<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-------------------
FORM 8-K
Current Report
Pursuant to Section 13 or 15(d)of
The Securities Exchange Act of 1994
Date of Report (Date of Earliest Event Reported): July 27, 1998
-------------------
NORTEK, INC.
(Exact name of Registrant as specified in its charter)
DELAWARE 1-6112 05-0314991
(State or other jurisdiction (Commission File (I.R.S. Employer
of Incorporation) Number) I.D. Number)
-------------------
50 Kennedy Plaza, Providence, Rhode Island 02903-2360
(Address of Principal Executive Offices) (Zip Code)
<PAGE> 2
ITEM 5. Other Events
Nortek, Inc. is filing herewith a press release issued July 27, 1998 by the
Company as Exhibit 99.1 which is incorporated herein by reference. This press
release was issued to report second quarter 1998 earnings.
Nortek, Inc. is filing herewith a press release issued July 28, 1998 by the
Company as Exhibit 99.2 which is incorporated herein by reference. This press
release was issued to report the pricing of $210,000,000 8 7/8 Senior Notes due
2008.
On July 27, 1998, the FTC voted to accept an Agreement Containing Consent
Order providing for the divestiture of Nortek, Inc.'s M&S Systems LP, thereby
terminating the waiting period with respect to its previously announced
acquisition of NuTone Inc. under the Hart-Scott-Rodino Antitrust Improvements
Act of 1976, as amended. Nortek, Inc. expects to consummate its acquisition of
NuTone Inc. contemporaneously with its offering of $210,000,000 8 7/8 Senior
Notes due 2008. Nortek, Inc. is filing herewith the Agreement Containing Consent
Order accepted by the FTC on July 27, 1998 as Exhibit 99.3 which is incorporated
herein by reference.
ITEM 7. Financial Statements and Exhibits.
(c) Exhibits.
Exhibit 99.1 Press release issued by Nortek, Inc. on July 27, 1998.
Exhibit 99.2 Press release issued by Nortek, Inc. on July 28, 1998.
Exhibit 99.3 Agreement Containing Consent Order.
<PAGE> 3
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, the registrant has duly caused this Current Report on Form 8-K to be
signed on its behalf by the undersigned hereunto duly authorized.
NORTEK, INC.
July 28, 1998 By: /s/ Richard J. Harris
- ------------- ---------------------------
Date Name: Richard J. Harris
Title: Vice President and Treasurer
<PAGE> 1
EXHIBIT 99.1
CONTACT: Richard L. Bready, Chairman
Richard J. Harris, Vice President and Treasurer
(401) 751-1600
RELEASE: IMMEDIATE
NORTEK SALES DOUBLE IN SECOND QUARTER
EARNINGS SIGNIFICANTLY AHEAD OF ANALYSTS' ESTIMATES
-----------------
PROVIDENCE, RI, July 27, 1998--NORTEK, INC. (NYSE:NTK) today reported
stronger-than-expected net sales, EBITDA and earnings from continuing
operations for the second quarter ended July 14, 1998.
Net sales for the quarter were $449.6 million compared to $223.8 million for
the same quarter a year earlier. Of the increase, $207.0 million was
attributable to the Ply Gem businesses acquired in August, 1997.
EBIDA from continuing operations for the quarter was $43.1 million, up 76
percent from $24.4 million for the comparable 1997 quarter. Pre-tax earnings
from continuing operations were $15.5 million, up 32 percent from last year's
$11.7 million. Earnings from continuing operations per diluted share were $0.78
for the 1998 second quarter versus $0.78 for the comparable 1997 quarter and
the "consensus street estimate" of $0.63.
- MORE -
NORTEK, INC. 50 KENNEDY PLAZA, PROVIDENCE, RHODE ISLAND 02903-2360,
401-751-1600 FAX 401-751-4610
<PAGE> 2
Second-quarter revenues reflect an increase of 8 percent for NORTEK'S core
business groups owned in both periods, the Residential Building Products Group
and the Air Conditioning and Heating Products Group. "Operating results for
these two groups were ahead of plan for the quarter," said Richard L. Bready,
Chairman and Chief Executive Officer of NORTEK. "The Ply Gem Windows, Doors and
Siding Group sales exceeded the prior year in this transition year as we
integrate the business into the NORTEK model, implementing new systems and
cost-control measures."
For the first six months of 1998, NORTEK'S net sales doubled to $842.1 million
from $418.0 million a year earlier reflecting both an increase of almost 11
percent from NORTEK'S core businesses owned in both periods and $379.7 million
from the Ply Gem acquisition. EBITDA from continuing operations for the first
six months was $72.2 million, up 70 percent from last year's $42.7 million.
Pre-tax earnings from continuing operations were $18.0 million, compared to
last year's $19.3 million. Diluted earnings per share from continuing
operations were $0.95 for the first six months of 1998 versus $1.25 for the
first half of last year. Per-share results reflect the Company's recent 2.2
million share equity offering completed in May. Mr. Bready noted "that
diluted earnings per share for the first six months of 1998 and 1997 is after
amortization of acquired goodwill of $0.50 per share and $0.14 per share,
respectively."
- PAGE 2 -
<PAGE> 3
The Company has also recently completed the sale of four businesses, including
its Universal-Rundle Corporation subsidiary, and has received cash proceeds in
excess of $59.0 million.
Bready stated that NORTEK's "solid first-half performance and related
developments have set the stage for further profitable growth in a continuing
strong economy." He said the just-announced 5.6-percent seasonally adjusted
increase in housing starts for June, an increase significantly ahead of
analysts' forecasts, was "particularly encouraging as we move toward completing
our acquisition of NuTone."
NORTEK is a leading international manufacturer and distributor of high-quality
competitively priced building, remodeling and indoor environmental control
products for the residential, commercial and industrial markets. The Company
offers a broad array of products for improving the environments where people
live and work. Its products include range hoods and spot ventilation products,
heating and air conditioning systems, wood and vinyl windows and doors, vinyl
siding products, air quality systems, and specialty electronic, wood and
decorating products.
###
This release contains forward-looking statements relating to future financial
results. Actual financial performance may differ as a result of factors over
which the Company has no control. Additional information which could affect the
Company's financial results is included in the Company's Securities and Exchange
Commission filings, copies of which are available from Nortek at no charge.
<PAGE> 4
NORTEK, INC. AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED SUMMARY OF OPERATIONS
(In Thousands except per share amounts)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
---------------------- ---------------------
July 4, June 28, July 4, June 28,
1998 1997 1998 1997
-------- --------- --------- --------
<S> <C> <C> <C> <C>
Net sales ........................... $449,647 $223,759 $842,115 $418,033
-------- -------- -------- --------
Cost of sales ....................... 333,941 158,725 628,595 295,711
Selling, general and administrative
expenses ........................... 79,938 45,521 155,499 88,599
Amortization of acquired goodwill ... 2,614 717 5,174 1,429
-------- -------- -------- --------
416,493 204,963 789,268 385,739
-------- -------- -------- --------
Operating earnings .................. 33,154 18,832 52,847 32,294
Interest expense .................... (19,740) (10,245) (39,198) (17,568)
Investment income ................... 2,086 3,113 4,351 4,574
-------- -------- -------- --------
Earnings from continuing operations
before provision for income taxes .. 15,500 11,700 18,000 19,300
Provision for income taxes .......... 7,000 4,000 8,200 6,900
-------- -------- -------- --------
Earnings from continuing
operations ......................... 8,500 7,700 9,800 12,400
Loss from discontinued operations ... 0 (1,000) 0 (2,000)
-------- -------- -------- --------
Net earnings ........................ $ 8,500 $ 6,700 $ 9,800 $ 10,400
======== ======== ======== ========
Net earnings (loss) per share of
common stock:
Earnings from continuing operations:
Basic ......................... $ .79 $ .80 $ .97 $ 1.28
======== ======== ======== ========
Diluted ....................... $ .78 $ .78 $ .95 $ 1.25
======== ======== ======== ========
Loss from discontinued operations:
Basic ......................... $ -- $ (.10) $ -- $ (.20)
======== ======== ======== ========
Diluted ....................... $ -- $ (.10) $ -- $ (.20)
======== ======== ======== ========
Net earnings
Basic ......................... $ .79 $ .70 $ .97 $ 1.08
======== ======== ======== ========
Diluted ....................... $ .78 $ .68 $ .95 $ 1.05
======== ======== ======== ========
Weighted average number of shares:
Basic ......................... 10,718 9,603 10,129 9,663
======== ======== ======== ========
Diluted ....................... 10,905 9,828 10,311 9,896
======== ======== ======== ========
EBITDA from continuing operations ... $ 43,052 $ 24,423 $ 72,723 $ 42,732
======== ======== ======== ========
</TABLE>
The accompanying notes are an integral part of this unaudited condensed
consolidated summary of operations.
<PAGE> 5
NORTEK, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED SUMMARY OF OPERATIONS
A. The unaudited condensed consolidated summary of operations for Nortek,
Inc. and its subsidiaries (the "Company"), in the opinion of management,
reflects all adjustments necessary for a fair statement of the periods
presented. It is suggested that this unaudited condensed consolidated
summary of operations be read in conjunction with the financial statements
and the notes included in the Company's latest Annual Report on form
10-K/A, and its latest Securities and Exchange Commission Quarterly Report
on form 10-Q.
B. The following presents the approximate unaudited Pro Forma and As Adjusted
net sales, operating earnings, earnings from continuing operations and
diluted earnings from continuing operations per share of the Company for
the three months and six months ended June 28, 1997 and gives pro forma
effect to the acquisition of Ply Gem Industries, Inc. ("Ply Gem"), the
sale of $310,000,000 principal amount of 9 1/8% Notes, the extension of
credit under the Ply Gem credit facility to refinance certain existing
indebtedness and the termination of Ply Gem's accounts receivable
securitization program, (all of which occurred in August 1997), the sale
of $175,000,000 principal amount of 9 1/4% Notes in March 1997, the
refinancing of certain subsidiary indebtedness, the sale of 2,182,500
shares of the Company's common stock in the second quarter of 1998 (the
"Sale of Common Stock"), and reflects the estimated cost reductions as
described below as if such transactions and adjustments had occurred on
January 1, 1997:
<TABLE>
<CAPTION>
For the Three Months For the Six Months
Ended June 28, 1997 Ended June 28, 1997
-------------------- -------------------
(In thousands except per share amounts)
(unaudited)
<S> <C> <C>
PRO FORMA
Net Sales........................ $442,711 $799,761
Operating earnings............... 31,500 46,200
Earnings from continuing
operations.................... 7,700 4,700
Diluted earnings from continuing
operations
Per Share................... .64 .39
AS ADJUSTED
Net Sales........................ $442,711 $799,761
Operating earnings............... 35,600 53,900
Earnings from continuing
operations.................... 10,300 9,700
Diluted earnings from continuing
operations
Per Share................... .86 .80
</TABLE>
Diluted earnings per share from continuing operations, to reflect the pro
forma effect of the Sale of Common Stock as if it occurred on January 1,
1998, would have been $.71 and $.82 for the three and six months ended
July 4, 1998, respectively.
In computing the pro forma results, earnings have been reduced by the net
interest income on the aggregate cash portion of the purchase price of the
acquisition at the historical rate earned by the Company and interest
expense on indebtedness incurred in connection with the acquisition and
the refinancing and repayment of certain indebtedness of Ply Gem. Earnings
have also been reduced by amortization of goodwill and reflect net
adjustments to depreciation expense as a result of an increase in the
estimated fair market value of property and equipment and changes in
depreciable lives. Interest expense on the subsidiary indebtedness
refinanced with funds from the sale of the 9 1/4% Notes was excluded at an
average interest rate consistent with the indebtedness outstanding which
was refinanced, net of the tax effect. Interest expense was included on
the 9 1/4 % Notes at a
<PAGE> 6
NORTEK, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED SUMMARY OF OPERATIONS
(CONTINUED)
rate of approximately 9 1/4%, plus amortization of deferred debt expense
and debt discount net of tax effect, and on the 9 1/8% Notes at a rate of
approximately 9 1/8%, plus amortization of deferred debt expense and
debt discount, net of tax effect. Pro Forma results reflect investment
income earned on the cash proceeds from the actual date of sale of common
stock to July 4, 1998.
In addition, since the Ply Gem acquisition date, the Company has realized,
and expects to continue to realize, cost savings as a result of the
acquisition. These savings result from several actions, including: (i) the
elimination of expenses associated with Ply Gem's New York headquarters;
(ii) the consolidation of Ply Gem's corporate functions such as accounting,
legal and risk management into Nortek; and (iii) the identification and
realization of under-performing product lines. Pro Forma operating earnings
for the three months and six months ended June 28, 1997 have been adjusted
for the pro forma effect of estimated cost reductions directly attributable
to the acquisition totaling approximately $2,054,000 and approximately
$3,721,000 respectively. As Adjusted operating earnings for the three
months and six months ended June 28, 1997 (see above) includes cost
reductions directly attributable to the acquisition and additional
estimated cost savings related to expenses associated with the elimination
of Ply Gem's New York headquarters, the consolidation of Ply Gem corporate
functions and the rationalization of certain under performing product lines
which total approximately $4,036,000 and $7,714,000, respectively.
C. In the fourth quarter of 1997, the Company adopted a plan of disposition
for its Plumbing Products Group and provided a pre-tax reserve of
$2,500,000 for future expenses including interest expense. The Plumbing
Products Group was sold on July 10, 1998. In the three months and six
months ended July 4, 1998, approximately $525,000 and $1,000,000
respectively of corporate interest expense was allocated against this
reserve. In the three months and six months ended June 28, 1997, the loss
for discontinued operations included an allocation of corporate interest
expense of approximately $475,000 and $950,000 respectively.
<PAGE> 1
NORTEK NEWS
EXHIBIT 99.2
CONTACT: Richard L. Bready, Chairman
Richard J. Harris, Vice President and Treasurer
(401) 751-1600
RELEASE: IMMEDIATE
NORTEK PRICES $210,000,000
OF SENIOR NOTES
------------------------
PROVIDENCE. RI, July 28, 1998--NORTEK, INC. (NYSE:NTK) today announced that it
has entered into an agreement to sell $210.0 million principal amount of 8 7/8
percent Senior Notes at a price of 99.641 percent of face value. The Notes
will mature August 1, 2008. The amount of Notes sold represents an increase of
$60 million principal amount over the previously announced $150 million.
The Senior Notes are being issued and sold in a private Rule 144A offering to
institutional investors, which is expected to close on July 31, 1998. NORTEK
will use the proceeds from the transaction to finance a portion of the
previously announced acquisition of NuTone, Inc.
"We are extremely pleased with the response to the Senior Note offering and
believe that it represents an attractive source of funding for this important
- MORE -
NORTEK, INC. 50 KENNEDY PLAZA, PROVIDENCE, RHODE ISLAND 02903-2360,
401-751-1600 FAX 401-751-4610
<PAGE> 2
acquisition," said NORTEK'S Chairman and Chief Executive Officer, Richard L.
Bready. "We look forward to successfully integrating NuTone and growing the
combined businesses."
The Senior Notes have not been registered under the Securities Act of 1933, as
amended, or under the securities law of any state and may not be offered or
sold in the United States or in any such state absent an applicable exemption
from registration under the Securities Act and any such law.
NORTEK is a leading international manufacturer and distributor of high-quality,
competitively priced building, remodeling and indoor environmental control
products for the residential, commercial and industrial markets. The Company
offers a broad array of products for improving the environments where people
live and work. Its products include range hoods and spot ventilation products,
heating and air conditioning systems, wood and vinyl windows and doors, vinyl
siding products, air quality systems, and specialty electronic, wood and
decorating products.
###
This release contains forward-looking statements relating to future financial
results. Actual financial performance may differ as a result of factors over
which the Company has no control. Additional information which could affect
the Company's financial results is included in the Company's Securities and
Exchange Commission filings, copies of which are available from Nortek at no
charge.
<PAGE> 1
UNITED STATES OF AMERICA
BEFORE FEDERAL TRADE COMMISSION
In the matter of
NORTEK, INC., a corporation.
File No. 981-0111
AGREEMENT CONTAINING CONSENT ORDER
The Federal Trade Commission ("Commission"), having initiated an investigation
of the acquisition by Nortek, Inc. ("Nortek"), through its wholly-owned
subsidiary NTK Sub, Inc., of all the outstanding shares of the capital stock of
NuTone Inc., and it now appearing that Nortek, hereinafter sometimes referred to
as "proposed respondent," is willing to enter into an agreement containing an
order to divest certain assets and providing for other relief:
IT IS HEREBY AGREED by and between proposed respondent, by its duly authorized
officers and attorney, and counsel for the Commission that:
1. Proposed respondent Nortek is a corporation organized, existing and
doing business under and by virtue of the laws of the State of
Delaware with its office and principal place of business located at 50
Kennedy Plaza, Providence, Rhode Island 02903.
2. Proposed respondent admits all the jurisdictional facts set forth
in the draft of complaint here attached.
3. Proposed respondent waives:
a. any further procedural steps;
b. the requirement that the Commission's decision contain a
statement of findings of fact and conclusions of law;
c. all rights to seek judicial review or otherwise to challenge
or contest the validity of the order entered pursuant to this
agreement; and
d. any claim under the Equal Access to Justice Act.
4. Within thirty (30) days of the date of this agreement is signed by
proposed respondent and every thirty (30) days thereafter until the
order becomes final, proposed respondent shall submit a report,
pursuant to Section 2.33 of the Commission's Rules, signed by the
proposed respondent setting forth in
<PAGE> 2
detail the manner in which the proposed respondent will comply with
Paragraph II of the order when and if entered. Such report will not
become part of the public record unless and until the accompanying
agreement and order are accepted by the Commission for public comment.
5. This agreement shall not become part of the public record of the
proceeding unless and until it is accepted by the Commission. If this
agreement is accepted by the Commission it, together with the draft of
complaint contemplated thereby, will be placed on the public record
for a period of sixty (60) days and information in respect thereto
publicly released. The Commission thereafter may either withdraw its
acceptance of this agreement and so notify the proposed respondent, in
which event it will take such action as it may consider appropriate,
or issue and serve its complaint (in such form as the circumstances
may require) and decision, in disposition of the proceeding.
6. This agreement is for settlement purposes only and does not
constitute an admission by proposed respondent that the law has been
violated as alleged in the draft of complaint here attached, or that
the facts as alleged in the draft complaint, other than jurisdictional
facts, are true.
7. This agreement contemplates that, if it is accepted by the
Commission, and if such acceptance is not subsequently withdrawn by
the Commission pursuant to the provisions of ss. 2.34 of the
Commission's Rules, the Commission may, without further notice to the
proposed respondent, (1) issue its complaint corresponding in form and
substance with the draft of complaint here attached and its decision
containing the following order in disposition of the proceeding and
(2) make information public with respect thereto. When so entered, the
order shall have the same force and effect and may be altered,
modified or set aside in the same manner and within the same time
provided by statute for other orders. The order shall become final
upon service. Delivery by the U.S. Postal Service of the complaint and
decision containing the agreed-to order to proposed respondent's
address as stated in this agreement shall constitute service. Proposed
respondent waives any right it may have to any other manner of
service. The complaint may be used in construing the terms of the
order, and no agreement, understanding, representation, or
interpretation not contained in the order or the agreement may be
used to vary or contradict the terms of the order.
8. By signing this agreement, proposed respondent represents that it
can accomplish the full relief contemplated by this agreement.
9. Proposed respondent has read the proposed complaint and order
contemplated hereby. Proposed respondent understands that once the
order has been issued, it will be required to file one or more
compliance reports showing that it has fully complied with the order.
Proposed respondent
<PAGE> 3
further understands that it may be liable for civil penalties in the
amount provided by law for each violation of the order after it
becomes final. Proposed respondent agrees to comply with the terms of
the proposed order from the date proposed respondent executes this
agreement containing consent order.
ORDER
I.
IT IS ORDERED that, as used in this order, the following definitions shall
apply:
A. "Respondent" or "Nortek" means Nortek, Inc., its directors,
officers, employees, agents, representatives, successors, and assigns;
its subsidiaries, including but not limited to M & S Systems LP, and
its divisions, groups and affiliates controlled by Nortek, Inc., and
the respective directors, officers, employees, agents,
representatives, successors, and assigns of each.
B. M & S Systems LP ("M & S") is a limited partnership organized,
existing, and doing business under and by virtue of the laws of the
State of Delaware, with its principal place of business located at
2861 Congressman Lane, Dallas, Texas 75220. M & S is a wholly-owned
subsidiary of Nortek.
C. "Commission" means the Federal Trade Commission.
D. "Hard-Wired Residential Intercoms" means electrical devices
installed in residences to provide audio-only room-to-room or
room-to-entrance communication or monitoring functions through
in-the-wall low voltage wiring, including, but not limited to, such
devices that incorporate music features.
E. "Assets To Be Divested" means M & S and all its assets, properties,
business and goodwill, tangible and intangible, including, but not
limited to, the following:
1. all machinery, fixtures, equipment, vehicles, transportation
facilities, furniture, tools and other tangible personal
property;
2. all customer lists, vendor lists, catalogs, sales promotion
literature, advertising materials, research materials, technical
information, management information systems, software,
inventions, trade secrets, intellectual property, patents and
patent applications and formulas, technology, know-how,
specifications, designs, engineering, drawings, processes and
quality control data;
3. all copyrights, brands, brand names, trade marks and trade
names owned or used by M & S, and all rights relating thereto,
except that the Broan and Novi trade names and the trade marks
shall not be included;
<PAGE> 4
4. inventory and storage capacity;
5. all rights, titles and interests in and to owned or leased
real property, together with appurtenances, licenses and permits;
6. all rights, titles and interests in and to the contracts
entered into in the ordinary course of business with customers
(together with associated bid and performance bonds), suppliers,
sales representatives, distributors, agents, personal property
lessors, personal property lessees, licensors, licensees,
consignors and consignees;
7. all rights under warranties and guarantees, express or
implied;
8. all books, record, files; and
9. all items of prepaid expense.
F. "Proposed Acquisition" means the proposed acquisition by Nortek of
all of the shares of the capital stock of NuTone Inc.
II.
IT IS FURTHER ORDERED that:
A. Respondent shall divest at no minimum price, absolutely and in good
faith, within six (6) months from the date respondent executes the
agreement containing consent order, the Assets To Be Divested.
B. Respondent shall divest the Assets To Be Divested only to an
acquirer that receives the prior approval of the Commission and only
in a manner that receives the prior approval of the Commission. The
purpose of the divestiture of the Assets To Be Divested is to ensure
the continued use of the Assets To Be Divested in the same business in
which the Assets To Be Divested are engaged at the time of the
Proposed Acquisition, and to remedy the lessening of competition in
the manufacture, production and sale of Hard-Wired Residential
Intercoms resulting from the Proposed Acquisition as alleged in the
Commission's complaint.
C. Pending divestiture of the Assets To Be Divested, respondent shall
take such actions as are necessary to maintain the viability and
marketability of the Assets To Be Divested and to prevent the
destruction, removal, wasting, deterioration, or impairment of any of
the Assets To Be Divested except for ordinary wear and tear.
D. Upon reasonable notice from the acquirer to respondent, respondent
shall provide such technical assistance to the acquirer as is
reasonably necessary to enable the acquirer to manufacture and sell
products in substantially the same manner and quality as they were
manufactured and sold prior to the divestiture of the assets described
in Paragraph I.E. of this agreement, except that Nortek shall only be
required to provide such technical assistance that is within its
operation or control and shall not be required to provide third-party
<PAGE> 5
technical assistance. Such assistance shall include reasonable
consultation with knowledgeable employees and training at the
acquirer's or the respondent's facility, at the acquirer's option, for
a period of time sufficient to satisfy the acquirer's management that
its personnel are appropriately trained in the skills necessary to
manufacture and sell the products. Respondent shall convey all
know-how necessary to manufacture and sell the products in
substantially the same manner and quality as they were manufactured
and sold prior to the divestiture. However, respondent shall not be
required to continue providing such assistance for more than one year
from the date of the divestiture. Respondent shall charge the acquiror
at a rate no more than its own direct costs for providing such
technical assistance.
E. Respondent shall comply with all terms of the Agreement to Hold
Separate, attached to this order and made a part hereof as Appendix I.
The Agreement to Hold Separate shall continue in effect until such
time as respondent has divested all the Assets To Be Divested as
required by this order.
III.
IT IS FURTHER ORDERED that:
A. If Nortek has not divested, absolutely and in good faith and with
the Commission's prior approval, the Assets To Be Divested within the
time period in Paragraph II, the Commission may appoint a trustee to
divest the Assets To Be Divested. In the event that the Commission or
the Attorney General brings an action pursuant to ss. 5(l) of the
Federal Trade Commission Act, 15 U.S.C. ss. 45(l), or any other
statute enforced by the Commission, Nortek shall consent to the
appointment of a trustee in such action. Neither the appointment of a
trustee nor a decision not to appoint a trustee under this Paragraph
shall preclude the Commission or the Attorney General from seeking
civil penalties or any other relief available to it, including a
court-appointed trustee, pursuant to ss. 5(l) of the Federal Trade
Commission Act, or any other statute enforced by the Commission, for
any failure by the respondent to comply with this order.
B. If a trustee is appointed by the Commission or a court pursuant to
Paragraph III.A. of this order, respondent shall consent to the
following terms and conditions regarding the trustee's powers, duties,
authority, and responsibilities:
1. The Commission shall select the trustee, subject to the
consent of respondent, which consent shall not be
unreasonably withheld. The trustee shall be a person with
experience and expertise in acquisitions and divestitures.
If respondent has not opposed, in writing, including the
reasons for opposing, the selection of any proposed trustee
within
<PAGE> 6
ten (10) days after notice by the staff of the Commission to
respondent of the identity of any proposed trustee,
respondent shall be deemed to have consented to the
selection of the proposed trustee.
2. Subject to the prior approval of the Commission, the trustee
shall have the exclusive power and authority to divest the
Assets To Be Divested.
3. Within ten (10) days after appointment of the trustee,
respondent shall execute a trust agreement that, subject to
the prior approval of the Commission and, in the case of a
court-appointed trustee, of the court, transfers to the
trustee all rights and powers necessary to permit the
trustee to effect the divestiture required by this order.
4. The trustee shall have twelve (12) months from the date the
Commission approves the trust agreement described in
Paragraph III.B.3. to accomplish the divestiture, which
shall be subject to the prior approval of the Commission.
If, however, at the end of the twelve-month period, the
trustee has submitted a plan of divestiture or believes that
divestiture can be achieved within a reasonable time, the
divestiture period may be extended by the Commission, or, in
the case of a court-appointed trustee, by the court;
provided, however, the Commission may extend this period
only two (2) times.
5. The trustee shall have full and complete access to the
personnel, books, records and facilities related to the
Assets To Be Divested or to any other relevant information,
as the trustee may request. Respondent shall develop such
financial or other information as such trustee may request
and shall cooperate with the trustee. Respondent shall take
no action to interfere with or impede the trustee's
accomplishment of the divestiture. Any delays in divestiture
caused by respondent shall extend the time for divestiture
under this Paragraph in an amount equal to the delay, as
determined by the Commission or, for a court-appointed
trustee, by the court.
6. The trustee shall use his or her best efforts to negotiate
the most favorable price and terms available in each
contract that is submitted to the Commission, subject to
respondent's absolute and unconditional obligation to divest
expeditiously at no minimum price. The divestiture shall be
made in the manner as set out in Paragraph II of this order;
provided, however, if the trustee receives bona fide offers
from more than one acquiring entity, and if the Commission
determines to approve more than one such acquiring entity,
the trustee shall divest to the acquiring entity or entities
selected by respondent from among those approved by the
Commission.
7. The trustee shall serve, without bond or other security, at
the cost and expense of respondent, on such reasonable and
customary terms and conditions as the Commission or a court
may set. The trustee shall have the authority to employ, at
the cost and expense of respondent, such consultants,
accountants, attorneys, investment bankers, business
brokers, appraisers, and other representatives and
assistants as are necessary to carry out the trustee's
duties and responsibilities. The
<PAGE> 7
trustee shall account for all monies derived from the
divestiture and all expenses incurred. After approval by the
Commission and, in the case of a court-appointed trustee, by
the court, of the account of the trustee, including fees for
his or her services, all remaining monies shall be paid at
the direction of the respondent, and the trustee's power
shall be terminated. The trustee's compensation shall be
based at least in significant part on a commission
arrangement contingent on the trustee's divesting the Assets
To Be Divested.
8. Respondent shall indemnify the trustee and hold the
trustee harmless against any losses, claims, damages,
liabilities, or expenses arising out of, or in connection
with, the performance of the trustee's duties, including all
reasonable fees of counsel and other expenses incurred in
connection with the preparation for, or defense of any
claim, whether or not resulting in any liability, except to
the extent that such liabilities, losses, damages, claims,
or expenses result from misfeasance, gross negligence,
willful or wanton acts, or bad faith by the trustee.
9. If the trustee ceases to act or fails to act diligently,
a substitute trustee shall be appointed in the same manner
as provided in Paragraph III.A. of this order.
10. The Commission or, in the case of a court-appointed
trustee, the court, may on its own initiative or at the
request of the trustee issue such additional orders or
directions as may be necessary or appropriate to accomplish
the divestiture required by this order.
11. The trustee shall have no obligation or authority to
operate or maintain the Assets To Be Divested.
12. The trustee shall report in writing to respondent and
the Commission every sixty (60) days concerning the
trustee's efforts to accomplish divestiture.
IV.
IT IS FURTHER ORDERED that within thirty (30) days after the date this
order becomes final and every thirty (30) days thereafter until respondent has
fully complied with the provisions of Paragraphs II or III of this order,
respondent shall submit to the Commission a verified written report setting
forth in detail the manner and form in which it intends to comply, is complying,
and has complied with Paragraphs II and III of this order. Respondent shall
include in its compliance reports, among other things that are required from
time to time, a full description of the efforts being made to comply with
Paragraphs II and III of the order, including a description of all substantive
contacts or negotiations for the divestiture and the identity of all parties
contacted. Respondent shall include in its compliance reports copies of all
written communications to and from such parties, all internal memoranda, and all
reports and recommendations concerning divestiture. The final compliance report
shall include a statement that the divestiture has been accomplished in the
manner approved by the Commission and shall include the date the divestiture was
accomplished.
<PAGE> 8
V.
IT IS FURTHER ORDERED that respondent shall notify the Commission at least
thirty (30) days prior to any proposed change in the corporate respondent that
may affect compliance obligations arising out of the order, such as dissolution,
assignment, sale resulting in the emergence of a successor corporation, or the
creation of dissolution of subsidiaries or any other change in the corporation.
VI.
IT IS FURTHER ORDERED that, for the purpose of determining or securing
compliance with this order, upon written request, respondent shall permit any
duly authorized representative of the Commission:
A. Access, during office hours and in the presence of counsel, to all
facilities and access to inspect and copy all books, ledgers,
accounts, correspondence, memoranda and other records and documents in
the possession or under the control of respondent relating to any
matters contained in this order; and
B. Upon five days' notice to respondent and without restraint or
interference from it, to interview officers, directors, employees,
agents or independent contractors of respondent.
Signed this ___ day of ________________, 19__.
NORTEK, INC., A CORPORATION FEDERAL TRADE COMMISSION
<PAGE> 9
By:____________________________ By:____________________________
Richard L. Bready Paul G. Block
Chairman and Chief Executive Officer Gary S. Cooper
Colleen S. Lynch
David I. Keniry
___________________________ Attorneys
Kevin J. Arquit, Esq. Boston Regional Office
Rogers & Wells
Counsel for Nortek, Inc. Approved:
___________________________________
Andrew D. Caverly
Acting Director
Boston Regional Office
____________________________________
Willard K. Tom
Deputy Director Bureau of Competition
____________________________________
William J. Baer
Director
Bureau of Competition
