to
which it is a party. No consent or authorization of, or filing with, any Person
(including, without limitation, any Governmental Authority), is required in
connection with the execution, delivery, performance, validity or enforceability
of this Agreement, the Notes, the other Loan Documents or the other documents
contemplated hereby or with the consummation of the Tender Offer or Merger or
the other transactions contemplated hereby or thereby, other than (i) the
Certificate of Ownership and Merger merging the Purchaser with and into the
Company and (ii) those consents, authorizations and filings which the failure to
obtain, take, give or make could not, either individually or in the aggregate,
be reasonably likely to (A) have a Material Adverse Effect, (B) affect the
enforceability, validity or binding effect of any of the Loan Documents or (C)
expose the Agent or any Bank to personal liability. This Agreement has been duly
executed and delivered on behalf of the
<PAGE> 51
45
Company and each Designated Subsidiary, and this Agreement, the Notes, the other
Loan Documents, the Related Documents and the other documents contemplated
hereby constitute, legal, valid and binding obligations of the Company and each
Subsidiary party thereto, enforceable against the Company and each Subsidiary
party thereto in accordance with their respective terms, except as
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the enforcement of
creditors' rights generally and by general principles of equity (regardless of
whether enforcement is sought in a proceeding in equity or at law).
3.5 No Legal Bar. The execution, delivery and performance of this
Agreement, the Notes, the other Loan Documents, the Related Documents and the
other documents contemplated hereby, the borrowings hereunder and the use of the
proceeds thereof, and the consummation of the Merger and the other transactions
contemplated hereby and thereby, will not violate any Requirement of Law or any
Contractual Obligation of the Company or any of its Subsidiaries, and will not
result in or require the creation or imposition of any Lien on any of its or
their respective properties pursuant to any Requirement of Law or any
Contractual Obligation, except, with respect to the foregoing other than with
respect to the Loan Documents, such violations as could not, either individually
or in the aggregate, be reasonably likely to (i) have a Material Adverse Effect,
(ii) subject any Loan Party or any of its Subsidiaries to any criminal penalties
or (iii) subject the Agent or any Bank to any civil or criminal penalties.
3.6 No Litigation. No action, suit, litigation, investigation or
proceeding, including, without limitation, any Environmental Proceeding, of or
before any arbitrator or Governmental Authority is pending or, to the knowledge
of the Company, threatened, by or against the Company or any of its Subsidiaries
or against any of their respective properties or revenues that could reasonably
be expected to have a Material Adverse Effect.
3.7 Federal Regulations. No part of the proceeds of any Loans hereunder
will be used in violation of the provisions of the Regulations of the Board of
Governors of the Federal Reserve System, including, without limitation,
Regulations G, U and X.
3.8 Investment Company Act. Neither the Company nor any Subsidiary is an
"investment company", or a company "controlled" by an "investment company",
within the meaning of the Investment Company Act of 1940, as amended.
3.9 Disclosure. The financial statements, certificates, opinions, and
other statements furnished in writing to the Agent or the Banks by or on behalf
of the Company or any Subsidiary in connection with this Agreement or the
transactions contemplated hereby do not, taken as a whole, contain any untrue
statement of a fact, or omit to state any fact necessary in order to make the
statements contained therein or herein not misleading, except for matters that
could not reasonably be expected to have a Material Adverse Effect.
<PAGE> 52
46
3.10 No Default. Neither the Company nor any of its Subsidiaries is in
default under or with respect to any Contractual Obligation in any respect which
could reasonably be expected to have a Material Adverse Effect. After giving
effect to the amendment and restatement of the Existing Credit Agreement as this
Agreement, no Default or Event of Default has occurred and is continuing.
3.11 Taxes. Except as set forth on Schedule 3.11 hereto, each of the
Company and its Subsidiaries has filed or caused to be filed all material tax
returns which to its knowledge are required to be filed, and has paid all taxes
shown to be due and payable on said returns or on any assessments made against
it or any of its property and all other material taxes, fees or other charges
which to its knowledge have been imposed on it or any of its property by any
Governmental Authority (other than those the amount or validity of which is
currently being contested in good faith by appropriate proceedings diligently
pursued and with respect to which reserves in conformity with GAAP have been
provided in its books); no material tax liens have been filed and, to the
knowledge of the Company, no claims are being asserted with respect to any such
taxes, fees or other charges, except for claims not material to the Company and
its Subsidiaries taken as a whole.
3.12 Subsidiaries. At the date of this Agreement, the Company has no
Subsidiaries except those listed on Schedule 3.12, and the Company owns directly
or indirectly 100% of the outstanding voting shares of each such Subsidiary
except as disclosed therein.
3.13 Ownership of Property; Liens. Except as permitted in subsection 6.2,
each of the Company and its Subsidiaries has good title in fee simple to, or
valid leasehold interest in, all its real property, and good title to all its
other property, and none of such owned property is subject to any Lien, except
for the security interest granted pursuant to the Security Documents.
3.14 ERISA. Except as described on Schedule 3.14, as it may be updated
from time to time by the Company pursuant to subsection 5.8(c), neither the
Company, nor any Commonly Controlled Entity, is a participating employer in any
Plan in which more than one employer makes contributions as described in
Sections 4063 and 4064 of ERISA, which, together with all other liabilities
described in this subsection, could give rise to a liability which is material.
For purposes of this subsection, a liability is material if it, together with
all other liabilities described in this subsection, could subject the Company or
any of its Subsidiaries to any tax, penalty, or other liabilities that could
reasonably be expected to have a Material Adverse Effect. Except as described on
Schedule 3.14, as it may be updated from time to time, neither the Company or
any Subsidiary nor any Commonly Controlled Entity has any contingent liability
with respect to any post-retirement benefit under any employee welfare benefit
plan (as defined in Section 3(l) of ERISA) other than (a) liability for health
plan continuation coverage as described in Part 6 of Title 1 of ERISA, (b)
liability
<PAGE> 53
47
under any severance plan, (c) liability under plans or programs required by law,
and (d) disability benefits under any tax-qualified pension plans in an amount
which together with all other liabilities described in this subsection, could
give rise to a liability which is material. Neither the Company or any
Subsidiary nor any Commonly Controlled Entity has received any notice from the
PBGC that any of the Single Employer Plans is being involuntary terminated and
no event shall have occurred, and there exists no condition or set of
circumstances, which present a material risk of the distress termination (within
the meaning of Section 4041(c) of ERISA) or the involuntary termination of any
of the Single Employer Plans. Neither the Company or any Subsidiary nor any
Commonly Controlled Entity has incurred any liability to the PBGC which remains
outstanding other than the payment of premiums, and there are no premiums which
have become due which are unpaid. Each Single Employer Plan that is intended to
be qualified under Section 401(a) of the Code has been determined by the
Internal Revenue Service to be so qualified and each trust related to such plan
has been determined to be exempt under Section 501(a) of the Code, or the period
for obtaining such a determination letter has not expired; and no event has
occurred and no condition currently exists which might reasonably be expected to
give rise to a liability that is material as a result of the failure of any plan
that is intended to be qualified under Section 401(a) of the Code to be so
qualified. No Plan is being audited or investigated by any government agency or
subject to any pending or threatened claim or suit, which audit, investigation,
pending claim or suit could reasonably be expected to give rise to a liability,
which together with all other liabilities described in this subsection would be
material. Each Single Employer Plan currently meets and during the preceding six
years has met the minimum funding standard of Section 302 of ERISA and Section
412 of the Code (without regard to any funding waiver). With respect to each
Multiemployer Plan, the Company, each Subsidiary and each Commonly Controlled
Entity have paid or accrued to the extent required by GAAP all contributions
pursuant to the terms of each applicable collective bargaining agreement. No
Reportable Event has occurred during the six-year period prior to the date on
which this representation is made or deemed made with respect to any Single
Employer Plan which Reportable Event, together with all other liabilities
described in this subsection, could give rise to a liability which is material,
and each Single Employer Plan has complied in all material respects with the
applicable provisions of ERISA and the Code. The present value of all benefit
liabilities (within the meaning of Title IV of ERISA) under each Single Employer
Plan maintained by the Company, any Subsidiary or any Commonly Controlled Entity
(based on those assumptions used to fund the respective Single Employer Plans)
did not, as of the last annual valuation date, exceed the value of the assets of
such Single Employer Plan allocable to such benefit liabilities by more than
$2,500,000. Except as described on Schedule 3.14, neither the Company or any
Subsidiary nor any Commonly Controlled Entity has any unsatisfied liability with
respect to a complete or partial withdrawal from any Multiemployer Plan, which
together with all other liabilities described in this subsection would be
material, and, to the best of the Company's knowledge, the liability to which
the Company, any Subsidiary or any Commonly Controlled Entity would become
subject under ERISA if the Company, any Subsidiary or any such Commonly
Controlled
<PAGE> 54
48
Entity were to withdraw completely from all Multiemployer Plans as of the
valuation date most closely preceding the date hereof would not, together with
all other liabilities described in this subsection, be material. Neither the
Company or any Subsidiary nor any Commonly Controlled Entity has failed to make
any payment when due with respect to any complete or partial withdrawal from any
Multiemployer Plan. No such Multiemployer Plan is in Reorganization or
Insolvent, where the liability which could reasonably be expected to result is
in an amount which, taken together with all the liabilities described in this
subsection, is material. Neither the Company or any Subsidiary nor any Commonly
Controlled Entity is required to provide security to a Single Employer Plan
pursuant to Section 307 of ERISA or Section 401(a)(29) of the Code. Neither the
Company or any Subsidiary nor any Commonly Controlled Entity has engaged in a
transaction which could reasonably be expected to subject it to liability under
Section 4069 or 4212(c) of ERISA which liability together with all other
liabilities described in this subsection is material. Except as disclosed in
Schedule 3.14, as it may be updated from time to time there are no agreements
which will provide payments to any officer, employee, shareholder or highly
compensated individual which will be parachute payments under Section 280G of
the Code that are nondeductible to the Company or any Subsidiary and which will
be subject to the tax under Section 4999 of the Code for which the Company or
any Subsidiary would have a material withholding liability.
3.15 Nortek Indentures. There have been delivered to the Agent and each
Bank a true and correct copy of each of the Nortek Indentures, including all
amendments, waivers and supplements thereto. To the knowledge of the Company,
the Nortek Indentures and all such other documents have been duly executed and
delivered by the parties thereto and are in full force and effect at the date
hereof.
3.16 SEC Reports. The Company has furnished the Agent with true copies of
the SEC Reports.
3.17 Intangible Assets. Each of the Company and the Subsidiaries possesses
all patents, trademarks, service marks, trade names, and copyrights and rights
with respect to the foregoing (collectively, "Patent Rights"), necessary to
conduct its business as now conducted and as proposed to be conducted, except
for technology not material to the operations of the Company and its
Subsidiaries taken as a whole. To the best knowledge of the Company, the Patent
Rights do not conflict with the patents, trademarks, service marks, trade names,
copyrights and other rights with respect to the foregoing of any other Person,
except for conflicts which are not material to the operations of the Company and
its Subsidiaries taken as a whole.
3.18 Name Changes, Mergers, Acquisitions. Except for the Merger and except
as set forth on Schedule 3.18, neither the Company nor any of the Material
Operating Subsidiaries has within the six-year period immediately preceding the
date of this Agreement
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49
changed its name, been the surviving entity of a merger or consolidation, or
acquired all or substantially all of the assets of any Person.
3.19 Licenses and Approvals. The Company and each of the Subsidiaries has
all necessary licenses, permits and governmental authorizations, including,
without limitation, licenses, permits and authorizations required to comply with
all Environmental Laws and Regulations, to own and operate its properties and to
carry on its business as now conducted, except for licenses, permits and
authorizations, which the failure to have does not materially adversely affect
the operations of the Company and its Subsidiaries taken as a whole.
3.20 Labor Disputes; Collective Bargaining Agreements; Employee
Grievances. Except as set forth on Schedule 3.20, there is no pending strike,
work stoppage, material unfair labor practice claim or charge, arbitration or
other material labor dispute against or affecting the Company or any Subsidiary
or their representative employees.
3.21 Solvency. To the best of the knowledge of the Company, each Loan
Party is Solvent, individually and together with its Subsidiaries and, after
giving effect to the receipt and application of the Loans and the issuance or
deemed issuance of L/Cs in accordance with the terms of this Agreement, each
Loan Party, individually and together with its Subsidiaries, shall continue to
be Solvent.
3.22 Outstanding Indebtedness for Borrowed Money. Schedule 3.22 sets forth
a complete and accurate list of all Indebtedness of the Company and its
Subsidiaries for borrowed money, and all available committed credit lines,
outstanding on the date hereof.
3.23 Hazardous Materials. Except as described in the Phase I Environmental
Assessments & Transaction Screens of Ply Gem Industries, Inc. and its
Subsidiaries across the United States draft dated June 20, 1997 prepared by
Dames & Moore, Hazardous Materials have not been released, discharged or
disposed of at, or transported to or from, any of the real property currently
owned, leased or occupied by the Company or its Subsidiaries so as to give rise
to any liability under Environmental Laws and Regulations, except in such case
where the liability would not have a Material Adverse Effect.
SECTION 4. CONDITIONS PRECEDENT
4.1 Conditions to Initial Loans and L/Cs. The agreement of each Bank to
make its initial Loan hereunder and of Fleet to maintain L/Cs on the Closing
Date shall be subject to the satisfaction, immediately prior to or concurrently
with the making of such Loan or the issuance or deemed issuance of any such L/C,
of each of the following conditions precedent:
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50
(a) Tender Offer and Merger. The Tender Offer shall have been consummated
in accordance with the Merger Agreement without any waiver or amendment of any
term or condition therein not consented to by the Banks and in compliance with
all applicable laws and necessary approvals. The Banks shall be satisfied that
the restrictions in Section 203 of the Delaware General Corporation Law, any
other applicable state takeover law and any supermajority charter provisions are
not applicable to the Merger or that any conditions for avoiding the
restrictions set forth therein have been satisfied.
(b) Corporate Structure. The Agent and the Banks shall be satisfied with
the corporate and legal structure and capitalization of the Company and each of
the other Loan Parties, including, without limitation, the terms and conditions
of the charter, bylaws and each class of capital stock of the Company and each
other Loan Party and each agreement or instrument relating to such structure or
capitalization.
(c) No Material Adverse Change. Since December 31, 1996, there shall have
occurred no material adverse change in the business, condition (financial or
otherwise), operations, performance or properties of the Company and its
Subsidiaries, taken as a whole.
(d) Pre-Commitment Information. All of the Pre-Commitment Information
shall be true and correct in all material aspects; and no additional information
shall have come to the attention of the Agent or any of the Banks that is
inconsistent in any material respect with the Pre-Commitment Information or that
could reasonably be expected to have a Material Adverse Effect.
(e) Capital Structure. The Banks shall be satisfied with the terms and
conditions of (i) the $310,000,000 of senior notes issued by Nortek pursuant to
that certain Nortek Indenture described in clause (c) of the definition thereof
and (ii) the at least $400,000,000 of equity to be contributed by Nortek to the
Company in connection with the Merger, including, without limitation, the
payment terms, covenants and events of default thereof. The Company shall have
received at least $400,000,000 in gross cash proceeds from the sale of its
common stock to Nortek and all such proceeds shall have been used or shall be
used simultaneously with the occurrence of the Closing Date under this Agreement
in accordance with the terms of the Merger Agreement.
(f) Compliance; No Litigation. The Agent and the Banks shall be satisfied
that the Company and its Subsidiaries are, and will be after giving effect to
the occurrence of the Closing Date, in compliance with all applicable laws,
including, without limitation, ERISA and all Environmental Laws and Regulations,
except where the failure to so comply could not reasonably be expected to have a
Material Adverse Effect. There shall exist no action, suit, investigation,
litigation or proceeding affecting the Company or any of its Subsidiaries
pending or threatened before any court, governmental agency or arbitrator that
(i) could be reasonably expected to have a Material Adverse Effect or (ii)
purports to affect
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51
the legality, validity or enforceability of the Tender Offer, the Merger, this
Agreement, any Note, any other Loan Document, any Related Document or the
consummation of the transactions contemplated hereby or thereby.
(g) Insurance. The Agent and the Banks shall be satisfied with the amount,
types and terms and conditions of all insurance maintained by the Company and
its Subsidiaries.
(h) Fees and Expenses. All accrued fees and expenses of the Agent and the
Banks (including the fees and expenses of counsel for the Agent and the Banks)
for which statements have been rendered on or prior to the Closing Date shall
have been paid.
(i) Consents and Approvals. All governmental and third party consents and
approvals necessary in connection with this Agreement, the other Loan Documents,
the Related Documents and the Nortek Indentures and the Tender Offer, the Merger
and the other transactions contemplated hereby and thereby shall have been
obtained (without the imposition of any conditions that are not acceptable to
the Banks) and shall remain in full force and effect; all applicable waiting
periods in connection with the Tender Offer, the Merger, and the other
transactions contemplated hereby shall have expired without any action having
been taken by any competent authority restraining, preventing or imposing
materially adverse conditions upon the Tender Offer, the Merger or the rights of
the Company or its Subsidiaries freely to transfer or otherwise dispose of, or
to create any Lien on, any properties now owned or hereafter acquired by any of
them.
(j) Agreement. The Agent and each Bank shall have received this Agreement,
duly executed and delivered by the Company and each Designated Subsidiary.
(k) Notes. The Agent shall have received, for the account of each Bank, a
Note conforming to the requirements hereof and executed and delivered by a duly
authorized officer of the Company and each Designated Subsidiary.
(l) Guaranty. The Agent and each Bank shall have received a Guaranty,
executed and delivered by a duly authorized officer of the Company and each
other Guarantor.
(m) Collateral. The Agent and each Bank shall have received the Security
Agreement, duly executed and delivered by the Collateral Grantors shall have
received each of the following:
(i) certificates representing the Pledged Shares (as defined in the
Security Agreement) accompanied by undated stock powers executed in blank
and instruments evidencing the Pledged Debt referred to therein indorsed
in blank;
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(ii) duly executed copies of proper financing statements, to be
filed under the Uniform Commercial Code of all jurisdictions that the
Agent may deem necessary or desirable in order to perfect and protect the
first priority liens and security interests created under the Security
Agreement, covering the Collateral (as defined in the Security Agreement);
(iii) completed requests for information to the extent the same
shall be available, dated on or before the Closing Date, listing all
effective financing statements filed in the jurisdictions referred to in
clause (B) above that name the Company or any other Collateral Grantor as
debtor, together with copies of such financing statements;
(iv) evidence of the completion of all other recordings and filings
of or with respect to the Security Agreement that the Agent may deem
necessary or desirable in order to perfect and protect the Liens created
thereby;
(v) evidence of the insurance required by the terms of the Security
Agreement; and
(vi) evidence that all other action (other than those actions
required to be taken under subsection 5.16) that the Agent may deem
necessary or desirable in order to perfect and protect the first priority
liens and security interests created under the Security Agreement has been
taken (including, without limitation, evidence satisfactory to the Agent
that all Liens on the Collateral in favor of any Person (other than the
Agent for the benefit of the Secured Parties) shall have been terminated).
(n) Borrowing Certificates. The Agent and each Bank shall have received
(i) a certificate of the Company in substantially the form of Exhibit D-1 dated
the Closing Date and executed and delivered by a duly authorized officer of the
Company and (ii) a certificate of each other Loan Party in substantially the
form of Exhibit D-2 dated the Closing Date and executed and delivered by a duly
authorized officer of each other Loan Party.
(o) Notice of Borrowing. The Agent shall have received a notice of
requested borrowing in accordance with subsection 2.3(a).
(p) Legal Opinions. (i) The Agent and each Bank shall have received the
executed legal opinion of (A) Charles M. Modlin, Esq., counsel to the Company
and each Subsidiary, dated the Closing Date, in substantially the form of
Exhibit F-1, and (B) Ropes & Gray, counsel to Nortek, dated the Closing Date, in
substantially the form of Exhibit F-2, in each case together with copies of the
legal opinions, if any, upon which such counsel relies, with such changes
thereto as may be approved by, and otherwise in form and
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53
substance satisfactory to the Agent and its counsel and covering such matters
incident to the transactions contemplated by this Agreement, the Notes, the
other Loan Documents, the Related Documents and the Nortek Indentures and by the
Tender Offer and Merger as the Agent may reasonably require.
(ii) The Agent and each Bank shall have received the executed legal
opinion of Shearman & Sterling, counsel to the Agent, dated the Closing Date, in
form and substance satisfactory to the Agent.
(q) Related Agreements. The Agent and each Bank shall have received true
and correct copies, certified as to authenticity by the Company and each
Subsidiary, of the Certificate of Incorporation and By-laws of the Company and
each such Subsidiary and such other documents or instruments to which the
Company or any of its Subsidiaries is a party or by which any of them is bound
as may be reasonably requested by the Agent.
(r) Corporate Proceedings. The Agent and each Bank shall have received a
copy of the resolutions, in form and substance reasonably satisfactory to the
Agent, of the Board of Directors of the Company, each other Loan Party and each
Subsidiary authorizing the execution, delivery and performance of this
Agreement, the Notes, the other Loan Documents, the Related Documents and all
documents and instruments to be delivered in connection herewith, in each case
to which it is a party, and the consummation of the Merger and the other
transactions contemplated hereby and thereby, certified by the Secretary or an
Assistant Secretary of the Company or such other Loan Party (as applicable), as
of the Closing Date; and each such certificate shall state that the resolutions
thereby certified have not been amended, modified, revoked or rescinded as of
the date of such certificate.
(s) Related Documents and Nortek Indentures. The Agent shall have
received, with a copy for each Bank, a certified copy of each Related Document
and each Nortek Indenture, together with all amendments, waivers or supplements
thereto.
(t) Consents. The Agent, with a copy for each Bank, shall have received
true copies (in each case certified as to authenticity on such date by a duly
authorized officer of the Company or by such other Person as may be appropriate
or may be required by the Agent) of all documents and instruments, including all
consents, authorizations, filings and orders, required under any Requirement of
Law or by Contractual Obligations of the Company or any Subsidiary, in
connection with the execution, delivery, performance, validity and
enforceability of this Agreement, the Notes, the other Loan Documents and the
Related Documents and such consents, authorizations, filings and orders shall be
satisfactory in form and substance to the Agent and shall be in full force and
effect.
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54
(u) Other Fees. The Agent shall have received for itself or for the
account of each Bank, as appropriate, the fees payable on the Closing Date
pursuant to subsection 2.7.
(v) Good Standings. The Agent and each Bank shall have received good
standing certificates as of dates not more than forty-five (45) days prior to
the Closing Date, with respect to each of the Company and each other Loan Party
from the Secretaries of State of their respective states of incorporation and
each state in which each of them is qualified to do business.
(w) Incumbency Certificates. The Agent and each Bank shall have received
an incumbency certificate (with specimen signatures) with respect to the Company
and each other Loan Party.
(x) Solvency Certificate. The Agent and each Bank shall have received from
the Company and each other Loan Party a Solvency Certificate, in form and
substance satisfactory to the Banks, attesting to the Solvency of the Company or
such other Loan Party, as the case may be, in each case individually and
together with its Subsidiaries, taken as a whole, immediately before and
immediately after giving effect to the Tender Offer and the Loan Documents, from
the treasurer of the Company or an authorized officer of each other Loan Party,
as the case may be.
(y) Ownership, Liens. A majority of the capital stock of the Company and
the Company's Subsidiaries shall be directly or indirectly owned by Nortek, the
Company or one or more of the Company's Subsidiaries, in each case free and
clear of any lien, charge or encumbrance, other than the liens and security
interests created under the Loan Documents.
(z) Projections. The Agent and the Banks shall have received a copy of the
Company's five year projections (including, without limitation, a balance sheet,
an income statement and a statement of cash flows, as well as management
assumptions with respect thereto) on a consolidated basis with respect to the
Company and its Subsidiaries, all in form and substance reasonably satisfactory
to the Agent.
(aa) Other Documentation. Such other documentation as the Agent or the
Banks shall reasonably request, including, without limitation, the Assignment
and Agreement, duly executed by each party thereto.
4.2 Conditions to All Loans. The agreement of each Bank to make any Loan
(including the initial Loans) and of Fleet to issue or maintain any L/Cs
requested to be made or issued or deemed issued hereunder is subject to the
satisfaction, immediately prior
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to or concurrently with the making of such Loan or issuance of such L/C, of the
following additional conditions precedent:
(a) Representations and Warranties. Each of the representations and
warranties made by the Company and each other Loan Party in or pursuant to
this Agreement (other than subsections 3.21 and 3.22) and the other Loan
Documents shall be true and correct in all material respects on and as of
such date as if made on and as of such date (except any such
representations and warranties that, by their terms, refer to a specific
date other than the date of the relevant Loan, in which case as of such
specific date).
(b) No Default or Event of Default. No Default or Event of Default
shall have occurred and be continuing on such date or after giving effect
to the Loans or L/Cs requested to be made or issued or deemed issued on
such date.
(c) No Violations of Law. Such Loan or L/C and the use of proceeds
thereof or any drawing thereon shall not contravene, violate or conflict
with, nor involve any Bank in a violation of, any law, rule, injunction,
or regulation, or determination of any court of law or other Governmental
Authority (including, without limitation, Regulation U).
(d) Other. All corporate or other proceedings, and all documents,
instruments and other legal matters in connection with the transactions
contemplated by this Agreement, the Notes and the other Loan Documents
shall be reasonably satisfactory in form and substance to the Agent and
its counsel. Each borrowing by the Company and each Designated Subsidiary
hereunder or issuance or deemed issuance of an L/C hereunder shall
constitute a representation and warranty by the Company and each borrowing
Designated Subsidiary as of the date of such borrowing or issuance or
deemed issuance that the conditions to such or issuance or deemed issuance
contained in subsections 4.2(a), (b) and (c) have been satisfied.
4.3 Conditions to Loans to New Designated Subsidiaries. The
agreement of each Bank to make any Loan to any new Designated Subsidiary shall
be subject to the receipt by each Bank, as appropriate, of (a) a Note issued by
such Designated Subsidiary, (b) corporate documents of such new Designated
Subsidiary, (c) a copy of an opinion of counsel to the Company in substantially
the form provided with respect to Designated Subsidiaries on the Closing Date
(including, without limitation, an opinion to the effect that the execution,
delivery and performance of the Loan Documents by such Designated Subsidiary,
including without limitation any borrowing made by it thereunder, do not violate
the requirements of the Nortek Indentures or any indentures or other agreements
binding upon such Designated Subsidiary) and (d) any other documents reasonably
requested by the Agent or any of the Banks in connection therewith.
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SECTION 5. AFFIRMATIVE COVENANTS
The Company and each Designated Subsidiary hereby covenant and agree with the
Agent and the Banks that, from and after the date of this Agreement until the
Obligations are paid in full and the Commitments are terminated and all L/Cs
have expired or been duly terminated, the Company shall, and, in the case of the
agreements set forth in subsections 5.3, 5.5, 5.6, 5.7, 5.11, 5.13, and 5.16,
such Designated Subsidiary shall (and each of the Company and such Designated
Subsidiary shall cause each of its respective Subsidiaries to):
5.1 Financial Statements. Furnish to the Agent and each Bank:
(a) as soon as available, but in any event within 90 days after the end of
each fiscal year of the Company, copies of (i) the consolidated balance sheets
of the Company and its consolidated Subsidiaries as at the end of such fiscal
year and the related consolidated statements of income, stockholders' equity and
cash flows for such fiscal year, in each case setting forth in comparative form
the figures for the previous year, certified, without qualification, by Arthur
Andersen, L.L.P. or another independent certified public accountant of
recognized standing reasonably acceptable to the Banks, and (ii) the
consolidating balance sheet of the Company and its consolidated Subsidiaries as
at the end of such fiscal year and the related consolidating statement of income
for such fiscal year, in each case showing intercompany eliminations, certified
by the chief financial officer of the Company as being, to the best of such
officer's knowledge, fairly stated in all material respects when considered in
relation to the consolidated financial statements of the Company and its
consolidated Subsidiaries; and
(b) as soon as available, but in any event within 45 days after the end of
each of the first three fiscal quarters of the Company, copies of (i) the
unaudited consolidated balance sheets of the Company and its consolidated
Subsidiaries as at the end of such fiscal quarter and the related unaudited
consolidated statements of income and cash flows for such fiscal quarter and for
the portion of the fiscal year through such fiscal quarter, certified by the
chief financial officer of the Company as presenting fairly, to the best of such
officer's knowledge, the financial condition and results of operations of the
Company and its consolidated Subsidiaries (subject to normal year-end audit
adjustments) and (ii) the unaudited consolidating balance sheet of the Company
and its consolidated Subsidiaries as at the end of such fiscal quarter and the
related unaudited consolidating statement of income for the portion of the
fiscal year through such fiscal quarter, in each case showing intercompany
eliminations, certified by the chief financial officer of the Company as being,
to the best of such officer's knowledge, fairly stated in all material respects
when considered in relation to the consolidated financial statements of the
Company and its consolidated Subsidiaries; all such financial statements to be
prepared in reasonable
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detail and (in the case of such consolidated financial statements) in accordance
with GAAP applied consistently throughout the periods reflected therein (except
as approved by the Company's accountants or such financial officer, as the case
may be, and disclosed therein and subject to year-end adjustments).
5.2 Certificates; Other Information. Furnish to the Agent and each Bank:
(a) concurrently with the delivery of each set of the financial
statements referred to in clause (i) of paragraph (a) of subsection 5.1, a
certificate of the independent certified public accountants reporting on
such financial statements stating that in making the examination necessary
therefor no knowledge was obtained of any Default or Event of Default,
except as specified in such certificate;
(b) concurrently with the delivery of each set of the financial
statements referred to in paragraphs (a) and (b) of subsection 5.1, a
certificate of the chief financial officer of the Company (i) stating
that, to the best of such officer's knowledge, during such fiscal quarter
the Company has observed or performed in all material respects all of its
covenants and other agreements, and satisfied every condition contained in
this Agreement to be observed, performed or satisfied by it, and that such
officer has obtained no knowledge of any Default or Event of Default
except as specified in such certificate, and (ii) showing in reasonable
detail the calculations supporting such statement in respect of
subsections 6.9, 6.10, 6.11, 6.12 and 6.18;
(c) within five days after the same are filed, copies of all
financial statements and reports which the Company may make to, or file
with, the Securities and Exchange Commission or any successor or analogous
Governmental Authority;
(d) not later than 90 days after the end of each fiscal year of the
Company, a copy of the projections by the Company of the operating budget
and cash flow of the Company and its Subsidiaries for the next succeeding
fiscal year, such projections to be accompanied by a certificate of a
Responsible Officer to the effect that such projections have been prepared
on a basis consistent with the Company's past practice (or otherwise
stating the basis on which such projections have been prepared); and
(e) promptly, such additional financial and other information as the
Agent or any Bank may from time to time reasonably request.
5.3 Payment of Obligations. Pay, discharge or otherwise satisfy at or
before maturity or before they become delinquent, as the case may be, all (a)
lawful taxes, assessments and governmental charges or levies upon it or its
property or assets, and
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(b) claims or demands of materialmen, mechanics, carriers, warehousemen,
landlords and other like Persons which, in any such case, if unpaid would by law
give rise to a Lien upon any of its property or assets, except when the amount
or validity thereof is currently being contested in good faith by appropriate
proceedings and reserves in conformity with GAAP with respect thereto have been
provided on the books of the Company or its Subsidiaries, as the case may be.
5.4 Material Operating Subsidiaries. Give notice to the Agent (which upon
receipt shall give a copy thereof to the Banks) of the occurrence of any
Subsidiary becoming a Material Operating Subsidiary concurrently with such
occurrence.
5.5 Conduct of Business and Maintenance of Existence. Except as permitted
by subsection 6.4, continue to engage in the Business of the Company, and
preserve, renew and keep in full force and effect its corporate existence and
take all reasonable action to maintain all rights, privileges and franchises
necessary or desirable in the normal conduct of its business; and comply with
all Contractual Obligations and Requirements of Law including, without
limitation, ERISA and all Environmental Laws and Regulations except to the
extent that the failure to comply therewith would not, in the aggregate, have a
Material Adverse Effect.
5.6 Maintenance of Property; Insurance. Keep all property useful and
reasonably necessary in its business in good working order and condition except
to the extent that breach of this clause would not materially adversely affect
the operations of the Company and its Subsidiaries taken as a whole; maintain
with reputable insurance companies believed by the Company to be financially
sound insurance on all its property in at least such amounts and with only such
deductibles and self insurance as are usually maintained by, and against at
least such risks (but including in any event product liability) as are usually
insured against in the same general area by, companies engaged in the same or a
similar business; and, furnish to the Agent and each Bank, upon written request,
full information as to the insurance carried.
5.7 Inspection of Property; Books and Records; Discussions. Keep proper
books of record and account in which full, true and correct entries in
conformity with GAAP and all material Requirements of Law shall be made of all
dealings and transactions in relation to its business and activities; and permit
representatives of the Agent or any Bank as the representative of the Agent to
visit and inspect any of its properties and examine and make abstracts from such
of its books and records as the Agent or such Bank may reasonably request at any
reasonable time and as often as may reasonably be desired, and to discuss the
aspects of the business, operations, properties and financial and other
condition of the Company and its Subsidiaries as the Agent or such Bank may
reasonably request with officers and employees of the Company and its
Subsidiaries and with its independent certified
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public accountants, provided that mutually satisfactory advance arrangements for
any such visit or inspection shall be made with appropriate representatives of
the Company.
5.8 Notices. Give notice to the Agent (which upon receipt shall give a
copy thereof to each of the Banks) promptly after a Responsible Officer has
actual knowledge thereof, but in any event within five (or 30, in the case of
any event described in clause (c)(i) below) Business Days after such officer
shall have obtained such actual knowledge:
(a) of the occurrence of any Default or Event of Default;
(b) of any (i) default or event of default under any Contractual
Obligation of the Company or any of its Subsidiaries or (ii) litigation,
investigation or proceeding which may exist at any time between the
Company or any of its Subsidiaries and any Governmental Authority, which,
in either case, if not cured or if adversely determined, would have a
Material Adverse Effect;
(c) of the following events: (i) the occurrence of any Reportable
Event with respect to any Single Employer Plan, which Reportable Event,
together with all other Reportable Events, if any, could subject the
Company or any of its Subsidiaries to any tax, penalty or other
liabilities that in the aggregate could reasonably be expected to have a
Material Adverse Effect, or any withdrawal from, or the receipt by the
Company, any Subsidiary or any Commonly Controlled Entity of any notice
regarding the termination, Reorganization or Insolvency of, any
Multiemployer Plan; (ii) the receipt or filing by the Company, any
Subsidiary or any Commonly Controlled Entity of any notice regarding the
institution of proceedings or the taking of any other action by PBGC, the
Company, any Subsidiary or any Commonly Controlled Entity or Multiemployer
Plan with respect to the withdrawal from, or the termination,
Reorganization or Insolvency of, any Plan subject to Title IV of ERISA; or
(iii) that a prohibited transaction has occurred (as defined in Section
406 of ERISA or Section 4975 of the Code), which could subject the Company
or any Subsidiary to tax or penalty which could reasonably be expected to
have a Material Adverse Effect; and the Company shall update the schedules
referred to in subsection 3.14 as of the date any representations set
forth therein is deemed to be made;
(d) of any litigation or proceeding affecting the Company or any of
its Subsidiaries in which the amount involved is $10,000,000 or more and
not covered by insurance or in which material injunctive or similar relief
is sought;
(e) of a material adverse change in the business, operations,
property, performance or condition (financial or otherwise) of the Company
and its Subsidiaries taken as a whole from that reflected in the financial
statements most recently delivered to the Banks pursuant to subsection
5.1; and
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(f) (i) any notice of any violation or administrative or judicial
complaint or order having been filed against the Company or such other
Subsidiary alleging violations of any Environmental Laws and Regulations,
or (ii) any notice from any governmental body alleging that the Company or
such other Subsidiary is or may be subject to any Environmental Liability;
and promptly upon receipt thereof, provide the Agent with a copy of such
notice.
Upon the request of the Agent or any Bank, the Company will reasonably
consult with the Agent as to the subject matter of notices pursuant to this
subsection 5.8.
5.9 Copies of Corporate Documents. Promptly deliver to the Agent copies of
any amendments or modifications to the certificate of incorporation or by-laws
of the Company or any Subsidiary, certified with respect to the certificate of
incorporation by the Secretary of State of the state of incorporation of such
Person and, with respect to the by-laws, by the secretary or assistant secretary
of such Person.
5.10 Conditions Subsequent. Deliver to the Agent, in form and substance
satisfactory to the Agent and in sufficient copies for the Agent and each Bank,
as soon as possible and in any event within 45 days after the Closing Date (or
such later date as may be agreed by the Company and the Agent):
(a) acknowledgment copies of proper financing statements, duly filed
under the Uniform Commercial Code of all jurisdictions that the Agent may
deem necessary or desirable in order to perfect and protect the first
priority liens and security interests created under the Security
Agreement, covering the Collateral;
(b) completed requests for information, listing the financing
statements referred to in clause (a) above and all other effective
financing statements filed in the jurisdictions referred to in clause (a)
above that name the Company or any of the other Collateral Grantors as
debtor, together with copies of such financing statements; and
(c) evidence that all other action as the Agent may deem necessary
or desirable in order to perfect and protect the first priority liens and
security interests created under the Security Documents has been taken.
5.11 Hazardous Material. Operate all property owned, operated or leased by
it in such a manner that (a) no Hazardous Material shall be placed, held,
located or disposed of, on, under or at the real property owned, operated or
leased by the Company or any Subsidiary or any part thereof, except for such
Hazardous Materials which are necessary for the Company's operation of its
business thereon and which shall be used, stored, treated and disposed of in
compliance with all applicable Environmental Laws and Regulations or
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(b) such real property owned, operated or leased by the Company or any
Subsidiary or any part thereof shall not be used as a collection, storage,
treatment or disposal site for any Hazardous Material, except, (i) in the
case of clause (b) above, in compliance with all Environmental Laws or
Regulations and (ii) in each case to the extent failure to comply with this
subsection 5.11, in the aggregate, would not have a material adverse effect
on the business, operations, property or financial condition of the Company
and its Subsidiaries taken as a whole.
5.12 Further Assurances. (a) Promptly upon request by the Agent, or any
Bank through the Agent, correct, and cause each of its Subsidiaries promptly to
correct, any material defect or error that may be discovered in any Loan
Document or in the execution, acknowledgment, filing or recordation thereof.
(b) Promptly upon request by the Agent, or any Bank through the Agent,
do, execute, acknowledge, deliver, record, rerecord, file, refile, register
and re-register, and cause each of its Subsidiaries promptly to do, execute,
acknowledge, deliver, record, re-record, file, re-file, register and
re-register, any and all such further acts, pledge agreements, assignments,
financing statements and continuations thereof, termination statements,
notices of assignment, transfers, certificates, assurances and other
instruments as the Agent, or any Bank through the Agent, may reasonably
require from time to time in order to (i) carry out more effectively the
purposes of this Agreement, the Notes or any other Loan Document, (ii) to
the fullest extent permitted by applicable law, subject any of the Company's
or any of its Subsidiaries' properties, assets, rights or interests to the
Liens now or hereafter intended to be covered by any of the Security
Documents, (iii) perfect and maintain the validity, effectiveness and
priority of any of the Security Documents and any of the Liens intended to
be created thereunder and (iv) assure, convey, grant, assign, transfer,
preserve, protect and confirm more effectively unto the Agent and the Banks
the rights granted or now or hereafter intended to be granted to the Agent
and the Banks under any Loan Document or under any other instrument executed
in connection with any Loan Document to which the Company or any of its
Subsidiaries is or is to be a party; provided, however, that in any event
this subsection 5.12 shall not require Liens on, and the execution and
delivery of Security Documents covering, any property to the extent not
otherwise required by the terms of the Loan Documents.
5.13 Compliance with Terms of Leaseholds. Make all payments and otherwise
perform all obligations in respect of all leases of real property to which the
Company or any of its Subsidiaries is a party, keep such leases in full force
and effect and not allow such leases to lapse or be terminated or any rights to
renew such leases to be forfeited or cancelled, notify the Agent of any default
by any party with respect to such leases and cooperate with the Agent in all
respects to cure any such default, except, in any case, where the failure to do
so, either individually or in the aggregate, would not be reasonably likely to
have a Material Adverse Effect.
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5.14 Performance of Related Documents. Perform and observe all of the
terms and provisions of each Related Document to be performed or observed by it,
maintain each such Related Document in full force and effect, enforce such
Related Document in accordance with its terms, take all such action to such end
as may be from time to time reasonably requested by the Agent and, upon request
of the Agent, make to each other party to each such Related Document such
demands and requests for information and reports or for action as the Company or
other Loan Party (as applicable) is entitled to make under such Related
Document, except, in any case, where the failure to do so, either individually
or in the aggregate, could not be reasonably expected to have a Material Adverse
Effect.
5.15 Hedge Agreements. Maintain at all times Hedge Agreements with Persons
acceptable to the Agent, covering a notional amount of not less than 40% of the
Commitments and providing for such Persons to make payments thereunder for a
period of no less than two years to the extent of increases in interest rates
greater than 3% above the weighted average Eurodollar Rate on the date hereof.
5.16 Conditions Subsequent to Closing Date. Use its best efforts to
deliver to the Agent, in form and substance satisfactory to the Agent and in
sufficient copies for each Bank, as soon as possible and in any event within 45
days after the Closing Date (or such later date as may be agreed by the Company
and the Agent):
(a) acknowledgment copies of proper financing statements (including,
without limitation, all UCC-1 financing statements and all UCC-3
termination statements), duly filed under the Uniform Commercial Code of
all jurisdictions that the Agent may deem necessary or desirable in order
to perfect and protect the first priority liens and security interests
created under the Security Agreement, covering the Collateral described in
the Security Agreement,
(b) completed requests for information, listing the financing statements
referred to in clause (a) above and all other effective financing
statements filed in the jurisdictions referred to in clause (a) above that
name any Loan Party as debtor, together with copies of such financing
statements,
(c) evidence that all other action as the Agent may deem necessary or
desirable in order to perfect and protect the first priority liens and
security interests created under the Security Agreement has been taken
(including, without limitation, obtaining landlord's letters, bailee's
letters or warehouseman's letters, each in form and substance reasonably
satisfactory to the Agent), and
(d) certificates representing the reissued Pledged Shares (as defined in
the Security Agreement) of Allied Plywood Corporation, Goldenberg Group,
Inc.,
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Richwood Building Products, Inc. and Great Lakes Windows, Inc.,
respectively, together with undated stock powers executed in blank.
SECTION 6. NEGATIVE COVENANTS
Each of the Company and each Designated Subsidiary hereby covenants and
agrees with the Agent and the Banks that, from and after the date of this
Agreement until the Obligations are paid in full and the Commitments are
terminated and all L/Cs have expired or been duly terminated, neither the
Company nor any Designated Subsidiary shall, or shall permit any of its
Subsidiaries to, directly or indirectly:
6.1 Limitation on Indebtedness. Create, incur, assume or suffer to exist
any Indebtedness, except:
(a) the Loans and the L/Cs;
(b) Indebtedness of the Company to any Subsidiary, and of any Subsidiary
to the Company, any other Subsidiary, so long as such Indebtedness remains
subordinated to the Obligations under the Loan Documents on terms and
conditions satisfactory to the Banks;
(c) Indebtedness of the Company and any of its Subsidiaries under
Financing Leases, or Indebtedness incurred upon refinancing or replacement
of such Financing Leases, or Indebtedness incurred in connection with (and
not later than 180 days following, in the case of the acquisition of land or
improvements; or 45 days following, in the case of the acquisition of other
property) the acquisition of property, or Indebtedness incurred to renew,
extend, refund, refinance or replace the foregoing, in an aggregate
principal amount not exceeding as to the Company and its Subsidiaries
$35,000,000 at any one time outstanding; (d) certain Indebtedness
outstanding on the date hereof and listed on Schedule 3.22, and extensions,
renewals, refundings, refinancings and replacements thereof, provided that
Indebtedness under the Existing Credit Agreement may not be outstanding
after August 26, 1997; and Indebtedness incurred to finance property
currently subject to existing operating leases existing on the date hereof,
to the extent that (i) the corresponding operating lease is terminated, and
(ii) the aggregate debt service under such Indebtedness does not exceed the
aggregate rental payments saved as a consequence of the termination of such
lease;
(e) Indebtedness of a corporation which becomes a Subsidiary after the
date hereof, provided that such Indebtedness existed at the time such
corporation became a Subsidiary and was not created in anticipation thereof;
<PAGE> 70
64
(f) unsecured subordinated Indebtedness of the Company, provided that
such Indebtedness is on such terms and pursuant to such documentation as the
Required Banks shall approve, which approval shall not be unreasonably
withheld;
(g) Indebtedness of the Company and its Subsidiaries evidenced by
promissory notes or other contractual obligations of the Company given to
the sellers as part of the consideration for acquisitions permitted by
subsection 6.7; and
(h) other Indebtedness of the Company and its Subsidiaries not to exceed
$10,000,000 in the aggregate at any one time outstanding; provided, however,
that the aggregate Indebtedness of the Company under this clause (i), when
added to the Indebtedness under clauses (e) and (g) of this subsection 6.1,
shall not exceed, in the years indicated, the amounts set forth below:
<TABLE>
<CAPTION>
Year Amount
<S> <C>
1997 $20,000,000
1998 $25,000,000
1999 $30,000,000
2000 $35,000,000
2001 (and each year $40,000,000
thereafter)
</TABLE>
provided, however, in each case that such Indebtedness shall not be owed to
Nortek or any of its Subsidiaries (other than Subsidiaries consisting of the
Company or any of its Subsidiaries, to the extent permitted above).
6.2 Limitation on Liens. Create, incur, assume or suffer to exist any Lien
upon any of its property, assets or revenues, whether now owned or hereafter
acquired, other than:
(a) Liens for taxes, assessments, fees or other governmental charges not
yet due or which are being contested in good faith by appropriate
proceedings or other appropriate actions, provided that adequate reserves
with respect thereto are maintained on the books of the Company or its
Subsidiaries, as the case may be, in conformity with GAAP;
(b) statutory liens of landlords, carriers', warehouseman's, mechanics',
materialmen's, repairmen's, or other like Liens arising in the ordinary
course of business and not overdue for a period of more than 60 days or
which are being contested in good faith by appropriate proceedings or other
appropriate actions;
<PAGE> 71
65
(c) pledges or deposits in connection with workers' compensation,
unemployment insurance and other social security legislation;
(d) deposits to secure the performance of tenders, bids, trade contracts
(other than for borrowed money), leases, statutory obligations, surety and
appeal bonds, performance bonds and other obligations of a like nature
incurred in the ordinary course of business or deposits incurred in
connection with other obligations to the extent such other obligations are
covered by insurance;
(e) easements, (including, without limitation, reciprocal easement
agreements and utility agreements), rights-of-way, covenants, consents,
reservations, encroachments, minor defects or irregularities in title,
variations and other restrictions, charges or encumbrances (whether or not
recorded) affecting real or personal property, which individually or in the
aggregate do not or are not reasonably likely to have a material adverse
effect on the conduct by the Company and its Subsidiaries of their
businesses taken as a whole;
(f) Liens in existence on the date hereof listed on Schedule 6.2 securing
Indebtedness permitted by subsection 6.1, provided that no such Lien is
spread to cover any additional property (other than the proceeds thereof)
after the date hereof and that the principal amount of Indebtedness secured
thereby is not increased;
(g) Liens securing Indebtedness of the Company and its Subsidiaries
permitted by subsection 6.1(c) in respect of the deferred acquisition price
of property, provided that (i) such Liens shall be created not later than
(A) 180 days after the acquisition of such property in the case of land or
improvements, and (B) 45 days after the acquisition of other property, (ii)
such Liens do not at any time encumber any property other than the property
financed by such Indebtedness and the proceeds of such property so financed,
(iii) the principal amount of Indebtedness secured thereby is not increased
and (iv) the principal amount of Indebtedness secured by any such Lien shall
at no time exceed the original acquisition price of such property;
(h) Liens on the property or assets of a corporation which becomes a
Subsidiary after the date hereof securing Indebtedness permitted by
subsection 6.1 (e), provided that (i) such Liens existed at the time such
corporation became a Subsidiary and were not created in anticipation
thereof, (ii) no such Lien is spread to cover any property or assets of such
corporation after the time such corporation becomes a Subsidiary (other than
proceeds of the property or assets which were the original subjects of such
Lien), and (iii) the principal amount of Indebtedness secured thereby is not
increased after such time;
<PAGE> 72
66
(i) Liens existing on property or assets prior to the acquisition thereof
by the Company or any Subsidiary, provided that (i) such Liens were not
created in anticipation thereof, (ii) no such Lien is spread to cover any
additional property (other than the proceeds of the property or assets which
were the original subject of such Lien) and (iii) the principal amount of
Indebtedness secured thereby is not increased;
(j) Liens arising out of the refinancing, extension, renewal, refunding or
replacement of any Indebtedness secured by any Lien permitted by any of the
other clauses of this subsection, provided that (i) no such Lien is spread
to cover any additional property (other than the proceeds of the property
which was the original subject of such Lien) and (ii) the principal amount
of Indebtedness secured thereby is not increased;
(k) Liens arising pursuant to any order of attachment, distraint or
similar legal process arising in connection with court proceedings so long
as the execution or other enforcement thereof is effectively stayed and the
claims secured thereby are being contested in good faith by appropriate
proceedings or other appropriate action;
(l) Liens securing reimbursement obligations in connection with trade
letters of credit issued on behalf of the Company or any Subsidiary in the
ordinary course of its business, provided that such Liens attach solely to
the goods the acquisition of which is financed by such letter of credit and
to the proceeds thereof;
(m) Intentionally omitted;
(n) Liens arising under the Security Documents;
(o) Financing Leases permitted under subsection 6.1; and
(p) Other Liens securing obligations which do not constitute Indebtedness,
the aggregate amount of which obligations does not exceed $2,500,000 at any
time outstanding.
6.3 Limitation on Contingent Obligations. Create, incur, assume or suffer
to exist any Contingent Obligation, except (a) Contingent Obligations in
existence on the date hereof listed on Schedule 6.3, (b) Contingent Obligations
of the Company in respect of obligations of any Material Operating Subsidiary or
of any Subsidiary in respect of Obligations of the Company or any Material
Operating Subsidiary and (c) Contingent Obligations of the Company and its
Subsidiaries supporting primary obligations of other Persons the aggregate
amount of which does not exceed $4,000,000 at any time.
<PAGE> 73
67
6.4 Limitation on Fundamental Changes. Enter into any merger or
consolidation or amalgamation, or liquidate, wind up or dissolve itself (or
suffer any liquidation or dissolution), or convey, sell, lease, assign, transfer
or otherwise dispose of its property, business or assets except the following:
(a) The Company and any of its Subsidiaries may sell or otherwise dispose
of (i) inventory and Cash Equivalents in the ordinary course of business,
(ii) tangible assets to be replaced in the ordinary course of business
within 12 months by other tangible assets of equal or greater value and
(iii) tangible assets that are no longer used or useful in the business of
the Company or the applicable Subsidiary, the fair market value of which
shall not exceed $2,000,000 in any fiscal year of the Company.
(b) Mergers constituting investments permitted by subsection 6.7.
(c) Licensing of products and intangible assets for fair value in the
ordinary course of business.
(d) So long as immediately before and after giving effect thereto no
Default or Event of Default exists, the Company and its Subsidiaries may
sell assets having a fair market value not exceeding $25,000,000 in any
fiscal year of the Company so long as the Net Proceeds thereof are applied
to repay the Loans as required by subsection 2.8(d).
(e) Asset Sales; provided, however, that
(i) the Net Proceeds from all such sales or dispositions shall not
exceed $150,000,000 in the aggregate during the term of this Agreement;
(ii) the consideration received by the Company or its Subsidiaries
from each such sale or disposition is at least equal to the fair market
value of the assets sold or disposed of in such sale or disposition;
(iii) the Net Proceeds from such sale or disposition in each case
shall be applied in accordance with subsection 2.8(d); and
(iv) any evidence of indebtedness referred to in the definition of
Net Proceeds shall be pledged in accordance with the provisions of such
definition.
(f) Any Subsidiaries of the Company may be merged or consolidated with or
into the Company (provided that the continuing or surviving corporation
shall be the Company) or with or into any one or more wholly-owned
Subsidiaries of the
<PAGE> 74
68
Company (provided that a wholly-owned Subsidiary shall be the continuing
or surviving corporation and that any such wholly-owned Subsidiary shall
be organized under a state of the United States).
(g) Any wholly-owned Subsidiary may sell, lease, transfer or otherwise
dispose of any or all of its assets (upon voluntary liquidation or
otherwise) to the Company or a wholly-owned Subsidiary of the Company.
(h) The Company may merge with the Purchaser pursuant to, and in
accordance with, the Merger Agreement.
6.5 Distributions. During such time as a Default or an Event of Default
shall have occurred and be continuing, or if a Default or Event of Default would
result therefrom, (a) declare or pay any dividends, (b) purchase, redeem,
retire, defease or otherwise acquire for value any of its capital stock or any
warrants, rights or options to acquire such capital stock, now or hereafter
outstanding, (c) return any capital to its stockholders as such, (d) make any
distribution of assets, capital stock, warrants, rights, options, obligations or
securities to its stockholders as such, (e) issue or sell any capital stock or
any warrants, rights or options to acquire such capital stock or (f) permit any
of its Subsidiaries to purchase, redeem, retire, defease or otherwise acquire
for value any capital stock of the Company or any warrants, rights or options to
acquire such capital stock or to issue or sell any capital stock or any
warrants, rights or options to acquire such capital stock; provided, however,
that notwithstanding the foregoing provisions of this subsection 6.5, but in any
event subject to the other provisions of this Agreement, during such time as a
Default or an Event of Default shall have occurred and be continuing, or if a
Default or Event of Default would result therefrom, the Company (i) may make any
dividend payable solely in shares of its common stock and (ii) may pay dividends
in an aggregate amount during any calendar year not to exceed the lesser of: (x)
twenty ($.20) cents per share of outstanding common stock and (y) $4,000,000.
6.6 Limitation on Dividend Restrictions Regarding Subsidiaries. Except for
any limitation or restriction pursuant to any applicable law or pursuant to this
Agreement, permit any limitation or restriction to exist upon the ability of any
Subsidiary to declare or pay dividends in respect of the capital stock of such
Subsidiary, whether such limitation or restriction is imposed through a covenant
limiting dividends, through financial covenants or otherwise.
6.7 Prohibition on Investments, Acquisitions, Loans and Advances. Make any
advance, loan, extension of credit or capital contribution to, or purchase any
stock, bonds, notes, debentures or other securities of, or make any other
investment in, or purchase any assets constituting a going concern business
from, any Persons (all of the foregoing being herein called "investments"),
except:
<PAGE> 75
69
(a) extensions of trade credit in the ordinary course of business;
(b) investments in Cash Equivalents;
(c) loans and advances to employees of the Company or its Subsidiaries for
travel, entertainment, relocation and similar expenses or otherwise, in the
ordinary course of business;
(d) investments by the Company in its Subsidiaries and investments by such
Subsidiaries in the Company and in other Subsidiaries; provided that there
shall not be outstanding at any time Special Subsidiary Loans in an
aggregate principal amount in excess of $15,000,000;
(e) investments not to exceed (i) $50,000,000 in the aggregate during any
fiscal year of the Company and (ii) $100,000,000 in the aggregate during the
term of this Agreement (the amount of any such investment to be determined
at cost, which cost shall include the aggregate amount of any Indebtedness
assumed or given in connection therewith) in connection with the acquisition
of the stock of any corporation or of the assets of any Person, provided
that (w) such acquisition shall have been approved or otherwise endorsed by
the board of directors of such Person or not contested (if no board approval
is required), (x) such corporation or assets are, prior to such acquisition,
engaged or used, as the case may be, in a business of the type described in
subsection 5.5, (y) the Company shall be in pro forma compliance with the
covenants contained in subsections 6.9, 6.10, 6.11 and 6.12, calculated
based on the most recent financial statements delivered to the Agent and the
Bank pursuant to subsection 5.1, as though such acquisition had occurred at
the beginning of the four-quarter period ending on the last day of the most
recently completed fiscal quarter of the Company, and (z) immediately before
and after giving effect to such acquisition, no Default shall have occurred
and be continuing or would result therefrom;
(f) investments made with capital stock of the Company in connection with
the acquisition of the stock of any corporation which becomes a Subsidiary,
which thereupon shall be deemed to be a Material Operating Subsidiary, or of
the assets of any Person, provided that (i) such acquisition shall have been
approved or otherwise endorsed by the board of directors of such Person or
not contested (if no board approval is required) and (ii) such corporation
or assets are, prior to such acquisition, engaged or used, as the case may
be, in a business of the type described in subsection 5.5;
(g) investments made with common stock of the Company in connection with
the acquisition of the stock of any corporation which does not become a
<PAGE> 76
70
Subsidiary as a result of such acquisition, provided that the aggregate
amount of such investments shall not exceed $10,000,000 during the term of
this Agreement (the amount of the investment, in the case of each such
acquisition, being the market value, on the date of such acquisition, of the
common stock of the Company delivered as consideration in such acquisition);
(h) other investments (but not a Special Subsidiary Loan) not to exceed
$20,000,000 in the aggregate (valued at cost) at any one time outstanding
and (except in the case of United States government securities) not to
exceed $4,000,000 in the securities of any one issuer; and
(i) so long as no Default or Event of Default has occurred and is
continuing and so long as no Default or Event of Default would result
therefrom, investments by the Company and its Subsidiaries in Nortek;
provided that, notwithstanding the foregoing, during the occurrence and
continuance of a Default or Event of Default, or if a Default or Event of
Default would result therefrom, the Company and its Subsidiaries may make
investments in Nortek to the extent that the Company and its Subsidiaries
are otherwise permitted to make investments under this subsection 6.7.
6.8 Prohibition on Optional Prepayments. Prepay, purchase, redeem, retire,
defease or otherwise acquire, or make any optional payment on account of any
principal of, interest on, or premium payable in connection with the optional
prepayment, redemption or retirement of any of its Subordinated Indebtedness,
provided, however, that in each other case nothing in this subsection 6.8 shall
be deemed to prevent the Company from:
(a) making a commitment to prepay, redeem or otherwise acquire or pay any
Subordinated Indebtedness which by its terms is convertible into common
stock of the Company for the purpose of inducing the holders of such
Indebtedness to so convert such Indebtedness; and
(b) in connection with any induced conversions of convertible subordinated
Indebtedness, acquiring or paying any such Indebtedness which is not
converted into common stock of the Company as a result of such inducement,
provided that the aggregate amount of money expended by the Company and its
Subsidiaries in connection with such acquisition and payment does not exceed
the sum of (i) the net cash proceeds to the Company of any substantially
contemporaneous sale of its common stock, (ii) an amount equal to 2% of the
aggregate principal amount of the issue of convertible subordinated
Indebtedness being so acquired or paid outstanding immediately prior to the
public announcement by the Company of such acquisition or payment and (iii)
the fees and expenses incurred in connection with such acquisition or
payment.
<PAGE> 77
71
6.9 Consolidated Net Worth. Permit Consolidated Net Worth, at any time, to
be less than an amount equal to the amount by which $375,000,000 exceeds the
lesser of (a) losses on the sale of Non-Core Subsidiaries after the date hereof
and (b) $25,000,000.
6.10 Leverage Ratio. Permit the ratio (the "Leverage Ratio") of (a)
consolidated Indebtedness of the Company and its Subsidiaries to (b)
Consolidated EBITDA for the four most recent consecutive full fiscal quarters of
the Company at any time within any period set forth below to exceed the ratio
set forth below for such period:
<TABLE>
<CAPTION>
Quarter Ending On Maximum Leverage Ratio
----------------- ----------------------
<S> <C>
September 30, 1997 3.25:1.00
December 31, 1997 3.00:1.00
March 31, 1998 3.00:1.00
June 30, 1998 3.00:1.00
September 30, 1998 3.00:1.00
December 31, 1998 2.75:1.00
March 31, 1999 2.75:1.00
June 30, 1999 2.50:1.00
September 30, 1999 2.50:1.00
December 31, 1999 2.50:1.00
March 31, 2000 2.50:1.00
June 30, 2000 and thereafter 2.00:1.00
</TABLE>
6.11 Interest Coverage Ratio. Permit the ratio of (a) Consolidated EBITDA
to (b) Interest Expense for the four most recent consecutive full fiscal
quarters of the Company at any time to be less than 3.50:1.00.
6.12 Current Ratio. Permit the ratio of Consolidated Current Assets to
Consolidated Current Liabilities at any time to be less than 2.0 to 1.0.
6.13 Intentionally Omitted.
6.14 Amendment, Etc. of Related Documents. Cancel or terminate any Related
Document or consent to or accept any cancellation or termination thereof, amend,
modify or change in any manner any term or condition of any Related Document or
give any consent, waiver or approval thereunder, waive any default under or any
breach of any term or condition of any Related Document, agree in any manner to
any other amendment, modification or change of any term or condition of any
Related Document or take any other action in connection with any Related
Document, in each case, that would materially
<PAGE> 78
72
adversely affect the interest or rights of the Company or any Subsidiary
thereunder or that would materially adversely affect the rights or interests of
the Agent or any Bank under the Loan Documents.
6.15 Fiscal Year. Change its fiscal year, except (a) to conform to the
fiscal year of Nortek following the Merger or (b) with the consent of the Agent,
which will not be unreasonably withheld.
6.16 Transactions with Affiliates. Except as otherwise permitted by this
Agreement, directly or indirectly: (a) make any investment in an Affiliate
except that any investments permitted under subsection 6.7 shall be permitted
hereunder; (b) transfer, sell, lease, assign or otherwise dispose of any assets
to an Affiliate; (c) merge into or consolidate with or purchase or acquire
assets from an Affiliate; or (d) enter into any other transaction directly or
indirectly with any Affiliate; provided, however, that: (i) payments on
investments permitted by subsection 6.7 shall be permitted hereunder, (ii) any
Affiliate who is a natural person may serve as an employee or director of the
Company, any Subsidiary, Nortek or any of its Subsidiaries and receive such
compensation and benefits for his services in such capacity as the Board of
Directors of the Company or such Subsidiary shall in good faith determine, (iii)
any merger permitted under subsection 6.4 shall be permitted hereunder, (iv) any
dividend or other distribution permitted under subsection 6.5 shall be permitted
hereunder and (v) the Company or any Subsidiary may enter into any transaction
with an Affiliate if the monetary or business consideration arising therefrom
would be substantially as advantageous to the Company or a Subsidiary as the
monetary or business consideration that would reasonably be expected by the
Company or such Subsidiary to be obtained in a comparable arm's length
transaction with a Person not an Affiliate.
6.17 Ownership of Designated Subsidiaries. Cease to own all of the issued
and outstanding capital stock of any Designated Subsidiary so long as any such
Subsidiary continues to be a Designated Subsidiary.
6.18 Limitation on Capital Expenditures. Make Capital Expenditures (i) in
excess of $125,000,000 during the five-year period ending with the Termination
Date, (ii) in excess of $37,500,000 during any fiscal year which follows the
1996 fiscal year, or (iii) in excess of $56,250,000 during any period of two
consecutive fiscal years following the 1996 fiscal year.
6.19 Financing Leases. Create, incur, assume or suffer to exist any
Financing Leases obligations that would cause the direct and contingent
liabilities of the Company and its Subsidiaries, on a consolidated basis, in
respect of all such Financing Leases to exceed $35,000,000 at any time
outstanding.
<PAGE> 79
73
6.20 Change in Nature of Business. Engage in any business other than the
Business of the Company.
6.21 Charter Amendments. Amend its certificate of incorporation or bylaws
in any manner that would materially adversely affect the rights of the Agent and
the Banks under the Loan Documents.
6.22 Accounting Changes. Make or permit any change in accounting policies
or reporting practices, except as required by generally accepted accounting
principles and except for the purpose of conforming such policies and practices
of the Company with those of Nortek following the Merger.
6.23 Intentionally Omitted.
6.24 Negative Pledge. Enter into or suffer to exist any agreement
prohibiting or conditioning the creation or assumption of any Lien upon any of
its property or assets other than (i) in favor of the Secured Parties or (ii) in
connection with the Nortek Indentures.
6.25 Formation of Subsidiaries. Organize or invest in any new Material
Operating Subsidiary or permit any existing Subsidiary to become a Material
Operating Subsidiary unless such Subsidiary shall have executed and delivered a
Guaranty and a Security Agreement supplement, each in form and substance
satisfactory to the Agent, and shall have become a Guarantor and a Collateral
Grantor under the Loan Documents.
SECTION 7. EVENTS OF DEFAULT
Upon the occurrence and during the continuance of any of the following
events:
(a) The Company or any Designated Subsidiary shall fail to pay any
principal of any Note or any Unpaid Drawing when due in accordance with the
terms of the Loan Documents or the Company or any other Loan Party shall
fail to pay any interest, any fee or any other payment under any Loan
Document, the amount of which is provided for herein, in the Fee Letter or
in such Loan Document, within five (5) Business Days after any such amount
becomes due in accordance with the terms hereof or thereof; or
(b) Any representation or warranty made or deemed made by the Company or
any of its Subsidiaries in this Agreement, any other Loan Document or in
any certificate, document or financial or other statement furnished at any
time under or in
<PAGE> 80
74
connection herewith or therewith shall prove to have been incorrect in any
material respect on or as of the date made, deemed made or confirmed; or
(c) The Company or any of its Subsidiaries shall default in the
observance or performance of any covenant or agreement contained in
subsection 5.8(a) or Section 6 of this Agreement; or
(d) The Company or any of its Subsidiaries shall default in the
observance or performance of any other covenant or agreement contained in
this Agreement, or contained in any of the other Loan Documents (other than
as set forth in clauses (a) through (c) of this Section 7) and such default
shall continue unremedied for a period of 30 days after the earlier of the
date on which (A) a Responsible Officer becomes aware of such failure or
(B) written notice thereof shall have been given to the Company by the
Agent or any Bank; or
(e) The Company or any of its Subsidiaries shall (i) default in the
payment of principal of or interest on any Indebtedness (other than the
Notes) which Indebtedness is in an aggregate principal amount equal to or
greater than $10,000,000 or in the payment of any Contingent Obligation
(other than any Guaranty) relating to any primary obligation the aggregate
principal amount of which is equal to or greater than $10,000,000, beyond
the period of grace, if any, provided in the instrument or agreement under
which such Indebtedness or Contingent Obligation was created or (ii)
default in the observance or performance of any other agreement or
condition relating to any such Indebtedness (other than the Notes) or
Contingent Obligation (other than any Guaranty) or contained in any
instrument or agreement evidencing, securing or relating thereto, or
contained in any Nortek Indenture, or any other event shall occur or
condition exist, the effect of which default or other event or condition
described in either clause (i) or (ii) of this paragraph is to cause, or to
permit the holder or holders of such Indebtedness or beneficiary or
beneficiaries of such Contingent Obligation (or a trustee or agent on
behalf of such holder or holders or beneficiary or beneficiaries) to cause
such Indebtedness to become due prior to its stated maturity or such
Contingent Obligation to become payable; or
(f) (i) The Company or any of its Subsidiaries shall commence any
case, proceeding or other action (A) under any existing or future law of
any jurisdiction, domestic or foreign, relating to bankruptcy, insolvency,
reorganization or relief of debtors, seeking to have an order for relief
entered with respect to it, or seeking to adjudicate it as bankrupt or
insolvent, or seeking reorganization, arrangement, adjustment, wind-up,
liquidation, dissolution, composition or other relief with respect to it or
its debts, or (B) seeking appointment of a receiver, trustee, custodian or
other similar official for it or for all or any substantial part of its
assets, or the Company or any of its Subsidiaries shall make a general
assignment for the benefit of its creditors;
<PAGE> 81
75
or (ii) there shall be commenced against the Company or any of its
Subsidiaries any such case, proceeding or other action referred to in
clause (i) which (A) results in the entry of an order for relief or any
such adjudication or appointment or (B) remains undismissed, unstayed,
undischarged or unbonded for a period of 60 days; or (iii) there shall be
commenced against the Company or any of its Subsidiaries any case,
proceeding or other action seeking issuance of a warrant of attachment,
execution, distraint or similar process against all or any substantial part
of its assets which results in the entry of an order for any such relief
which shall not have been vacated, discharged, or stayed or bonded pending
appeal within 60 days from the entry thereof; or (iv) the Company or any of
its Subsidiaries shall take any action authorizing, or in furtherance of,
or indicating its consent to, approval of, or acquiescence in, any of the
acts set forth above in clause (i), (ii) or (iii) above; or (v) the Company
or any of its Subsidiaries shall generally not, or shall be unable to, or
shall admit in writing its inability to, pay its debts as they become due;
or
(g) One or more judgments or decrees shall be entered against the
Company or any of its Subsidiaries involving in the aggregate a liability
(to the extent not paid or fully covered by insurance) of $5,000,000 or
more and all such judgments or decrees shall not have been vacated,
satisfied, discharged, stayed or bonded pending appeal within 60 days from
the entry thereof; or
(h) (i) Any Person shall engage in any "prohibited transaction" (as
defined in Section 406 of ERISA or Section 4975 of the Code) involving any
Plan or engage in a transaction which could subject such person to
liability under Section 502(l) of ERISA, (ii) any "accumulated funding
deficiency" (as defined in Section 302 of ERISA), whether or not waived,
shall exist with respect to any Single Employer Plan, (iii) a Reportable
Event shall occur with respect to, or proceedings shall commence to have a
trustee appointed, or a trustee shall be appointed, to administer or to
terminate, any Single Employer Plan, which Reportable Event or institution
of proceedings or appointment of a trustee is, in the reasonable opinion of
the Agent, likely to result in the termination of any Single Employer Plan
for purposes of Title IV of ERISA, (iv) any Single Employer Plan shall,
other than in a standard termination, terminate for purposes of Title IV of
ERISA, or the Company, any Subsidiary or any Commonly Controlled Entity
shall file a notice of intent to terminate a Single Employer Plan in a
distress termination under Section 4041(c) of ERISA, or (v) the Company or
any Commonly Controlled Entity shall, or is, in the reasonable opinion of
the Agent, likely to, incur any liability in connection with its failure to
meet any obligation arising out of a withdrawal from, or the Insolvency or
Reorganization of, a Multiemployer Plan and in each case in clauses (i)
through (v) above, such event or condition, together with all other such
events or conditions, if any, which have occurred or exist could reasonably
be expected to subject the
<PAGE> 82
76
Company or any of its Subsidiaries to any tax, penalty or other liabilities
that in the aggregate could reasonably be expected to have a Material
Adverse Effect; or
(i) A Change of Control shall occur; or
(j) any non-monetary judgment or decree shall be rendered against the
Company or any of its Subsidiaries that could reasonably be likely to have
a Material Adverse Effect, and such judgment or decree shall not have been
vacated, satisfied, discharged, stayed or bonded pending appeal within 60
days from the entry thereof; or
(k) (i) any provision of any Loan Document after delivery thereof
pursuant to subsection 4.1 shall for any reason (other than pursuant to the
terms thereof) cease to be valid and binding on, or enforceable against,
any of the Company or its Subsidiaries which are party thereto; or (ii) any
Security Document after delivery thereof pursuant to subsection 4.1 shall
for any reason (other than pursuant to the terms thereof) cease to create a
valid and perfected first priority (subject, during the first 45 days after
the Closing Date (or such later date as agreed by the Agent and the Company
as specified in subsection 5.16) only to the completion of the actions
required under subsection 5.16) lien on and security interest in the
Collateral purported to be covered thereby; or (iii) in the case of clause
(i) or (ii) above, the Company or any Subsidiary shall so state in writing;
then, and in any such event, (x) if such event is an Event of Default specified
in paragraph (f) above with respect to the Company, automatically the
Commitments shall immediately terminate and the Loans hereunder (with accrued
interest thereon) and all other amounts owing under this Agreement and the Notes
shall immediately become due and payable, and (y) if such event is any other
Event of Default, either or both of the following actions may be taken: (1) with
the consent of the Required Banks, the Agent may, or upon the request of the
Required Banks, the Agent shall, by notice to the Company, declare the
Commitments to be terminated forthwith, whereupon the Commitments shall
immediately terminate; and (2) with the consent of the Required Banks, the Agent
may, or upon the request of the Required Banks, the Agent shall, declare the
Loans (with accrued interest thereon) and all other amounts owing under this
Agreement and the Notes to be due and payable forthwith, whereupon the same
shall immediately become due and payable. In addition, after the occurrence and
during the continuance of an Event of Default, the Company and each Subsidiary
shall, promptly upon demand by the Agent, deliver to the Agent cash collateral
in such form as reasonably requested by the Agent, for deposit in a cash
collateral account, in a maximum amount equal to the undrawn amount of all L/Cs
then outstanding, to be maintained by the Agent as an interest-bearing deposit
account under the sole dominion and control of the Agent as pledgee, and shall
execute and deliver such documents and instruments (including a pledge
agreement) as the Agent may reasonably request in order to
<PAGE> 83
77
perfect or protect the Agent's lien and security interest in such collateral
account to secure payment of the Reimbursement Obligations with respect to L/Cs
then outstanding. Such deposit shall be held by the Agent as such security for
the ratable benefit of the Banks. Upon cure of the Event of Default, all such
cash collateral (and interest accrued thereon) shall promptly be returned to the
Company and its Subsidiaries). Except as expressly provided above in this
Section 7, presentment, demand, protest and all other notices of any kind are
hereby expressly waived.
SECTION 8. THE AGENT
8.1 Appointment. Each Bank (in its capacity as a Bank and a
potential Hedge Bank) hereby irrevocably designates and appoints Fleet as the
Agent for such Bank under this Agreement and the other Loan Documents and each
such Bank irrevocably authorizes Fleet, as Agent for such Bank, to take such
action on its behalf under the provisions of this Agreement and the other Loan
Documents and to exercise such powers and perform such duties as are expressly
delegated to the Agent by the terms of this Agreement and the other Loan
Documents, together with such other powers as are reasonably incidental thereto.
Notwithstanding any provision to the contrary elsewhere in this Agreement, the
Agent shall not have any duties or responsibilities, except those expressly set
forth herein, or any fiduciary relationship with any Bank, and no implied
covenants, functions, responsibilities, duties, obligations or liabilities shall
be read into this Agreement or otherwise exist against the Agent.
8.2 Delegation of Duties. The Agent may execute any of its duties
under this Agreement and the other Loan Documents by or through agents or
attorneys-in-fact and shall be entitled to advice of counsel concerning all
matters pertaining to such duties. The Agent shall not be responsible for the
negligence or misconduct of any agents or attorneys-in-fact selected by it with
reasonable care.
8.3 Exculpatory Provisions. Neither the Agent nor any of its
officers, directors, employees, agents, attorneys-in-fact or Affiliates shall be
(a) liable for any action lawfully taken or omitted to be taken by it or such
Person under or in connection with this Agreement or any of the other Loan
Documents (except for its or such Person's own gross negligence or willful
misconduct), or (b) responsible in any manner to any of the Banks for any
recitals, statements, representations or warranties made by the Company, or any
Subsidiary or any officer thereof contained in this Agreement or any of the
other Loan Documents or in any certificate, report, statement or other document
referred to or provided for in, or received by the Agent under or in connection
with, this Agreement or any of the other Loan Documents or for the value,
validity, effectiveness, genuineness, enforceability or sufficiency of this
Agreement or any of the other Loan Documents or for any failure of the Company
or any Subsidiary to perform its obligations hereunder or thereunder. The Agent
shall be under no obligation to any Bank to ascertain or to inquire as to the
observance or
<PAGE> 84
78
performance of any of the agreements contained in, or conditions of, this
Agreement or any of the other Loan Documents, or to inspect the properties,
books or records of the Company or any Subsidiary.
8.4 Reliance by Agent. The Agent shall be entitled to rely, and
shall be fully protected in relying, upon any Note, resolution, notice, consent,
certificate, affidavit, letter, cablegram, telegram, telecopy, or teletype
message, statement, order or other document or conversation believed by it to be
genuine and correct and to have been signed, sent or made by the proper Person
or Persons and upon advice and statements of legal counsel (including, without
limitation, counsel to the Company and any Subsidiary), independent accountants
and other experts selected by the Agent. The Agent may deem and treat the payee
of any Note as the owner thereof for all purposes unless a written notice of
assignment, negotiation or transfer thereof shall have been filed with the
Agent. The Agent shall be fully justified in failing or refusing to take any
action under this Agreement and the other Loan Documents unless it shall first
receive such advice or concurrence of the Required Banks as it deems appropriate
or it shall first be indemnified to its satisfaction by the Banks against any
and all liability and expense which may be incurred by it by reason of taking or
continuing to take any such action. The Agent shall in all cases be fully
protected in acting, or in refraining from acting, under this Agreement and the
other Loan Documents in accordance with a request of the Required Banks, and
such request and any action taken or failure to act pursuant thereto shall be
binding upon all the Banks and all future holders of the Notes.
8.5 Notice of Default. The Agent shall not be deemed to have
knowledge or notice of the occurrence of any Default or Event of Default
hereunder unless the Agent has received notice from a Bank, the Company or any
Subsidiary referring to this Agreement, describing such Default or Event of
Default and stating that the notice is a "notice of default". In the event that
the Agent receives such a notice, the Agent shall give prompt notice thereof to
the Banks. The Agent shall take such action with respect to such Default or
Event of Default as shall be reasonably directed by the Required Banks; provided
that unless and until the Agent shall have received such directions, the Agent
may (but shall not be obligated to) take such action, or refrain from taking
such action, with respect to such Default or Event of Default as it shall deem
advisable in the best interests of the Banks.
8.6 Non-Reliance on Agent and Other Banks. Each Bank expressly
acknowledges that neither the Agent nor any of its officers, directors,
employees, agents, attorneys-in-fact or Affiliates has made any representations
or warranties to it and that no act by the Agent hereinafter taken, including
any review of the affairs of the Company or any Subsidiary, shall be deemed to
constitute any representation or warranty by the Agent to any Bank. Each Bank
represents to the Agent that it has, independently and without reliance upon
the Agent or any other Bank, and based on such documents and information as it
has deemed appropriate, made its own appraisal of and investigation into the
business,
<PAGE> 85
79
operations, property, performance and other condition (financial or otherwise)
and creditworthiness of the Company and each Subsidiary and made its own
decision to make its Loans hereunder and enter into this Agreement. Each Bank
also represents that it will, independently and without reliance upon the Agent
or any other Bank, and based on such documents and information as it shall deem
appropriate at the time, continue to make its own credit analysis, appraisals
and decisions in taking or not taking action under this Agreement, and to make
such investigation as it deems necessary to inform itself as to the business,
operations, property, performance and other condition (financial or otherwise)
and creditworthiness of the Company and each Subsidiary. Except for notices,
reports and other documents expressly required to be furnished to the Banks by
the Agent hereunder, the Agent shall have no duty or responsibility to provide
any Bank with any credit or other information concerning the business,
operations, property, performance and other condition (financial or otherwise)
or creditworthiness of the Company and its Subsidiaries which may come into the
possession of the Agent or any of its officers, directors, employees, agents,
attorneys-in-fact or Affiliates.
8.7 Indemnification. The Banks agree to indemnify the Agent in its
capacity as such (to the extent not reimbursed by the Company and without
limiting the obligation of the Company to do so), ratably according to the
respective amounts of their Commitments, from and against any and all
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements of any kind whatsoever which may at any time
(including without limitation at any time following the payment of the Notes) be
imposed on, incurred by or asserted against the Agent in any way relating to or
arising out of this Agreement or any of the other Loan Documents or any
documents contemplated by or referred to herein or the transactions contemplated
hereby or any action taken or omitted by the Agent under or in connection with
any of the foregoing; provided that no Bank shall be liable for the payment of
any portion of such liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements resulting solely
from the Agent's gross negligence or willful misconduct. The agreements in this
subsection shall survive the payment of the Notes and all other amounts payable
hereunder.
8.8 Agent in Its Individual Capacity. The Agent and its Affiliates
may make loans to, accept deposits from, issue or maintain L/Cs on account of
and generally engage in any kind of business with the Company and its
Subsidiaries as though the Agent were not the Agent hereunder. With respect to
its Loans made or renewed by it and any Note issued to it, the Agent shall have
the same rights and powers under this Agreement as any Bank and may exercise the
same as though it were not the Agent, and the terms "Bank" and "Banks" shall
include the Agent in its individual capacity.
8.9 Successor Agent. The Agent may resign as an Agent upon 20
days' notice to the Banks. If the Agent shall resign as the Agent under this
Agreement, then the
<PAGE> 86
80
Required Banks shall appoint from among the Banks a successor agent for the
Banks which successor agent shall be approved by the Company, whereupon such
successor agent shall succeed to the rights, powers and duties of the Agent
which resigned, and the term "Agent", shall mean such successor agent effective
upon its appointment, and the former Agent's rights, powers and duties as the
Agent shall be terminated, without any other or further act or deed on the part
of such former Agent or any of the parties to this Agreement or any holders of
the Notes; provided, however, that upon the occurrence and during the
continuance of an Event of Default the approval of the Company of the successor
agent shall not be required hereunder. Upon its resignation hereunder, each
Agent shall execute and deliver any documents relating to its actions as Agent
which may be necessary to permit the successor agent to act as Agent hereunder.
After any retiring Agent's resignation hereunder as the Agent, the provisions of
this subsection 8.9 shall inure to its benefit as to any actions taken or
omitted to be taken by it while it was the Agent under this Agreement.
8.10 Failure to Act. Except for action expressly required of the
Agent hereunder, the Agent shall in all cases be fully justified in failing or
refusing to act hereunder unless it shall be indemnified to its satisfaction by
the Banks against any and all liability and expense that may be incurred by it
by reason of taking or continuing to take any such action.
SECTION 9. MISCELLANEOUS
9.1 Amendments and Waivers. With the written consent of the
Required Banks, the Agent, the Company and the Designated Subsidiaries may, from
time to time, enter into written amendments, supplements or modifications hereto
for the purpose of adding any provisions to this Agreement or the other Loan
Documents or changing in any manner the rights of the Banks or the Company and
the Designated Subsidiaries hereunder, and the Agent may execute and deliver to
the Company and the Designated Subsidiaries a written instrument waiving, on
such terms and conditions as the Agent may specify in such instrument, any of
the requirements of this Agreement or the other Loan Documents or any Default or
Event of Default and its consequences; provided, however, that no such waiver
and no such amendment, supplement or modification shall (a) extend the maturity
of any Loan, or reduce the principal amount thereof, or change the amount or
termination date of any Bank's Commitment, or release, amend or modify any
Guaranty or any collateral covered by any of the Security Documents, or reduce
the interest rate or Facility Fee, Issuance Fee or Drawing Fee payable hereunder
or extend the time of payment of interest and any fees hereunder or the time of
reimbursement of any draws under L/Cs or amend the definition of "Required
Banks" or increase the L/C Sublimit, or amend, modify or waive any provision of
subsection 4.1, 4.2 or 5.16 or this subsection 9.1, or consent to the assignment
or transfer by the Company and each Designated Subsidiary of any of its rights
and obligations under this Agreement, in each case without the written consent
of all of the Banks, or (b) amend, modify or waive any provision of Section 8 or
otherwise affect the rights and obligations of the Agent under the Loan
Documents without the written consent of
<PAGE> 87
81
the then Agent (with any such change in any provision of Section 8 to be
effective prospectively only). Any such waiver and any such amendment,
supplement or modification shall be binding upon the parties to this Agreement
and all holders of the Notes. In the case of any waiver, the parties to this
Agreement shall be restored to their former position and rights hereunder and
under the outstanding Notes, and any Default or Event of Default waived shall be
deemed to be cured and not continuing; but no such waiver shall extend to any
subsequent or other Default or Event of Default, or impair any right consequent
thereon.
9.2 Notices. All notices, consents, requests and demands to or
upon the respective parties hereto to be effective shall be in writing or by
telegraph or telecopy and, unless otherwise expressly provided herein, shall be
deemed to have been duly given or made when delivered by hand, or four (4)
Business Days after deposit in the mail, registered mail, return receipt
requested, postage prepaid, or, in the case of telegraphic or telecopy notice,
when received, addressed as follows in the case of the Company and the
Designated Subsidiaries and the Agent, and as set forth on Schedule I in the
case of the other parties hereto, or to such address or other address as may be
hereafter notified by any of the respective parties hereto or any future holders
of the Notes:
The Company
or any
Designated
Subsidiary: Ply Gem Industries, Inc.
777 Third Avenue
New York, New York 10017
Attention: Treasurer
Telephone: (212) 832-1550
Telecopy: (212) 888-0472
With copies to: Charles M. Modlin, Esq.
EAB Plaza
12th Floor
West Tower
Uniondale, New York 11556-0132
Telephone: (516) 794-4600
Telecopy: (516) 794-4604
and
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82
Nortek, Inc.
50 Kennedy Plaza
Providence, Rhode Island
Attention: Richard J. Harris
Vice President
Telephone: (401) 751-1600
Telecopy: (401) 751-4724
and
Ropes & Gray
One International Place
Boston, Massachusetts 02110
Attention: Douglas N. Ellis, Jr., Esq.
Telephone: (617) 951-7000
Telecopy: (617) 951-7050
The Agent: Fleet National Bank
One Federal Street
Boston, Massachusetts 02211
Attention: John Mann, Agency Services
Telephone: (617) 346-0429
Telecopy: (617) 346-4682
and
Fleet National Bank
111 Westminster Street
Providence, Rhode Island 02903
Attention: Stephen Craven
Vice President
Telephone: 401-278-5913
Telecopy: 401-278-5726
with a copy to: Shearman & Sterling
599 Lexington Avenue
New York, New York 10022
Attention: Pamela Borgeson, Esq.
Telephone: (212) 848-7649
Telecopy: (212) 848-7179
<PAGE> 89
83
provided that any notice, request or demand to or upon the Agent or the Banks
pursuant to subsection 2.3, 2.6 or 2.8 shall not be effective until received.
9.3 No Waiver; Cumulative Remedies. No failure to exercise and no
delay in exercising, on the part of the Agent or any Bank, any right, remedy,
power or privilege hereunder, shall operate as a waiver thereof; nor shall any
single or partial exercise of any right, remedy, power or privilege hereunder
preclude any other or further exercise thereof or the exercise of any other
right, remedy, power or privilege. The rights, remedies, powers and privileges
herein provided are cumulative and not exclusive of any rights, remedies, powers
and privileges provided by law.
9.4 Survival of Representations and Warranties. All
representations and warranties made hereunder and in any document, certificate
or statement delivered pursuant hereto or in connection herewith shall survive
the execution and delivery of this Agreement and the Notes and the making of the
Loans and the issuance of L/Cs.
9.5 Payment of Expenses, Etc. The Company agrees (a) to pay or
reimburse the Agent for all its reasonable out-of-pocket costs and expenses
incurred in connection with the preparation, execution and delivery of, and any
amendment, supplement or modification to, this Agreement, the other Loan
Documents and any other documents prepared in connection herewith, and the
consummation of the transactions contemplated hereby and thereby, including,
without limitation, the reasonable fees and disbursements of counsel to the
Agent in connection therewith, all reasonable and customary syndication
expenses, including without limitation travel expenses incurred by the Agent in
connection with due diligence and syndication member and prospective member
meetings and typesetting duplication and binding expenses with respect to
materials for syndicate members, (b) to pay or reimburse each Bank and the Agent
for all its reasonable out-of-pocket costs and expenses incurred in connection
with the enforcement or preservation of any rights against the Company or any of
its Subsidiaries under this Agreement, the other Loan Documents and any such
other documents, (c) to pay, indemnify, and to hold each Bank and the Agent and
each of their Affiliates and their officers, directors, employees, agents and
advisors (each an "Indemnified Party") harmless from, any and all recording and
filing fees and any and all liabilities with respect to, or resulting from any
delay in paying, stamp, excise and other taxes, if any, if legal, which may be
payable or reasonably determined to be payable in connection with the execution
and delivery of, or consummation of any of the transactions contemplated by, or
any amendment, supplement or modification of, or any waiver or consent under or
in respect of, this Agreement, the other Loan Documents and any such other
documents, and (d) to pay, indemnify, and hold each Indemnified Party harmless
from and against any and all other liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements of any
kind or nature whatsoever with respect to, or arising out of, the Commitments,
Loans and L/Cs, the actual or proposed use of proceeds thereof, the execution,
delivery, enforcement and performance of this
<PAGE> 90
84
Agreement, the other Loan Documents or the consummation of the transactions
contemplated thereby (including without limitation; the Tender Offer and the
Merger) or related to any Environmental Liability or Environmental Proceeding
(other than costs, expenses and disbursements incurred by Banks other than the
Agent in negotiating and closing the transactions contemplated hereby) (all the
foregoing, collectively, the "indemnified liabilities"); provided that the
Company shall have no obligation hereunder to any Indemnified Party with respect
to indemnified liabilities arising from (i) the gross negligence or willful
misconduct of such Indemnified Party, (ii) legal proceedings commenced against
such Indemnified Party by any security holder or creditor of such Indemnified
Party arising out of and based upon rights afforded any such security holder or
creditor solely in its capacity as such, (iii) any breach of obligations of any
Bank (including, without limitation, the Agent in its capacity as such) to any
other Bank or (iv) a successful claim by the Company or any of its Subsidiaries
against such Indemnified Party as determined in a final, non appealable judgment
by a court of competent jurisdiction. The Company acknowledges that the Agent
and the Banks shall, prior to foreclosure of, or exercise by them of proxy
rights with respect to, any of the shares of Subsidiaries securing the Loans,
have no liability or responsibility for either:
(A) damage, loss or injury to human health, the environment or
natural resources caused by the presence, disposal, release or
threatened release of Hazardous Materials on any part of the real
property owned, operated or leased by the Company or its Subsidiaries;
or
(B) abatement and/or clean-up required under any applicable
Environmental Laws and Regulations for a release, threatened release or
disposal of any Hazardous Materials located at the real property owned,
operated or leased by the Company or its Subsidiaries or used by or in
connection with the Company's or any Subsidiary's business.
The agreements in this subsection shall survive repayment of the Notes and all
other amounts payable hereunder; provided, however, that nothing herein shall
affect the provisions relating to 180-day periods contained in subsections 2.15,
2.16 and 2.22.
9.6 Binding Effect; No Assignment or Delegation by Company or any
Designated Subsidiary. This Agreement shall be binding upon and inure to the
benefit of the Company and each Designated Subsidiary and their successors and
to the benefit of the Banks and the Agent and their respective successors and
assigns. The rights and obligations of the Company and each Designated
Subsidiary under this Agreement shall not be assigned or delegated without the
prior written consent of the Agent, and each Bank, and any purported assignment
or delegation without such consent shall be void.
<PAGE> 91
85
9.7 Assignments and Participations by Banks; Pledge to Federal
Reserve Bank. (a) Each Bank may assign to one or more banks or other entities
all or a portion of its rights and obligations under this Agreement (including,
without limitation, all or a portion of its Commitment, the Loans owing to it,
and the Note or Notes held by it); provided, however, that: (i) each such
assignment shall be of a constant, and not a varying, percentage of all of the
assigning Bank's rights and obligations under this Agreement, (ii) except in
connection with the assignment by any Bank of its entire Commitment, the amount
of the Commitment of the assigning Bank being assigned pursuant to each such
assignment (determined as of the date of the Assignment and Acceptance with
respect to such assignment) shall in no event be less than $5,000,000 and shall
be an integral multiple of $1,000,000, and (iii) each such assignment shall be
to an Eligible Assignee. Upon the execution, delivery, acceptance and recording,
from and after the effective date specified in each Assignment and Acceptance,
which effective date shall be at least three Business Days after the execution
thereof: (x) the assignee thereunder shall be a party hereto and, to the extent
that rights and obligations hereunder have been assigned to it pursuant to such
Assignment and Acceptance, have the rights and obligations of a Bank hereunder,
and (y) the Bank assignor thereunder shall, to the extent that rights and
obligations hereunder have been assigned by it pursuant to such Assignment and
Acceptance, relinquish its rights and be released from its obligations under
this Agreement (and, in the case of an Assignment and Acceptance covering all or
the remaining portion of an assigning Bank's rights and obligations under this
Agreement, such Bank shall cease to be a party hereto); and provided further,
that the Company shall not be required to pay any amount under this Agreement
that is greater than the amount which it would otherwise have been required to
pay had such assignment not been made.
(b) By executing and delivering an Assignment and Acceptance, the
Bank assignor thereunder and the assignee thereunder confirm to and agree with
each other and the other parties hereto as follows: (i) other than as provided
in such Assignment and Acceptance, such assigning Bank makes no representation
or warranty and assumes no responsibility with respect to any statements,
warranties or representations made in or in connection with this Agreement or
the execution, legality, validity, enforceability, genuineness, sufficiency or
value of this Agreement or any other instrument or document furnished pursuant
hereto; (ii) such assigning Bank makes no representation or warranty and assumes
no responsibility with respect to the financial condition of the Company and
each Designated Subsidiary or the performance or observance by the Company and
each Designated Subsidiary of any of their respective obligations under this
Agreement or any other instrument or document furnished pursuant hereto; (iii)
such assignee confirms that it has received a copy of this Agreement, together
with copies of such financial statements and such other documents and
information as it has deemed appropriate to make its own credit analysis and
decision to enter into such Assignment and Acceptance; (iv) such assignee will,
independently and without reliance upon the Agent, such assigning Bank or any
other Bank and based on such documents and information as it shall deem
appropriate at the time,
<PAGE> 92
86
continue to make its own credit decisions in taking or not taking action under
this Agreement; (v) such assignee confirms that it is an Eligible Assignee; (vi)
such assignee appoints and authorizes the Agent to take such action as agent on
its behalf and to exercise such powers under this Agreement as are delegated to
the Agent by the terms hereof, together with such powers as are reasonably
incidental thereto; and (vii) such assignee agrees that it will perform in
accordance with their terms all of the obligations which by the terms of this
Agreement are required to be performed by it as a Bank. Neither the Company nor
any Subsidiary shall have any liability or obligation under this subsection
9.7(b).
(c) Upon its receipt of an Assignment and Acceptance executed by
an assigning Bank and an assignee representing that it is an Eligible Assignee,
together with any original Note subject to such assignment, the Agent shall
accept such Assignment and Acceptance, and give prompt notice thereof to the
Company. Within five Business Days after its receipt of such notice, each of the
Company and each Designated Subsidiary, at its own expense, shall execute and
deliver to the Agent in exchange for the surrendered Note a new Note to the
order of such Eligible Assignee in an amount equal to the Commitment assumed by
it pursuant to such Assignment and Acceptance and, if the assigning Bank has
retained a Commitment hereunder, a new Note to the order of the assigning Bank
in an amount equal to the Commitment retained by it hereunder. Such new Note(s)
shall be in an aggregate principal amount equal to the aggregate principal
amount of such surrendered Note, shall be dated the effective date of such
Assignment and Acceptance and shall otherwise be in substantially in the form of
Exhibit A.
(d) The Company and each Designated Subsidiary acknowledges that
any Bank may, in the ordinary course of its commercial banking business and in
accordance with applicable law, at any time: (i) sell to one or more Eligible
Participants participating interests in any Loan owing to such Bank, any Note
held by such Bank, any Commitment of such Bank or any other interest of such
Bank hereunder (each a "Participating Interest"), without in any such case the
need for any approval by the Company, and (ii) subject to the Company's prior
approval in each instance (but only when no Event of Default shall have occurred
and is continuing), which approval shall not be unreasonably withheld, sell to
one or more banks or other entities that do not, directly or indirectly, engage
in business competitive with the business of the Company and its Subsidiaries
(each such participant and each Eligible Participant is hereinafter referred to
individually as a "Participant" and collectively as the "Participants") a
Participating Interest provided that no Participant (other than an Affiliate of
such Bank which is a Subsidiary of such Bank or the parent holding company of
such Bank or a Subsidiary of such holding company) shall be entitled under the
relevant participation agreement or any associated agreement to require such
Bank to take or omit to take any action hereunder, except, to the extent that
any Participant has any interest directly affected thereby, action that extends
the final maturity of any Loan, reduces the rate or extends the time of payment
of interest on any Loan, extends the time for payment or reduces any fee payable
to such Bank hereunder, reduces the principal amount of any Loan
<PAGE> 93
87
or releases all or substantially all of the Collateral described in the Security
Agreement. In the event of any such sale by such Bank of participating interests
to a Participant, such Bank's obligations under this Agreement shall remain
unchanged, such Bank shall remain solely responsible for the performance
thereof, such Bank shall remain the holder of any such Note for all purposes
under this Agreement, and the Company shall continue to deal solely and directly
with such Bank in connection with such Bank's rights and obligations under this
Agreement. The Company and each Designated Subsidiary also agrees that each
Participant shall be entitled to the benefits of subsections 2.13, 2.15, 2.16
and 2.22 with respect to its participation in the Commitments, and the
Eurodollar Loans outstanding from time to time; provided that no Participant
shall be entitled to receive any greater amount pursuant to such subsections
than the transferor Bank would have been entitled to receive in respect of the
amount of the participation transferred by such transferor Bank to such
Participant had no such transfer occurred.
(e) The Company and each Designated Subsidiary authorizes each
Bank to disclose to any Eligible Assignee or Participant or potential Eligible
Assignee or Participant any and all financial information in its possession
concerning the Company and each Designated Subsidiary which has been delivered
to it by the Company and each Designated Subsidiary pursuant to this Agreement
or which has been delivered to it by the Company and each Designated Subsidiary
in connection with its credit evaluation of the Company prior to entering into
this Agreement; provided that the intended recipient first delivers
confidentiality undertakings for the benefit of the Company to the effect of
subsection 9.11 with respect to non-public information.
(f) If, pursuant to subsection 9.7(a) or (b), any interest in this
Agreement, a participation agreement or any Note is transferred to any
Participant or Eligible Assignee which is organized under the laws of any
jurisdiction other than the United States or any State thereof, the transferor
Bank shall cause such Participant or Eligible Assignee concurrently with the
effectiveness of such transfer, (i) to represent to the transferor Bank for the
benefit of the Company and its Subsidiaries that under applicable law and
treaties no taxes will be required to be withheld by the transferor Bank or the
Company or each Designated Subsidiary with respect to any Loans, (ii) to furnish
to the Bank and the Company either U.S. Internal Revenue Service Form 4224 or
U.S. Internal Revenue Service Form 1001 (wherein such Participant claims
entitlement to complete exemption from U.S. federal withholding tax on all
interest payments hereunder) and (iii) to agree to provide the transferor Bank a
new Form 4224 or Form 1001 upon the obsolescence of any previously delivered
form and comparable statements in accordance with applicable U.S. laws and
regulations and amendments duly executed and completed by such Participant, and
to comply from time to time with all applicable U.S. laws and regulations with
regard to such withholding tax exemption.
<PAGE> 94
88
(g) No person to whom a participation has been granted or who has
received an assignment hereunder may grant any participation or make any
assignment unless such participation or assignment would be permitted under this
subsection 9.7 if made by a Bank.
(h) Notwithstanding anything to the contrary herein, no assignment
or participation will be permitted if, after giving effect thereto, the
aggregate Commitment of the transferee (if other than the Agent in its capacity
as a Bank), together with such transferee's participating interest in the
Commitments, would exceed 25% of the aggregate Commitments.
(i) Notwithstanding any other provision set forth in this
Agreement, any Bank may at any time create a security interest in all or any
portion of its rights under this Agreement (including, without limitation, the
Loans owing to it and the Notes held by it) in favor of any Federal Reserve Bank
in accordance with Regulation A. No such assignment shall release the transferor
Bank from its obligations hereunder.
9.8 Further Assurances. At any time and from time to time, upon
the request of the Agent, the Company and each Designated Subsidiary shall
execute, deliver and acknowledge or cause to be executed, delivered and
acknowledged, such further documents and instruments and do such other acts and
things as the Agent may reasonably request in order to fully effect the purposes
of this Agreement and the other Loan Documents and any other agreements,
instruments and documents delivered pursuant hereto or in connection with the
Loans or the L/Cs.
9.9 Adjustments; Set-off. (a) If any Bank (a "Benefited Bank")
shall at any time receive any payment of all or part of any of its Loans or
interest thereon, or receive any collateral in respect thereof or any payment
under any Guaranty (whether voluntarily or involuntarily, by set-off, pursuant
to events or proceedings of the nature referred to in paragraph (f) of Section
7, or otherwise) in a greater proportion than any such payment to and collateral
received by any other Bank, if any, in respect of such other Bank's Loans, or
interest on any of the foregoing, such Benefited Bank shall purchase for cash
from each other Bank such portion of each such other Bank's Loans, or shall
provide each such other Bank with the benefits of any such collateral, or the
proceeds thereof, as shall be necessary to cause such Benefited Bank to share
the excess payment or benefits of such collateral or proceeds ratably with the
other Banks; provided, however, that if all or any portion of such excess
payment or benefits is hereafter recovered from such Benefited Bank, such
purchase shall be rescinded, and the purchase price and benefits returned, to
the extent of such recovery, but without interest. The Company and each
Designated Subsidiary agrees that each Bank so purchasing a portion of any other
Bank's Loans may exercise all rights of payment (including, without limitation,
rights of set-off) with respect to such portion as fully as if such Bank were
the direct holder of such portion. Any payments received after the
<PAGE> 95
89
Banks have taken action pursuant to this subsection 9.9 shall be allocated
ratably among the Loans and participations in L/Cs of all the Banks.
(b) In addition to any rights and remedies of each Bank provided
by law, upon the occurrence and during the continuation of an Event of Default,
each Bank shall have the right, without prior notice to the Company or any
Designated Subsidiary, any such notice being expressly waived to the extent
permitted by applicable law, to set off and apply against any indebtedness,
whether matured or unmatured, of the Company or any of its Subsidiaries to such
Bank under this Agreement or any of the other Loan Documents, any amount owing
from such Bank to the Company or any such Subsidiary at, or at any time after,
the happening of any of the above-mentioned events, and such right of set-off
may be exercised by such Bank against the Company or any such Subsidiary or
against any trustee in bankruptcy, debtor in possession, assignee for the
benefit of creditors, receiver, custodian or execution, judgment or attachment
creditor of the Company or any such Subsidiary or against anyone else claiming
through or against the Company or any such Subsidiary or such trustee in
bankruptcy, debtor in possession, assignee for the benefit of creditors,
receivers, or execution, judgment or attachment creditor, notwithstanding the
fact that such right of set-off shall not have been exercised by such Bank prior
to the making, filing or issuance, or service upon such Bank of, or of notice
of, any such petition, assignment for the benefit of creditors, appointment or
application for the appointment of a receiver, or issuance of execution,
subpoena, order or warrant. Each Bank agrees promptly to notify the Company, any
such Subsidiary, the Agent and each other Bank after any such set-off and
application made by such Bank, provided that the failure to give such notice
shall not affect the validity of such set-off and application.
9.10 Severability. Any provision of this Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
9.11 Confidentiality. Each Bank agrees to maintain the
confidentiality of information designated as confidential and provided to it by
the Company, or any Subsidiary in connection with this Agreement or the other
Loan Documents; provided, however, that any Bank may disclose such information
(a) at the request of any bank regulatory authority or in connection with an
examination of such Bank by any such authority, (b) pursuant to subpoena or
other court process, (c) when required to do so in accordance with the
provisions of any applicable law, (d) as required by any other Governmental
Authority, (e) to such Bank's independent auditors, attorneys or other
professional advisors upon receipt of a confidentiality undertaking for the
benefit of the Company in conformity with this subsection 9.11 as to non-public
information or (f) to any Eligible Assignee or Participant or potential Eligible
Assignee or Participant; provided that such Eligible Assignee or Participant, as
the
<PAGE> 96
90
case may be, agrees in writing to maintain the confidentiality of such
information in conformity with this subsection 9.11.
9.12 Counterparts. This Agreement may be executed by one or more of
the parties to this Agreement on any number of separate counterparts and all of
said counterparts taken together shall be deemed to constitute one and the same
instrument. A set of the copies of this Agreement signed by all the parties
shall be lodged with the Company, the Designated Subsidiaries and the Agent.
9.13 GOVERNING LAW; CONSENT TO JURISDICTION; WAIVER OF TRIAL BY JURY.
(a) THIS AGREEMENT, THE OTHER LOAN DOCUMENTS AND ALL OTHER
DOCUMENTS AND INSTRUMENTS EXECUTED AND DELIVERED IN CONNECTION HEREWITH AND
THEREWITH, SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE
WITH, THE LAWS OF THE STATE OF NEW YORK.
(b) EACH OF THE COMPANY AND EACH DESIGNATED SUBSIDIARY IRREVOCABLY
CONSENTS THAT ANY LEGAL ACTION OR PROCEEDING AGAINST IT UNDER, ARISING OUT OF OR
IN ANY MANNER RELATING TO THIS AGREEMENT, AND THE OTHER LOAN DOCUMENTS MAY BE
BROUGHT IN ANY COURT OF THE STATE OF NEW YORK, COUNTY OF NEW YORK, OR IN THE
UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK. THE COMPANY
AND EACH DESIGNATED SUBSIDIARY, BY THE EXECUTION AND DELIVERY OF THIS AGREEMENT,
EXPRESSLY AND IRREVOCABLY ASSENTS AND SUBMITS TO THE PERSONAL NONEXCLUSIVE
JURISDICTION OF ANY OF SUCH COURTS IN ANY SUCH ACTION OR PROCEEDING. EACH OF THE
COMPANY AND EACH DESIGNATED SUBSIDIARY FURTHER IRREVOCABLY CONSENTS TO THE
SERVICE OF ANY COMPLAINT, SUMMONS, NOTICE OR OTHER PROCESS RELATING TO ANY SUCH
ACTION OR PROCEEDING BY DELIVERY THEREOF IN ACCORDANCE WITH APPLICABLE LAW. EACH
OF THE COMPANY AND EACH DESIGNATED SUBSIDIARY HEREBY EXPRESSLY AND IRREVOCABLY
WAIVES ANY CLAIM OR DEFENSE IN ANY SUCH ACTION OR PROCEEDING BASED ON ANY
ALLEGED LACK OF PERSONAL JURISDICTION, IMPROPER VENUE OR FORUM NON CONVENIENS OR
ANY SIMILAR BASIS. EACH OF THE COMPANY AND EACH DESIGNATED SUBSIDIARY SHALL NOT
BE ENTITLED IN ANY SUCH ACTION OR PROCEEDING TO ASSERT ANY DEFENSE GIVEN OR
ALLOWED UNDER THE LAWS OF ANY STATE OTHER THAN THE STATE OF NEW YORK UNLESS SUCH
DEFENSE IS ALSO GIVEN OR ALLOWED BY THE LAWS OF THE STATE OF NEW YORK. NOTHING
IN THIS SUBSECTION SHALL AFFECT OR IMPAIR IN ANY
<PAGE> 97
91
MANNER OR TO ANY EXTENT THE RIGHT OF ANY BANK TO COMMENCE LEGAL PROCEEDINGS OR
OTHERWISE PROCEED AGAINST THE COMPANY OR ANY DESIGNATED SUBSIDIARY IN ANY
JURISDICTION OR TO SERVE PROCESS IN ANY MANNER PERMITTED BY LAW.
[THE REST OF THIS PAGE INTENTIONALLY LEFT BLANK]
<PAGE> 98
(c) EACH OF THE COMPANY, THE DESIGNATED SUBSIDIARIES, THE BANKS
AND THE AGENT WAIVES TRIAL BY JURY IN ANY LITIGATION IN ANY COURT WITH RESPECT
TO, IN CONNECTION WITH, OR ARISING OUT OF, THIS AGREEMENT, THE OTHER LOAN
DOCUMENTS OR ANY INSTRUMENT OR DOCUMENT DELIVERED PURSUANT TO THIS AGREEMENT, OR
THE VALIDITY, PROTECTION, INTERPRETATION, COLLECTION OR ENFORCEMENT THEREOF.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered by their proper and duly authorized officers as of
the day and year first above written.
PLY GEM INDUSTRIES, INC.
By /s/
-----------------------------------
Title: Exec VP
ACKNOWLEDGED AND AGREED AS TO
EACH PROVISION RELATING TO
ANY DESIGNATED SUBSIDIARY:
SAGEBRUSH SALES, INC.
By /s/ Paul Morgatsly
----------------------------
Title: Assistant Secretary
SNE ENTERPRISES, INC.
By /s/ Paul Morgatsly
----------------------------
Title: Assistant Secretary
VARIFORM, INC.
By /s/ Paul Morgatsly
----------------------------
Title: Assistant Secretary
<PAGE> 99
GREAT LAKES WINDOW, INC.
By /s/ Paul Morgatsly
----------------------------
Title: Assistant Secretary
<PAGE> 100
FLEET NATIONAL BANK,
as Agent and as a Bank
By /s/
----------------------------
Title Vice President
<PAGE> 101
BANK OF MONTREAL
By /s/ R.J.McClorey
----------------------------
Title R.J.McClorey
DIRECTOR
<PAGE> 102
THE YASUDA TRUST AND BANKING
COMPANY, LIMITED NEW YORK
BRANCH
By /s/ Rohn laudenschlager
----------------------------
Title Rohn Laudenschlager
Senior Vice President
<PAGE> 103
FLEET NATIONAL BANK,
as Agent and as a Bank
By /s/ Stephen J. Craven
-----------------------
Title Vice President
<PAGE> 104
BANK OF MONTREAL
By /s/ R.J. McClorey
-----------------------
Title R.J. McClorey
DIRECTOR
<PAGE> 105
THE YASUDA TRUST AND BANKING
COMPANY, LIMITED NEW YORK
BRANCH
By /s/ Rohn Laudenschlager
----------------------------
Title Rohn Laudenschlager
Senior Vice President
<PAGE> 1
Exhibit (1)(b)
================================================================================
NORTEK, INC.
$310,000,000
9 1/8% Senior Notes due 2007
Purchase Agreement
August 21, 1997
WASSERSTEIN PERELLA SECURITIES, INC.
BEAR, STEARNS & CO. INC.
================================================================================
<PAGE> 2
NORTEK, INC.
$310,000,000
9 1/8% Senior Notes due 2007
PURCHASE AGREEMENT
August 21, 1997
New York, New York
WASSERSTEIN PERELLA SECURITIES, INC.
31 West 52nd Street
New York, New York 10019
BEAR, STEARNS & CO. INC.
245 Park Avenue
New York, New York 10167
Ladies & Gentlemen:
Nortek, Inc., a Delaware corporation ("NORTEK"), proposes to issue and
sell to Wasserstein Perella Securities, Inc. and Bear, Stearns & Co. Inc. (each,
an "INITIAL PURCHASER", and collectively, the "INITIAL PURCHASERS") $310,000,000
aggregate principal amount of its 9 1/8% Senior Notes due 2007 (the "NOTES") in
connection with the Acquisition (as defined below) by Nortek of Ply Gem
Industries, Inc., a Delaware corporation ("PLY GEM"), subject to the terms and
conditions set forth herein. The Notes will be issued pursuant to the provisions
of an indenture dated August 26, 1997 (the "INDENTURE"), between Nortek and
State Street Bank and Trust Company, as trustee (the "TRUSTEE"). The terms
"NORTEK" and "PLY GEM" refer to Nortek and its subsidiaries and Ply Gem and its
subsidiaries, respectively, prior to giving effect to the Acquisition. The term
"COMPANY" refers, collectively, to Nortek and Ply Gem.
On July 24, 1997, Nortek, a wholly-owned subsidiary of Nortek and Ply Gem
entered into an Agreement and Plan of Merger (the "MERGER AGREEMENT"). In
connection with the Merger Agreement, on July 29, 1997, such Nortek subsidiary
commenced a tender offer to purchase all outstanding shares of common stock,
$0.25 par value per share ("COMMON STOCK" or "SHARES"), of Ply Gem at a price of
$19.50 per share, net to the seller in cash, without interest thereon (the
"TENDER OFFER"), upon such terms and conditions as are set forth in the offer to
purchase dated July 29, 1997 (the "OFFER TO PURCHASE") and the related letter of
transmittal. The obligation of Nortek's subsidiary to accept for payment or pay
for any tendered shares in the Tender Offer is conditioned on the conditions
specified in the Offer to Purchase (such
<PAGE> 3
2
conditions collectively, the "ACQUISITION CONDITIONS"). As promptly as
practicable after satisfaction or waiver of the Acquisition Conditions and the
acceptance of and payment for the Shares tendered pursuant to the Tender Offer,
the Merger Agreement provides that Nortek's subsidiary will be merged with and
into Ply Gem (the "MERGER"), which shall be the surviving corporation and shall
thereby become a wholly owned subsidiary of Nortek. In the Merger, each issued
and outstanding Share (other than Shares owned directly or indirectly by Ply
Gem, Shares held in the treasury of Ply Gem and Shares owned by Ply Gem
stockholders who perfect appraisal rights under the General Corporation Law of
the State of Delaware) will be converted into the right to receive $19.50 in
cash or such higher price that may be paid in the Tender Offer, without
interest. As part of the transactions contemplated by the Merger Agreement, each
outstanding stock option to acquire Shares (an "OPTION") will be cancelled for
the excess, if any, of the price paid in the Tender Offer over the exercise
price of the Option. The transactions contemplated by the Merger Agreement are
referred to herein as the "ACQUISITION." The Acquisition, this Offering and the
use of proceeds therefrom, issuance of the Bridge Notes (as defined in the
Offering Memorandum referred to below) or extensions of credit under the Ply Gem
Credit Facility (as defined in the Offering Memorandum)(as the case may be) and
the other transactions contemplated by the Operative Documents (as defined
below) are referred to herein collectively as the "TRANSACTIONS."
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 August 8, 1997 (including all documents incorporated
therein by reference, the "PRELIMINARY OFFERING MEMORANDUM"), and a final
offering memorandum dated August 21, 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). Capitalized terms used herein and not otherwise
defined shall have the meanings assigned to such terms in the Offering
Memorandum.
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, (ii) to a limited number of
other persons such Initial Purchaser reasonably believes to be institutional
"accredited investors" ("ACCREDITED INVESTORS") as defined in Rule 501(a)(1),
(2), (3) or (7) under Regulation D of the
<PAGE> 4
3
Act, in private sales exempt from registration under the Act or (iii) to
non-U.S. persons such Initial Purchaser reasonably believes are permitted to
purchase the Notes in offshore transactions in reliance upon Regulation S under
the Act (each, a "REGULATION S PURCHASER") (such persons specified in clauses
(i), (ii) and (iii) being referred to herein as the "ELIGIBLE PURCHASERS").
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 $310,000,000 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
OUTSIDE THE UNITED STATES IN COMPLIANCE WITH REGULATION S 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,
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 LIMITA-
<PAGE> 5
4
TIONS PROVIDED BY 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, 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.
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, (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 and (iii) persons such Initial Purchaser reasonably believes to be
Regulation S Purchasers, 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
<PAGE> 6
5
99.192% 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 A 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 statement under the Act (the "EXCHANGE OFFER
REGISTRATION STATEMENT") relating to the 9 1/8% 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, $310,000,000 aggregate principal amount of Notes. The
purchase price for the Notes will be $962.16 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, Weiss, Rifkind, Wharton
& Garrison, 1285 Avenue of the Americas, New York, New York 10019 on Tuesday,
August 26, 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, Accredited Investors and
Regulation S Purchasers (the "GLOBAL NOTE") shall be delivered by the Company to
the Initial Purchasers (or as the Initial Purchasers direct), in each case with
any transfer taxes thereon duly paid by the Company, 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
<PAGE> 7
6
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 or order
preventing or suspending the use of the Preliminary Offering Memorandum or the
Offering Memorandum, of any suspension of the qualification or exemption from
qualification of any Notes for offering or sale in any jurisdiction, or the
initiation or threatening 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 (as amended or supplemented from time to time) 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 preventing or suspending the use of the
Preliminary Offering Memorandum or the Offering Memorandum or 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.
(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, it
becomes necessary or
<PAGE> 8
7
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 4(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 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
<PAGE> 9
8
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, (iv) 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, (v) the preparation of certificates for the Notes (including, without
limitation, printing and engraving thereof), (vi) the fees, disbursements and
expenses of the Company's counsel and accountants, (vii) 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"), (viii)
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, (ix)
rating the Notes by rating agencies, (x) the fees and expenses of the Trustee
and its counsel, (xi) the performance by the Company of its other obligations
under this Agreement and the other Operative Documents, and (xii) "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 4(s), 6, 7 and
12(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;" PROVIDED THAT, no more than $155 million of such proceeds
shall be used, directly or indirectly, to acquire the Shares in the Tender
Offer.
(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 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
<PAGE> 10
9
for the Notes and to comply with all applicable federal and state securities
laws in connection with the Exchange Offer.
(l) 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, maintain the listing of the Notes on PORTAL
for so long as the Notes are outstanding 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,
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, the Trustee or to holders of the Notes or the
Series B Notes 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, its affiliates (as defined in
Rule 501(b) under the Act) nor any person acting on behalf of either 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, except that the Company makes no undertaking in
this Section 4(q) regarding the Initial Purchasers or any person acting on
behalf of either of them.
<PAGE> 11
10
(r) Prior to the Closing Date, the Company will not
amend or modify the Merger Agreement or the terms or conditions of the Tender
Offer in any manner or respect which would be adverse to the holder of any Note
without the prior written consent of the Initial Purchasers.
(s) If (i) the Closing Date occurs after the Expected
Closing Date (as defined below), interest on the Notes when issued shall accrue
from the Expected Closing Date or (ii) this Agreement is terminated and the
Notes are not issued as contemplated hereby and by the Offering Memorandum, a
fee shall be payable by Nortek to the Initial Purchasers in an amount equal to
the amount of interest that would have accrued on the Notes (under the terms
thereof as described in the Offering Memorandum) had the Notes been issued, from
the Expected Closing Date to the date of termination of this Agreement. The term
"EXPECTED CLOSING DATE" means August 26, 1997.
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. The
statistical and market-related data included in the Preliminary Offering
Memorandum and the Offering Memorandum are based on or derived from
sources which the Company believes to be reliable and accurate. No
forward looking statements within the meaning of Section 27A of the Act
and Section 21E of the Exchange Act contained in the Preliminary Offering
Memorandum and the Offering Memorandum have been made or reaffirmed
without a reasonable basis or have been disclosed other than in good
faith.
(ii) The Company has complied with any and all
requests by any securities authority in any jurisdiction for additional
information to be included in the Preliminary Offering Memorandum and the
Offering Memorandum. No action has been taken or, to the knowledge of the
Company, threatened, and no statute, rule, regulation or order has been
enacted, adopted or issued by any governmental agency or body, including
any federal or state court of competent jurisdiction, which (A) prevents
the
<PAGE> 12
11
execution, delivery and performance of any of the Operative Documents or
the Merger Agreement, (B) prevents or suspends the issuance or sale of
the Notes or the use of the Preliminary Offering Memorandum or the
Offering Memorandum, or any amendment or supplement thereto, in any
jurisdiction or (C) asserts that any of the transactions contemplated by
this Agreement are subject to the registration requirements of the Act.
(iii) Arthur Andersen LLP, which has certified the
financial statements and supporting schedules included in the Offering
Memorandum in respect of Nortek and its subsidiaries, is an independent
certified public accounting firm with regard to Nortek and its
subsidiaries as required by the Act if the Offering were required to be
registered under the Act. Grant Thornton LLP, which has certified the
financial statements and supporting schedules included in the Offering
Memorandum in respect of Ply Gem and its subsidiaries, is an independent
certified public accounting firm with regard to Ply Gem 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 (exclusive of any amendments or
supplements thereto subsequent to the date of this Agreement), there has
been no material adverse change in or 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 (a "MATERIAL ADVERSE
EFFECT"), whether or not arising from transactions in the ordinary course
of business, no fact has become known to the Company which could
reasonably be expected to have a Material Adverse Effect, and no loss of,
or damage to, properties (whether or not insured) has occurred which
could reasonably be expected to have a Material Adverse Effect. Since
June 28, 1997, 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 (A) incurred
or undertaken any liabilities or obligations, direct or contingent, that
are material to the Company and its subsidiaries taken as a whole, (B)
entered into any material transaction not in the ordinary course of
business and consistent with past practice or (C) declared or paid any
dividend or made any distribution on any shares of its capital stock or,
other than the purchase of not more than 200,000 shares of the Company's
common stock, redeemed, purchased or otherwise acquired or agreed to
redeem, purchase or otherwise acquire any shares of its capital stock.
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,
there has not been any change in the long-term
<PAGE> 13
12
debt of the Company or any material change in the capital stock of the
Company.
(v) The Company has the requisite corporate power
and the authority to (A) enter into this Agreement, each of the other
Operative Documents to which it is a party and the Merger Agreement, (B)
perform each of its obligations hereunder and thereunder and (C)
consummate the Transactions including, without limitation, to issue, sell
and deliver the Notes to be sold by it hereunder and to consummate the
Acquisition. This Agreement, each of the other Operative Documents to
which the Company is a party, the Merger Agreement and the Transactions
contemplated herein and therein have been duly and validly authorized by
the Company and each of such agreements 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 (A) 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 (B) 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, each of the other Operative Documents and the Merger
Agreement by the Company and the consummation by the Company of the
Transactions (including, but not limited to, (A) the issuance, sale and
delivery of the Notes by the Company and compliance by the Company with
the terms thereof and (B) consummation of the Acquisition) do not and
will not (1) conflict with or result in a breach or violation 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),
result in a material modification of the effect of, 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, modifications,
accelerations, prepayments, liens, charges or encumbrances which would
not individually or in the aggregate have a Material Adverse Effect or
prohibit or restrict the consummation of the transactions contemplated
hereby and thereby; (2) 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; (3) violate or conflict with any
judgment, decree, order, statute, rule or regulation of any court or
<PAGE> 14
13
arbitrator 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 or restrict the consummation of the transactions
contemplated hereby and thereby; or (4) result in the termination or
revocation of the Company's or any of its subsidiaries' consents,
approvals, authorizations, orders, registrations, qualifications,
licenses or permits of or from any public, regulatory or governmental
agency or body to own, lease or operate its properties or conduct its
business as now being conducted or as described in the Offering
Memorandum, except where such termination or revocation would not have a
Material Adverse Effect.
(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 (A) the valid execution,
delivery and performance of this Agreement, any of the other Operative
Documents or the Merger Agreement, (B) the consummation by the Company of
the Transactions, including, but not limited to, (1) the issuance, sale
and delivery of the Notes to be issued, sold and delivered by the Company
hereunder and (2) the consummation of the Acquisition or (C) compliance
by the Company with the terms hereof or thereof, except, in the case of
those required to be made prior to the date hereof, such as have been
obtained and made or, in the case of those permitted to be made
hereafter, as will be timely obtained or made.
(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 June 28, 1997, a
duly authorized and outstanding capitalization as set forth in the
"Actual" column under the caption "Capitalization" in the Offering
Memorandum. On June 28, 1997, after giving pro forma effect to the
Transactions (assuming extensions of credit under the Ply Gem Credit
Facility but not issuance of the Bridge Notes), 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. Except as described in the Offering Memorandum
(including the documents incorporated by reference therein), there are no
outstanding subscriptions, rights, warrants, calls or options to acquire,
or instruments convertible into or exchangeable for, or agreements or
understandings with respect to the issuance of, any shares of capital
stock of or other equity or
<PAGE> 15
14
other ownership interest in the Company's subsidiaries other than those
owned or held by the Company or another subsidiary of the Company.
(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, 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, and after giving effect to the Transactions will have, all requisite
power and authority, and all necessary consents, approvals,
authorizations, orders, registrations, qualifications, licenses and
permits of and from, and has made all appropriate declarations and
filings with, 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. Neither the Company nor any of its
subsidiaries has received any notice of any proceedings relating to the
revocation or modification of any thereof, nor is the Company or any of
its subsidiaries aware of any basis therefor, and no such consent,
approval, authorization, order, registration, qualification, franchise,
license or permit contains a restriction that is materially burdensome to
the Company or any of its subsidiaries that is not adequately and
accurately disclosed in the Offering Memorandum.
(x) As of June 28, 1997 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 authorized
and validly issued, are fully paid and non-assessable and were not issued
in violation of preemptive rights, repurchase rights or rights of first
refusal and, except as described in the Offering Memorandum, are owned
directly or indirectly by the Company, free and clear of any lien,
pledge, encumbrance, claim, security interest, restriction on voting or
transfer, stockholders' agreement, voting trust or other defect of title
whatsoever. The Company 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) investments in subsidiaries of the Company, (B) minority
investments in marketable securities that may be made in the ordinary
course of business as a part of its
<PAGE> 16
15
investment of excess cash assets and (C) 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 (A) could reasonably be expected to have a Material Adverse Effect
or (B) seeks to restrain, enjoin, prevent the consummation of, or
otherwise challenge the execution and delivery of this Agreement, or the
other Operative Documents to which it is a party or the issuance of the
Notes or questions the legality or validity of any such actions; (C)
seeks to recover damages or obtain other relief in connection with any of
such actions or (D) seeks to restrain, enjoin, prevent the consummation
of, or otherwise challenges, or seeks to recover damages or obtain other
relief in connection with the Acquisition and has a reasonable
probability of success on the merits.
(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), (B) paid or agreed to pay to any person any
compensation for soliciting another to purchase any other securities of
the Company or (C) taken any action prohibited under Regulation M under
the Exchange Act in connection with the offering of the Notes.
(xiii) The consolidated audited and unaudited
financial statements of Nortek and its subsidiaries and Ply Gem and its
subsidiaries, including the notes thereto, and supporting schedules
included or incorporated by reference in the Offering Memorandum comply
as to form in all material respects with the requirements applicable to a
Report on Form 10-K or a Report on Form 10-Q, as applicable, 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 Nortek and its subsidiaries or Ply Gem
and its subsidiaries, as the case may be, at the dates and for the
periods indicated and the supporting schedules included or incorporated
by reference in the Offering Memorandum present fairly the information
required to be stated therein. Except as disclosed in such audited and
unaudited financial statements, such consolidated financial statements,
including the notes thereto, (A) have been prepared in accordance with
generally accepted accounting principles consistently applied throughout
the periods involved and (B) are in accordance in all material respects
with the
<PAGE> 17
16
books and records of Nortek and its subsidiaries and Ply Gem and its
subsidiaries, as applicable. If the Offering Memorandum were a prospectus
included in a registration statement filed with the Commission, no other
financial statements would be required to be included in the Offering
Memorandum. The financial data set forth in the Offering Memorandum under
the captions "Summary--Nortek, Inc., Summary Consolidated Financial
Data", "Summary--Ply Gem Industries, Inc., Summary Consolidated Financial
Data", "Capitalization", "Selected Financial Data of Nortek", "Selected
Financial Data of Ply Gem" and "Management's Discussion and Analysis of
Financial Condition and Results of Operations" are (A) in accordance with
the books and records of the Company and its subsidiaries in all material
respects, (B) fairly present, on the basis stated in the Offering
Memorandum, the information set forth therein and (C) have been compiled
on a basis consistent with that of the audited financial statements
included or incorporated by reference 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 or incorporated by reference into the
Offering Memorandum.
(xiv) The unaudited pro forma and adjusted pro
forma financial data included in the Offering Memorandum (A) has been
prepared on a basis consistent with the historical financial statements
of Nortek and its subsidiaries and Ply Gem and its subsidiaries (except
for the pro forma and adjusted pro forma adjustments set forth therein),
(B) gives effect to assumptions used in the preparation thereof that are
reasonable and made in good faith, (C) presents fairly the information
set forth using adjustments which are appropriate to give effect to the
proposed transactions referred to therein, (D) has been correctly
compiled based on the proper application of the pro forma and adjusted
pro forma adjustments to the historical financial information set forth
therein and (E) except for the adjusted pro forma financial data,
complies as to form in all material respects with the applicable
accounting requirements of Rule 11-02 of Regulation S-X. The adjusted pro
forma consolidated financial data reflect adjustments that give effect to
events that are factually supportable.
(xv) Each of the Company and its subsidiaries has,
and upon completion of the Transactions will have, good and marketable
title to all real property and personal property and assets owned by them
which is material to the business of the Company and its subsidiaries, in
each case subject to no lien, mortgage, pledge, charge or encumbrance of
any kind except (A) those set forth in the Offering Memorandum or (B)
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. Each of the
Company and its subsidiaries holds, and upon completion of the
Transactions will hold, its leased properties under
<PAGE> 18
17
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. Except as disclosed in the
Offering Memorandum, the Company and each of its subsidiaries owns or
leases, and upon completion of the Transactions will own or lease, 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.
(xvi) Neither the Company nor any of its
subsidiaries is, and upon consummation of the Transactions none of such
persons will 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, as amended, and the rules and regulations
promulgated thereunder. Each such person 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". Neither the Company nor any of its subsidiaries is, and upon
consummation of the Transactions none of such persons will be, subject to
registration as a "holding company" or a "subsidiary company" of a
holding company or an "affiliate" thereof within the meaning of the
Public Utility Holding Company Act of 1935, as amended.
(xvii) The Company and each of its subsidiaries have
(A) 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 (B) 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 (A), or
extend the due date of or pay the same in clause (B), in the aggregate,
could not reasonably be expected to have a Material Adverse Effect; 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 have
a Material Adverse Effect; to the Company's best knowledge, all tax
liabilities of Nortek and its subsidiaries are adequately provided for on
the consolidated books of Nortek and all tax liabilities of Ply Gem and
its subsidiaries are adequately provided for on the consolidated books of
Ply Gem.
(xviii) The Company and each of its subsidiaries own
or possess, and after completion of the Transactions will 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
<PAGE> 19
18
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, 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, technology
or know-how except for conflicts which would not reasonably be expected
to have a Material Adverse Effect; 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.
(xix) There are no contracts, indentures,
mortgages, loan agreements, notes, leases or other agreements or
instruments or other documents (other than the Operative 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 Report on Form 10-K of Nortek for the year ended December 31, 1996
or in the subsequent Reports on Form 10-Q of Nortek incorporated in the
Offering Memorandum 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 or any of its
subsidiaries is a party have been duly authorized, executed and delivered
by such person a party thereto, constitute valid and binding agreements
of such person and are enforceable against such person 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.
(xx) 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.
(xxi) 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
<PAGE> 20
19
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.
(xxii) Neither the Company nor any of its
subsidiaries is, and upon completion of the Transactions neither the
Company nor any of its subsidiaries will be, 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) in the due performance or
observance of any term, covenant or condition contained in any contract,
agreement, indenture, loan or other agreement, instrument, mortgage, deed
of trust, 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 or
assets 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. 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.
Each of the Company and each of its subsidiaries enjoys, and upon
completion of the Transactions will enjoy, 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. Neither the Company nor any of its
subsidiaries is, and upon completion of the Transactions will be, in
violation or breach of, or in default with respect to, any term of its
respective articles or certificate of incorporation or bylaws. Neither
the Company nor any of its subsidiaries is, and upon completion of the
Transactions neither the Company nor any of its subsidiaries will be, in
violation of, or in default with respect to, any law, ordinance, rule,
regulation, order, judgment or decree to which it or its property or
assets may be subject, 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.
(xxiii) Except as described in the Offering
Memorandum, (A) no labor disturbance by or dispute with the employees of
the Company and any of its subsidiaries exists or, to the best knowledge
of the Company, is threatened and (B) 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 (A) and (B) to have a Material Adverse
Effect.
<PAGE> 21
20
(xxiv) Except as described in the Offering
Memorandum, (A) 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 (B) 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.
(xxv) Except as disclosed in the Offering
Memorandum, there has been no storage, generation, transportation,
handling, treatment, disposal, discharge, emission or other release of
any kind of toxic or other wastes or other hazardous substances by, due
to or caused by the Company or any of its subsidiaries (or, to the
knowledge of the Company, any other entity (including any predecessor)
for whose acts or omissions the Company or any of its subsidiaries is or
could reasonably be expected to be liable) upon any of the property now
or previously owned or leased by the Company or any of its subsidiaries,
or upon any other property, which would, under any statute or any
ordinance, rule (including rule of common law), regulation, order,
judgment, decree or permit, give rise to any liability, except for any
violation or liability that could not reasonably be expected to have,
singularly or in the aggregate with all such violations and liabilities,
a Material Adverse Effect. Except as disclosed in the Offering
Memorandum, there has been no disposal, discharge, emission or other
release of any kind onto such property or into the environment
surrounding such property of any toxic or other wastes or other hazardous
substances with respect to which the Company has knowledge, except for
any such disposal, discharge, emission or other release of any kind which
could not reasonably be expected to have, singularly or in the aggregate
with all such discharges and other releases, a Material Adverse Effect.
Except as disclosed in the Offering Memorandum, neither the Company nor
any of its subsidiaries is in violation of any federal, state,
provincial, foreign or local law, rule, regulation, code or ordinance
relating to pollution, protection of the environment, the storage,
handling, transportation or disposal of hazardous or toxic wastes or
substances or health and safety, except such violations which would not
reasonably be expected to have, a Material Adverse Effect.
(xxvi) 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.
<PAGE> 22
21
(xxvii) Neither the Company nor any of its
subsidiaries has 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. None of the Company, its
subsidiaries or any of the directors, officers or controlling persons of
the Company or its subsidiaries 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.
(xxviii) The Company and each of its subsidiaries
have, and upon completion of the Transactions will have, insurance
covering their respective properties, operations, personnel and
businesses, which insures against such losses and risks and in such
amounts as are prudent and customary in the businesses in which they are
engaged and, in the opinion of the Company, are adequate to protect their
respective businesses.
(xxix) The Company has complied and will comply with
all provisions of Florida Statutes Section 517.075 (Chapter 92-198, Laws
of Florida).
(xxx) 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.
(xxxi) Each of the Operative Documents (other than
the Notes, the Exchange Notes and the Private Exchange Notes) and the
Merger Agreement 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 (A) the enforceability thereof may
be limited by applicable bankruptcy, insolvency, fraudulent conveyance,
reorganization or similar laws affecting the rights of creditors
generally and (B) 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.
(xxxii) The Notes have been duly and validly
authorized by the Company for issuance and sale to the Initial Purchasers
pursuant to this
<PAGE> 23
22
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
(A) the enforceability thereof may be limited by applicable bankruptcy,
insolvency, fraudulent conveyance, reorganization or similar laws
affecting the rights of creditors generally and (B) rights of
acceleration and the availability of equitable remedies may be limited by
general principles of equity.
(xxxiii) 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 (A) the enforceability thereof may be limited by
applicable bankruptcy, insolvency, fraudulent conveyance, reorganization
or similar laws affecting the rights of creditors generally and (B)
rights of acceleration and the availability of equitable remedies may be
limited by general principles of equity.
(xxxiv) 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 and the Indenture is not
required to be qualified under the Trust Indenture Act of 1939, as
amended, assuming (A) that the purchasers who buy the Notes in the Exempt
Resales are either QIBs, Accredited Investors or Regulation S Purchasers
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 affiliates or any representatives acting on its or their behalf
(other than 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.
(xxxv) Set forth on EXHIBIT B hereto is a list of
each funded employee pension or benefit plan, as defined in Article 3,
Section 2(A) of the Employee Retirement Income Security Act of 1974, as
amended, including the
<PAGE> 24
23
regulations and published interpretations thereunder ("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 (a
"COMPANY PLAN"). No event or condition exists, or upon completion of the
Transactions would exist, with respect to any Company Plan which is
reasonably likely to result in a Material Adverse Effect.
(xxxvi) 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 (the
"FEDERAL RESERVE BOARD") or analogous foreign laws and regulations.
(xxxvii) On the Closing Date, the Indenture will
conform in all material respects to the requirements of the Trust
Indenture Act and the rules and regulations of the Commission applicable
to an indenture which is qualified thereunder.
(xxxviii) On and immediately after the completion of
the Transactions, the Company together with its subsidiaries on a
consolidated basis will be Solvent. As used in this paragraph, the term
"SOLVENT" means, with respect to a particular date, that on such date (A)
the present fair saleable value of the assets of the Company together
with its subsidiaries on a consolidated basis is not less than the total
amount required to pay the probable liabilities of the Company together
with its subsidiaries on a consolidated basis on its total existing debts
and liabilities (including contingent liabilities) as they become
absolute and matured, (B) the Company together with its subsidiaries on a
consolidated basis is able to realize upon its assets and pay its debts
and other liabilities, contingent obligations and commitments as they
mature and become due in the normal course of business, (C) assuming the
sale of the Notes as contemplated by this Agreement and the Offering
Memorandum, the Company together with its subsidiaries on a consolidated
basis is not incurring debts or liabilities beyond its ability to pay as
such debts and liabilities mature and (D) the Company together with its
subsidiaries on a consolidated basis is not engaged in any business or
transaction, and is not about to engage in any business or transaction,
for which its property would constitute unreasonably small capital after
giving due consideration to the prevailing practice in the industry in
which the Company is engaged. In computing the amount of such contingent
liabilities at any time, it is intended that such liabilities will be
computed at the amount that, in light of all the facts and circumstances
existing at such time, represents the amount that can reasonably be
expected to become an actual or matured liability.
<PAGE> 25
24
(xxxix) None of the Company, any of its respective
affiliates or any person acting on its or their behalf (other than the
Initial Purchasers, as to whom the Company makes no representation) has
engaged or will engage in any directed selling efforts within the meaning
of Regulation S under the Act ("REGULATION S") with respect to the Notes.
The sale of the Notes pursuant to Regulation S is not part of a plan or
scheme to evade the registration provisions of the Act. The Company, its
respective affiliates and all persons acting on its or their behalf
(other than the Initial Purchasers, as to whom the Company makes no
representation) have complied with and will comply with the offering
restrictions requirements of Regulation S in connection with the offering
of the Notes outside the United States and, in connection therewith, the
Offering Memorandum will contain the disclosure required by Rule 902(h).
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 (x) persons it reasonably believes to be QIBs in reliance
on the exemption from the registration requirements of the Act provided
by Rule 144A, (y) a limited number of Accredited Investors that execute
and deliver a letter containing certain representations and agreements in
the form attached as ANNEX A to the Offering Memorandum and (z) non-U.S.
persons outside the United States to whom it reasonably believes offers
and sales of the Notes may be made in reliance upon Regulation S.
(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 seminar or meeting whose
attendees have been invited by any general solicitation or general
advertising.
<PAGE> 26
25
(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,
Accredited Investors and Regulation S Purchasers. 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, (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 (3) Regulation S Purchasers and (B) that, in the case of such QIBs,
Accredited Investors and Regulation S Purchaser, 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.
(v) None of such Initial Purchaser nor any of its
affiliates or any person acting on its or their behalf has engaged or
will engage in any directed selling efforts within the meaning of
Regulation S with respect to the Notes.
(vi) The Notes offered and sold by such Initial
Purchaser pursuant hereto in reliance on Regulation S have been and will
be offered and sold only in offshore transactions.
(vii) The sale of the Notes offered and sold by
such Initial Purchaser pursuant hereto in reliance on Regulation S is not
part of a plan or scheme to evade the registration provisions of the Act.
(viii) Such Initial Purchaser agrees that it has
offered the Notes and will offer and sell the Notes (A) as part of its
distribution at any time and (B) otherwise until 40 days after the later
of the commencement of the offering of the Notes pursuant hereto and the
Closing Date, only in
<PAGE> 27
26
accordance with Rule 903 of Regulation S or another exemption from the
registration requirements of the Act. Such Initial Purchaser agrees that,
during such 40-day restricted period, it will not cause any advertisement
with respect to the Notes (including any "tombstone" advertisement) to be
published in any newspaper or periodical or posted in any public place
and will not issue any circular relating to the Notes, except such
advertisements as permitted by and including the statement required by
Regulation S.
(ix) Such Initial Purchaser agrees that it has not
offered or sold and will not offer or sell the Notes sold pursuant hereto
in reliance on Regulation S (A) as part of its distribution at any time
and (B) otherwise until 40 days after the later of the commencement of
the offering of the Notes pursuant hereto and the Closing Date, to a U.S.
person (as defined in Rule 902 of the Act) or for the account or benefit
of a U.S. person (other than a distributor as defined in Rule 902 of the
Act).
(x) Such Initial Purchaser agrees that, at or
prior to confirmation of a sale of Notes by it to any distributor, dealer
or person receiving a selling concession, fee or other remuneration
during the 40-day restricted period referred to in Rule 903(c)(3) under
the Act, it will send to such distributor, dealer or person receiving a
selling concession, fee or other remuneration a confirmation or notice to
substantially the following effect:
"The Notes covered hereby have not been registered under the U.S.
Securities Act of 1933, as amended (the "Securities Act"), and may
not be offered and sold within the United States or to, or for the
account or benefit of U.S. persons (i) as part of your
distribution at any time or (ii) otherwise until 40 days after the
later of the commencement of the Offering and the closing Date,
except in either case in accordance with Regulation S under the
Securities Act (or Rule 144A or to Accredited Institutions in
transactions that are exempt from the registration requirements of
the Securities Act), and in connection with any subsequent sale by
you of the Notes covered hereby in reliance on Regulation S during
the period referred to above to any distributor, dealer or person
receiving a selling concession, fee or other remuneration, you
must deliver a notice to substantially the foregoing effect. Terms
used above have the meanings assigned to them in Regulation S."
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.
<PAGE> 28
27
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 and as incurred in
investigating, preparing or defending against, or appearing as a third party
witness in connection with, 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 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 (x) 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 (y) 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.
<PAGE> 29
28
(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 reasonably incurred and as incurred in investigating, preparing or
defending or appearing as a third party witness in connection with 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.
(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
<PAGE> 30
29
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. No indemnifying party shall, without the prior
written consent of the indemnified party (which consent shall not be
unreasonably withheld), effect any settlement of any pending or threatened
proceeding in respect of which any indemnified party is or could reasonably have
been a party and indemnity reasonably could have been sought hereunder by such
indemnified party unless such settlement includes an unconditional release of
such indemnified party from all liability on claims that are the subject matter
of such proceeding.
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 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
<PAGE> 31
30
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 and all of the statements of the Company and
its officers made in any certificate delivered pursuant to 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.
<PAGE> 32
31
(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 shall have been issued and no
proceeding for that purpose shall have been commenced or shall be pending or
threatened.
(c) The Tender Offer shall have been consummated in all
material respects in accordance with the Merger Agreement as in effect on the
date hereof and none of the conditions to closing the Tender Offer set forth in
Exhibit A to the Merger Agreement shall have been amended or waived in any
material respect by the Company without the prior written consent of the Initial
Purchasers.
(d) 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 Material
Adverse Effect, 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(d), 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.
(e) The Company shall have received either (i)
extensions of credit under the Ply Gem Credit Facility or (ii) net proceeds from
the issuance and sale of the Bridge Notes, in either case as described in the
Offering Memorandum.
(f) The Initial Purchasers shall have received a
certificate, dated the Closing Date, signed by the Chief Executive Officer and
the Chief Financial Officer or Chief Accounting Officer on behalf of the
Company, in form and substance satisfactory to the Initial Purchasers, (i)
stating that (A) to such officers' knowledge, the Offering Memorandum, as of its
date, did not include any untrue statement of a material fact and did not omit
to state a 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, and since the date of the Offering Memorandum, no
event has occurred which should have been set forth in a
<PAGE> 33
32
supplement or amendment to the Offering Memorandum so that the Offering
Memorandum (as so amended or supplemented) would not include any untrue
statement of a material fact and would not omit to state a 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 and (B) subsequent to the date of the most recent financial
statements contained in the Offering Memorandum, there has been no event or
development that could reasonably be expected to result in a Material Adverse
Effect, except in each case as described in or expressly contemplated by the
Offering Memorandum and (ii) confirming the matters set forth in paragraph (a)
of this Section 8 as of the Closing Date.
(g) The Initial Purchasers shall have received a
certificate, dated the Closing Date, signed by the Company, in form and
substance satisfactory to the Initial Purchasers, stating that the Chief
Executive Officer and the Chief Financial Officer or Chief Accounting Officer of
the Company have carefully examined the Offering Memorandum.
(h) 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 EXHIBIT
C-1 hereto, and (ii) the General Counsel of the Company, to the effect set forth
in EXHIBIT C-2 hereto.
(i) The purchase of and payment for the Notes by the
Initial Purchasers hereunder (i) shall not be prohibited or enjoined
(temporarily or permanently) by any applicable law or governmental regulation
(including, without limitation, Regulation G, T, U or X of the Federal Reserve
Board, (ii) shall not subject the Initial Purchasers to any material penalty or,
in their reasonable judgment, other onerous conditions, which onerous conditions
arise as a result of or in connection with the Acquisition, the Ply Gem Credit
Facility, the issuance of the Bridge Notes (including the use of proceeds from
such facility or notes) or the use of proceeds of the Offering, under or
pursuant to any applicable law or governmental regulation (provided, however,
that such regulation or law was not in effect on the date of this Agreement),
and (iii) shall be permitted by the laws and regulations of the United States
jurisdictions to which they are subject.
(j) At the time this Agreement is executed and at the
Closing Date, the Initial Purchasers shall have received from each of Arthur
Andersen LLP and Grant Thornton LLP, each of which are independent certified
public accountants, (i) customary comfort letters, dated as of the date of this
Agreement and as of the Closing Date, 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 Nortek and its subsidiaries (in the case of Arthur
Andersen LLP) and of Ply Gem and its subsidiaries (in the case of Grant Thornton
LLP) contained or incorporated by reference in the Offering Memorandum and (ii)
a signed copy of each independent accountants' report included in the Offering
Memorandum.
<PAGE> 34
33
(k) The Initial Purchasers shall have received an
opinion, dated the Closing Date, in form and substance reasonably satisfactory
to the Initial Purchasers, of Paul, Weiss, Rifkind, Wharton & Garrison, counsel
for the Initial Purchasers, covering such matters as are customarily covered in
such opinions.
(l) Paul, Weiss, Rifkind, Wharton & Garrison, 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.
(m) 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.
(n) 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.
(o) 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.
(p) 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 9 7/8% Notes below B- or the 9 1/4% Notes or the
Notes below B+; (ii) any downgrading by Moody's Investors Service Inc.
("MOODY'S") in the rating of the 9 7/8% Notes below B3 or the 9 1/4% Notes or
the Notes below B1; or (iii) any notice given by S&P or Moody's of any intention
or potential to effect such a downgrading.
(q) The Notes shall have been duly executed and
delivered by the Company and duly authenticated by the Trustee.
(r) The Notes shall have been approved by the NASD for
trading in the PORTAL Market.
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.
<PAGE> 35
34
9. CONDITIONS TO THE OBLIGATIONS OF NORTEK. The obligations of
Nortek to issue and deliver the Notes, as provided herein, shall be subject to
the satisfaction of the following condition precedent:
(a) The Tender Offer shall have been consummated in all
material respects in accordance with the Merger Agreement as in effect on the
date hereof and none of the conditions to closing the Tender Offer set forth in
Exhibit A to the Merger Agreement shall have been amended or waived in any
material respect by the Company without the prior written consent of the Initial
Purchasers.
10. 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
fourth 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.
11. SURVIVAL OF REPRESENTATIONS AND AGREEMENTS. All
representations and warranties, covenants and agreements of the Initial
Purchasers and the Company contained in this Agreement, including, without
limitation, the agreements contained in Sections 4(f) and 12(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), 4(s), 6, 7
and 12(d) shall survive the termination of this Agreement, including any
termination pursuant to Section 12.
12. 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 18, 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 Effect shall have occurred since the respective dates as of which
information is given in the Offering Memorandum, 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
<PAGE> 36
35
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 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
12 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 12(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.
13. 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
<PAGE> 37
36
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.
14. 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 Wasserstein
Perella Securities, Inc., 31 West 52nd Street, New York, New York 10019-6118,
Attention: Peter H. Rothschild, telecopier number: (212) 969-7802, with a copy
to Paul, Weiss, Rifkind, Wharton & Garrison, 1285 Avenue of the Americas, New
York, New York 10019-6064, Attention: Paul D. Ginsberg, telecopier number (212)
757-3990; 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, telecopier
number: (401) 751-4610, with a copy to Ropes & Gray, One International Place,
Boston, Massachusetts 02110-2624, Attention: Douglass N. Ellis, Jr., telecopier
number: (617) 951-7050.
15. PARTIES. Except as provided by Section 4(j), 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.
16. 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.
17. COUNTERPARTS. This Agreement may be executed in one or more
counterparts which together shall constitute one and the same instrument.
18. 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.
19. 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.
<PAGE> 38
37
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/ Kevin W. Donnelly
-------------------------------
Name: Kevin W. Donnelly
Title: Vice President and
General Counsel
Accepted and agreed as of
the date first above written:
WASSERSTEIN PERELLA SECURITIES, INC.
By:
-------------------------------------
Name:
Title:
BEAR, STEARNS & CO. INC.
By:
-------------------------------------
Name:
Title:
<PAGE> 39
37
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:
-------------------------------
Name:
Title:
Accepted and agreed as of
the date first above written:
WASSERSTEIN PERELLA SECURITIES, INC.
By:
-------------------------------------
Name:
Title:
BEAR, STEARNS & CO. INC.
By: /s/ J. Andrew Bugas
-------------------------------------
Name: J. Andrew Bugas
Title: Senior Managing Director
<PAGE> 40
37
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:
-------------------------------
Name:
Title:
Accepted and agreed as of
the date first above written:
WASSERSTEIN PERELLA SECURITIES, INC.
By: /s/ James C. Kingsbery
-------------------------------------
Name: JAMES C. KINGSBERY
Title: VICE PRESIDENT
BEAR, STEARNS & CO. INC.
By:
-------------------------------------
Name:
Title:
<PAGE> 41
SCHEDULE I
<TABLE>
<CAPTION>
Principal
Amount of
Initial Purchaser Notes
----------------- -----
<S> <C>
Wasserstein Perella Securities, Inc. ................... $217,000,000
Bear, Stearns & Co. Inc. ............................... $ 93,000,000
------------
TOTAL ............................................. $310,000,000
============
</TABLE>
<PAGE> 42
EXHIBIT A
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement (this "AGREEMENT") is made and entered
into as of August 26, 1997 among Nortek, Inc., a Delaware corporation (the
"COMPANY"), Wasserstein Perella Securities, Inc. and Bear, Stearns & Co. Inc.
(collectively, the "INITIAL PURCHASERS").
This Agreement is made pursuant to the Purchase Agreement dated as of
August 21, 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 $310,000,000 aggregate principal amount of the Company's 9
1/8% 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.
"DEPOSITARY" 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> 43
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 NOTES" shall mean the 9 1/8% 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
August 26, 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.
"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.
"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 August 26, 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.
<PAGE> 44
3
"LIQUIDATED DAMAGES" shall have the meaning set forth in Section 2(e)
hereof.
"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
<PAGE> 45
4
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 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 and 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.
<PAGE> 46
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 60 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 135 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;
<PAGE> 47
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 Depositary 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;
(ii) accept for exchange all Notes or portions thereof duly
tendered pursuant to the Private Exchange; and
<PAGE> 48
7
(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.
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
<PAGE> 49
8
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 180 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 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
<PAGE> 50
9
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 holders of a majority
of the of Registrable Securities covered by such Shelf Registration Statement,
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 60
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 61st day after the Closing Date until but excluding the date such
Exchange Offer Registration Statement is filed. In addition, if on or prior to
135 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 136th 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
<PAGE> 51
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 until but excluding
the date of the Exchange Offer is consummated. 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 in an amount equal to $0.05 per week per $1,000
principal amount of Notes (or Private Exchange Notes) held by such Holder to
each Holder affected by such circumstance, which amount will increase by $0.05
per week per $1,000 principal amount of Notes (or Private Exchange Notes) for
each 90-day period that such Liquidated Damages continue to accrue under any
circumstance, up to a maximum amount of Liquidated Damages of $0.25 per week per
$1,000 principal amount of Notes (or Private Exchange Notes). For any portion of
a week that Liquidated Damages are payable hereunder, such Liquidated Damages
shall be calculated on a pro rata basis.
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 Liquidated Damages assessed in
respect of the Notes shall cease to accrue to the extent that such Liquidated
Damages related to the failure of any such event to have occurred. Upon the
effectiveness of a Shelf Registration Statement, the Liquidated Damages assessed
in respect of the Notes (and the Private Exchange Notes) shall cease to accrue,
from and as of the date of such effectiveness, unless and until reassessed 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
<PAGE> 52
11
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; 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,
<PAGE> 53
12
covered by such Registration Statement, their counsel and the managing
underwriters, if any, a reasonable 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 holders of a majority of the
Registrable Securities covered by such Registration Statement 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 disposition in each such jurisdiction of such
Registrable Securities owned by such
<PAGE> 54
13
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) of 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;
(g) in the case of a Shelf Registration, furnish to each Holder, upon
request and without charge, at least one conformed copy of each
<PAGE> 55
14
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 Depositary; 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 Depositary;
(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 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
<PAGE> 56
15
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 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
<PAGE> 57
16
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 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
<PAGE> 58
17
(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
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
<PAGE> 59
18
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 Officer's
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
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
<PAGE> 60
19
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 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);
<PAGE> 61
20
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 finally,
judicially determined by a court of competent jurisdiction that such indemnified
party was not entitled to indemnification by the Company pursuant to this
Section 4.
(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 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 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
<PAGE> 62
21
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 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.
<PAGE> 63
22
(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 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
<PAGE> 64
23
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.
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
<PAGE> 65
24
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
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.
<PAGE> 66
25
(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.
<PAGE> 67
26
IN WITNESS WHEREOF, the parties hereto have executed this Registration
Rights Agreement as of the date first written above.
NORTEK, INC.
By:
------------------------------------
Name:
Title:
Accepted as of the date first above written:
WASSERSTEIN PERELLA SECURITIES, INC.
By:
-----------------------------------
Name:
Title:
BEAR, STEARNS & CO. INC.
By:
-----------------------------------
Name:
Title:
<PAGE> 68
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-1, 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 light of the circumstances under which they were made, not
misleading.
<PAGE> 69
EXHIBIT B
LIST OF FUNDED EMPLOYEE PENSION AND BENEFIT PLANS OF THE COMPANY
DEFINED BENEFIT PLANS
1. Nortek, Inc. Retirement Plan
a. Broan Mfg. Co., Inc. Pension Plan "A"
Appendix II to the Nortek, Inc. Retirement Plan
b. Broan Mfg. Co., Inc. Pension Plan "B"
Appendix III to the Nortek, Inc. Retirement Plan
c. Pension Plan for Employees of Nordyne, Inc.
Appendix VI to the Nortek, Inc. Retirement Plan
d. Music & Sound, Inc. Pension Plan for Non-Production Employees
Appendix VIII to the Nortek, Inc. Retirement Plan
e. Nortek, Inc. Pension Plan for Certain Employees of Providence, RI
Appendix IX to the Nortek, Inc. Retirement Plan
f. SMB Corporation Employees Pension Plan--Governair
Appendix XII of the Nortek, Inc. Retirement Plan
g. SMB Corporation Employees Pension Plan--Temtrol
Appendix XII of the Nortek, Inc. Retirement Plan
h. Mohawk Flush Doors Pension Plan for Salaried Employees
Appendix XIV, III
i. Mohawk Flush Doors Pension Plan for Hourly-Rated Employees of
Northumberland
Appendix XV
2. Universal-Rundle Corporation Retirement Plan "A"
3. Milwaukee Faucets Retirement Income Plan
4. Northway Products Retirement Income Plan
<PAGE> 70
5. Mammoth Negotiated Hourly Pension Plan
6. Hoover Treated Wood Products, Inc. Retirement Income Plan
7. Ply Gem Group Pension Plan
8. SNE Enterprises, Inc. Pension Plan
DEFINED CONTRIBUTION PLANS
1. CES Group Flexible Savings Plan (401(k))
2. Northway Products Savings Plan
3. Mammoth Negotiated Hourly 401(k) Plan
4. Universal-Rundle Profit Sharing and Thrift Plan
5. Universal-Rundle Savings Plan for Union Employees
6. M & S Systems, Inc. 401(k) Savings Plan
7. Nordyne, Inc. 401(k) Savings Plan
8. Broan Mfg. Co., Inc. 401(k) Savings Plan
9. Linear Corporation 401(k) Plan
10. Moore-O-Matic, Inc. 401(k) Plan
11. Nortek, Inc. 401(k) Savings Plan
12. The Broan Group 401(k) Plan for Employees of Jensen Industries, Inc. and
Aubrey Manufacturing, Inc.
13. Rangaire, Inc. 401(k) Plan
14. Ply Gem Industries, Inc. Group Profit Sharing/401(k) Plan
15. SNE Enterprises, Inc. 401(k) Plan
16. SNE Enterprises, Inc. 401(k) Savings Plan
-2-
<PAGE> 71
17. Ply Gem Manufacturing Division of Ply Gem Industries, Inc. 401(k) Plan
MULTIEMPLOYER PLANS
1. Labor Agreement between Allied Plywood Corporation and Teamsters Union
Local No. 25, for the term from February 1, 1995 to January 31, 1998.
2. Labor Agreement, dated April 1, 1995, between The Goldenberg Group, Inc.
Goldenhill Unit and Cabinet Makers, Millmen and Industrial Carpenters
Local 721 affiliated with the United Brotherhood of Carpenters and
Joiners of America, AFL-CIO, for the term from 1995 to 1998.
3. Labor Agreement, dated April 1, 1995, between The Goldenberg Group, Inc.
Goldenberg Unit and Cabinet Makers, Millmen and Industrial Carpenters
Local 721 affiliated with the United Brotherhood of Carpenters and
Joiners of America, AFL-CIO, for the term from 1995 to 1998.
4. Agreement, dated August 12, 1996, between Goldenberg Plywood & Lumber
Company, Inc. and Teamsters Building Material and Dump Truck Local Union
No. 420, for the term from August 12, 1996 to August 11, 1999.
5. Agreement, dated May 28, 1996, between Continental Wood Preservers, Inc.
and Teamsters Local Union No. 247, an affiliate of the International
Brotherhood of Teamsters, for the term from May 28, 1996 to November 15,
1999.
6. Agreement between Studley Products, Inc. and Productions, Service and
Sales District Council, I.U.C. Local 222, AFL-CIO, for the term from
February 1, 1997 to January 31, 1999.
7. Agreement between Goldenhill and Graphic Communications Union District
Council No. 2, AFL-CIO, for the term from July 15, 1994 to July 14, 1997.
-3-
<PAGE> 72
Exhibit C-1
[ROPES & GRAY LETTERHEAD]
August __, 1997
Wasserstein Perella Securities, Inc.
31 West 52nd Street
New York, New York 10019
Bear, Stearns & Co. Inc.
245 Park Avenue
New York, New York 10167
Re: $275,000,000 PRINCIPAL AMOUNT % SENIOR NOTES DUE 2007 OF
NORTEK, INC.
Ladies and Gentlemen:
We have acted as counsel for Nortek, Inc., a Delaware corporation (the
"Company"), in connection with the issuance and sale by the Company of
$275,000,000 principal amount of % Senior Notes due 2007 (the "Notes"). This
opinion is furnished to you pursuant to Section 8(g) of the Purchase Agreement
dated August __, 1997 (the "Purchase Agreement") among the Company and each of
you relating to the issue and sale of the Notes. Terms defined in the Purchase
Agreement and not otherwise defined herein are used herein with the meanings so
defined.
We have attended the closing of the sale of the Notes held today. We
have examined a copy of the final Offering Memorandum of the Company dated
August __, 1997 relating to the offering of the Notes, together with all
exhibits thereto (the "Offering Memorandum"); the Company's Annual Report on
Form 10-K for the fiscal year ended December 31, 1996 (the "Form 10-K"); the
Company's Quarterly Reports on Form 10-Q for the quarterly periods ended March
29, 1997 and June 28, 1997 (together with the Form 10-K, the "Incorporated
Documents"); an executed copy of the Indenture dated as of August __, 1997
between the Company and State Street Bank and Trust Company, as Trustee,
relating to the Notes (the "Indenture"); three global Notes executed by the
Company in the aggregate principal amount of $275,000,000; an executed copy of
the Purchase Agreement; an executed copy of the Registration Rights Agreement
dated as of August __, 1997 (the "Registration Rights Agreement") among the
Company and each of you; an executed copy of the Agreement and
<PAGE> 73
Wasserstein Perella Securities, Inc.
Bear, Stearns & Co. Inc. -2- August __, 1997
Plan of Merger dated as of July 24, 1997 among the Company, NTK Sub, Inc. and
Ply Gem Industries, Inc. (the "Merger Agreement"); and such other documents as
we have deemed necessary as a basis for the opinions expressed herein. Except as
otherwise specified herein, all references to the Offering Memorandum include
the Incorporated Documents.
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 United States of America. We call your
attention to the fact that (i) each of the Indenture, the Notes, the Purchase
Agreement and the Registration Rights Agreement provides that it is to be
governed by the laws of the State of New York and (ii) the Merger Agreement
provides that it is to be governed by the laws of the State of Delaware. For
purposes of the opinions in numbered paragraphs 3, 4, 5 and 6 below, we have
assumed with your permission that the Indenture, the Registration Rights
Agreement, the Notes, the Series B Notes, the Private Exchange Notes, if any,
and the Merger Agreement would be governed by and construed in accordance with
the domestic substantive laws of The Commonwealth of Massachusetts without
giving effect to any choice or conflict of laws rule or provision that would
cause the application of the domestic substantive laws of any other
jurisdiction.
We call your attention to the fact that certain of the contracts,
agreements or documents referred to in paragraph 9(i) below require compliance
by the Company with certain financial ratios in order to incur the indebtedness
represented by the Notes. We express no opinion in numbered paragraph 9(i) below
with respect to any conflict, breach, default, right of acceleration,
requirement of prepayment, consent, lien, charge or encumbrance referred to
therein to the extent any of the foregoing relate to the requirement by the
Company to comply with any such financial ratio.
We note that you have also been delivered today the opinion of Kevin W.
Donnelly, Vice President, General Counsel and Secretary of the Company, as to
certain matters addressed herein and as to certain additional matters.
Insofar as this opinion relates to factual matters, information with
respect to which is in the possession of the Company, we have made inquiries to
the extent we believe reasonable with respect to such matters and have relied
upon representations made by the Company in the Purchase Agreement and the other
Operative Documents and representations made to us by one or more officers of
the Company. Although we have not independently verified the accuracy of such
representations, we do not know of the existence or absence of any fact
contradicting such representations. Any reference herein to "our knowledge,"
"known to us" or any variation thereof shall mean the actual knowledge of
lawyers in this firm who have
<PAGE> 74
Wasserstein Perella Securities, Inc.
Bear, Stearns & Co. Inc. -3- August __, 1997
participated in our representation of the Company in connection with the
preparation of the Offering Memorandum.
Based upon and subject to the foregoing, we are of the opinion that:
1. The Company is duly incorporated and is validly existing as a corporation
in good standing under the laws of the State of Delaware, with corporate
power to own its properties and conduct its business as described the
Offering Memorandum. The Company has all requisite corporate authority to
execute, deliver and perform its obligations under the Purchase
Agreement, each of the other Operative Documents and the Merger
Agreement, to the extent it is a party thereto, and to consummate the
Transactions, including, without limitation, the corporate power and
authority to issue, sell and deliver the Notes and to consummate the
Acquisition, as applicable.
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, assuming the due authorization, execution
and delivery thereof by the other parties named therein, 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; provided, however, that we express no
opinion in this numbered paragraph 4 with respect to any provisions of
the Registration Rights Agreement relating to rights of indemnity or
contribution.
5. The Notes have been duly authorized, executed and delivered by the
Company for issuance and sale to you pursuant to the Purchase Agreement
and, when issued and
<PAGE> 75
Wasserstein Perella Securities, Inc.
Bear, Stearns & Co. Inc. -4- August __, 1997
authenticated in accordance with the terms of the Indenture and delivered
against payment therefor in accordance with the terms of the Purchase
Agreement, 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.
6. The Series B Notes and the Private Exchange Note, 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. The Merger Agreement has been duly authorized, executed and delivered by
the Company and, assuming the due authorization, execution and delivery
thereof by the other parties named therein, 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.
8. When the Notes are issued and delivered pursuant to the Purchase
Agreement at the closing held today, 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.
9. The execution and delivery by the Company of the Purchase Agreement, the
other Operative Documents and the Merger Agreement, the performance by
the Company of its agreements contained therein and the consummation of
the Transactions (including, without limitation, the issuance, sale and
delivery of the Notes by the Company and the consummation of the
Acquisition), as applicable, 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
<PAGE> 76
Wasserstein Perella Securities, Inc.
Bear, Stearns & Co. Inc. -5- August __, 1997
of time or both, would constitute a default) under, result in a material
modification of, or give rise to any right to accelerate the maturity of
or require the prepayment of any obligation of the Company pursuant to,
or require any consent under, 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 Form 10-K, (ii) violate or conflict with
any provisions of the certificate of incorporation or bylaws of the
Company or (iii) to our knowledge (assuming for purposes of this numbered
paragraph 8, compliance with state securities or Blue Sky laws and the
antifraud provisions of federal and state securities laws as to which we
express no opinion), violate or conflict with any judgment, decree,
order, statute, rule or regulation of any court or arbitrator or any
public, governmental or regulatory agency or body having jurisdiction
over the Company or any of its 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. Assuming compliance with applicable state securities and
Blue Sky laws, as to which we express no opinion, and except in
connection with 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 or was required for (1) the
execution, delivery and performance by the Company of the Purchase
Agreement; any of the other Operative Documents to which it is a party or
the Merger Agreement; (2) the issuance and sale of the Notes; or (3) the
consummation of any of the other Transactions, as applicable, except such
as have been obtained and made or have been disclosed in the Offering
Memorandum.
10. The Company is not, and upon consummation of the Transactions will not
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. Neither the Company nor any of its subsidiaries
is a "holding company" or a "subsidiary company" of a holding company, or
an "affiliate" thereof within the meaning of the Public Utility Holding
Company Act of 1935, as amended.
11. Assuming (i) the accuracy of, and compliance with, the representations,
warranties, covenants and agreements of the Company and you 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 you initially resell or otherwise transfer the Notes, as
specified in the Offering Memorandum, and (iii) the compliance by you
with the offering and transfer procedures and restrictions described
<PAGE> 77
Wasserstein Perella Securities, Inc.
Bear, Stearns & Co. Inc. -6- August __, 1997
in the Offering Memorandum, it is not necessary in connection with the
offer, sale and delivery of the Notes to you or in connection with the
initial resale of the Notes by you in the manner contemplated by the
Purchase Agreement and the Offering Memorandum to register the sale of
the Notes to you or the Exempt Resales under the 1933 Act (it being
understood that we do 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.
12. 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.
13. 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.
14. To our 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.
We have not independently verified the accuracy, completeness or fairness
of the statements made or the information contained in the Offering Memorandum,
and, except with respect to the descriptions referred to in paragraph 13 above,
we are not passing upon and do not assume any responsibility therefor. In the
course of the preparation by the Company of the Offering Memorandum, we have
participated in discussions with your representatives and those 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. We have not
reviewed individual litigation files of the Company or consulted with counsel
directly involved in handling particular legal or governmental proceedings for
the Company, our investigation of pending or threatened legal or governmental
proceedings having consisted solely of our participation in the foregoing
discussions. On the basis of information that we have gained in the course of
our representation of the Company in connection with its preparation of the
Offering Memorandum and our participation in the discussions referred to above,
we have no reason to believe that as of the date of the Offering Memorandum or
as of the date hereof, 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 not
misleading. We express no opinion, however, as to the financial
<PAGE> 78
Wasserstein Perella Securities, Inc.
Bear, Stearns & Co. Inc. -7- August __, 1997
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 statements or omissions made by the Company in reliance
upon information furnished in writing to the Company by you in connection with
the Offering Memorandum that is referred to in Section 10 of the Purchase
Agreement, or as to statements in or omissions from the Offering Memorandum
which relate to Ply Gem Industries, Inc. or any of its subsidiaries.
Except as otherwise expressly consented to by us in writing, this opinion
is solely for your benefit.
Very truly yours,
/s/ Ropes & Gray
<PAGE> 79
[NORTEK, INC. LETTERHEAD]
Exhibit C-2
August __, 1997
Wasserstein Perella Securities, Inc.
31 West 52nd Street
New York, New York 10019
Bear, Stearns & Co. Inc.
245 Park Avenue
New York, New York 10167
Re: $275,000,000 PRINCIPAL AMOUNT % SENIOR NOTES DUE 2007
OF NORTEK, INC.
Ladies and Gentlemen:
I am Vice President, General Counsel and Secretary of Nortek, Inc., a
Delaware corporation (the "Company"), and have acted, in a limited capacity, as
counsel to the Company in connection with the issuance and sale by the Company
of $275,000,000 principal amount of % Senior Notes due 2007 (the "Notes").
This opinion is furnished to you pursuant to Section 8(h) of the Purchase
Agreement dated August __, 1997 (the "Purchase Agreement") among the Company and
each of you relating to the issue and sale of the Notes. Terms defined in the
Purchase Agreement and not otherwise defined herein are used herein with the
meanings so defined.
I have examined a copy of the Offering Memorandum of the Company dated
August __, 1997 relating to the offering of the Notes (the "Offering
Memorandum"); the Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 1996 (the "Form 10-K"); the Company's Quarterly Reports on Form
10-Q for the quarterly periods ended March 29, 1997 and June 28, 1997 (together
with the Form 10-K, the "Incorporated Documents"); an executed copy of the
Indenture dated as of August __, 1997 between the Company and State Street Bank
and Trust Company, as Trustee, relating to the Notes (the "Indenture"); three
global Notes executed by the Company in the aggregate principal amount of
$275,000,000; an executed copy of the Purchase Agreement; an executed copy of
the Registration Rights Agreement dated as of August __, 1997 (the "Registration
Rights Agreement") among the Company and each of you; an executed copy of the
Agreement and Plan of Merger dated as of
<PAGE> 80
Wasserstein Perella Securities, Inc.
Bear, Stearns & Co. Inc. -2- August __, 1997
July 24, 1997 among the Company, NTK Sub, Inc. and Ply Gem Industries, Inc. (the
"Merger Agreement"); and such other documents as I have deemed necessary as a
basis for the opinions expressed herein. Except as otherwise specified herein,
all references to the Offering Memorandum include the Incorporated Documents.
I 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 United States of America. I call your
attention to the fact that (i) each of the Indenture, the Notes, the Purchase
Agreement and the Registration Rights Agreement provides that it is to be
governed by the laws of the State of New York and (ii) the Merger Agreement
provides that it is to be governed by the laws of the State of Delaware. For
purposes of the opinions in numbered paragraphs 5, 6, 7 and 8 below, I have
assumed with your permission that the Indenture, the Registration Rights
Agreement, the Notes, the Series B Notes, the Private Exchange Notes, if any,
and the Merger Agreement would be governed by and construed in accordance with
the domestic substantive laws of The Commonwealth of Massachusetts without
giving effect to any choice or conflict of laws rule or provision that would
cause the application of the domestic substantive laws of any other
jurisdiction.
I call your attention to the fact that certain of the contracts,
agreements or documents referred to in paragraph 10(i) below require compliance
by the Company with certain financial ratios in order to incur the indebtedness
represented by the Notes. I express no opinion in numbered paragraph 10(i) below
with respect to any conflict, breach, default, right of acceleration,
requirement of prepayment, consent, lien, charge or encumbrance referred to
therein to the extent any of the foregoing relate to the requirement by the
Company to comply with any such financial ratio.
I note that you have also been delivered today the opinion of Ropes &
Gray, counsel for the Company, as to certain matters addressed herein.
Insofar as this opinion relates to factual matters, information with
respect to which is in the possession of the Company, I have made inquiries to
the extent I believe reasonable with respect to such matters and have relied
upon representations made by the Company in the Purchase Agreement and the other
Operative Documents and representations made to me by one or more officers of
the Company. Although I have not independently verified the accuracy of such
representations, I do not know of the existence or absence of any fact
contradicting such representations. Any reference herein to "my knowledge,"
"known to me" or any variation thereof shall mean my actual knowledge on the
basis of the inquiries and representations referred to above in this paragraph.
Based upon and subject to the foregoing, I am of the opinion that:
<PAGE> 81
Wasserstein Perella Securities, Inc.
Bear, Stearns & Co. Inc. -3- August __, 1997
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 thereto. 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, each of
the other Operative Documents and the Merger Agreement, to the extent it
is a party thereto, and to consummate the Transactions, as applicable,
including, without limitation, the corporate power and authority to
issue, sell and deliver the Notes and to consummate the Acquisition, as
applicable.
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. 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
my 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.
<PAGE> 82
Wasserstein Perella Securities, Inc.
Bear, Stearns & Co. Inc. -4- August __, 1997
6. The Registration Rights Agreement has been duly authorized, executed and
delivered by the Company and, assuming the due authorization, execution
and delivery thereof by the other parties named therein, 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; PROVIDED, HOWEVER, that I express no
opinion in this numbered paragraph 6 with respect to any provisions of
the Registration Rights Agreement relating to rights of indemnity or
contribution.
7. The Notes have been duly authorized, executed and delivered by the
Company for issuance and sale to you 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 of the Purchase Agreement, 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 Note, 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 Merger Agreement has been duly authorized, executed and delivered by
the Company, and, assuming the due authorization, execution and delivery
thereof by the other parties named therein, 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
<PAGE> 83
Wasserstein Perella Securities, Inc.
Bear, Stearns & Co. Inc. -5- August __, 1997
creditors' rights generally and (ii) rights of acceleration and the
availability of equitable remedies may be limited by general principles
of equity.
10. The execution and delivery by the Company of the Purchase Agreement, the
other Operative Documents and the Merger Agreement, to the extent it is a
party thereto, the performance by the Company of its agreements contained
therein, to such extent, and the consummation of the Transactions
(including, without limitation, the issuance, sale and delivery of the
Notes by the Company and the consummation of the Acquisition), as
applicable, 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, result in a material
modification of, 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 pursuant to, or require any consent under, 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 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 my knowledge (assuming for
purposes of this numbered paragraph 9, compliance with state securities
or Blue Sky laws and the anti-fraud provisions of federal and state
securities laws as to which I express no opinion), violate or conflict
with any judgment, decree, order, statute, rule or regulation of any
court or arbitrator 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. Assuming compliance with applicable state securities and
Blue Sky laws, as to which I express no opinion, and except in connection
with 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 or was required for (1) the
execution, delivery and performance by the Company of the Purchase
Agreement, any of the other Operative Documents or the Merger Agreement
to the extent it is a party; (2) the issuance and sale of the Notes; or
(3) consummation of any of the other Transactions, as applicable, except
such as have been obtained and made or have been disclosed in the
Offering Memorandum.
11. To my knowledge, there is no litigation, action, suit, investigation or
proceeding, governmental or otherwise, before any court or before or by
any public, regulatory or
<PAGE> 84
Wasserstein Perella Securities, Inc.
Bear, Stearns & Co. Inc. -6- August __, 1997
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.
12. Except as set forth in the Registration Rights Agreement, to my
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 of the Transactions, 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 any such securities held by such
holders.
13. The Purchase Agreement, the Merger 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.
14. To my 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.
I have not independently verified the accuracy, completeness or fairness
of the statements made or the information contained in the Offering Memorandum,
and, except with respect to the descriptions referred to in paragraph 12 above,
I am not passing upon and do not assume any responsibility therefor. In the
course of the preparation by the Company of the Offering Memorandum, I have
participated in discussions with your representatives and those 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. While I have
responsibility for the legal affairs of the Company, the Company is represented
by separate litigation counsel with respect to litigation matters and I have not
reviewed the files of each such litigation, although, where I have deemed it
appropriate, I have consulted with such counsel in respect of the status of such
litigation. My investigation of pending or threatened legal or governmental
proceedings has consisted of the regular conduct of my duties as the Company's
general counsel and correspondence with litigation counsel and representatives
of the Company. On the basis of information that I have gained in the course of
my representation of the Company in connection with its preparation of the
Offering Memorandum and my participation in the discussions referred to above, I
have no reason to believe that as of the date of the Offering Memorandum or as
of the date hereof, 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 not
misleading. I express no opinion, however, 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 statements or omissions made by the Company in reliance upon the
information furnished in writing to the Company by you in connection with the
Offering Memorandum referred to in Section 10 of the Purchase Agreement, or as
to statements in or omissions from the Offering Memorandum which relate to Ply
Gem Industries, Inc. or any of its subsidiaries.
Except as otherwise expressly consented to by me in writing, this
opinion is solely for your benefit.
Very truly yours,
Kevin W. Donnelly
<PAGE> 85
Wasserstein Perella Securities, Inc.
Bear, Stearns & Co. Inc. -7- August __, 1997
misleading. I express no opinion, however, 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 statements or omissions made by the Company in reliance upon the
information furnished in writing to the Company by you in connection with the
Offering Memorandum referred to in Section 10 of the Purchase Agreement, or as
to statements in or omissions from the Offering Memorandum which relate to Ply
Gem Industries, Inc. or any of its subsidiaries.
Except as otherwise expressly consented to by me in writing, this opinion
is solely for your benefit.
Very truly yours,
/s/ Kevin W. Donnelly
<PAGE> 1
EXHIBIT (1)(c)
NORTEK, INC.,
Company,
and
STATE STREET BANK AND TRUST COMPANY,
Trustee
-------------------------------------
INDENTURE
Dated as of August 26, 1997
-------------------------------------
$310,000,000
Series A and Series B
9 1/8 % Senior Notes due September 1, 2007
<PAGE> 2
TABLE OF CONTENTS(1)
--------------------
Page
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 .................... 21
SECTION 2.03 REGISTRAR AND PAYING AGENT ...................... 22
SECTION 2.04 PAYING AGENT TO HOLD MONEY IN TRUST ............. 23
SECTION 2.05 HOLDER LISTS .................................... 23
SECTION 2.06 TRANSFER AND EXCHANGE ........................... 23
SECTION 2.07 REPLACEMENT NOTES ............................... 33
SECTION 2.08 OUTSTANDING NOTES; DETERMINATIONS OF
HOLDERS' ACTION ................................. 34
SECTION 2.09 TEMPORARY NOTES ................................. 35
SECTION 2.10 CANCELLATION .................................... 35
SECTION 2.11 CUSIP NUMBER .................................... 35
SECTION 2.12 DEFAULTED INTEREST .............................. 35
SECTION 2.13 LIQUIDATED DAMAGES UNDER REGISTRATION
RIGHTS AGREEMENT ................................ 36
ARTICLE 3
REDEMPTION ........................................................ 36
SECTION 3.01 RIGHT TO REDEEM; NOTICES TO TRUSTEE ............. 36
SECTION 3.02 SELECTION OF NOTES TO BE REDEEMED ............... 36
SECTION 3.03 NOTICE OF REDEMPTION ............................ 36
SECTION 3.04 EFFECT OF NOTICE OF REDEMPTION .................. 37
SECTION 3.05 DEPOSIT OF REDEMPTION PRICE ..................... 37
- ----------------------
(1) This Table of Contents shall not, for any purpose, be deemed to be part
of this Indenture.
i
<PAGE> 3
SECTION 3.06 NOTES REDEEMED IN PART .......................... 38
ARTICLE 4
COVENANTS ......................................................... 38
SECTION 4.01 PAYMENT OF NOTES ................................ 38
SECTION 4.02 REPORTS ......................................... 38
SECTION 4.03 COMPLIANCE CERTIFICATES ......................... 39
SECTION 4.04 FURTHER INSTRUMENTS AND ACTS .................... 40
SECTION 4.05 MAINTENANCE OF OFFICE OR AGENCY ................. 40
SECTION 4.06 LIMITATION ON RESTRICTED PAYMENTS ............... 41
SECTION 4.07 LIMITATION ON ADDITIONAL INDEBTEDNESS ........... 42
SECTION 4.08 LIMITATION ON SALE OR ISSUANCE OF
PREFERRED STOCK OF RESTRICTED SUBSIDIARIES ...... 46
SECTION 4.09 LIMITATION ON LIENS ............................. 47
SECTION 4.10 LIMITATION ON CERTAIN RESTRICTIONS
AFFECTING SUBSIDIARIES .......................... 48
SECTION 4.11 REPURCHASE UPON CHANGE OF CONTROL ............... 48
SECTION 4.12 LIMITATION ON USE OF PROCEEDS FROM
ASSET SALES ..................................... 51
SECTION 4.13 LIMITATION ON TRANSACTIONS WITH
AFFILIATES ...................................... 51
SECTION 4.14 LIMITATION ON GUARANTIES BY SUBSIDIARIES ........ 52
SECTION 4.15 PAYMENT OF TAXES AND OTHER CLAIMS ............... 53
SECTION 4.16 CORPORATE EXISTENCE ............................. 53
SECTION 4.17 MAINTENANCE OF PROPERTIES AND INSURANCE ......... 53
SECTION 4.18 STAY, EXTENSION AND USURY LAWS .................. 54
SECTION 4.19 INVESTMENT COMPANY ACT .......................... 54
SECTION 4.20 PAYMENTS FOR CONSENTS ........................... 54
SECTION 4.21 COVENANT TO COMPLY WITH SECURITIES
LAWS UPON PURCHASE OF NOTES ..................... 54
ARTICLE 5
SUCCESSOR CORPORATION ............................................. 55
SECTION 5.01 WHEN THE COMPANY MAY MERGE OR
TRANSFER ASSETS ................................. 55
SECTION 5.02 SUCCESSOR CORPORATION SUBSTITUTED ............... 56
ARTICLE 6
DEFAULTS AND REMEDIES ............................................. 57
SECTION 6.01 EVENTS OF DEFAULT ............................... 57
SECTION 6.02 ACCELERATION .................................... 59
SECTION 6.03 OTHER REMEDIES .................................. 59
SECTION 6.04 WAIVER OF PAST DEFAULTS ......................... 60
SECTION 6.05 CONTROL BY MAJORITY ............................. 60
SECTION 6.06 LIMITATION ON SUITS ............................. 60
ii
<PAGE> 4
SECTION 6.07 RIGHTS OF HOLDERS TO RECEIVE PAYMENT ............ 61
SECTION 6.08 COLLECTION SUIT BY TRUSTEE ...................... 61
SECTION 6.09 TRUSTEE MAY FILE PROOFS OF CLAIM ................ 61
SECTION 6.10 PRIORITIES ...................................... 62
SECTION 6.11 UNDERTAKING FOR COSTS ........................... 62
SECTION 6.12 RESTORATION OF RIGHTS AND REMEDIES .............. 62
ARTICLE 7
TRUSTEE .......................................................... 63
SECTION 7.01 DUTIES OF TRUSTEE ............................... 63
SECTION 7.02 RIGHTS OF TRUSTEE ............................... 64
SECTION 7.03 INDIVIDUAL RIGHTS OF TRUSTEE .................... 65
SECTION 7.04 TRUSTEE'S DISCLAIMER ............................ 65
SECTION 7.05 NOTICE OF DEFAULTS .............................. 65
SECTION 7.06 REPORTS BY TRUSTEE TO HOLDERS ................... 65
SECTION 7.07 COMPENSATION AND INDEMNITY ...................... 65
SECTION 7.08 REPLACEMENT OF TRUSTEE .......................... 66
SECTION 7.09 SUCCESSOR TRUSTEE BY MERGER ..................... 67
SECTION 7.10 ELIGIBILITY; DISQUALIFICATION ................... 67
SECTION 7.11 PREFERENTIAL COLLECTION OF CLAIMS
AGAINST THE COMPANY ............................. 67
ARTICLE 8
DISCHARGE OF INDENTURE ............................................ 68
SECTION 8.01 DISCHARGE OF LIABILITY ON NOTES ................. 68
SECTION 8.02 REPAYMENT TO THE COMPANY OR
SUBSIDIARY GUARANTORS ........................... 69
ARTICLE 9
AMENDMENTS ........................................................ 69
SECTION 9.01 WITHOUT CONSENT OF HOLDERS ...................... 69
SECTION 9.02 WITH CONSENT OF HOLDERS ......................... 70
SECTION 9.03 COMPLIANCE WITH TRUST INDENTURE ACT ............. 71
SECTION 9.04 REVOCATION AND EFFECT OF CONSENTS,
WAIVERS AND ACTIONS ............................ 71
SECTION 9.05 NOTATION ON OR EXCHANGE OF NOTES ................ 71
SECTION 9.06 TRUSTEE TO SIGN SUPPLEMENTAL
INDENTURES ..................................... 71
SECTION 9.07 EFFECT OF SUPPLEMENTAL INDENTURES ............... 71
ARTICLE 10
MISCELLANEOUS ..................................................... 72
SECTION 10.01 TRUST INDENTURE ACT CONTROLS ................... 72
SECTION 10.02 NOTICES ........................................ 72
SECTION 10.03 COMMUNICATION BY HOLDERS WITH OTHER HOLDERS .... 73
iii
<PAGE> 5
SECTION 10.04 CERTIFICATE AND OPINION AS TO
CONDITIONS PRECEDENT .......................... 73
SECTION 10.05 STATEMENTS REQUIRED IN CERTIFICATE
OR OPINION ..................................... 73
SECTION 10.06 SEPARABILITY CLAUSE ............................ 74
SECTION 10.07 RULES BY TRUSTEE, PAYING AGENT AND REGISTRAR ... 74
SECTION 10.08 LEGAL HOLIDAYS ................................. 74
SECTION 10.09 GOVERNING LAW .................................. 74
SECTION 10.10 NO RECOURSE AGAINST OTHERS ..................... 74
SECTION 10.11 SUCCESSORS ..................................... 75
SECTION 10.12 MULTIPLE ORIGINALS ............................. 75
iv
<PAGE> 6
INDENTURE, dated as of August 26, 1997, between Nortek, Inc., a Delaware
corporation (the "Company"), and State Street Bank and Trust Company, a
Massachusetts banking corporation (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 % Series A Senior
Notes due September 1, 2007 (the "Series A Notes") and the 9 % Series B Senior
Notes due September 1, 2007 (the "Series B Notes"):
ARTICLE 1
DEFINITION 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.
2
<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, with respect to any Person, any and all shares,
interests, participations, rights or other equivalents (however designated) of
capital stock (including common or preferred stock), partnership interests or
any other participation right or other interest in the nature of any equity
interest in such Person.
"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
3
<PAGE> 9
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 (other than
the Ply Gem Credit Facility) 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
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<PAGE> 10
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 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
5
<PAGE> 11
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 of any
Subsidiary of such Person (or if such Person is the Company, of any Restricted
Subsidiary) 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 (or such Restricted
Subsidiary, if applicable) to the extent of such restriction or limitation in
such period; (x) the net income of any Person acquired in a pooling transaction
for any period prior to the date of such acquisition; and (xi) 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.
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<PAGE> 12
"Default" means any event which is, or after notice or passage of time or
both would be, an Event of Default.
"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, including
without limitation all Indebtedness outstanding under the Ply Gem Credit
Facility on such date.
"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.
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<PAGE> 14
"Holder" means a Person in whose name a Note is registered on the
Registrar's books.
"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.
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<PAGE> 15
"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.
"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.
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<PAGE> 16
"9 1/4% Notes" means the Company's 9 1/4% Senior Notes due March 15, 2007.
"9 7/8% Notes" means the Company's 9 7/8% Senior Subordinated Notes due
2004.
"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
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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 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 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, 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
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<PAGE> 18
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.
"Ply Gem Credit Facility" means one or more credit facilities between Ply
Gem 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 "Ply Gem Credit Facility." All Ply
Gem Credit Facilities are referred to collectively herein as the "Ply Gem Credit
Facility."
"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
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<PAGE> 19
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 or is redeemable at the sole
option of the holder thereof, in whole or in part, prior to the Stated Maturity
of the Notes.
"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 1/8% Series A Senior Notes due
September 1, 2007 to be issued pursuant to this Indenture.
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<PAGE> 20
"Series B Notes" means the Company's 9 1/8% Series B Senior Notes due
September 1, 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.
"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.
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"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.
"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.
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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 (other than
directors' qualifying shares) is owned by such Person (either directly or
indirectly through Wholly-Owned Subsidiaries).
SECTION 1.02 OTHER DEFINITIONS.
Term Defined
---- in
Section
-------
"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
"IAI Global Note" ........................................ 2.01
"incurrence" ............................................. 4.07
"Legal Holiday" .......................................... 10.08
"Offshore Notes Exchange Date" ........................... 2.01
"Paying Agent" ........................................... 2.03
"QIB Global Note" ........................................ 2.01
"refinance" .............................................. 4.07
"Refinancing Indebtedness" ............................... 4.07
"Registrar" .............................................. 2.03
"Regulation S Purchasers" ................................ 2.01
"Reporting Subsidiary" ................................... 4.06
"Restricted Payment" ..................................... 4.06
"Securities Act" ......................................... 7.04
"surviving entity" ....................................... 5.01
"Temporary Regulation S Global Note" ..................... 2.01
"U.S. Government Obligations" ............................ 8.01
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
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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.
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.
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(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 Registrar.
(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.
(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
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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.
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.
Original Notes offered and sold to "qualified institutional buyers" (as
defined in Rule 144A under the Securities Act) ("QIBs") and institutional
"Accredited Investors" (within the meaning of Rule 501(a)(1), (2), (3) or (7)
under the Securities Act ("IAIs"), in each case in accordance with Rule 144A
under the Securities Act ("Rule 144A") as provided in the Purchase Agreement,
shall be issued initially in the form of two permanent Global Notes (with
separate CUSIP numbers) substantially in the form set forth in Exhibit A
(including the text set forth in footnote 1 thereto and the additional schedule
referred to therein, but excluding the text set forth in footnote 3 thereto),
deposited with the Trustee, as custodian for the Depositor, duly executed by the
Company and authenticated by the Trustee for the Depository, duly executed by
the Company and authenticated by the Trustee as hereinafter provided. One Global
Note (which may be represented by more than one certificate, if so required by
the Depository's rules regarding the maximum principal amount to be represented
by a single certificate) will represent Original Notes sold to QIBs (the "QIB
Global Note"), and the other will represent Original Notes sold to IAIs (the
"IAI Global Note").
Original Notes offered and sold in reliance on Regulation S, if any, shall
be issued initially in the form of one Global Note (the "Temporary Regulation S
Global Note") having a different CUSIP number than that of the QIB Global Note
or the IAI Global Note substantially in the form set forth in Exhibit A
(including the text set forth in footnotes 1 and 3 thereto and the additional
schedule referred to therein), deposited with the Trustee, as custodian for the
Depository, duly executed by the Company and authenticated by the Trustee as
hereinafter provided. The Temporary Regulation S Global Note may not be issued
in definitive form until the later of the completion of the distribution of the
Original Notes and the termination of the "restricted period" (as defined in
Regulation S) with respect to the offer and sale of the Original Notes (the
"Offshore Notes Exchange Date"). The Company shall promptly notify the Trustee
in writing of the
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occurrence of the Offshore Notes Exchange Date and, at any time following the
Offshore Notes Exchange Date, upon receipt by the Trustee and the Company of a
certificate substantially in the form set forth in Exhibit G, the Company shall
execute, and the Trustee shall authenticate and deliver, one or more permanent
certificated Definitive Notes in registered form pursuant to Section 2.06(4).
The aggregate principal amount of each Global Note may from time to time be
increased or decreased by adjustments made on the records of the Trustee, as
custodian for the Depository or its nominee, as hereinafter provided. Transfers
of Original Notes from QIBs to IAIs or persons who acquire an interest in the
Original Notes pursuant to Regulation S (the "Regulation S Purchasers"), from
IAIs to QIBs or Regulation S Purchasers or from Regulation S Purchasers to QIBs
or IAIs, will be represented by appropriate increases and decreases to the
respective amounts of the appropriate Global Notes; provided, however, that such
increases or decreases in the amount of Global Notes shall be made by the
Trustee, as Note Custodian, in accordance with the 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.
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 accompanied by any certificate
and opinions required by the TIA and the following
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paragraph, 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 $310,000,000, 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 $310,000,000. 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 ANS 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 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
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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 LIST 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 other authorized denominations, the
Registrar shall register the transfer or make the
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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 OUTSIDE THE UNITED STATES IN COMPLIANCE WITH REGULATION S
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) Each Temporary Regulation S Global Note shall also bear the
following legend:
"THIS SECURITY MAY NOT BE OFFERED OR SOLD TO A U.S. PERSON (AS SUCH
TERM IS DEFINED IN REGULATION S UNDER THE SECURITIES ACT) OR FOR THE
ACCOUNT OR BENEFIT OF A U.S. PERSON PRIOR TO THE EXPIRATION OF THE OFFSHORE
NOTES EXCHANGE DATE (AS DEFINED IN THE INDENTURE), AND NO TRANSFER OR
EXCHANGE OF THIS SECURITY MAY BE MADE FOR AN INTEREST IN A CERTIFICATED
SECURITY UNTIL AFTER THE LATER OF THE DATE OF EXPIRATION OF THE OFFSHORE
NOTES
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EXCHANGE DATE AND THE DATE ON WHICH THE PROPER REQUIRED CERTIFICATION
RELATING TO SUCH INTEREST HAS BEEN PROVIDED IN ACCORDANCE WITH THE TERMS OF
THE INDENTURE, TO THE EFFECT THAT THE BENEFICIAL OWNER OR OWNERS OF SUCH
INTEREST ARE NOT U.S. PERSONS."
(d) 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 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).
(e) 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
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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.
(f) 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.
(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
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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).
(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
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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.
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 canceled 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.
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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.
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 canceled 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 canceled 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 canceled as provided in this Section 2.10, except as
expressly permitted by this Indenture. All canceled 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
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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.
ARTICLE 3
REDEMPTION
----------
SECTION 3.01 RIGHT TO REDEEM; NOTICES TO TRUSTEE. At any time on and after
September 1, 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.
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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
(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, made at least 45 days prior to the
Redemption Date, 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
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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 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
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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.
(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.
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(2) So long as not contrary to the then current recommendation of the
American Institute of Certified Public Accountants as certified by the
Company to the Trustee in an Officer's Certificate, 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 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.
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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,
(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
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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 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 (other than Redeemable Stock or any Capital Stock convertible into
any security other than such Capital Stock).
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:
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(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
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
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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 any such
Indebtedness incurred by a Subsidiary Guarantor is contractually
subordinated in right of payment to its guarantee of the Notes;
PROVIDED further 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 or ceases to be a
Restricted 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 or ceases to be a Restricted
Subsidiary;
(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;
(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;
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(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 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
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(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, (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, shall
not, when added to all other Indebtedness outstanding under such
clause, 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 (xiv) above,
shall not exceed 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 or the Subsidiary Guaranties 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.
The Company will not, directly or indirectly, incur any Indebtedness that
is expressly subordinated to any other Indebtedness of the Company or any
Restricted Subsidiary unless such Indebtedness is also expressly subordinated to
the Notes (and any Subsidiary Guaranty, as applicable) to the same extent and in
the same manner as such Indebtedness is subordinated to such other Indebtedness
of the Company or such Restricted Subsidiary.
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
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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
or the Ply Gem 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;
(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) and (xiv) of
Section 4.07;
(vi) Liens in respect of Indebtedness permitted by clause (xiii)
of Section 4.07;
(vii) 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
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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
(viii) 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 Ply Gem Credit Facility, (h) the Broan Limited Credit
Facility, (i) any other agreement pursuant to which any Restricted Subsidiary of
the Company incurs Indebtedness in accordance with Section 4.07 and (j) any
agreement effecting a refinancing of Indebtedness issued pursuant to any
agreement or instrument referred to in clause (d), (e), (f), (g), (h) or (i)
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
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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 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
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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 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
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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 equal to or greater than
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 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
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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 (excluding for this purpose, any Indebtedness deemed
to arise from a guarantee by the Company of Indebtedness of any Restricted
Subsidiary of the Company) or any Subsidiary Guarantor (other than the Notes),
unless (a) such liability is in respect of the Company Credit Facility or the
Ply Gem 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 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.
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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
and Section 4.14 in the indenture governing the Company's 9 1/4% 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 or the 9 1/4% Notes includes such a covenant similar
to Section 4.15 of the indenture governing the 9 7/8% Notes or Section 4.14 in
the indenture governing the 9 1/4% 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 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,
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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 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.
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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 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
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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 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
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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;
(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;
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(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) 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 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.
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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, 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 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 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.
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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;
(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.
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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 and to take other actions, including participating as a
member of any committee of creditors, as it may deem 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 or other official 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 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
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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.
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(4) Whether or not expressly so provided, every provision of this
Indenture that 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 actually known to one
of its Trust Officers.
(8) The Trustee shall not be required to examine any reports or
financial information filed with it by the Company pursuant to Section 4.02
to determine whether the limitations set forth in Sections 4.06 through
4.13 have been exceeded.
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.
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(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.
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);
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(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 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, provided that,
if not paid as such expenses, such compensation and expenses shall remain
payable as provided under Section 6.10.
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
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(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 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).
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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 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
hereunder 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
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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, set forth in an Officer's
Certificate accompanied by an Opinion of Counsel, 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.
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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, 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.
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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 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.
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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.
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
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<PAGE> 78
-with a copy to-
State Street Bank and Trust Company
Two International Place - 4th Floor
Boston, MA 02110
Attention: Corporate Trust Department - Nortek Notes
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 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:
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<PAGE> 79
(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 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
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<PAGE> 80
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.
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<PAGE> 81
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: /s/ Kevin W. Donnelly
-----------------------------------------
Name: Kevin W. Donnelly
-----------------------------------
Title: Vice President and General Counsel
-----------------------------------
STATE STREET BANK AND TRUST
COMPANY
By: /s/ Gerald R. Wheeler
-----------------------------------------
Name: Gerald R. Wheeler
-----------------------------------
Title: Vice President
-----------------------------------
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<PAGE> 82
EXHIBIT A
[FORM OF FACE OF NOTE]
NORTEK, INC.
9 1/8% [Series A/B] Senior Note due September 1, 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 September 1, 2007.
Interest Payment Dates: September 1 and March 1, commencing March 1, 1998.
Record Dates: August 15 and February 15.
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> 83
[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> 84
[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
OUTSIDE THE UNITED STATES IN COMPLIANCE WITH REGULATION S UNDER THE SECURITIES
ACT, (2) AGREES THAT IT WILL NOT PRIOR TO THE DATE WHICH IS TWO YEARS
- -------------------
(1) This paragraph should be included only if the Note is issued in global
form.
A-3
<PAGE> 85
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 TERMINATION DATE."](2)
- ---------------------
(2) This paragraph should not be included on Exchange Notes received in an
Exchange Offer.
A-4
<PAGE> 86
["THIS SECURITY MAY NOT BE OFFERED OR SOLD TO A U.S. PERSON (AS SUCH TERM IS
DEFINED IN REGULATION S UNDER THE SECURITIES ACT) OR FOR THE ACCOUNT OR BENEFIT
OF A U.S. PERSON PRIOR TO THE EXPIRATION OF THE OFFSHORE NOTES EXCHANGE DATE (AS
DEFINED IN THE INDENTURE), AND NO TRANSFER OR EXCHANGE OF THIS SECURITY MAY BE
MADE FOR AN INTEREST IN A CERTIFICATED SECURITY UNTIL AFTER THE LATER OF THE
DATE OF EXPIRATION OF THE OFFSHORE NOTES EXCHANGE DATE AND THE DATE ON WHICH THE
PROPER REQUIRED CERTIFICATION RELATING TO SUCH INTEREST HAS BEEN PROVIDED IN
ACCORDANCE WITH THE TERMS OF THE INDENTURE, TO THE EFFECT THAT THE BENEFICIAL
OWNER OR OWNERS OF SUCH INTEREST ARE NOT U.S. PERSONS."](3)
- ---------------------------------------
(3) This paragraph should only be included on the Temporary Regulation S
Global Note.
A-5
<PAGE> 87
[FORM OF REVERSE SIDE OF NOTE]
9 1/8% [Series A/B] Senior Note due September 1, 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 March 1, 1998. 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
August 26, 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 canceled 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.
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(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 Agent, Registrar or co-registrar.
(4) INDENTURE
The Company issued the Notes under an Indenture, dated as of August 26,
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 $310,000,000
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 September 1, 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:
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<PAGE> 89
September 15, REDEMPTION PRICE
2002 104.563%
2003 103.042%
2004 101.521%
2005 and thereafter 100.000%
(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
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<PAGE> 90
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
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(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
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(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
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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> 94
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> 95
SCHEDULE OF INCREASES OR DECREASES IN GLOBAL NOTES
The following increases or decreases in this Global Note have been made:
DATE OF AMOUNT OF AMOUNT OF PRINCIPAL SIGNATURE
EXCHANGE DECREASE IN INCREASE IN AMOUNT OF OF
PRINCIPAL PRINCIPAL THIS GLOBAL AUTHORIZED
AMOUNT OF AMOUNT OF NOTE OFFICER OF
THIS GLOBAL THIS GLOBAL FOLLOWING TRUSTEE OR
NOTE NOTE SUCH DECREASE NOTE
(OR INCREASE) CUSTODIAN
- --------- ------------- ------------ -------------- -------------
<PAGE> 96
EXHIBIT B
CERTIFICATE TO BE DELIVERED UPON EXCHANGE
OR REGISTRATION OF TRANSFER OF NOTES
Re: 9 1/8% [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).
- -----------------------------------
**/ Check applicable box.
B-1
<PAGE> 97
[ ] 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.
[ ] 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
B-2
<PAGE> 98
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 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> 99
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 9 1/8% 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> 100
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> 101
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 1/8% 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> 102
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> 103
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> 104
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> 105
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 would obligate it to become a Subsidiary
Guarantor (if it was not already a Subsidiary Guarantor) such Subsidiary
Guarantor shall be, 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 this Indenture or (ii) the sale or other
disposition (by merger or otherwise) of a 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 this Indenture, such Subsidiary Guarantor shall be
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
E-3
<PAGE> 106
accordance with the terms of this Indenture, including 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> 107
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
August 26, 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> 108
EXHIBIT G
FORM OF CERTIFICATE TO BE DELIVERED
-----------------------------------
UPON TERMINATION OF RESTRICTED PERIOD
-------------------------------------
State Street Bank and Trust Company,
as Registrar
Attention: Corporate Trust Department
Ladies and Gentlemen:
This letter relates to Notes represented by the Temporary Regulation S
Global Note certificate (the "Temporary Certificate"). Pursuant to Section 2.01
of the Indenture dated as of August 26, 1997 relating to the Notes (the
"Indenture"), we hereby certify that (1) we are the beneficial owner of
$[__________] principal amount of Original Notes represented by the Temporary
Certificate and (2) we are a person outside the United States to whom the
Original Notes could be transferred in accordance with Rule 904 of Regulation S
promulgated under the Securities Act of 1933, as amended. Accordingly, you are
hereby requested to issue a Definitive Note representing the undersigned's
interest in the principal amount of Original Notes represented by the Temporary
Certificate, all in the manner provided by the Indenture.
You and the Company are entitled to rely upon this letter and 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 Holder]
By: ________________________
Name:
Date:
Title:
G-1
<PAGE> 109
CROSS REFERENCE TABLE(5)
TIA INDENTURE
SECTION SECTION
310(a)(1)............................................... 7.10
(a)(2)............................................ 7.10
(a)(3)............................................ N.A.(6)
(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.
- ---------------------------------
(5) Note: This Cross Reference Table shall not, for any purpose, be deemed
to be part of this Indenture.
(6) N.A. means Not Applicable.
G-i
<PAGE> 110
(b)............................................... 6.07
(c)............................................... N.A.
317(a)(1)............................................... 6.08
(a)(2)............................................ 6.09
(b)............................................... 2.04
318(a).................................................. 10.01
