-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, DLYzyPv3I0gk/jLmu5fFAx47BbJDOgQCjWohpQyf6tfQI61CkzRjn1Ng5kVXNSNo xxaCwZSN7CqtNmAGPFGeIA== 0000950135-98-004393.txt : 19980729 0000950135-98-004393.hdr.sgml : 19980729 ACCESSION NUMBER: 0000950135-98-004393 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 19980727 ITEM INFORMATION: ITEM INFORMATION: FILED AS OF DATE: 19980728 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: NORTEK INC CENTRAL INDEX KEY: 0000072423 STANDARD INDUSTRIAL CLASSIFICATION: AIR COND & WARM AIR HEATING EQUIP & COMM & INDL REFRIG EQUIP [3585] IRS NUMBER: 050314991 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: SEC FILE NUMBER: 001-06112 FILM NUMBER: 98672605 BUSINESS ADDRESS: STREET 1: 50 KENNEDY PLZ CITY: PROVIDENCE STATE: RI ZIP: 02903 BUSINESS PHONE: 4017511600 MAIL ADDRESS: STREET 1: 50 KENNEDY PLAZA CITY: PROVIDENCE STATE: RI ZIP: 02903 8-K 1 NORTEK, INC. 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) 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. 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 EX-99.1 2 PRESS RELEASE 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 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 - 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. 4 NORTEK, INC. AND SUBSIDIARIES UNAUDITED CONDENSED CONSOLIDATED SUMMARY OF OPERATIONS (In Thousands except per share amounts)
Three Months Ended Six Months Ended ---------------------- --------------------- July 4, June 28, July 4, June 28, 1998 1997 1998 1997 -------- --------- --------- -------- 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 ======== ======== ======== ========
The accompanying notes are an integral part of this unaudited condensed consolidated summary of operations. 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:
For the Three Months For the Six Months Ended June 28, 1997 Ended June 28, 1997 -------------------- ------------------- (In thousands except per share amounts) (unaudited) 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
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 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. EX-99.2 3 PRESS RELEASE 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 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. EX-99.3 4 AGREEMENT CONTAINING CONSENT ORDER 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 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 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; 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 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 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 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. 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 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 -----END PRIVACY-ENHANCED MESSAGE-----