exv10w20






Exhibit 10.20




 





WARRANT AGREEMENT




between



NORTEK, INC.



AS ISSUER



and



U.S. BANK NATIONAL ASSOCIATION



AS WARRANT AGENT



December 17, 2009



 




 









 





TABLE OF CONTENTS




	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Page	 
	Section 1.	 	      Certain Defined Terms
	 	 	1	 
	Section 2.	 	      Appointment of Warrant Agent
	 	 	3	 
	Section 3.	 	      Issuance of Warrants; Form, Execution and Delivery
	 	 	3	 
	 	(a	)	 	Issuance of Warrants
	 	 	3	 
	 	(b	)	 	Form of Warrant
	 	 	4	 
	 	(c	)	 	Execution of Warrants
	 	 	4	 
	 	(d	)	 	Countersignature of Warrant Certificates
	 	 	4	 
	Section 4.	 	      Warrant Registration
	 	 	5	 
	 	(a	)	 	Registration
	 	 	5	 
	 	(b	)	 	Transfer or Exchange
	 	 	5	 
	 	(c	)	 	Valid and Enforceable
	 	 	5	 
	 	(d	)	 	Endorsement
	 	 	5	 
	 	(e	)	 	No Service Charge
	 	 	5	 
	 	(f	)	 	Cancellation
	 	 	5	 
	 	(g	)	 	Treatment of Holders of Warrant Certificates
	 	 	5	 
	Section 5.	 	      Duration and Exercise of Warrants
	 	 	6	 
	 	(a	)	 	Expiration Date
	 	 	6	 
	 	(b	)	 	Exercise Price
	 	 	6	 
	 	(c	)	 	Manner of Exercise
	 	 	6	 
	 	(d	)	 	When Exercise Effective
	 	 	6	 
	 	(e	)	 	Delivery of Certificates, Etc
	 	 	6	 
	 	(f	)	 	Fractional Shares
	 	 	7	 
	Section 6.	 	Adjustment of Exercise Price and Number of Shares Purchasable or
Number of Warrants
	 	 	7	 
	 	(a	)	 	Stock Dividends, Split-ups and Combinations of Shares
	 	 	7	 
	 	(b	)	 	Adjustments for Mergers and Consolidations
	 	 	8	 
	 	(c	)	 	Notice of Adjustment in Exercise Price or Warrant Shares
	 	 	8	 
	 	(d	)	 	No Change in Warrant Terms on Adjustment
	 	 	8	 
	 	(e	)	 	Treasury Shares
	 	 	9	 
	Section 7.	 	      Change of Control
	 	 	9	 






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TABLE OF CONTENTS

(continued)




	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Page	 
	 	(a	)	 	Election to Purchase upon Change of Control Event
	 	 	9	 
	 	(b	)	 	Payment of Change of Control Payment Amount
	 	 	9	 
	Section 8.  	 	      Cancellation of Warrants
	 	 	9	 
	Section 9.  	 	      Mutilated or Missing Warrant Certificates
	 	 	9	 
	Section 10.	 	      Merger, Consolidation, Etc
	 	 	10	 
	Section 11.	 	      Reservation of Shares
	 	 	10	 
	 	(a	)	 	Reservation of Shares
	 	 	10	 
	 	(b	)	 	Certain Actions
	 	 	10	 
	Section 12.	 	      Notification of Certain Events
	 	 	10	 
	 	(a	)	 	Corporate Action
	 	 	10	 
	Section 13.	 	      Warrant Agent
	 	 	11	 
	 	(a	)	 	Limitation on Liability
	 	 	11	 
	 	(b	)	 	Instructions
	 	 	12	 
	 	(c	)	 	Agents
	 	 	12	 
	 	(d	)	 	Cooperation
	 	 	12	 
	 	(e	)	 	Agent Only
	 	 	12	 
	 	(f	)	 	Right to Counsel
	 	 	12	 
	 	(g	)	 	Compensation
	 	 	12	 
	 	(h	)	 	Force Majeure
	 	 	13	 
	 	(i	)	 	Accounting
	 	 	13	 
	 	(j	)	 	No Conflict
	 	 	13	 
	 	(k	)	 	Resignation; Termination
	 	 	13	 
	 	(l	)	 	Merger, Consolidation or Change of Name of Warrant Agent
	 	 	14	 
	Section 14.	 	      Warrantholder Not Deemed a Stockholder
	 	 	14	 
	Section 15.	 	      Notices to Company and Warrant Agent
	 	 	15	 
	Section 16.	 	      Supplements and Amendments
	 	 	15	 
	Section 17.	 	      Successors
	 	 	16	 
	Section 18.	 	      Termination
	 	 	16	 
	Section 19.	 	      Governing Law and Consent to Forum
	 	 	16	 






ii









 






TABLE OF CONTENTS

(continued)




	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Page	 
	Section 20.	 	      Waiver of Jury Trial
	 	 	16	 
	Section 21.	 	      Benefits of this Agreement
	 	 	16	 
	Section 22.	 	      Counterparts
	 	 	16	 
	Section 23.	 	      Headings
	 	 	17	 
	EXHIBITS	 	 
	 	 	 	 
	  EXHIBIT A	 	      FORM OF WARRANT CERTIFICATE
	 	 	A-1	 






iii









 






          This WARRANT AGREEMENT (this “Agreement”) is dated as of December 17, 2009, between Nortek,
Inc., a Delaware corporation, as issuer (the “Company”) and U.S. Bank National Association, a
national association, as warrant agent (the “Warrant Agent”).




W I T N E S S E T H




          WHEREAS, in connection with the financial restructuring of NTK Holdings, Inc., Nortek
Holdings, Inc., the Company and certain of its wholly-owned subsidiaries (collectively, the
“Debtors”) pursuant to the Debtors’ Joint Prepackaged Plans of Reorganization, dated September 18,
2009 (the “Plan”) under chapter 11 of title 11 of the United States Code, 11 U.S.C. §§101, et seq.,
the Company has agreed to issue warrants, which, in the aggregate, are exercisable to purchase up
to 789,474 shares of the Company’s common stock, par value $0.01 per share (the “Common Stock”),
subject to adjustment as provided herein (the “Warrants”);




          WHEREAS, pursuant to the Plan, the Company has agreed to exchange the Warrants in partial
satisfaction and discharge of Allowed NTK 10-3/4% Notes Claims and NTK Holdings Senior Unsecured
Loan Claims (each as defined in the Plan);




          WHEREAS, the Warrant Agent, at the request of the Company, has agreed to act as the agent of
the Company in connection with the issuance, transfer, exchange, replacement and exercise of the
Warrants as provided herein; and




          WHEREAS, the Company desires to enter into this Agreement to set forth the terms and
conditions of the Warrants and the rights of the holders thereof.




          NOW, THEREFORE, in consideration of the premises and mutual agreements herein set forth, the
parties hereto agree as follows:




          Section 1. Certain Defined Terms. Whenever used in this Agreement, the following
words and phrases, unless the context otherwise requires, shall have the meanings specified in this
Section.




          “Aggregate Exercise Price” has the meaning specified in Section 5(c) hereof.




          “Agreement” has the meaning specified in the preamble hereof.




          “Business Day” means any date other than a Saturday or a Sunday or a day on which commercial
banking institutions in New York City, New York are authorized or required by law to be closed;
provided that, in determining the period within which certificates or Warrants are to be
issued and delivered at a time when shares of Common Stock are listed or admitted to trading on any
national securities exchange or in the over-the-counter market and in determining Fair Value of any
securities listed or admitted to trading on any national securities exchange or in the
over-the-counter market, “Business Day” shall mean any day when the principal exchange on which
such securities are then listed or admitted to trading is open for trading or, if such securities
are traded in the over-the counter market in the United States, such market is open for trading.







 









 








          “Change of Control Event” means (i) the acquisition by a Person (other than the Company or a
wholly-owned subsidiary of the Company) in a tender offer or a series of related tender offers of
more than 75% of the outstanding Common Stock (determined on a fully-diluted basis) or (ii) the
consolidation or merger of the Company with or into another Person (other than a wholly-owned
subsidiary of the Company) pursuant to which the Company’s existing holders of Common Stock own
less than a majority of the surviving entity’s voting stock; provided that a merger or
consolidation which results in the voting securities of the Company outstanding immediately prior
to such merger or consolidation continuing to represent (either by remaining outstanding or being
converted into voting securities of the surviving entity or any parent thereof) more than 50% of
the combined voting power of the voting securities of the Company or such surviving entity or any
parent thereof outstanding immediately after such merger or consolidation shall not constitute a
Change of Control Event.




          “Change of Control Event Date” has the meaning specified in Section 7(a).




          “Change of Control Offer” has the meaning specified in Section 7(a).




          “Change of Control Payment Amount” means for each Warrant to be purchased, the amount equal to
(i) the consideration paid per share of Common Stock pursuant to the Change of Control Event minus
the Exercise Price; provided that to the extent the consideration does not consist solely
of cash, any non-cash consideration shall be valued (i) if such non-cash consideration is listed on
one or more stock exchanges, the average of the closing or last reported sales prices of a share of
non-cash consideration on the primary national or regional stock exchange on which such non-cash
consideration is listed, (ii) if such non-cash consideration is not so listed or quoted but is
traded in the over-the-counter market, the average of the closing bid and asked prices of a share
of such non-cash consideration, in each case for the 20 Business Days (or such lesser number of
Business Days as such non-cash consideration shall have been so listed, quoted or traded) next
preceding the date of measurement or (iii) if neither (i) nor (ii) is applicable, by an investment
bank of national reputation selected by holders of a majority of the outstanding Warrants.




          “Common Stock” has the meaning specified in the recitals hereto.




          “Equity Plan” means the Nortek, Inc. Equity Incentive Plan as in effect of the date hereof.




          “Effective Date” has the meaning specified in the Plan.




          “Exchange Act” means the Securities Exchange Act of 1934, as amended, and the rules and
regulations promulgated thereunder.




          “Exercise Price” means the current Exercise Price for the Warrants as set forth in Section
5(b) hereof.




          “Expiration Date” has the meaning specified in Section 5(a) hereof.




          “Fair Value” means (i) with respect to Common Stock, if such security is listed on one or more
stock exchanges, the average of the closing or last reported sales prices of a share






2









 







of Common Stock on the primary national or regional stock exchange on which such security is
listed or (ii) if the Common Stock is not so listed or quoted but is traded in the over-the-counter
market, the average of the closing bid and asked prices of a share of such Common Stock, in each
case for the 20 Business Days (or such lesser number of Business Days as such Common Stock shall
have been so listed, quoted or traded) next preceding the date of measurement; provided,
however, that if no such sales price or bid and asked prices have been quoted during the
preceding 20-day period or there is otherwise no established trading market for such security, then
“Fair Value” means the value of such Common Stock as determined in good faith by the Board of
Directors of the Company without consideration of any minority investment discount or discount
related to restrictions on transferability or illiquidity.




          “Fully Diluted Outstanding” shall mean, when used with reference to Common Stock, at any date
as of which the number of shares thereof is to be determined, all shares of Common Stock
outstanding at such date and all shares of Common Stock issuable in respect of the Warrants
outstanding on such date, and other options or warrants to purchase, or securities convertible
into, shares of Common Stock outstanding on such date.




          “Holder” means the Person in whose name a Warrant is registered as set forth in the Warrant
Register maintained by the Warrant Agent.




          “Person” means any individual, corporation, limited liability company, partnership, firm,
joint venture, association, joint-stock company, trust or other entity.




          “Plan” has the meaning specified in the recitals hereto.




          “Securities Act” means the Securities Act of 1933, as amended, and all rules and regulations
promulgated thereunder.




          “Warrant Agent” has the meaning specified in the preamble hereof and shall include any
successor Warrant Agent hereunder.




          “Warrant Agent’s Principal Office” shall mean the office of the Warrant Agent set forth in
Section 15 hereof (or such other office of the Warrant Agent or any successor thereto hereunder
acceptable to the Company as set forth in a written notice provided to the Company and the
Holders).




          “Warrant Certificates” has the meaning set forth in Section 3(b) hereof.




          “Warrant Register” has the meaning set forth in Section 4(a) hereof.




          “Warrant Shares” means the shares of Common Stock issuable upon exercise of the Warrants.




          “Warrants” means the Company’s warrants to purchase up to an aggregate of 789,474 shares of
Common Stock at the Exercise Price, subject to adjustment as provided herein.




          Section 2. Appointment of Warrant Agent. The Company hereby appoints the Warrant
Agent to act as agent for the Company in accordance with the instructions






3









 







hereinafter in this Agreement set forth; and the Warrant Agent hereby accepts such
appointment, upon the terms and conditions hereinafter set forth.




          Section 3. Issuance of Warrants; Form, Execution and Delivery.




          (a) Issuance of Warrants. On the date hereof, the Company shall, pursuant to the
Plan, deliver to the disbursing agent under the Plan for re-distribution to (i) each holder of NTK
10-3/4% Notes Claims, such holder’s pro rata share of 464,278 Warrants (based upon the principal
amount of NTK 10-3/4% Notes (as defined in the Plan) held by such holder) and (ii) the holder of
NTK Holdings Senior Unsecured Loan Claims, such holder’s pro rata share of 325,196 Warrants (based
upon the principal amount of NTK Holdings Senior Unsecured Loan (as defined in the Plan) held by
such holder). Each Warrant shall entitle the Holder, subject to the satisfaction of the conditions
to exercise set forth in Section 5 hereof, to purchase from and after the date of issuance of
Warrants to such Holder and until 5:00 p.m., New York City time, on the Expiration Date, one
Warrant Share at the Exercise Price. The number of Warrants to be issued pursuant to this
Agreement, the number of Warrant Shares issuable on exercise of each Warrant and the Exercise Price
are all subject to adjustment pursuant to Section 6 hereof.




          (b) Form of Warrant. The certificates evidencing the Warrants (collectively, the
“Warrant Certificates”) to be delivered pursuant to this Agreement and the forms of election to
exercise and of assignment to be printed on the reverse thereof shall be in substantially the form
set forth in Exhibit A hereto, together with such appropriate insertions, omissions,
substitutions and other variations as are required or permitted by this Agreement, and may have
such letters, numbers or other marks of identification and such legends or endorsements placed
thereon as may be required to comply with any law or with any rules made pursuant thereto or with
any rules of any securities exchange or as may be determined, consistently herewith, by the
officers executing such Warrant Certificates, as evidenced by their execution of the Warrant
Certificates. Each Warrant Certificate shall be dated as of the date on which it is countersigned
by the Warrant Agent, as described in Section 3(d) below.




          The terms and provisions contained in the Warrants shall constitute, and are hereby expressly
made, a part of this Agreement. The Company and the Warrant Agent, by their execution and delivery
of this Agreement, expressly agree to such terms and provisions and to be bound thereby. However,
to the extent any provision of any Warrant conflicts with the provisions of this Agreement, the
provisions of this Agreement shall govern and be controlling.




          (c) Execution of Warrants. Warrant Certificates shall be executed on behalf of the
Company by its Chairman of the Board, Vice Chairman of the Board, President, any Vice President,
General Counsel, Treasurer or Secretary, either manually or by facsimile signature printed thereon.
In case any such officer of the Company whose signature shall have been placed upon any Warrant
Certificate shall cease to be such officer of the Company before countersignature by the Warrant
Agent or issuance and delivery thereof, such Warrant Certificate nevertheless may be countersigned
by the Warrant Agent and issued and delivered with the same force and effect as though such person
had not ceased to be such officer of the Company.




          (d) Countersignature of Warrant Certificates. Warrant Certificates shall be manually
countersigned by an authorized signatory of the Warrant Agent and shall not be valid






4









 







for any purpose unless and until so countersigned. Such manual countersignature shall
constitute conclusive evidence of such authorization. The Warrant Agent is hereby authorized to
countersign, in accordance with the provisions of this Section 3(d), and deliver any new Warrant
Certificates, as and when directed by the Company pursuant to Section 3(a) hereof and as and when
required pursuant to the provisions of Section 4 and Section 9 hereof. Each Warrant Certificate
shall, when manually countersigned by an authorized signatory of the Warrant Agent, entitle the
registered holder thereof to exercise the rights as the holder of the number of Warrants set forth
thereon, subject to the provisions of this Agreement.




          Section 4. Warrant Registration.




          (a) Registration. The Warrant Certificates shall be issued in registered form only
and shall be registered in the names of the record Holders to whom they are to be delivered (any
such delivery to a registered Holder will be at its last address as shown on the register of the
Company). The Warrant Agent shall maintain or cause to be maintained a register in which, subject
to such reasonable regulations as it may prescribe, the Warrant Agent shall provide for the
registration of Warrants and of transfers or exchanges of Warrant Certificates as provided in this
Agreement. Such register shall be maintained at the Warrant Agent’s Principal Office by the
Warrant Agent (the “Warrant Register”).




          (b) Transfer or Exchange. At the option of the Holder, Warrant Certificates may be
exchanged or transferred for other Warrant Certificates for a like aggregate number of Warrants,
upon surrender of the Warrant Certificates to be exchanged at the Warrant Agent’s Principal Office,
and upon payment of the taxes and charges herein provided. Whenever any Warrant Certificates are
so surrendered for exchange or transfer, the Company shall execute, and an authorized signatory of
the Warrant Agent shall manually countersign and deliver, the Warrant Certificates that the Holder
making the exchange is entitled to receive.




          (c) Valid and Enforceable. All Warrant Certificates issued upon any registration of
transfer or exchange of Warrant Certificates in accordance with this Agreement shall be the valid
obligations of the Company, evidencing the same obligations, and entitled to the same benefits
under this Agreement, as the Warrant Certificates surrendered for such registration of transfer or
exchange.




          (d) Endorsement. Every Warrant Certificate surrendered for registration of transfer
or exchange shall (if so required by the Company or the Warrant Agent) be duly endorsed, or be
accompanied by an instrument of transfer in form reasonably satisfactory to the Company and the
Warrant Agent and duly executed by the registered Holder thereof or such Holder’s officer or
representative duly authorized in writing.




          (e) No Service Charge. No service charge shall be made to the Warrant Holder for any
registration of transfer or exchange of Warrant Certificates.




          (f) Cancellation. Any Warrant Certificate surrendered for registration of transfer,
exchange or the exercise of the Warrants represented thereby shall, if surrendered to the Company,
be delivered to the Warrant Agent, and all Warrant Certificates surrendered or so delivered to the
Warrant Agent shall be promptly cancelled by the Warrant Agent. Any such






5









 







Warrant Certificate shall not be reissued and, except as provided in this Section 4 in case of
an exchange or transfer, in Section 9 in case of a mutilated Warrant Certificate and in Section 5
in case of the exercise of less than all the Warrants represented thereby, no Warrant Certificate
shall be issued hereunder in lieu thereof. The Warrant Agent shall deliver to the Company from
time to time or otherwise dispose of such cancelled Warrant Certificates in a reasonably prompt
manner.




          (g) Treatment of Holders of Warrant Certificates. The Company and the Warrant Agent
may treat the registered Holder of a Warrant Certificate as the absolute owner thereof for any
purpose and as the Person entitled to exercise the rights represented by the Warrants evidenced
thereby, any notice to the contrary notwithstanding.




          Section 5. Duration and Exercise of Warrants.




          (a) Expiration Date. The Warrants shall expire on December 17, 2014, which is the
fifth (5th) anniversary of the Effective Date of the Plan (the “Expiration Date”). After the
Expiration Date, the Warrants will become void and of no value.




          (b) Exercise Price. The Exercise Price for the Warrants shall be $52.80 per Warrant
Share (subject to adjustment pursuant to Section 6 hereof).




          (c) Manner of Exercise. Subject to the provisions of this Agreement, each Warrant
shall entitle the Holder thereof to purchase from the Company (and the Company shall issue and sell
to such Holder) one fully paid and nonassessable Warrant Share evidenced by the Warrant Certificate
at a price equal to the Exercise Price. All or any of the Warrants represented by a Warrant
Certificate may be exercised prior to the Expiration Date by the registered Holder thereof during
normal business hours on any Business Day, by (i) surrendering such Warrant Certificate, and (ii)
delivering the subscription form set forth therein duly executed by such Holder, and in each case
by hand or by mail to the Warrant Agent at the Warrant Agent’s Principal Office. Such Warrant
Certificate and subscription form shall be accompanied by payment in full in respect of each
Warrant that is exercised (in the aggregate, the “Aggregate Exercise Price”), which shall be made
by certified or official bank or bank cashier’s check payable to the order of the Company, or by
wire transfer to the Warrant Agent in immediately available funds. The Aggregate Exercise Price
shall be in an amount equal to the product of the number of Warrant Shares designated in such
subscription form multiplied by the Exercise Price (plus such additional consideration as may be
provided herein). Upon such surrender and payment, such Holder shall thereupon be entitled to
receive the number of duly authorized, validly issued, fully paid and nonassessable Warrant Shares
determined as provided in Section 3, and as and if adjusted pursuant to Section 6.




          (d) Conversion Right. In lieu of the payment of the Aggregate Exercise Price, the
Holder shall have the right (but not the obligation), to require the Company to convert each
Warrant, in whole or in part, into shares of Common Stock (the “Conversion Right”) as provided for
in this Section 5(d). Upon exercise of the Conversion Right, the Company shall deliver to the
Holder (without payment by the Holder of any of the Aggregate Exercise Price) in accordance with
Section 5(c) that number of shares of Common Stock equal to the quotient obtained by dividing (i)
the value of the Warrant or portion thereof at the time the Conversion






6









 







Right is exercised (determined by subtracting the Aggregate Exercise Price at the time of the
exercise of the Conversion Right from the aggregate Fair Value of the shares of Common Stock
issuable upon exercise of the Warrant at the time of the exercise of the Conversion Right) by (ii)
the Fair Value of one share of Common Stock at the time of the exercise of the Conversion Right.




          The Conversion Right may be exercised by the Holder on any Business Day prior to the
Expiration Date by surrender of this Warrant to the Company, with a duly executed subscription form
completed, exercising the Conversion Right and specifying the total number of warrants with regard
to which the Holder is exercising the conversion right.




          (e) When Exercise Effective. Each exercise of any Warrant in accordance with Section
5(c) above shall be deemed to have been effected immediately prior to the close of business on the
Business Day on which the Warrant Certificate representing such Warrant, duly executed, with
accompanying payment shall have been delivered as provided in Section 5(c), and at such time the
Person or Persons in whose name or names the certificate or certificates for Common Stock shall be
issuable upon such exercise as provided in Section 5(f) below shall be deemed to have become the
holder or holders of record thereof.




          (f) Delivery of Certificates, Etc. (A) As promptly as practicable after the exercise
of any Warrant, but in any event within five (5) Business Days thereafter, the Company at its
expense (other than as to payment of transfer taxes which will be paid by the Holder) will issue
and deliver to such Holder, or as such Holder may otherwise direct in writing (subject to Section 9
hereof),





          (1) a certificate or certificates or other appropriate evidence of ownership
for the number of Warrant Shares to which such Holder is entitled, and




          (2) if less than all the Warrants represented by a Warrant Certificate are
exercised, a new Warrant Certificate or Certificates of the same tenor and for the
aggregate number of Warrants that were not exercised, executed and countersigned in
accordance with Section 3(c) and Section 3(d) hereof.



               (B) The Warrant Agent shall countersign any new Warrant Certificate, register it in such name
or names as may be directed in writing by such Holder, and shall deliver it to the Person entitled
to receive the same in accordance with this Section 5(f). The Company, whenever required by the
Warrant Agent, shall supply the Warrant Agent with Warrant Certificates executed on behalf of the
Company for such purpose. At the request of such Holder, the Company shall use commercially
reasonable efforts to cause its transfer agent to electronically transmit such Common Shares to
such Holder through the Deposit Withdrawal Agent Commission System of The Depository Trust Company.



               (C) Upon any exercise of Warrants, the Warrant Agent shall, as promptly as practicable, advise
the Treasurer of the Company or his or her designee of (i) the number of Warrants exercised, (ii)
the instruction of each holder of the Warrant Certificates evidencing such Warrants with respect to
delivery of the Common Stock to which such holder is entitled upon such exercise, (iii) the timing
of delivery of Warrant Certificates evidencing the



7









 




balance, if any, of the Warrants remaining after such exercise, and (iv) such other
information related thereto as the Company shall reasonably require.




               (D) The Company shall not be required to pay any stamp or other tax or other governmental
charge required to be paid in connection with any transfer involved in the issuance of the Common
Stock to a Person other than a registered holder; and in the event that any such transfer is
involved, the Company shall not be required to issue or deliver any Warrant Certificate or share of
Common Stock until such tax or other charge shall have been paid or it has been established to the
Company’s satisfaction that no such tax or other charge is due. The Warrant Agent shall have no
duty or obligation under this Section 5 or any other similar provision of this Agreement unless and
until it is satisfied that all such taxes and/or governmental charges have been paid in full.



          (g) Fractional Shares. Notwithstanding any adjustment pursuant to Section 6 in the
number of Warrant Shares purchasable upon the exercise of a Warrant, the Company shall not be
required to issue Warrants to purchase fractions of Warrant Shares, or to issue fractions of
Warrant Shares upon exercise of the Warrants, or to distribute certificates which evidence
fractional Shares. In the event of an adjustment that results in a Warrant becoming exercisable
for fractional Shares, the Company shall deliver an amount in cash equal to the Fair Value of the
same fraction of the closing price of the Common Stock on the Exercise Date.




          Section 6. Adjustment of Exercise Price and Number of Warrant Shares Purchasable or Number
of Warrants.




          (a) Stock Dividends, Split-ups and Combinations of Shares. If, after the date hereof,
the number of outstanding shares of Common Stock is increased by a dividend or share distribution,
in each case payable in shares of Common Stock, or adjusted by a split-up, combination or other
reclassification of shares of Common Stock, then, in the case of such events, the amount of Common
Stock issuable for each Warrant and the Exercise Price will be adjusted as follows: on the day
following the date fixed for the determination of holders of shares of Common Stock entitled to
receive such dividend or share distribution, and in the cases of split-ups, combinations and other
reclassifications, on the day following the effective date thereof: (a) the Exercise Price in
effect immediately prior to such action shall be adjusted to a new Exercise Price that bears the
same relationship to the Exercise Price in effect immediately prior to such event as the total
number of shares of Common Stock outstanding immediately prior to such action bears to the total
number of shares of Common Stock outstanding immediately after such event, and (b) the number of
shares of Common Stock purchasable upon the exercise of any Warrant after such event shall be the
number of shares of Common Stock obtained by multiplying the number of shares of Common Stock
purchasable immediately prior to such adjustment upon the exercise of such Warrant by the Exercise
Price in effect immediately prior to such adjustment and dividing the product so obtained by the
Exercise Price in effect after such adjustment.




          (b) Adjustments for Mergers and Consolidations. In case the Company, after the date
hereof, shall merge or consolidate with another Person, then, in the case of any such transaction,
proper provision shall be made so that, upon the basis and terms and in the manner provided in this
Warrant Agreement, the Holders of the Warrants, upon the exercise thereof at






8









 







any time after the consummation of such transaction (but prior to the Expiration Date) shall
be entitled to receive (at the Aggregate Exercise Price in effect at the time of the transaction
for all Common Stock issuable upon such exercise immediately prior to such consummation), in lieu
of the Common Stock issuable upon such exercise prior to such consummation, the greatest amount of
securities, cash or other property to which such holder would have been entitled as a holder of
Common Stock upon such consummation if such Holder had exercised the Warrants held by such Holder
immediately prior thereto, subject to adjustments (subsequent to such consummation) as nearly
equivalent as possible to the adjustments provided for in Section 6(a).




          (c) Notice of Adjustment in Exercise Price or Warrant Shares. Whenever the Exercise
Price and/or number of Warrant Shares issuable shall be adjusted as provided in this Section 6, the
Company shall forthwith file with the Warrant Agent a statement, signed by the Chairman of the
Board, Vice Chairman of the Board, the President, any Vice President, General Counsel, its
Treasurer, an Assistant Treasurer, its Secretary or an Assistant Secretary, summarizing the facts
requiring such adjustment, the Exercise Price that will be effective after such adjustment and the
impact of such adjustment on the number and kind of securities issuable upon exercise of the
Warrants. The Company shall also cause a notice setting forth any such adjustments to be sent by
mail, first class, postage prepaid, to each registered Holder at its address appearing on the
Warrant Register. The Warrant Agent shall have no duty with respect to any statement filed with it
except to keep the same on file and available for inspection by registered holders of Warrants
during reasonable business hours. The Warrant Agent shall not at any time be under any duty or
responsibility to any holder of a Warrant to determine whether any facts exist that may require any
adjustment to the Exercise Price or securities issuable, or with respect to the nature or extent of
any adjustment of the Exercise Price or securities issuable when made or with respect to the method
employed in making such adjustment.




          (d) No Change in Warrant Terms on Adjustment. Irrespective of any adjustments in the
Exercise Price or the number of Warrant Shares issuable upon exercise, Warrants theretofore or
thereafter issued may continue to express the same prices and number of shares as are stated in the
similar Warrants issuable initially, or at some subsequent time, pursuant to this Agreement, and
the Exercise Price and such number of shares issuable upon exercise specified thereon shall be
deemed to have been so adjusted.




          (e) Treasury Shares. Shares of Common Stock at any time owned by the Company or its
subsidiaries shall not be deemed to be outstanding for the purposes of any computation under this
Section 6.




          Section 7. Change of Control.




          (a) Election to Purchase upon Change of Control Event. Notwithstanding anything else
contained herein, if prior to the Expiration Date, an agreement resulting in a Change of Control
Event is entered into, within 30 days prior to the date of the consummation of such Change of
Control Event (the “Change of Control Event Date”), the Company or the surviving Person (if other
than the Company) may elect to purchase from all Holders (the “Change of Control Offer”) all, but
not less than all, of the outstanding Warrants at a purchase price equal to the Change of Control
Payment Amount on the Change of Control Event Date in






9









 







accordance with the procedures set forth in this Section 7 and shall notify the Warrant Agent
in writing of such purchase.




          (b) Payment of Change of Control Payment Amount. If the Company elects to make a
Change of Control Offer, then on the Change of Control Event Date, the Company or the surviving
Person (if other than the Company) shall deposit with the Warrant Agent money sufficient to pay the
Change of Control Payment Amount for all Warrants. The Warrant Agent shall promptly mail to each
Holder, payment in an amount equal to the applicable Change of Control Payment Amount.




          Section 8. Cancellation of Warrants. The Warrant Agent shall cancel all Warrant
Certificates surrendered for exchange, substitution, transfer or exercise in whole or in part by
such method as it shall deem fair and appropriate. Such cancelled Warrant Certificates shall
thereafter be disposed of in a manner satisfactory to the Company.




          Section 9. Mutilated or Missing Warrant Certificates. Upon receipt by the Company and
the Warrant Agent from any Holder of evidence reasonably satisfactory to them of the ownership of
and the loss, theft, destruction or mutilation of such Holder’s Warrant Certificate and indemnity
reasonably satisfactory to them, together with such additional documentation that the Company and
the Warrant Agent may require, and in case of mutilation upon surrender and cancellation thereof,
the Company will execute and the Warrant Agent will countersign and deliver in lieu thereof a new
Warrant Certificate of like tenor and representing an equal number of Warrants to such Holder;
provided in the case of mutilation, no indemnity shall be required if such Warrant
Certificate in identifiable form is surrendered to the Company or the Warrant Agent for
cancellation. Upon the issuance of any new Warrant Certificate under this Section 9, the Company
may require the payment of a sum sufficient to cover any stamp tax or other governmental charge
that may be imposed in relation thereto and any other expenses (including the reasonable fees and
expenses of the Warrant Agent) in connection therewith. Every new Warrant Certificate executed and
delivered pursuant to this Section 9 in lieu of any lost, stolen or destroyed Warrant Certificate
shall be entitled to the same benefits of this Agreement equally and proportionately with any and
all other Warrant Certificates, whether or not the allegedly lost, stolen or destroyed Warrant
Certificate shall be at any time enforceable by anyone. The provisions of this Section 9 are
exclusive and shall preclude (to the extent lawful) all other rights or remedies with respect to
the replacement of mutilated, lost, stolen or destroyed Warrant Certificates.




          Section 10. Merger, Consolidation, Etc. Notwithstanding anything contained herein to
the contrary, the Company will not effect a merger or consolidation prior to the Expiration Date
unless, prior to the consummation of such transaction, each Person (other than the Company) that
may be required to deliver any Common Stock, securities, cash or property upon the exercise of any
Warrant as provided herein shall assume, by written instrument delivered to the Warrant Agent, the
obligations of the Company under this Agreement and under each of the Warrants, including, without
limitation, the obligation to deliver such shares of Common Stock, cash or property as may be
required pursuant to Section 6 hereof, and shall provide for adjustments equivalent to the
adjustments provided for in Section 6 hereof.




          Section 11. Reservation of Shares.







10









 








          (a) Reservation of Shares. The Company shall at all times reserve and keep available,
free from preemptive rights, out of its authorized but unissued Common Stock, solely for issuance
and delivery upon exercise of Warrants, the full number of Warrant Shares from time to time
issuable upon the exercise of all Warrants. All Warrant Shares shall be duly authorized and, when
issued upon such exercise, shall be duly and validly issued, and fully paid and nonassessable, and
free from all taxes, liens, charges, security interests, encumbrances and other restrictions
created by or through the Company.




          (b) Certain Actions. Before taking any action that would cause an adjustment pursuant
to Section 6 reducing any Exercise Price below the then par value (if any) of the Warrant Shares
issuable upon exercise of the Warrants, the Company will take any reasonable corporate action that
may, in the opinion of its counsel, be necessary in order that the Company may validly and legally
issue fully paid and nonassessable Warrant Shares at such Exercise Price as so adjusted.




          Section 12. Notification of Certain Events.




          (a) Corporate Action. In the event of:




               (A) any taking by the Company 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 dividend (excluding cash
distributions made as a dividend payable out of earnings or out of surplus legally available for
dividends under the laws of the jurisdiction of incorporation of the Company) or other distribution
of any kind; or




               (B) (A) any capital reorganization of the Company, (B) any reclassification of the capital
shares of the Company (other than a change in par value or from par value to no par value or from
no par value to par value or as a result of a split-up or combination), (C) the consolidation or
merger of the Company with or into any other Person (other than a consolidation or merger in which
the Company is the continuing corporation and which does not result in any change in the shares of
Common Stock) or (D) the sale or transfer of the properties and assets of the Company as, or
substantially as, an entirety to another Person; or




               (C) the voluntary or involuntary dissolution, liquidation, or winding up of the Company,



the Company shall cause to be filed with the Warrant Agent and mailed to each Holder a notice
specifying (x) the date or expected date on which any such record is to be taken for the purpose of
such dividend or distribution, and the amount and character of any such dividend or distribution or
if a record is not to be taken, the date as of which the holders of Common Stock of record to be
entitled to such dividend or distribution are to be determined, and the amount and character of
such dividend or distribution or (y) the date or expected date on which any such reorganization,
reclassification, consolidation, merger, sale, transfer, dissolution, liquidation or winding up is
expected to become effective, and the time, if any such time is to be fixed, as of which holders of
record of Common Stock shall be entitled to exchange their shares of Common Stock for the
securities or other property deliverable upon such reorganization, reclassification, consolidation,
merger, sale, transfer, exchange offer, dissolution, liquidation or winding up. Such






11









 







notice shall be delivered not less than ten (10) days prior to such date therein specified.
Failure to give such notice within the time provided or any defect therein shall not affect the
legality or validity of any such action.




          Section 13. Warrant Agent. The Warrant Agent undertakes the duties and obligations
imposed by this Agreement upon the terms and conditions set forth in this Section 13.




          (a) Limitation on Liability. The Warrant Agent shall not by countersigning Warrant
Certificates or by any other act hereunder be accountable with respect to or be deemed to make any
representations as to the validity or authorization of the Warrants or the Warrant Certificates
(except as to its countersignature thereon), as to the validity, authorization or value (or kind or
amount) of any Common Stock or other property delivered or deliverable upon exercise of any
Warrant, or as to the purchase price of such Common Stock, securities or other property. The
Warrant Agent shall not (i) be liable for any recital or statement of fact contained herein or in
the Warrant Certificates or for any action taken, suffered or omitted by the Warrant Agent in good
faith in the belief that any Warrant Certificate or any other document or any signature is genuine
or properly authorized, (ii) be responsible for determining whether any facts exist that may
require any adjustment of the purchase price and the number of Warrant Shares purchasable upon
exercise of Warrants, or with respect to the nature or extent of any such adjustments when made, or
with respect to the method of adjustment employed, (iii) be responsible for any failure on the part
of the Company to issue, transfer or deliver any Common Stock or property upon the surrender of any
Warrant for the purpose of exercise or to comply with any other of the Company’s covenants and
obligations contained in this Agreement or in the Warrant Certificates, (iv) be liable for any
action taken, suffered or omitted to be taken in connection with this Agreement, except for its own
bad faith, gross negligence or willful misconduct, (v) be liable for special, indirect or
consequential loss or damage of any kind whatsoever (including, but not limited to, lost profits),
even if the Warrant Agent has been advised of the likelihood of such loss or damage and regardless
of the form of action, or (vi) be responsible for any failure of the Company to comply with any of
the covenants contained in this Agreement or in the Warrant Certificates to be complied with by the
Company.




          (b) Instructions. The Warrant Agent is hereby authorized to accept advice or
instructions with respect to the performance of its duties hereunder from the President and Chief
Executive Officer, Treasurer, Chief Legal Officer, Secretary and Chief Financial Officer of the
Company and to apply to any such officer for advice or instructions. The Warrant Agent shall be
fully protected and authorized in relying upon the most recent advice or instructions received from
any such officer. The Warrant Agent shall not be liable for any action taken, suffered or omitted
by it in accordance with the advice or instructions of any such officer, except to the extent that
such action or omission resulted directly from the Warrant Agent’s gross negligence, bad faith or
willful misconduct.




          (c) Agents. The Warrant Agent may execute and exercise any of the rights and powers
hereby vested in it or perform any duty hereunder either itself or by or through its attorneys,
agents or employees, provided reasonable care has been exercised in the selection and in the
continued employment of such attorney, agent or employee. The Warrant Agent shall not be under any
obligation or duty to institute, appear in, or defend any action, suit or legal






12









 







proceeding in respect hereof, but this provision shall not affect the power of the Warrant
Agent to take such action as the Warrant Agent may consider necessary. The Warrant Agent shall
promptly notify the Company in writing of any claim made or action, suit or proceeding instituted
against the Warrant Agent arising out of or in connection with this Agreement.




          (d) Cooperation. The Company will perform, execute, acknowledge and deliver or cause
to be performed, executed, acknowledged and delivered all such further acts, instruments and
assurances as may reasonably be required by the Warrant Agent in order to enable the Warrant Agent
to carry out or perform its duties under this Agreement.




          (e) Agent Only. The Warrant Agent shall act solely as agent for the Company in
accordance with the terms and conditions hereof. The Warrant Agent shall not be liable except for
the performance of such duties as are specifically set forth herein, and no implied covenants or
obligations shall be read into this Agreement against the Warrant Agent, whose duties and
obligations shall be determined solely by the express provisions hereof.




          (f) Right to Counsel. The Warrant Agent may at any time consult with legal counsel
satisfactory to it (who may be legal counsel for the Company), and the Warrant Agent shall incur no
liability or responsibility to the Company or to any Warrant holder for any action taken, suffered
or omitted by the Warrant Agent in good faith in reliance on the opinion or advice of such counsel.




          (g) Compensation. The Company agrees to pay to the Warrant Agent reasonable
compensation for all services rendered by the Warrant Agent in the execution of this Agreement, to
reimburse the Warrant Agent for all expenses, taxes and governmental charges and other charges of
any kind and nature incurred by the Warrant Agent in the execution of this Agreement. The Company
shall indemnify the Warrant Agent against any and all losses, liabilities or expenses incurred
(including reasonable counsel’s fees) by it arising out of or in connection with the acceptance or
administration of its duties under this Warrant Agreement, including the costs and expenses of
enforcing this Agreement against the Company and defending itself against any claim (whether
asserted by the Company or any holder of the Warrants or any other person) or liability in
connection with the exercise or performance of any of its powers or duties hereunder, except to the
extent any such loss, liability or expense may be attributable to its gross negligence, willful
misconduct or bad faith.




          (h) Force Majeure. The Warrant Agent shall not be responsible or liable for any
failure or delay in the performance of its obligations under this Agreement arising out of or
caused, directly or indirectly, by circumstances beyond its reasonable control, including without
limitation, acts of God; earthquakes; fires; floods; wars; civil or military disturbances;
sabotage; epidemics; riots; interruptions, loss or malfunctions of utilities or computer service;
acts of civil or military authority or governmental actions; it being understood that the Warrant
Agent shall use its best efforts to resume performance as soon as practicable under the
circumstances.




          (i) Accounting. The Warrant Agent shall account promptly to the Company with respect
to Warrants exercised and concurrently pay to the Company all moneys received by the Warrant Agent
on behalf of the Company on the purchase of shares of Common Stock through the exercise of
Warrants. The Warrant Agent shall advise the Company by telephone at






13









 







the end of each day on which a payment for the exercise of Warrants is received of the amount
so deposited to such account. The Warrant Agent shall as soon as practicable confirm such
telephone advice to the Company in writing.




          (j) No Conflict. Subject to applicable law, the Warrant Agent and any stockholder,
affiliate, director, officer or employee of the Warrant Agent may buy, sell or deal in any of the
Warrants or other securities of the Company or become pecuniarily interested in any transaction in
which the Company may be interested, or contract with or lend money to the Company or otherwise act
as fully and freely as though it were not Warrant Agent under this Agreement. Subject to
applicable law, nothing herein shall preclude the Warrant Agent from acting in any other capacity
for the Company or for any other Person.




          (k) Resignation; Termination. The Warrant Agent may resign its duties and be
discharged from all further duties and liabilities hereunder (except liabilities arising as a
result of the Warrant Agent’s bad faith, gross negligence or willful misconduct) after giving
thirty (30) days’ prior written notice to the Company. The Company may remove the Warrant Agent
upon thirty (30) days’ written notice, and the Warrant Agent shall thereupon in like manner be
discharged from all further duties and liabilities hereunder, except as have been caused by the
Warrant Agent’s bad faith, gross negligence or willful misconduct. The Company shall cause to be
mailed promptly (by first class mail, postage prepaid) to each registered holder of a Warrant at
such holder’s last address as shown on the register of the Company, at the Company’s expense, a
copy of such notice of resignation or notice of removal, as the case may be. Upon such resignation
or removal the Company shall promptly appoint in writing a new warrant agent. If the Company shall
fail to make such appointment within a period of ninety (90) days after it has been notified in
writing of such resignation by the resigning Warrant Agent or after such removal, then the holder
of any Warrant may apply to any court of competent jurisdiction for the appointment of a new
warrant agent. Pending appointment of a successor to the Warrant Agent, either by the Company or
by such a court, the duties of the Warrant Agent shall be carried out by the Company. Any
successor warrant agent, whether appointed by the Company or by such a court, shall be (i) a
Person, organized under the laws of the United States or of any state thereof and authorized under
such laws to conduct a shareholder services business, be subject to supervision and examination by
Federal or state authority, and have a combined capital and surplus of not less than $100,000,000
as set forth in its most recent published annual report of condition; or (ii) an affiliate of such
a Person described above. After acceptance in writing of such appointment by the new warrant agent
it shall be vested with the same powers, rights, duties and responsibilities as if it had been
originally named herein as the Warrant Agent, without any further assurance, conveyance, act or
deed; but if for any reason it shall be necessary or expedient to execute and deliver any further
assurance, conveyance, act or deed, the same shall be done at the expense of the Company and shall
be legally and validly executed and delivered by the resigning or removed Warrant Agent. Not later
than the effective date of any such appointment the Company shall file notice thereof with the
resigning or removed Warrant Agent and shall forthwith cause a copy of such notice to be mailed (by
first class, postage prepaid) to each registered holder of a Warrant at such holder’s last address
as shown on the register of the Company. Failure to give any notice provided for in this Section
13(k), or any defect in any such notice, shall not affect the legality or validity of the
resignation of the Warrant Agent or the appointment of a new warrant agent, as the case may be.
The rights of the Warrant Agent under this Section 13 shall survive the Warrant Agent’s resignation
or removal.







14









 








          (l) Merger, Consolidation or Change of Name of Warrant Agent. Any corporation into
which the Warrant Agent may be merged or converted or with which it may be consolidated, or any
corporation resulting from any merger, conversion or consolidation to which the Warrant Agent shall
be a party, or any corporation succeeding to the all or substantially all of the agency business of
the Warrant Agent or any new warrant agent shall be the successor to the Warrant Agent hereunder
without the execution or filing of any document or any further act on the part of any of the
parties hereto, provided that such corporation would be eligible for appointment as a successor
Warrant Agent under the provisions of Section 13(k) above. If at the time such successor to the
Warrant Agent shall succeed under this Agreement, any of the Warrant Certificates shall have been
countersigned but not delivered, any such successor to the Warrant Agent may adopt the
countersignature of the original Warrant Agent; and if at that time any of the Warrant Certificates
shall not have been countersigned, any successor to the Warrant Agent may countersign such Warrant
Certificates either in the name of the predecessor Warrant Agent or in the name of the successor
Warrant Agent; and in all such cases such Warrant Certificates shall have the full force provided
in the Warrant Certificates and in this Agreement. If at any time the name of the Warrant Agent
shall be changed and at such time any of the Warrants shall have been countersigned but not
delivered, the Warrant Agent whose name has changed may adopt the countersignature under its prior
name; and if at that time any of the Warrants shall not have been countersigned, the Warrant Agent
may countersign such Warrants either in its prior name or in its changed name; and in all such
cases such Warrants shall have the full force provided in the Warrants and in this Agreement.




          Section 14. Warrantholder Not Deemed a Stockholder. Prior to the exercise of the
Warrants represented thereby no holder of a Warrant Certificate, as such, shall be entitled to any
rights of a stockholder of the Company, including, but not limited to, the right to vote, to
receive dividends or other distributions, to exercise any preemptive right or, except as otherwise
expressly provided herein, to receive notice as stockholders in respect of the meetings of
stockholders or for the election of directors of the Company or any other matter.




          Section 15. Notices to Company and Warrant Agent. All notices, requests or demands
authorized by this Agreement to be given or made by the Warrant Agent or by any registered holder
of any Warrant to or on the Company or the Warrant Agent to be effective shall be in writing
(including by telecopy), and shall be deemed to have been duly given or made when delivered by
hand, or two Business Days after being delivered to a recognized courier (whose stated terms of
delivery are two business days or less to the destination of such notice), or five days after being
deposited in the mail, or, in the case of telecopy notice, when received, addressed (until another
address is filed in writing by the Company with the Warrant Agent) as follows:



c/o Nortek, Inc.

50 Kennedy Plaza

Providence, RI 02903-2603

Attention: General Counsel

Telephone: (401) 751-1600

Facsimile: (401) 751-9844




          with a copy to:






15









 







Weil, Gotshal & Manges LLP

767 Fifth Avenue

New York, NY 10153

Attention: Matthew D. Bloch, Esq.

Telephone: (212) 310-8165

Facsimile: (212) 310-8000




          If the Company shall fail to maintain such office or agency or shall fail to give such notice
of any change in the location thereof, presentation may be made and notices and demands may be
served at the principal office of the Warrant Agent.




          Any notice pursuant to this Agreement to be given by the Company or by any registered holder
of any Warrant to the Warrant Agent shall be sufficiently given if sent by first-class mail,
postage prepaid, addressed (until another address is filed in writing by the Warrant Agent with the
Company), as follows:



U.S. Bank National Association

One Federal Street, 3rd Floor

Boston, MA 02110

Attention: Todd Dinezza

Telephone: (617) 603-6573

Facsimile: (617) 603-6668




          Section 16. Supplements and Amendments. The Company and the Warrant Agent may from
time to time supplement or amend this Agreement (a) without the approval of any holders of Warrants
in order to cure any ambiguity, manifest error or other mistake in this Agreement, or to correct or
supplement any provision contained herein that may be defective or inconsistent with any other
provision herein, or to make any other provisions in regard to matters or questions arising
hereunder that the Company and the Warrant Agent may deem necessary or desirable and that shall not
adversely affect, alter or change the interests of the holders of the Warrants or (b) with the
prior written consent of holders of the Warrants exercisable for a majority of the Warrant Shares
then issuable upon exercise of the Warrants then outstanding; provided that each amendment
or supplement that decreases the Warrant Agent’s rights or increases its duties and
responsibilities hereunder shall also require the prior written consent of the Warrant Agent. In
executing any such supplement or amendment, the Warrant Agent shall be entitled to receive and
shall be fully protected in relying upon an opinion of counsel stating that such supplement or
amendment is permitted or authorized by this Agreement. The Warrant Agent may, but shall not be
obligated to, enter into any such supplement or amendment which affects the Warrant Agent’s own
rights, duties or immunities under this Agreement. Notwithstanding the foregoing, the consent of
each holder of a Warrant affected shall be required for any amendment pursuant to which the
Exercise Price would be increased (other than pursuant to adjustments provided herein), the number
of Warrant Shares purchasable upon exercise of Warrants would be decreased (other than pursuant to
adjustments provided herein) or the Expiration Date shall be changed to an earlier date. Upon
execution and delivery of any amendment pursuant to this Section 16, such amendment shall be
considered a part of this






16









 







Agreement for all purposes and every holder of a Warrant Certificate theretofore or thereafter
countersigned and delivered hereunder shall be bound thereby.




          Section 17. Successors. Subject to Section 10, all the covenants and provisions of
this Agreement by or for the benefit of the Company or the Warrant Agent shall bind and inure to
the benefit of their respective successors and assigns hereunder.




          Section 18. Termination. This Agreement shall terminate on the Expiration Date.
Notwithstanding the foregoing, this Agreement will terminate on any earlier date when all Warrants
have been exercised. The provisions of Section 13 shall survive such termination.




          Section 19. Governing Law and Consent to Forum. THIS AGREEMENT SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE APPLICABLE TO CONTRACTS MADE AND
TO BE PERFORMED WITHIN THE STATE OF DELAWARE WITHOUT REGARD TO SUCH STATE’S CHOICE OF LAW
PROVISIONS WHICH WOULD REQUIRE THE APPLICATION OF THE LAW OF ANY OTHER JURISDICTION. EACH OF THE
COMPANY AND THE WARRANT AGENT HEREBY IRREVOCABLY SUBMITS TO THE JURISDICTION OF ANY DELAWARE STATE
COURT SITTING IN THE CITY OF WILMINGTON OR ANY FEDERAL COURT SITTING IN THE CITY OF WILMINGTON IN
RESPECT OF ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT, AND EACH
IRREVOCABLY ACCEPTS FOR ITSELF AND IN RESPECT OF ITS PROPERTY, GENERALLY AND UNCONDITIONALLY, THE
JURISDICTION OF THE AFORESAID COURTS AND WAIVES ANY OBJECTION BASED ON INCONVENIENT FORUM. NOTHING
HEREIN SHALL AFFECT THE RIGHT OF ANY PERSON TO SERVE PROCESS IN ANY MANNER PERMITTED BY LAW OR TO
COMMENCE LEGAL PROCEEDINGS OR OTHERWISE PROCEED AGAINST THE COMPANY IN ANY OTHER JURISDICTION.




          Section 20. Waiver of Jury Trial. The parties hereto waive all right to trial by jury
in any action or proceeding to enforce or defend any rights hereunder.




          Section 21. Benefits of this Agreement. Nothing in this Agreement shall be construed
to give to any Person other than the Company, the Warrant Agent and the registered holders of the
Warrants any legal or equitable right, remedy or claim under this Agreement, and this Agreement
shall be for the sole and exclusive benefit of the Company, the Warrant Agent and the registered
holders of the Warrants.




          Section 22. Counterparts. This Agreement may be executed in any number of
counterparts and each of such counterparts shall for all purposes be deemed to be an original, and
such counterparts shall together constitute but one and the same instrument.




          Section 23. Headings. The headings of sections of this Agreement have been inserted
for convenience of reference only, are not to be considered a part hereof and in no way modify or
restrict any of the terms or provisions hereof.




[signature page follows]








17









 








          IN WITNESS WHEREOF, the parties hereto have caused this Warrant Agreement to be executed and
delivered as of the day and year first above written.




	 	 	 	 	 
	 	NORTEK, INC.

 	 
	 	By:  	/s/ Kevin W. Donnelly
 	 
	 	 	Name:  	Kevin W. Donnelly 	 
	 	 	Title:  	Vice President, General Counsel and
Secretary 	 
	 



[SIGNATURE PAGE TO WARRANT AGREEMENT]




 









 








	 	 	 	 	 
	 	U.S. BANK NATIONAL ASSOCIATION,

as Warrant Agent

 	 
	 	By:  	/s/ Todd R. DiNezza
 	 
	 	 	Name:  	Todd R. DiNezza 	 
	 	 	Title:  	Assistant Vice President 	 
	 



[SIGNATURE PAGE TO WARRANT AGREEMENT]




 









 








EXHIBIT A




FORM OF WARRANT CERTIFICATE



 









 





[FORM OF FACE OF WARRANT CERTIFICATE]




			
	Warrant No.
	 	Number of Warrants: [               ]





Exercisable During the Period that Commences at 9:00 a.m., New York City time, on December 17, 2009
and Terminates at 5:00 p.m., New York City time, on December 17, 2014 except as provided below.




WARRANT TO PURCHASE




COMMON STOCK, PAR VALUE $0.01 PER SHARE,



OF



NORTEK, INC.



          This certifies that                      or registered assigns, is the registered owner of the
number of WARRANTS set forth above (the “Warrants”), each of which represents the right, subject to
the provisions of the Warrant Agreement (as defined below) at any time after December 17, 2009 (the
“Original Issue Date”) and on or before 5:00 p.m., New York City time, on the Expiration Date (as
defined in the Warrant Agreement), to purchase from Nortek, Inc., a Delaware corporation (the
“Company”), at the price per share of $52.80 (the “Exercise Price”), one share of Common Stock,
$0.01 par value, of the Company as such stock was constituted as of the Original Issue Date,
subject to adjustment as provided in the Warrant Agreement hereinafter referred to, upon surrender
hereof, with the subscription form on the reverse hereof duly executed, by hand or by mail to U.S.
Bank National Association, One Federal Street, 3rd Floor, Boston, MA 02110, or to any successor
thereto, as the warrant agent under the Warrant Agreement, at the office of such successor
maintained for such purpose (any such warrant agent being herein called the “Warrant Agent”), and
(i) simultaneous payment in full (by certified or official bank or bank cashier’s check payable to
the order of the Company, or by wire transfer of immediately available funds to an account
designated by the Warrant Agent for the benefit of the Company) of the Exercise Price in respect of
each Warrant represented by this Warrant Certificate that is so exercised (ii) the exercise of a
Conversion Right in accordance with Section 5(d) of the Warrant Agreement or (iii) by any
combination of (i) and (ii).




          Upon any partial exercise of the Warrants represented by this Warrant Certificate, there shall
be issued to the holder hereof a new Warrant Certificate representing the Warrants that were not
exercised.







 









 








          No fractional shares may be issued upon the exercise of rights to purchase hereunder. Subject
to the terms and conditions of the Warrant Agreement, in the event of an adjustment that results in
a Warrant becoming exercisable for a fraction of a share, the Company shall deliver an amount in
cash equal to the Fair Value (as defined in the Warrant Agreement) of the same fraction of the
closing price of the Common Stock on the exercise date.




          This Warrant Certificate is issued under and in accordance with a Warrant Agreement, dated as
of December 17, 2009 (the “Warrant Agreement”), between the Company and the Warrant Agent, and is
subject to the terms and provisions contained therein. The Warrant Agreement is hereby
incorporated by reference in and made a part of this instrument and is hereby referred to for a
description of the rights, limitation of rights, obligations, duties and immunities thereunder of
the Warrant Agent, the Company and the registered holders of the Warrants. The holder of this
Warrant Certificate consents to all terms and provisions of the Warrant Agreement by acceptance
hereof. Copies of the Warrant Agreement are on file at the above-mentioned office of the Warrant
Agent and may be obtained by writing to the Warrant Agent.




          REFERENCE IS HEREBY MADE TO THE FURTHER PROVISIONS OF THIS WARRANT SET FORTH ON THE REVERSE
HEREOF, WHICH FURTHER PROVISIONS SHALL FOR ALL PURPOSES HAVE THE SAME EFFECT AS IF SET FORTH BELOW.



This Warrant Certificate shall not be valid unless countersigned by the Warrant Agent.



Dated:                                         




	 	 	 	 	 
	 	NORTEK, INC.

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 


Countersigned:




	 	 	 	 	 
	U.S. BANK NATIONAL ASSOCIATION, 

as Warrant Agent

 	 
	By:  	 	 
	 	Name:  	 	 
	 	Title:  	 	 



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REVERSE OF WARRANT CERTIFICATE




NORTEK, INC.



          The transfer of this Warrant Certificate and all rights hereunder is registrable by the
registered holder hereof, in whole or in part, on the register of the Company upon surrender of
this Warrant Certificate at the office or agency of the Company or the office of the Warrant Agent
maintained for such purpose at One Federal Street, 3rd Floor, Boston, MA 02110, duly endorsed or
accompanied by a written instrument of transfer duly executed and in form satisfactory to the
Company and the Warrant Agent, by the registered holder hereof or his attorney duly authorized in
writing and upon payment of any necessary transfer tax or other governmental charge imposed upon
such transfer or registration thereof. Upon any partial transfer the Company will cause to be
delivered to such transferring holder a new Warrant Certificate or Certificates with respect to any
portion not so transferred.




          This Warrant Certificate may be exchanged at the office or agency of the Company or the office
of the Warrant Agent maintained for such purpose at One Federal Street, 3rd Floor, Boston, MA
02110, for Warrant Certificates representing the same aggregate number of Warrants, each new
Warrant Certificate to represent such number of Warrants as the holder hereof shall designate at
the time of such exchange.




          Prior to the exercise of the Warrants represented hereby, the holder of this Warrant
Certificate, as such, shall not be entitled to any rights of a stockholder of the Company,
including, but not limited to, the right to vote, to receive dividends or other distributions, to
exercise any preemptive right or to receive any notice of meetings of stockholders, and shall not
be entitled to receive notice of any proceedings of the Company except as expressly provided in the
Warrant Agreement. Nothing contained herein shall be construed as imposing any liabilities upon
the holder of this Warrant Certificate to purchase any securities or as a stockholder of the
Company, whether such liabilities are asserted by the Company or by creditors or stockholders of
the Company or otherwise.




          This Warrant Certificate shall be void and all rights represented hereby shall cease unless
exercised before the close of business on December 17, 2014 or, if earlier, as provided in the
Warrant Agreement.




          This Warrant Certificate shall not be valid for any purpose until it shall have been manually
countersigned by an authorized signatory of the Warrant Agent.




          The Company and Warrant Agent may deem and treat the registered holder hereof as the absolute
owner of this Warrant Certificate (notwithstanding any notation of ownership or other writing
hereon made by anyone) for the purpose of any exercise hereof and for all other purposes, and
neither the Company nor the Warrant Agent shall be affected by any notice to the contrary.




          In the event of any conflict or inconsistency between this Warrant Certificate and the Warrant
Agreement, the Warrant Agreement shall control.










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SUBSCRIPTION FORM




(To be executed only upon exercise of warrant)




	 	 	To: NORTEK, INC., a Delaware corporation

U.S. BANK NATIONAL ASSOCIATION, as Warrant Agent




Attention:                                         




          The undersigned (i) [irrevocably exercises [     ] Warrants represented by the enclosed
Warrant Certificate] [hereby exercises its Conversion Right in respect of [     ] Warrants in
accordance with the terms of this Agreement], (ii) surrenders this Warrant Certificate and all
right, title and interest therein to Nortek, Inc. and (iii) directs that the securities or other
property deliverable upon the exercise of such Warrants be registered or placed in the name and at
the address specified below and delivered thereto.



Dated: [               ], 20[     ]




	 	 	 

	 

	 	 
	 

	 	 
	 

	 	(Owner)*
	 
	 	 
	 

	 	 
	 

	 	 
	 

	 	(Signature of Authorized Representative)
	 
	 	 
	 

	 	 
	 

	 	 
	 

	 	(Street Address)
	 
	 	 
	 

	 	 
	 

	 	 
	 

	 	(City) (State) (Zip Code)






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Securities or property to be

issued and delivered to:




	 	 	 

	 

	 	 
	 

	 	 
	 

	 	Signature Guaranteed**






	 	 	 	 	 

	 

	 	Please insert social	 	 
	 

	 	security or other	 	 
	 

	 	identifying number	 	 
	 

	 	 
 

	 	 





	 	 	 	 	 	 	 

	Name
	 	 	 	 	 	 
	 	 	 
	Street Address	 	 	 	 
	 

	 	 	 	 	 	 
	City, State and Zip Code	 	 	 	 
	 

	 	 	 	 	 	 






 




     *The signature must correspond with the name as written upon the face of the within Warrant
Certificate in every particular, without alteration or enlargement or any change whatsoever.




     **The signature must be guaranteed by a Securities Transfer Association medallion program
(“stamp”) participant or an institution receiving prior approval from the Warrant Agent.










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FORM OF ASSIGNMENT




          FOR VALUE RECEIVED, the undersigned registered holder of the within Warrant Certificate hereby
sells, assigns and transfers unto the Assignee named below all of the rights of the undersigned
under the within Warrant Certificate, with respect to the number of warrants set forth below:




	 	 	 	 	 

	Name of

	 	 	 	No. of
	Assignee

	 	Address
	 	Warrants
	 

	 	 
	 	 





Please insert social

security or other

identifying number

of Assignee


and does hereby irrevocably constitute and appoint                      attorney to make such transfer
on the books of Nortek, Inc. maintained for the purpose, with full power of substitution in the
premises.



Dated: [               ], 20[     ]



Name                                   
               
                      
                    *



Signature of Authorized

Representative               
                  
                    
                      
   



Signature Guaranteed                                
              
              
        **





 





     * The signature must correspond with the name as written upon the face of the within Warrant
Certificate in every particular, without alteration or enlargement or any change whatsoever.




     ** The signature must be guaranteed by a Securities Transfer Association medallion program
(“stamp”) participant or an institution receiving prior approval from the Warrant Agent.





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