-----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, SE2LqLXgAHNjZWtVsiTcmoJrETPfP7uEMz4GA8C65OaqoGfpJ1E94WC95BuM8foE Kj/buMzEn8CGeIdmk60LGQ== 0000950172-02-001461.txt : 20020701 0000950172-02-001461.hdr.sgml : 20020701 20020701132950 ACCESSION NUMBER: 0000950172-02-001461 CONFORMED SUBMISSION TYPE: SC 13D PUBLIC DOCUMENT COUNT: 3 FILED AS OF DATE: 20020701 SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: NORTEK INC CENTRAL INDEX KEY: 0000072423 STANDARD INDUSTRIAL CLASSIFICATION: MILLWOOD, VENEER, PLYWOOD & STRUCTURAL WOOD MEMBERS [2430] IRS NUMBER: 050314991 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D SEC ACT: 1934 Act SEC FILE NUMBER: 005-30364 FILM NUMBER: 02693178 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 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: K HOLDINGS INC CENTRAL INDEX KEY: 0001176878 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D BUSINESS ADDRESS: STREET 1: 320 PARK AVE 24TH FL CITY: NEW YORK STATE: NY ZIP: 10022 BUSINESS PHONE: 2127513939 MAIL ADDRESS: STREET 1: 320 PARK AVE 24TH FL CITY: NEW YORK STATE: NY ZIP: 10022 SC 13D 1 s418076.txt SC 13D UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 SCHEDULE 13D UNDER THE SECURITIES EXCHANGE ACT OF 1934* NORTEK, INC. (Name of Issuer) Common Stock, par value $1.00 per share Special Common Stock, par value $1.00 per share (Title of Class of Securities) 65655910 (CUSIP NUMBER) James J. Connors, II K Holdings, Inc. 320 Park Avenue New York, NY 10022 (212) 751-3939 (Name, Address and Telephone Number of Persons Authorized to Receive Notices and Communications) Copy To: Lou R. Kling Skadden, Arps, Slate, Meagher & Flom LLP Four Times Square New York, NY 10036 (212) 735-3000 June 20, 2002 (Dates of Events which Require 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 Rule13d-1(e), 13d-1(f) or 13d-1(g), check the following box: [ ] NOTE: Schedules filed in paper format shall include a signed original and five copies of this schedule, including all exhibits. See Rule 13d-7 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 9 Pages CUSIP NO. 65655910 SCHEDULE 13D Page 2 of 9 Pages 1. NAME OF REPORTING PERSONS S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSONS K Holdings, Inc. 2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) / / (b) /x/ 3. SEC USE ONLY 4. SOURCE OF FUNDS OO/Not Applicable 5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(d) or 2(e): / / 6. CITIZENSHIP OR PLACE OF ORGANIZATION Delaware NUMBER OF 7. SOLE VOTING POWER SHARES BENEFICIALLY 0 - Common Stock OWNED BY 0 - Special Common Stock EACH REPORTING 8. SHARED VOTING POWER PERSON WITH 408,150 - Common Stock* 1,588,697 - Special Common Stock* 9. SOLE DISPOSITIVE POWER 0 - Common Stock 0 - Special Common Stock 10. SHARED DISPOSITIVE POWER 0 - Common Stock 0 - Special Common Stock 11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 408,150 - Common Stock* 1,588,697 - Special Common Stock* 12. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES /X/ The amount set forth in Row (11) excludes 236,800 shares of Common Stock and 46,263 shares of Special Common Stock held in various benefit plans of the Issuer for which Richard L. Bready disclaimed beneficial ownership on the Schedule 13D Mr. Bready filed on June 24, 2002. ___________________ * Reflects the number of shares of Common Stock and Special Common Stock of Nortek, Inc. beneficially owned by Richard L. Bready as of June 20, 2002, as represented by the Schedule 13D filed by Richard L. Beady on June 24, 2002. Page 2 of 9 Pages CUSIP NO. 65655910 SCHEDULE 13D Page 3 of 9 Pages 13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 16.1% of Common Stock, including Special Common Stock. 91.9% of Special Common Stock. 14. TYPE OF REPORTING PERSON CO Page 3 of 9 Pages CUSIP NO. 65655910 SCHEDULE 13D Page 4 of 9 Pages ITEM 1. SECURITY ISSUER. The class of equity securities to which this statement on Schedule 13D (the "Statement") relates is the Common Stock, par value $1.00 per share (the "Common Stock"), and the Special Common Stock, par value $1.00 per share (the "Special Common Stock"), each of Nortek, Inc., a Delaware corporation (the "Issuer"). The principal executive offices of the Issuer are located at 50 Kennedy Plaza, Providence, Rhode Island 02903. ITEM 2. IDENTITY AND BACKGROUND. (a)-(c), (f) The name of the person filing this Statement is K Holdings, Inc., a Delaware corporation ("K Holdings" or the "Reporting Person"). The principal business of K Holdings will be the acquisition of the outstanding shares of capital stock, other than shares owned by certain members of management, of Nortek Holdings (as defined in Item 4 below) and the operation of Nortek Holdings after such acquisition. All of the outstanding capital stock of K Holdings is beneficially owned by Kelso Investment Associates VI, L.P., a Delaware limited partnership ("KIA IV"), and KEP VI, LLC, a Delaware limited liability company, ("KEP VI"), which are two private investment funds formed by Kelso & Company L.P., a Delaware limited partnership ("Kelso"). Kelso is a private investment firm specializing in acquisition transactions. The general partner of KIA VI is Kelso GP VI, LLC, a Delaware limited liability company ("Kelso GP VI"), the principal business of which is serving as the general partner of KIA VI. The principal business address of K Holdings, KIA VI, KEP VI and Kelso GP VI is c/o Kelso & Company, 320 Park Avenue, 24th Floor, New York, New York 10022. The name, citizenship, principal occupation and address of each managing member of Kelso GP VI and KEP VI is set forth on Schedule I, which is incorporated by reference herein. (d)-(e) During the last five years, none of the persons or entities referred to in this Item 2 (including those persons listed on Schedule I) has been (i) convicted in a criminal proceeding (excluding traffic violations and similar misdemeanors) or (ii) a party to a civil proceeding or a judicial or administrative body of competent jurisdiction and as a result of such proceeding, was or is 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. All of the persons or entities referred to in this Item 2 (including those persons listed on Schedules I) hereby disclaim beneficial ownership of any shares of Common Stock or Special Common Stock, and the filing of this Statement shall not be construed as an admission that such persons or entities are, for purposes of Section 13(d) of the Securities Exchange Act of 1934, as amended, (the "Exchange Act") the beneficial owners of any such shares of Common Stock or Special Common Stock. ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION. K Holdings may be deemed to have acquired beneficial ownership of 408,150 shares of Common Stock and 1,588,697 shares of Special Common Stock pursuant to a Voting Agreement, dated June 20, 2002, (the "Voting Agreement") entered into among the Issuer, K Holdings and Richard L. Bready ("RLB"). However, K Holdings disclaims any beneficial ownership of the shares of Common Stock and Special Common Stock that are covered by the Voting Agreement. Subject to the terms of the Voting Agreement, RLB has agreed to (a) vote, all of the Common Stock and Special Common Stock that he owns (i) in favor of the Recapitalization Agreement, (as defined in Item 4), the transactions contemplated thereby and any actions required in furtherance thereof, (ii) against any action or agreement that would result in a breach in any material respect of any covenant, representation or warranty or any other obligation of the Issuer under the Voting Agreement, Recapitalization Agreement or Exchange Agreement (as defined in Item 4 below), (iii) against certain extraordinary corporate transactions, asset sales, acquisitions, or other transaction intended to impede the transactions contemplated by the Recapitalization Agreement, (iv) against any change in the composition of the Board of Directors of the Issuer, other than as contemplated by the Recapitalization Agreement, and (v) against any amendment to the Certificate of Incorporation or by-laws of the Issuer other than as contemplated by the Recapitalization Agreement, and (b) grant an irrevocable proxy to K Holdings and designees of the Special Committee of the Board of Directors of the Issuer, intended to be used only in the event of a failure by RLB to comply with the obligations described in clause (a) above, to vote all of the shares of Common Stock and Special Common Stock held by RLB Page 4 of 9 Pages CUSIP NO. 65655910 SCHEDULE 13D Page 5 of 9 Pages (i) pursuant to the items in clause (a) above in the case of K Holdings and (ii) pursuant to the item in clause (a)(i) above in the case of the designees of the Special Committee. The Voting Agreement was entered into in consideration of the execution and delivery of the Recapitalization Agreement and K Holdings did not pay additional consideration in connection with the execution and delivery of the Voting Agreement. The foregoing description of the Voting Agreement is qualified in its entirety by reference to the Voting Agreement, a copy of which is attached hereto as Exhibit 1 and is incorporated herein by reference. ITEM 4. PURPOSE OF TRANSACTION. (a), (b), (e) and (g) On June 20, 2002, the Issuer, Nortek Holdings, Inc., a Delaware Corporation and a direct wholly owned subsidiary of the Issuer ("Nortek Holdings"), and K Holdings entered into an Agreement and Plan of Recapitalization (the "Recapitalization Agreement") pursuant to which, through a series of transactions, the Issuer will become an indirect subsidiary of K Holdings. As an initial step, Nortek Holdings Merger Sub, Inc., a Delaware corporation and a direct wholly owned subsidiary of Nortek Holdings will merge with and into the Issuer (the "Holding Company Merger") whereby the Issuer shall continue as the surviving corporation and become a direct wholly owned subsidiary of Nortek Holdings and each share the Issuer's Common Stock and Special Common Stock will be converted into a share of common stock, par value $1.00 per share, and special common stock, par value $1.00 per share, respectively, of Nortek Holdings. The restated certificate of incorporation and by-laws of the Issuer as in effect immediately prior to the Holding Company Merger, shall be the certificate of incorporation and by-laws of Nortek Holdings after the Holding Company Merger. Following the satisfaction or waiver of the conditions set forth in the Recapitalization Agreement, including obtaining shareholder approval for the transactions contemplated thereby (the "Recapitalization Conditions"), Nortek Holdings will file an amendment to its certificate of incorporation with the Secretary of State of Delaware, whereby each share of issued and outstanding Common Stock and Special Common Stock shall be reclassified (the "Reclassification") into one fully paid and nonassessable share of Class B redeemable common stock, par value $1.00 per share, of Nortek Holdings. Shortly thereafter, Nortek Holdings will redeem (the "Redemption") all of the shares of Class B redeemable common stock for $46.00 in cash and K Holdings will purchase from Nortek Holdings shares of newly formed Class A common stock for $46.00 per share. Additionally, as part of the transactions contemplated by the Recapitalization Agreement, K Holdings, the Issuer, Nortek Holdings and RLB have entered into the Exchange Agreement, dated June 20, 2002, pursuant to which, subject to the Recapitalization Conditions and other conditions, prior to the Reclassification, RLB will exchange all of the shares of Common Stock and Special Common Stock that he owns for a newly formed class of preference stock of Nortek Holdings and all of the options that he owns for new options. Following the exchange, a portion of the preference stock owned by RLB will be sold to K Holdings for $46.00 in cash, and the remaining will be converted into Class A common stock of Nortek Holdings after the Redemption. The purpose of entering into the Voting Agreement was to aid in facilitating the consummation of the transactions contemplated by the Recapitalization Agreement. (c) Not Applicable. (d) Pursuant to the Recapitalization Agreement, the Issuer will use its reasonable best efforts to obtain the resignation of each director of Nortek Holdings when the transactions contemplated by the Recapitalization Agreement are complete, other than RLB. The Board of Directors of Nortek Holdings following the transactions contemplated by the Recapitalization Agreement shall consist of five to eleven directors. (f) Not Applicable. (h) - (i)If the transactions contemplated by the Recapitalization Agreement are consummated, the Common Stock of the Issuer will be delisted from the New York Stock Exchange and will be deregistered under Section 12(g)(4) of the Exchange Act. Page 5 of 9 Pages CUSIP NO. 65655910 SCHEDULE 13D Page 6 of 9 Pages The foregoing descriptions of the Voting Agreement, Recapitalization Agreement, Holding Company Merger, Exchange Agreement, and the transactions related thereto, are qualified in their entirety by reference to the Voting Agreement, Recapitalization Agreement, Exchange Agreement, the Senior Secured Credit Facility Commitment Letter dated May 31, 2002 by and between Nortek, Fleet Capital Corporation and Fleet Securities, Inc., the Bridge Facility Commitment Letter dated June 20, 2002 by and between Kelso, UBS AG, Stamford Branch, and UBS Warburg LLC, the Form of Certificate of Amendment to the Restated Certificate of Incorporation of Nortek Holdings, Inc., and the Form of Certificate of the Designations, Powers, Preferences and Rights of Series B Convertible Preference Stock of Nortek Holdings, Inc., copies of which are attached hereto as Exhibits 1, 2, 3, 4, 5, 6 and 7, respectively, and are incorporated herein by reference. ITEM 5. INTEREST IN SECURITIES OF THE ISSUER. (a) - (b)The responses of K Holdings with respect to Rows 11, 12 and 13 of the cover pages to this Statement that relate to the aggregate number and percentage of Common Stock and Special Common Stock are incorporated herein by reference. The responses of K Holdings with respect to Rows 7, 8, 9, and 10 of the cover pages of this Statement that relate to the number of shares as to which K Holdings has sole power to vote or to direct the vote, shared power to vote or to direct the vote and sole or shared power to dispose or to direct the disposition are incorporated herein by reference. K Holdings may be deemed to have shared power to vote such shares of Common Stock and Special Common Stock with respect to the limited matters described in Item 3 above. However, K Holdings disclaims any beneficial ownership of the shares of Common Stock and Special Common Stock that are covered by the Voting Agreement. Except as set forth in this Statement, to the knowledge of K Holdings, no person named in Item 2 beneficially owns any shares of Common Stock or Special Common Stock. (c) Except as described in this Statement, there have been no other transactions in the securities of the Issuer effected by K Holdings or, to the knowledge of K Holdings, the other persons named in Item 2. (d) Other than with respect to the voting rights described in Item 3 and Item 4 above, neither K Holdings nor, to the knowledge of K Holdings, any person named in Item 2 possesses any powers, rights or privileges with respect to the Issuer's securities. (e) Not applicable. ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT TO SECURITIES OF THE ISSUER. Except as described in this Statement, the Reporting Person presently has no contracts, arrangements, understandings or relationships with any other person with respect to any securities of the Issuer, including but not limited to the transfer or voting of any shares of Common Stock or Special Common Stock, finder's fees, joint ventures, loans or option arrangements, puts or calls, guarantees of profits, division of profits or loss or the giving or withholding of proxies. ITEM 7. MATERIAL TO BE FILED AS EXHIBITS. 1. Voting Agreement dated June 20, 2002 by and between Nortek, Inc., K Holdings, Inc., an affiliate of Kelso & Company, L.P., and Richard L. Bready (incorporated herein by reference to Exhibit 4 of the Schedule 13D filed by Richard L. Bready on June 24, 2002, File No. 005-30364). 2. Agreement and Plan of Recapitalization dated June 20, 2002 by and between Nortek, Inc., Nortek Holdings, Inc., a wholly owned subsidiary of Nortek, Inc., and K Holdings, Inc., an affiliate of Kelso & Company, L.P. (incorporated herein by reference to Exhibit 1 of the Schedule 13D filed by Richard L. Bready on June 24, 2002, File No. 005-30364). 3. Exchange Agreement dated June 20, 2002 by and between Nortek, Inc., Nortek Holdings, Inc., a wholly owned subsidiary of Nortek, Inc., K Holdings, Inc., an affiliate of Kelso & Company, L.P., and Richard L. Bready (incorporated herein by reference to Exhibit 5 of the Schedule 13D filed by Richard L. Bready on June 24, 2002, File No. 005-30364). Page 6 of 9 Pages CUSIP NO. 65655910 SCHEDULE 13D Page 7 of 9 Pages 4. Senior Secured Credit Facility Commitment Letter dated May 31, 2002 by and between Nortek, Inc., Fleet Capital Corporation and Fleet Securities, Inc (incorporated herein by reference to Exhibit 2 of the Schedule 13D filed by Richard L. Bready on June 24, 2002, File No. 005-30364). 5. Bridge Facility Commitment Letter dated June 20, 2002 by and between Kelso & Company, L.P., UBS AG, Stamford Branch and UBS Warburg LLC (incorporated herein by reference to Exhibit 3 of the Schedule 13D filed by Richard L. Bready on June 24, 2002, File No. 005-30364). 6. Form of Certificate of Amendment to the Restated Certificate of Incorporation of Nortek Holdings, Inc. 7. Form of Certificate of the Designations, Powers, Preferences and Rights of Series B Convertible Preference Stock of Nortek Holdings, Inc. 8. Press Release, dated June 20, 2002 (incorporated herein by reference to Exhibit 6 of the Schedule 13D filed by Richard L. Bready on June 24, 2002, File No. 005-30364). Page 7 of 9 Pages CUSIP NO. 65655910 SCHEDULE 13D Page 8 of 9 Pages Schedule I The following table sets forth the name and present principal occupation of each managing member of Kelso GP VI and KEP VI. The business address of each such person is c/o Kelso & Company, L.P. ("Kelso"), 320 Park Avenue, 24th Floor, New York, New York 10022 and each such person is a citizen of the United States. Managing Member Present Principal Employment - ------------------------------------------------------------------------------ Frank T. Nickell President and Chief Executive Officer of Kelso Thomas R. Wall, IV Managing Director of Kelso George E. Matelich Managing Director of Kelso Michael B. Goldberg Managing Director of Kelso David I. Wahrhaftig Managing Director of Kelso Frank K. Bynum Managing Director of Kelso Philip E. Berney Managing Director of Kelso Page 8 of 9 Pages CUSIP NO. 65655910 SCHEDULE 13D Page 9 of 9 Pages 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: July 1, 2002 K Holdings, Inc. /s/ James J. Connors, II ------------------------------ Name: James J. Connors, II Title: Vice President Page 9 of 9 Pages EX-6 3 s365305.txt EX 6 Exhibit 6 CERTIFICATE OF AMENDMENT TO THE RESTATED CERTIFICATE OF INCORPORATION OF NORTEK HOLDINGS, INC. Nortek Holdings, Inc., a Delaware corporation (hereinafter called the "Corporation"), hereby certifies as follows: FIRST: This Certificate of Amendment further amends the Restated Certificate of Incorporation of the Corporation to create two new classes of common stock and to reclassify all outstanding shares of all classes of common stock into one of such newly created classes of common stock under the terms herein set forth. SECOND: The amendment to the Restated Certificate of Incorporation contained herein was duly adopted in accordance with Section 242 of the General Corporation Law of the State of Delaware ("GCL"). THIRD: Article FIFTH of the Corporation's Restated Certificate of Incorporation is hereby amended to read in its entirety as set forth below: FIFTH: (A) Authorized Shares. The total number of shares of stock which the Corporation shall have authority to issue is 52,000,000, of which the Corporation shall have authority to issue (i) [_____] shares of Class A Common Stock, par value $1.00 per share (the "Class A Common Stock"), (ii) [_____] shares of Class B Common Stock, par value $1.00 per share (the "Class B Common Stock"), and (iii) [_____] shares of Preference Stock, par value $1.00 per share (the "Preference Stock"). The Class A Common Stock and the Class B Common Stock are hereinafter referred to collectively as the "Common Stock." (B) Common Stock. Except as otherwise provided in this Article FIFTH, the Class A Common Stock and the Class B Common Stock shall have the same rights and privileges and shall rank equally, share ratably and be identical in all respects as to all matters. (1) Voting Rights. Subject to applicable law and the rights of any outstanding series of Preference Stock to vote as a separate class or series, the shares of Class A Common Stock and Class B Common Stock shall vote together as a single class and each share of Common Stock shall entitle the holder thereof to one (1) vote upon all matters upon which stockholders shall have the right to vote. (2) Dividends and Distributions. Subject to the preferential and other dividend rights of any outstanding series of Preference Stock, holders of Class A Common Stock and Class B Common Stock shall be entitled to such dividends and other distributions in cash, stock or property of the Corporation when and as such dividends and other distributions may be declared thereon by the Board of Directors from time to time out of assets or funds of the Corporation legally available therefor. No dividend or other distribution may be declared or paid on any share of Class A Common Stock unless a like dividend or other distribution is simultaneously declared or paid, as the case may be, on each share of Class B Common Stock, nor shall any dividend or other distribution be declared or paid on any share of Class B Common Stock unless a like dividend or other distribution is simultaneously declared or paid, as the case may be, on each share of Class A Common Stock, in each case without preference or priority of any kind; provided, however, that all dividends and distributions on the Class A Common Stock and Class B Common Stock payable in shares of Common Stock of the Corporation shall be made in shares of Class A Common Stock and Class B Common Stock, respectively; provided, further, that the Redemption (as defined below) shall not constitute any such dividend or distribution and the shares of Class B Common Stock may be redeemed without any dividend or distribution being made to the holders of the Class A Common Stock. (3) Class B Common Stock Redemption. (a) Immediately following the Purchase Transactions and the Distribution (each as defined in the Agreement and Plan of Recapitalization, dated June 20, 2002, as may be amended from time to time by and among Nortek, Inc., the Corporation, and K Holdings, Inc. (the "Recapitalization Agreement")), the Corporation shall irrevocably call for redemption and redeem (the "Redemption") in whole the outstanding shares of Class B Common Stock at a redemption price (the "Redemption Price") of $46.00 per share. The date and time of such Redemption is hereinafter referred to as the "Redemption Time." Promptly following the call for Redemption, the Corporation shall issue a press release to such effect and notify the Exchange Agent (as defined in the Recapitalization Agreement) thereof. (b) The Corporation shall promptly cause to be mailed a notice of such redemption by first class mail, postage prepaid, to each holder of record of the shares to be redeemed at such holder's address as the same appears on the stock register of the Corporation; provided that neither the failure to give such notice nor any defect therein shall affect the validity of the giving of notice for the redemption of any share of Class B Common Stock to be redeemed except as to the holder to whom the Corporation has failed to give said notice or except as to the holder whose notice was defective. Each such notice shall state: (i) the Redemption Time, (ii) the number of shares of Class B Common Stock to be redeemed; (iii) the Redemption Price; and (iv) the place or places where certificates for such shares are to be surrendered for payment of the Redemption Price, and such notice shall be accompanied by a letter of transmittal for use by the holder of Class B Common Stock in surrendering such shares. Upon the mailing of any such notice of redemption, the Corporation shall become obligated to redeem at the Redemption Time specified thereon all shares of Class B Common Stock. (c) On or after the Redemption Time, each holder of shares of Class B Common Stock shall surrender the certificate evidencing such shares (together with a duly completed letter of transmittal) to the Exchange Agent or another bank or trust company designated by the Corporation, having a capital and surplus of at least $1,000,000,000, and shall thereupon be entitled to receive payment of the Redemption Price. If, at the Redemption Time, funds in cash in an amount sufficient to pay the aggregate Redemption Price for all outstanding shares of Class B Common Stock shall be available therefor and shall have been irrevocably set aside and deposited with the Exchange Agent or another bank or trust company, having a capital and surplus of at least $1,000,000,000, for purposes of payment of such Redemption Price with irrevocable instructions and authority to such bank or trust company to pay to each holder of Class B Common Stock the Redemption Price upon surrender of each certificate for Class B Common Stock, then, notwithstanding that the certificates evidencing any shares so called for redemption shall not have been surrendered, as of the Redemption Time the shares shall no longer be deemed outstanding, the holders thereof shall cease to be stockholders of the Corporation, and all rights whatsoever with respect to such redeemed shares (except the right of the holders to receive the Redemption Price, without interest, upon surrender of their certificates therefor) shall terminate, except if the Corporation shall default in payment of the Redemption Price to any holder of Class B Common Stock, in which case the rights of such holder to receive the Redemption Price shall continue unless and until such shares are redeemed and such Redemption Price is paid in accordance with the terms hereof. If at the Redemption Time, the Corporation does not have sufficient capital and surplus legally available to redeem all the outstanding shares of Class B Common Stock, the Corporation shall take all measures permitted under the GCL to increase the amount of its capital and surplus legally available, and the Corporation shall redeem as many shares of Class B Common Stock as it may legally redeem, ratably from the holders thereof in proportion to the number of shares held by them, and shall thereafter from time to time, as soon as it shall have funds available therefor, redeem as many shares of Class B Common Stock as it legally may until it has redeemed all of the outstanding shares of Class B Common Stock. (d) No share of Class B Common Stock acquired by the Corporation by reason of purchase, redemption, conversion or otherwise shall be reissued, and all such shares shall be canceled, retired and eliminated from the shares which the Corporation shall be authorized to issue and after any of the foregoing events occur that result in no shares of Class B Common Stock remaining outstanding, the Corporation shall not thereafter issue any additional shares of Class B Common Stock. (C) Preference Stock. The Board of Directors is expressly authorized to provide for the issuance of all or any shares of the Preference Stock in one or more classes or series, and to fix for each such class or series such voting powers, full or limited, or no voting powers, and such distinctive designations, preferences and relative, participating, optional or other special rights and such qualifications, limitations or restrictions thereof, as shall be stated and expressed in the resolution or resolutions adopted by the Board of Directors providing for the issuance of such class or series and as may be permitted by the GCL, including, without limitation, the authority to provide that any such class or series may be (i) subject to redemption at such time or times and at such price or prices; (ii) entitled to receive dividends (which may be cumulative or non-cumulative) at such rates, on such conditions, and at such times, and payable in preference to, or in such relation to, the dividends payable on any other class or classes or any other series; (iii) entitled to such rights upon the dissolution of, or upon any distribution of the assets of, the Corporation; or (iv) convertible into, or exchangeable for, shares of any other class or classes of stock, or of any other series of the same or any other class or classes of stock, of the Corporation at such price or prices or at such rates of exchange and with such adjustments; all as may be stated in such resolution or resolutions. FOURTH: Effective upon the time this Certificate of Amendment becomes effective, (i) each presently outstanding share of Common Stock, and each presently outstanding share of Special Common Stock shall, without any action on the part of the respective holders thereof, be reclassified as, and changed into (the "Reclassification"), one share of Class B Common Stock. Upon consummation of the Reclassification, the holders of shares of Class B Common Stock of the Corporation shall have all of the rights accorded to them by law, this Restated Certificate of Incorporation, as amended, and the Recapitalization Agreement. IN WITNESS WHEREOF, Nortek Holdings, Inc. has caused this Certificate to be duly executed in its corporate name this [____] day of [_____], 2002. Nortek Holdings, Inc. By:___________________ Name: Title: EX-7 4 s367394.txt EX-7 Exhibit 7 CERTIFICATE OF THE DESIGNATIONS, POWERS, PREFERENCES AND RIGHTS OF SERIES B CONVERTIBLE PREFERENCE STOCK OF NORTEK HOLDINGS, INC. PURSUANT TO SECTION 151 OF THE GENERAL CORPORATION LAW OF THE STATE OF DELAWARE ---------------------------------------------------- NORTEK HOLDINGS, INC. (the "Corporation"), a corporation organized and existing under and by virtue of the provisions of the General Corporation Law of the State of Delaware (the "GCL"), certifies that the following resolution was adopted by the Board of Directors of the Corporation: "RESOLVED, that pursuant to the authority expressly granted to and vested in the Board of Directors of the Corporation (the "Board of Directors") by the provisions of the Restated Certificate of Incorporation of the Corporation (the "Certificate of Incorporation"), there is hereby created, out of the 7,000,000 shares of preference stock, par value $1.00 per share, of the Corporation authorized in Article FIFTH of the Certificate of Incorporation (the "Preference Stock"), a series of the Preference Stock consisting of [______] shares, which series shall have the following powers, designations, preferences and relative, participating, optional or other rights, and the following qualifications, limitations and restrictions (in addition to any powers, designations, preferences and relative, participating, optional or other rights, and any qualifications, limitations and restrictions, set forth in the Certificate of Incorporation which are applicable to the Preference Stock): 1. Creation, Number and Designation. Pursuant to Article FIFTH, section (C), of the Certificate of Incorporation, a class of Preference Stock is hereby created and designated as Series B Convertible Preference Stock (the "Series B Preference Stock"). The number of shares constituting the Series B Preference Stock shall be [___] at $1.00 par value per share. 2. Definitions. For purposes of this Certificate of Designation, the following terms shall have the respective meanings indicated in this Section 2: Board of Directors shall have the meaning set forth in the preamble hereto. Business Day shall mean any calendar day which is not a Saturday, Sunday or public holiday under the laws of the State of New York. Certificate of Incorporation shall have the meaning set forth in the preamble hereto. Certificate of Designation shall mean this Certificate of Designation, as amended. Class A Common Stock shall have the meaning set forth in Section 7 hereof. Common Adjustment shall have the meaning set forth in Section 5(a)(i) hereof. Common Stock shall mean the Common Stock of the Corporation. Conversion Ratio shall have the meaning set forth Section 7(a) hereof. Corporation shall have the meaning set forth in the preamble hereto. Distribution shall mean the declaration or payment of any dividend (whether in cash or otherwise) on or in respect of any shares of any class of capital stock of any person (other than dividends payable solely in shares of common stock of such person), the purchase, redemption, or other retirement of any shares of any class of capital stock of any person, directly or indirectly through a subsidiary or otherwise, the return of capital by any person to its stockholders as such or any other distribution on or in respect of any shares of any class of capital stock of any person. Fair Market Value shall mean, as to any security, the Twenty Day Average of the closing prices of such security's sales on all domestic securities exchanges on which such security may at the time be listed. If at any time such security is not listed on any domestic securities exchange, the "Fair Market Value" of such security shall be the fair market value thereof as determined in good faith by the Board of Directors. GCL shall have the meaning set forth in the preamble hereto. Initial Purchase Price shall mean, with respect to any share of Series B Preference Stock, the price per share paid to the Corporation for such share of Series B Preference Stock; provided that, if shares of capital stock of the Corporation are exchanged for or used to purchase the Series B Preference Stock pursuant to an Exchange Agreement (as defined in the Recapitalization Agreement), the Initial Purchase Price shall be equal to the Redemption Consideration (as defined in the Recapitalization Agreement). Junior Securities shall mean shares of capital stock in the Corporation other than the Series B Preference Stock, whether presently outstanding or hereafter issued, that do not expressly provide that such series ranks senior to or on parity with the Series B Preference Stock as to either rights on payment of dividends or rights on liquidation, winding up or dissolution and shall include the Common Stock, the Special Common Stock and the Class A Common Stock. Liquidation Event shall have the meaning set forth in Section 5(a)(iii) hereof. Parity Liquidation Preference shall have the meaning set forth in Section 5(a)(i) hereof. Parity Securities shall mean each class or series of capital stock that expressly provides that such series ranks on parity with the Series B Preference Stock as to either rights on payments of dividends or rights on liquidation, winding up or dissolution. Participating Securities shall have the meaning set forth in Section 4(b) hereof. Preference Stock shall have the meaning set forth in the preamble hereto. Recapitalization Agreement shall mean the Agreement and Plan of Recapitalization, dated as of June 20, 2002, by and among the Corporation, Nortek, Inc., and K Holdings, Inc., as the same may be amended from time to time in accordance with its terms. Senior Securities shall mean each class or series of capital stock that expressly provides that such series ranks senior to the Series B Preference Stock as to either rights on payments of dividends or rights on liquidation, winding up or dissolution. Series B Liquidation Preference shall have the meaning set forth in Section 5(a)(i) hereof. Series B Preference Stock shall have the meaning set forth in Section 1 hereof. Series B Preference Stock Initial Issue Date shall mean the date upon which shares of Series B Preference Stock are issued. Special Common Stock shall mean the Special Common Stock of the Corporation. Twenty Day Average means, with respect to any prices and in connection with the calculation of Fair Market Value, the average of such prices over the twenty Business Days ending on and including the Business Day immediately prior to the day as of which "Fair Market Value" is being determined. 3. Ranking. (a) Except as otherwise provided herein or in the applicable certificate of designation or amendment to the Certificate of Incorporation establishing a class or series of capital stock, the Series B Preference Stock shall, with respect to dividends and rights on liquidation, winding up or dissolution, rank (i) senior to each class of Junior Securities, (ii) on parity with each class or series of Parity Securities and (iii) junior to each class or series of Senior Securities. (b) The respective definitions of Senior Securities, Junior Securities and Parity Securities shall include any rights, warrants, debt securities or options exercisable for or convertible into any of the Senior Securities, Junior Securities and Parity Securities, as the case may be. (c) The Series B Preference Stock shall be subject to the creation of Senior Securities, Parity Securities and Junior Securities. 4. Preference Dividends. (a) Except as provided below, no Distributions shall be payable on shares of Series B Preference Stock. (b) Right to Preference Dividends. Each share of Series B Preference Stock shall be entitled to receive when, as and if declared by the Board of Directors out of funds of the Corporation legally available therefor its pro rata share of Distributions paid out by the Corporation on shares of its Common Stock (and any other security entitled to Distributions therewith, together with the Common Stock, the "Participating Securities"). In order to determine the pro rata participation right of a share of Series B Preference Stock, each such share of Series B Preference Stock shall participate pro rata assuming conversion into the largest number of full shares of Common Stock into which such shares of Series B Preference Stock could be converted, pursuant to Section 7 set forth below, on the date the Corporation declares such Distribution. (c) Priority. Until such time as all current and accrued dividends on any Senior Securities shall have been paid (i) no Distribution whatsoever (other than a dividend payable solely in Junior Securities or Parity Securities, respectively) shall be paid or declared, on any Junior Securities or Parity Securities, and (ii) no shares of Junior Securities or Parity Securities shall be purchased, redeemed or acquired by the Corporation, and no monies shall be paid into or set aside or made available for a sinking fund for the purchase, redemption, acquisition or retirement for value thereof; provided, however, that the Corporation may repurchase shares of Junior Securities or Parity Securities held by an officer of or consultant to the Corporation subject to a stock repurchase agreement under which the Corporation has the right or obligation to repurchase such shares in the event of the termination of an employment or consulting arrangement or other similar discontinuation of such relationship; provided, further, that the foregoing shall not prohibit the Redemption, the Reclassification (each as defined in the Recapitalization Agreement), or any cash payments in connection therewith. 5. Liquidation Rights of Series B Preference Stock (a) Preference. (i) Upon any Liquidation Event (as defined below) no Distribution shall be made to the holders of Junior Securities, unless, prior thereto, the holders of shares of Series B Preference Stock shall have received, out of the assets of the Corporation available for distribution, $.05 per share (the "Series B Liquidation Preference") and the holders of any Parity Securities shall have received any applicable liquidation preference in respect thereof pursuant to the terms thereof, subject to clause (ii) below (the "Parity Liquidation Preference"). Following the payment of the full amount of the Series B Liquidation Preference and the Parity Liquidation Preference, no additional distributions shall be made to the holders of shares of Series B Preference Stock or holders of shares of Parity Securities, as the case may be, unless, prior thereto, the holders of shares of Junior Securities shall have received an amount per share (the "Common Adjustment") equal to the Series B Liquidation Preference, subject to clause (ii) below. Following the payment of the full amount of the Series B Liquidation Preference, the Parity Liquidation Preference and the Common Adjustment, as applicable, in respect of all outstanding shares of Series B Preference Stock, Parity Securities and Junior Securities, respectively, holders of Series B Preference Stock, holders of shares of Parity Securities and holders of shares of Junior Securities shall receive their ratable and proportionate share of the remaining assets to be distributed in respect thereof, on a per share basis, respectively. (ii) In the event that there are not sufficient assets available to permit payment in full of the Series B Liquidation Preference and the Parity Liquidation Preference, then such remaining assets shall be distributed ratably to the holders of Series B Preference Stock and Parity Securities in proportion to their respective liquidation preferences. In the event that there are not sufficient assets available to permit payment in full of the Common Adjustment, then such remaining assets shall be distributed ratably to the holders of Junior Securities. (iii) For the purposes of this Certificate of Designation "Liquidation Event" shall be deemed to include any liquidation, dissolution or winding up of the Corporation, whether voluntary or involuntary. Neither the consolidation or merger of the Corporation into or with any other entity, nor the sale or transfer by the Corporation of all or any part of its assets, nor the reduction, reclassification or redemption of the capital stock of the Corporation, shall be deemed to be a Liquidation Event. (b) Securities or Other Property. Whenever the distribution provided for in this Section 5 shall be payable in securities or other property other than cash, the value of such distribution shall be (i) the Fair Market Value of such securities and/or (ii) the fair market value of such other property as determined in good faith by the Board of Directors. 6. Voting Rights. (a) The holders of shares of Series B Preference Stock shall not be entitled to any voting rights except as hereinafter provided in this Section 6 or as otherwise provided by law. (b) Each holder of shares of Series B Preference Stock shall be entitled to vote together with the holders of Common Stock (and any other security entitled to vote with the Common Stock, including the Special Common Stock) as a single class on all matters submitted to a vote of the holders of Common Stock and, except as otherwise expressly provided herein, shall be entitled to the number of votes equal to the largest number of full shares of Common Stock into which such shares of Series B Preference Stock could be converted, pursuant to the provisions of Section 7 set forth below, at the record date for the determination of the stockholders entitled to vote on such matters or, if no such record date is established, at the date such vote is taken. (c) So long as any shares of Series B Preference Stock remain outstanding, the Corporation shall not, directly or indirectly, without the written consent or waiver of the holders of at least 90% of the then outstanding shares of Series B Preference Stock, (i) amend any provision of the Corporation's Certificate of Incorporation in such a manner as would alter or change the powers, preferences or special rights of the holders of shares of Series B Preference Stock so as to effect such holders adversely; it being expressly provided that the creation of any Junior Securities shall be deemed not to adversely affect the holders of the Series B Preference Stock or (ii) authorize or issue any Senior Securities or Parity Securities. 7. Conversion. The holders of Series B Preference Stock shall have the following rights with respect to the conversion of such shares of Series B Preference Stock into shares of Common Stock or Class A Common Stock (as defined in the Recapitalization Agreement), as applicable: (a) Optional Conversion by Holder. Subject to and in compliance with this Section 7, each share of Series B Preference Stock shall be convertible, at any time following, in the case of clause (x) below, the termination of the Recapitalization Agreement or, in the case of clause (y) below, the Reclassification, into one (the "Conversion Ratio") fully paid and nonassessable share of (x) Common Stock or (y) in the event of and following the Reclassification, Class A Common Stock to be created pursuant to the Charter Amendment (as defined in the Recapitalization Agreement). (b) Automatic Conversion. Immediately following the Redemption Time (as defined in the Recapitalization Agreement), each share of Series B Preference Stock shall automatically be converted into a number of shares of Class A Common Stock equal to the then existing Conversion Ratio. (c) Adjustments for Stock Dividends, Subdivisions or Splits and Combinations. If at any time or from time to time after the Series B Preference Stock Initial Issue Date the number of outstanding shares of Common Stock or Class A Common Stock is increased by a stock dividend payable in shares of Common Stock or Class A Common Stock, as the case may be, or by a subdivision or split-up of shares of Common Stock or Class A Common Stock then the Conversion Ratio then in effect immediately before that stock dividend, subdivision or split shall be proportionately increased, and, conversely, if the Corporation at any time or from time to time after the Series B Initial Issue Date combines the outstanding shares of Common Stock or Class A Common Stock into a smaller number of shares, the Conversion Ratio then in effect immediately before that combination shall be proportionately decreased; it being understood that no such adjustments shall be made (under this subsection (c)) as a result of the Reclassification and Redemption. Any adjustment under this subsection (c) shall become effective at the open of business on the date the subdivision or combination becomes effective. (d) Adjustments for Reclassification, Exchange and Substitution. In the event that at any time or from time to time after the Series B Preference Stock Initial Issue Date, the Common Stock or Class A Common Stock, as the case may be, issuable upon the conversion of the Series B Preference Stock is changed into the same or a different number of shares of any class or classes of stock, whether by recapitalization, reclassification or otherwise (other than a subdivision or combination of shares or stock dividend or a reorganization, merger, consolidation or sale of assets, provided for elsewhere in this Section 7 and other than pursuant to the Reclassification or Redemption), then and in any such event the Series B Preference Stock shall be convertible into the kind and amount of stock and other securities and property receivable upon such recapitalization, reclassification or other change, by holders of the number of shares of Common Stock or Class A Common Stock, as the case may be, into which such shares of Series B Preference Stock could have been converted immediately prior to such recapitalization, reclassification or change, all subject to further adjustment as provided in this Section 7. (e) Reorganizations, Mergers, Consolidations or Sales of Assets. If at any time or from time to time after the Series B Preference Stock Initial Issue Date there is a capital reorganization of the Common Stock or Class A Common Stock (other than a recapitalization, subdivision, combination, reclassification or exchange of shares provided for elsewhere in this Section 7 or other than an event that would be deemed a Liquidation Event described in Section 5(a) and other than pursuant to the Reclassification or Redemption) or a merger or consolidation of the Corporation with or into another entity, or the sale of all or substantially all of the Corporation's properties and assets to any other person, then, as a part of such reorganization, merger, consolidation or sale, provision shall be made so that the holders of the Series B Preference Stock shall thereafter be entitled to receive upon conversion of the Series B Preference Stock the number of shares of stock or other securities or property to which a holder of the number of shares of Common Stock or Class A Common Stock, as the case may be, deliverable upon conversion would have been entitled on such capital reorganization, merger, consolidation, or sale. In any such case, appropriate adjustment shall be made in the application of the provisions of this Section 7 with respect to the rights of the holders of the Series B Preference Stock after the reorganization, merger, consolidation or sale to the end that the provisions of this Section 7 (including adjustment of the Conversion Ratio then in effect and the number of shares issuable upon conversion of the Series B Preference Stock) shall be applicable after that event and be as nearly equivalent as may be practicable. (f) Deferral in Certain Circumstances. In any case in which the provisions of this Section 7 shall require that an adjustment shall become effective immediately after a record date of an event, the Corporation may defer, until the occurrence of such event, issuing to the holder of any Series B Preference Stock converted after such record date and before the occurrence of such event the shares of Common Stock or Class A Common Stock that would be issuable upon such conversion by reason of the adjustment required by such event; provided, however, that the Corporation shall issue to such holder the shares of Common Stock or Class A Common Stock issuable upon such conversion before giving effect to such adjustments. (g) Mechanics of Conversion. (i) Optional Conversion. Each holder of Series B Preference Stock who desires to convert the same into shares of Common Stock or Class A Common Stock, as applicable, pursuant to Section 7(a) hereof, may, following the Reclassification or the termination of the Recapitalization Agreement without the Reclassification having occurred, do so by surrendering the certificate or certificates therefor, duly endorsed, at the office of the Corporation or of any transfer agent for the Series B Preference Stock or Common Stock, or Class A Common Stock and giving written notice to the Corporation at such office that such holder elects to convert the same and stating therein the number of shares of Series B Preference Stock being converted. Thereupon the Corporation shall as soon as practicable issue and deliver to such holder a certificate or certificates for the number of whole shares of Common Stock or Class A Common Stock, as applicable, to which such holder is entitled. Such conversion shall be deemed to have been made immediately prior to the close of business on the date of such surrender of the certificate or certificates representing the shares of Series B Preference Stock to be converted, and the person entitled to receive the shares of Common Stock or Class A Common Stock, as applicable, issuable upon such conversion shall be treated for all purposes as the record holder of such shares of Common Stock or Class A Common Stock, as applicable, on such date. (ii) Automatic Conversion. Upon the occurrence of the event specified in Section 7(b) above, the outstanding shares of Series B Preference Stock shall be converted into Class A Common Stock and shall cease to be outstanding without any further action by the holders of such shares and whether or not the certificates representing such shares are surrendered to the Corporation or its transfer agent; provided however, that the Corporation shall not be obligated to issue certificates evidencing the shares of Class A Common Stock issuable upon such conversion unless the certificate or certificates evidencing such shares of Series B Preference Stock are delivered either to the Corporation or its transfer agent as provided below. Upon surrender by any holder of the certificate or certificates formerly representing shares of Series B Preference Stock at the office of the Corporation or any transfer agent for the Series B Preference Stock, there shall be issued and delivered to such holder promptly at such office and in the name as shown on the surrendered certificate or certificates, a certificate or certificates for the number of shares of Class A Common Stock into which the shares of Series B Preference Stock were convertible on the date on which such automatic conversion occurred. Until surrendered as provided above, each certificate formerly representing shares of Series B Preference Stock shall be deemed for all corporate purposes to represent the number of shares of Class A Common Stock resulting from such automatic conversion. (h) Certificate of Adjustment. In each case of an adjustment or readjustment of the Conversion Ratio, the Corporation, at its expense, shall compute such adjustment or readjustment in accordance with the provisions hereof and prepare a certificate showing such adjustment or readjustment, and shall mail such certificate, by first class mail, postage prepaid, to each registered holder of Series B Preference Stock at the holder's address as shown in the Corporation's books. The certificate shall set forth such adjustment or readjustment, showing in reasonable detail the facts upon which such adjustment or readjustment is based, including a statement of (i) the Conversion Ratio at the time in effect and the calculation upon which such adjustment was based and (ii) the type and amount, if any, of other property which at the time would be received upon conversion of the Series B Preference Stock. (i) No Fractional Shares. No fractional shares of Common Stock or Class A Common Stock, as applicable, or scrip representing fractional shares shall be issued upon the conversion of shares of Series B Preference Stock. Instead of issuing any fractional shares of Common Stock or Class A Common Stock, as applicable, which would otherwise be issuable upon conversion of Preference Stock, the number of shares of Common Stock or Class A Common Stock, as applicable, to be issued in such event shall be rounded down to the nearest whole share. The determination as to whether or not any fractional shares would otherwise be issuable absent the preceding provisions shall be based upon the aggregate number of shares of Series B Preference Stock being converted at any one time by any holder thereof, not upon each share of Series B Preference Stock being converted. (j) Notices of Record Date. In the event of, other than in connection with the Reclassification or Redemption, (i) any taking by the Corporation of a record of the holders of any class of securities for the purpose of determining the holders thereof who are entitled to receive any Distribution, or (ii) any capital reorganization of the Corporation, any reclassification or recapitalization of the capital stock of the Corporation, any merger or consolidation of the Corporation with or into any other corporation, or any transfer of all or substantially all of the assets of the Corporation to any other person or any voluntary or involuntary dissolution, liquidation or winding up of the Corporation, the Corporation shall mail to each holder of Series B Preference Stock at least twenty (20) Business Days prior to the record date specified therein, a notice specifying (1) the date on which any such record is to be taken for the purpose of such Distribution and a description of such Distribution, (2) the date on which any such reorganization, reclassification, transfer, consolidation, merger, dissolution, liquidation or winding up is expected to become effective, and (3) the date, if any, that is to be fixed as to when the holders of record of Common Stock or Class A Common Stock (or other securities) shall be entitled to exchange their shares of Common Stock or Class A Common Stock (or other securities) for securities or other property deliverable upon such reorganization, reclassification, transfer, consolidation, merger, dissolution, liquidation or winding up. (k) Issue Taxes. The Corporation shall pay any and all issue and other taxes that may be payable in respect of any issue or delivery of shares of Common Stock or Class A Common Stock, as applicable, on conversion of Series B Preference Stock pursuant hereto; provided, however, that the Corporation shall not be obligated to pay any transfer taxes resulting from any transfer requested by any holder in connection with any such conversion. (l) Reservation of Stock Issuable Upon Conversion. The Corporation shall at all times reserve and keep available out of its authorized but unissued shares of Common Stock or Class A Common Stock, as applicable, solely for the purpose of effecting the conversion of the shares of the Series B Preference Stock, such number of its shares of Common Stock or Class A Common Stock, as applicable, as shall from time to time be sufficient to effect the conversion of all outstanding shares of the Series B Preference Stock; and if at any time the number of authorized but unissued shares of Common Stock or Class A Common Stock, as applicable, shall not be sufficient to effect the conversion of all then outstanding shares of the Series B Preference Stock, the Corporation will take such corporate action as may, in the opinion of its counsel, be necessary to increase its authorized but unissued shares of Common Stock or Class A Common Stock, as applicable, to such number of shares as shall be sufficient for such purpose, including, without limitation, engaging in best efforts to obtain the requisite stockholder approval of any necessary amendment to the Certificate of Incorporation. 8. Limitation and Rights Upon Insolvency. Notwithstanding any other provision of this Certificate of Designation, the Corporation shall not be required to pay any Distribution on, or to pay any amount in respect of any redemption of, the Series B Preference Stock at a time when immediately after making such payment the Corporation is or would be rendered insolvent (as defined by applicable law), provided that the obligation of the Corporation to make any such payment shall not be extinguished in the event the foregoing limitation applies. 9. No Reissuance of Series B Preference Stock. No share of Series B Preference Stock acquired by the Corporation by reason of purchase, conversion or otherwise shall be reissued, and all such shares shall be canceled, retired and eliminated from the shares which the Corporation shall be authorized to issue and at such time as no shares of Series B Preference Stock are outstanding, the provisions of this Certificate of Designations shall no longer be effective. 10. Record Holders. The Corporation may deem and treat the record holder of any share of Series B Preference Stock as the true and lawful owner thereof for all purposes, and the Corporation shall not be affected by any notice to the contrary. 11. Notice. Except as may otherwise be provided for herein, all notices referred to herein shall be in writing, and all notices hereunder shall be deemed to have been given upon the earlier of receipt of such notice or three (3) Business Days after the mailing of such notice if sent by registered mail with postage prepaid, addressed: if to the Corporation, to Nortek Holdings, Inc., 50 Kennedy Plaza, Providence, RI 02903, Attention: General Counsel, or to an agent of the Corporation designated as permitted by the Certificate of Incorporation or, if to any holder of the Series B Preference Stock, to such holder at the address of such holder of the Series B Preference Stock as listed in the stock record books of the Corporation; or to such other address as the Corporation or holder, as the case may be, shall have designated by notice similarly given. 12. (a) Headings of Subdivisions. The headings of the various subdivisions hereof are for convenience of reference only and shall not affect the interpretation of any of the provisions hereof. (b) Severability of Provisions. If any voting powers, preferences and relative, participating, optional and other special rights of the Series B Preference Stock and qualifications, limitations and restrictions thereof set forth in this resolution is invalid, unlawful or incapable of being enforced by reason of any rule of law or public policy, all other voting powers, preferences and relative, participating, optional and other special rights of Series B Preference Stock and qualifications, limitations and restrictions thereof set forth in this resolution which can be given effect without the invalid, unlawful or unenforceable voting powers, preferences and relative, participating, optional and other special rights of Series B Preference Stock and qualifications, limitations and restrictions thereof shall, nevertheless, remain in full force and effect, and no voting powers, preferences and relative, participating, optional or other special rights of Series B Preference Stock and qualifications, limitations and restrictions thereof herein set forth shall be deemed dependent upon any other such voting powers, preferences and relative, participating, optional or other special rights of Series B Preference Stock and qualifications, limitations and restrictions thereof unless so expressed herein. IN WITNESS WHEREOF, the Corporation has caused this Certificate of Designation to be signed this [___] day of [_______], 2002. NORTEK HOLDINGS, INC. By: --------------------------- Name: Title: -----END PRIVACY-ENHANCED MESSAGE-----