Exhibit 10.1
Execution Version
EMPLOYMENT AGREEMENT
     This EMPLOYMENT AGREEMENT (the “Agreement”) is made and entered into this
16th day of December, 2011 by and between Michael J. Clarke (the “Executive”)
and Nortek, Inc., a Delaware corporation (the “Company”). This Agreement shall
be effective as the 30th day of December, 2011 (the “Effective Date”).
     WHEREAS, the Company desires to employ the Executive and the Executive
desires to be employed on the terms and conditions set forth in this Agreement.
     NOW, THEREFORE, in consideration of the foregoing premises and the mutual
promises, terms, provisions and conditions set forth in this Agreement, the
parties hereby agree:
     1. Employment. Subject to the terms and conditions set forth in this
Agreement, the Company hereby offers and the Executive hereby accepts
employment.
     2. Term. Subject to earlier termination as hereinafter provided, the
Executive’s employment shall be for an initial term of three years commencing on
the Effective Date. Commencing on the third anniversary of the Effective Date
and on each succeeding anniversary of the Effective Date thereafter (each such
anniversary date shall hereinafter be referred to as the “Renewal Date”), unless
previously terminated, the term of the Executive’s employment shall be
automatically extended for one additional year, unless at least thirty (30) days
prior to any Renewal Date, the Company or the Executive shall give notice to the
other party that the Executive’s employment hereunder shall not be so extended.
The term of the Executive’s employment hereunder as from time to time extended
or renewed is hereafter referred to as the “Term.”
     3. Capacity and Performance.
     (a) During the Term, the Executive shall serve as Chief Executive Officer
of the Company. He shall be employed by the Company on a full-time basis and
shall perform the duties and responsibilities of his position and such other
duties and responsibilities on behalf of the Company and its Affiliates,
consistent with his position as Chief Executive Officer, as reasonably may be
designated from time to time by the Board of Directors of the Company (the
“Board”) or its designees. In addition, and without further compensation, the
Executive shall serve as a director and/or officer of one or more of the
Company’s Affiliates if so elected or appointed from time to time.
     (b) During the Term, the Executive shall devote his full business time and
his best efforts, business judgment, skill and knowledge exclusively to the
advancement of the business and interests of the Company and its Affiliates and
to the discharge of his duties and responsibilities hereunder. The Executive
shall not engage in any other business activity or serve in any industry, trade,
professional, governmental or academic position during the Term, except as may
be expressly approved in advance by the Board or its designee in writing;
provided, however, that the Executive may without advance consent engage in
charitable activities and personal investment activities, provided that such
activities do not, individually or in the aggregate, interfere with the
performance of

 

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Executive’s duties under this Agreement and are not in conflict with the
business interests of the Company or its Affiliates or otherwise violative of
Sections 7, 8 or 9 of this Agreement.
     4. Compensation and Benefits. As compensation for all services performed by
the Executive hereunder during the Term, and subject to performance of the
Executive’s duties and of the obligations of the Executive to the Company and
its Affiliates, pursuant to this Agreement or otherwise:
     (a) Base Salary. During the Term, the Company shall pay the Executive an
annualized base salary of $925,000, subject to annual review for increase in the
discretion of the Board, payable in accordance with the normal payroll practices
of the Company for its executives (“Base Salary”).
     (b) Signing Bonus; Retention Bonus.
     (i) Within fifteen days (15) following the Effective Date, the Company
shall pay to the Executive a one-time signing bonus (the “Signing Bonus”) in an
amount equal to $500,000.
     (ii) On the first anniversary of the Effective Date, the Executive shall be
paid a one-time bonus of $500,000 (the “Retention Bonus”), subject to his
remaining continuously employed by the Company through such date.
Notwithstanding the foregoing, in the event that the Executive terminates his
employment for Good Reason or his employment is terminated by the Company
without Cause or due to the Executive’s disability (as defined in Section 5(b)
below) or due to his death, in each case, prior to the first anniversary of the
Effective Date, the Company shall pay the Executive (or his Designated
Beneficiary (as defined below) or estate, if applicable) the Retention Bonus on
a date that is the sixtieth (60th) day following the date his employment
terminates; provided, however, that any obligation of the Company to pay the
Retention Bonus upon the Executive’s termination of employment under this
subsection (ii) is conditioned on the Executive’s (or his Designated Beneficiary
or estate, if applicable) signing and returning a timely and effective Release
of Claims (as defined below) in a manner set forth in Section 5(d) of this
Agreement.
     (c) Annual Bonus Compensation. For each full fiscal year completed during
the Term, the Executive shall be entitled to receive an annual bonus (the
“Annual Bonus”) on the following terms and conditions. The Annual Bonus shall be
determined under, and subject to, the terms of the Company’s short-term
incentive plan for its executives generally, as in effect from time to time (the
“Bonus Plan”). The Executive’s target Annual Bonus (“Target Bonus”) shall be
equal to one-hundred percent (100%) of the Base Salary, with the actual amount
of the Annual Bonus, if any, to be based on the attainment of pre-established
performance goals as determined by the Board or the Compensation Committee of
the Board (the “Compensation Committee”) in accordance with the terms of the
Bonus Plan. Notwithstanding the foregoing, for the 2012 fiscal year, the payout
level for the Executive under the Bonus Plan will be guaranteed at fifty percent
(50%) of the Base Salary. Under the Bonus Plan currently in effect, which is

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subject to change from time to time, seventy percent (70%) of the Annual Bonus
is based on the achievement of an adjusted EBITDA (adjusted earnings before
interest, taxes, depreciation and amortization) performance goal (the “EBITDA
Bonus”). Under the Bonus Plan currently in effect, which is subject to change
from time to time, participants are entitled to receive a 50% payout of their
EBITDA Bonus if EBITDA is 85% of the EBITDA target established for the year (the
“EBITDA Target”), increasing linearly to a 100% payout of their EBITDA Bonus if
EBITDA equals the EBITDA Target, and further increasing linearly to a 200%
payout of their EBITDA Bonus if EBITDA is equal to or greater than 120% of the
EBITDA Target. Additionally, under the Bonus Plan currently in effect, which is
subject to change from time to time, thirty percent (30%) of the Annual Bonus is
based on the achievement of individual performance goals, as determined by the
Board or the Compensation Committee, provided that adjusted EBITDA is greater
than a minimum threshold. Any bonus due to the Executive hereunder shall be paid
in the time and manner set forth in the Bonus Plan.
     (d) Equity Compensation.
     (i) On or promptly following the Effective Date, subject to the receipt of
any required Board or Compensation Committee approval, the Company shall grant
to the Executive an option to purchase 200,000 shares of Common Stock (the
“Option”). The Option shall be granted under the Company’s 2009 Omnibus
Incentive Plan (as amended from time to time, the “EIP”). The Option will vest
in equal installments on each of the first five (5) anniversaries of its date of
grant, subject to the Executive remaining continuously employed by the Company
through each such date. The Option shall be subject to the terms of the EIP and
the award agreement evidencing such Option. For purposes of this Agreement,
“Common Stock” means common stock of the Company, par value $0.01 per share.
     (ii) On or promptly following the Effective Date, subject to the receipt of
any required Board or Compensation Committee approval, the Company shall grant
to the Executive 50,000 shares of restricted Common Stock (the “Time-Based
Restricted Stock Grant”). The Time-Based Restricted Stock Grant will be subject
to the terms of the EIP and the restricted stock award agreement evidencing such
grant. The Time-Based Restricted Stock Grant will vest in equal installments on
each of the first five (5) anniversaries of its date of grant, subject to the
Executive remaining continuously employed by the Company through each such date.
     (iii) On or promptly following the Effective Date, subject to the receipt
of any required Board or Compensation Committee approval, the Company shall
grant to Executive 100,000 shares of restricted Common Stock (the
“Performance-Based Restricted Stock Grant”). The Performance-Based Restricted
Stock Grant will vest in five (5) annual installments, subject to the attainment
of performance goals as established and determined by the Board or the
Compensation Committee and further subject to the Executive remaining
continuously employed by the Company through each applicable vesting date. The
vesting date shall occur, with respect to each subject fiscal year, on the date

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the Board or the Compensation Committee determines, upon receipt of audited
financial statements for such fiscal year, whether the performance goals have
been satisfied. Subject to the attainment of performance goals, the Executive
shall be eligible to vest in 0% to 100% of the number of shares of restricted
Common Stock underlying the Performance-Based Restricted Stock Grant, with
target performance resulting in the vesting of 50% of the shares underlying such
grant.
     (iv) Future Equity Awards. The Executive shall be eligible to be considered
for the grant of additional annual equity awards during the Term, beginning in
fiscal year 2013, in the sole discretion of, and in a form and amount determined
by, the Board or the Compensation Committee. The annual target grant date award
value of any such future award is expected to be approximately $1,000,000;
provided, however, that nothing herein shall be deemed to be, nor construed as,
a commitment or obligation by the Company to make any additional equity or
equity-based awards in any specified amount to the Executive or to have the
Executive remain in the Company’s employ. Any such equity awards shall be
subject to the receipt of any required shareholder, Board or Compensation
Committee approvals, the terms of the EIP or the Company’s equity incentive plan
as then in effect and the award agreement evidencing such award.
     (v) Acceleration. In the event of a Change in Control (as defined in the
EIP), upon such Change in Control, in all cases, to the extent then outstanding
in accordance with the terms of the applicable award agreements evidencing such
awards, the vesting of the Option and the Time-Based Restricted Stock Grant to
be granted to Executive pursuant to Sections 4(d)(i) and 4(d)(ii) above will
accelerate in full and fifty percent (50%) of the then unvested portion of the
Performance-Based Restricted Stock Grant to be granted to Executive pursuant to
Section 4(d)(iii) above will accelerate.
     (e) Vacations. During the Term, the Executive shall be entitled to four (4)
weeks of vacation per annum (pro-rated for partial years), to be taken at such
times and intervals as shall be determined by the Executive, subject to the
reasonable business needs of the Company. Vacation shall otherwise be governed
by the policies of the Company, as in effect from time to time.
     (f) Other Benefits. During the Term and subject to any contribution
therefor generally required of employees of the Company, the Executive shall be
entitled to participate in any and all employee benefit plans from time to time
in effect for senior executive officers of the Company generally, except to the
extent such plans or benefits are otherwise expressly provided to the Executive
(e.g., a severance pay plan). Such participation shall be subject to (i) the
terms of the applicable plan documents, (ii) generally applicable Company
policies and (iii) the discretion of the Board or any administrative or other
committee provided for in or contemplated by such plan (the “Employee Benefit
Plans”). The Company may prospectively alter, modify, add to or terminate its
Employee Benefit Plans at any time as it, in its sole judgment, determines to be
appropriate, without recourse by the Executive.

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     (g) Relocation Expenses. The Executive agrees to relocate from his current
residence in California to a location that is a reasonable commuting distance
from the Company’s principal executive offices in Providence, Rhode Island (the
“New Residence”) by December 31, 2012. The Company shall make available to the
Executive relocation assistance through a professional relocation service
provider. In addition, the Company shall pay or reimburse the Executive for his
reasonable costs, up to a maximum amount of $150,000, incurred in connection
with relocating to the New Residence, subject to such reasonable substantiation
and documentation as may be specified by the Board or Company policy from time
to time, and provided such relocation is completed not later than December 31,
2012. Such permitted payments or reimbursements, if any, shall include (i) any
penalty fee incurred by the Executive in connection with cancelling the lease on
his current residence, (ii) temporary housing for the Executive and his
immediate family through December 31, 2012, (iii) upon the Executive’s
children’s enrollment at a school near the New Residence, the reasonable cost of
tuition fees for each child under the age of eighteen (18) through June 30,
2012, provided such child is in a grade of kindergarten through twelfth (12th)
grade, (iv) four (4) house hunting or school selection trips, including
roundtrip airline tickets for the Executive and his immediate family, and
(v) transportation and storage of household goods and motor vehicles. The
Company shall also provide the Executive with a tax gross-up for applicable
federal, state and local taxes paid by the Executive in connection with the
allowance provided under this subsection (g). This gross-up payment shall be
paid no later than April 15th of the year following the year to which such
taxable income relates.
     (h) Tax Preparation. The Company shall pay or reimburse the Executive for
the reasonable cost of tax preparation services incurred by Executive in
connection with the preparation of his personal income tax returns, subject to
such reasonable substantiation and documentation as may be specified by the
Board or Company policy from time to time.
     (i) Business Expenses. The Company shall pay or reimburse the Executive for
reasonable, customary and necessary business expenses incurred or paid by the
Executive in the performance of his duties and responsibilities hereunder,
subject to applicable Company policies and such reasonable substantiation and
documentation as may be specified by the Board or Company policy from time to
time.
     (j) Timing of Payments. Any payments or reimbursements under Sections 4(g),
4(h) or 4(i) shall be made within thirty (30) days after submission of written
documentation substantiating such expenses, in a form reasonably acceptable to
the Company. Any payments or reimbursements provided for under this Agreement
that would constitute nonqualified deferred compensation subject to Section 409A
of the Internal Revenue Code of 1986, as amended (“Section 409A”), shall be
subject to the following additional rules: (i) no reimbursement of any such
expense shall affect the Executive’s right to reimbursement of any such expense
in any other taxable year, (ii) reimbursement of the expense shall be made, if
at all, promptly, but not later than the end of the calendar year following the
calendar year in which the expense was incurred, and (iii) the right to
reimbursement shall not be subject to liquidation or exchange for any other
benefit.

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     5. Termination of Employment and Severance Pay. The Executive’s employment
hereunder shall terminate under the following circumstances:
     (a) Death. In the event of the Executive’s death during the Term, the date
of death shall be the date of termination of the Executive’s employment, and the
Company shall pay or provide to the Executive’s Designated Beneficiary or, if no
beneficiary has been designated by the Executive in a notice received by the
Company, to his estate: (i) any Base Salary earned but not paid through the date
of termination; (ii) pay for any vacation time earned but not used through the
date of termination; (iii) any bonus compensation awarded for the fiscal year
preceding that in which termination occurs, but unpaid on the date of
termination; (iv) any amounts accrued and payable under any Employee Benefit
Plan pursuant to Section 4(f) above; (v) any tax gross-up payment owed under
Section 4(g) above with respect to the period prior to the date of termination
that is unpaid on such date; (vi) any unpaid or unreimbursed expenses pursuant
to Sections 4(g), 4(h) or 4(i) incurred by the Executive but unreimbursed on the
date of termination, provided that such expenses and required substantiation and
documentation are submitted within sixty (60) days following termination and
that any business expenses incurred pursuant to Section 4(i) are reimbursable
under Company policy (all of the foregoing, payable subject to the timing
limitations described herein, “Final Compensation”); (vii) a pro rata portion of
the Annual Bonus for the year in which such termination occurs, pro-rated based
on the number of days the Executive was employed during such year prior to the
date of termination, which bonus shall be determined based on actual Company
performance for the full year in which such termination occurs (it being
understood that if any portion of the Annual Bonus is based on the attainment of
individual performance goals, for purposes of determining the amount of the
pro-rata bonus, 100% of the bonus shall be deemed to be based on attainment of
Company performance goals) (the “Pro-Rata Bonus”); and (vii) if the Executive’s
employment is terminated prior to the first anniversary of the Effective Date,
the Retention Bonus, which shall be paid in accordance with the terms of
Section 4(b)(ii) of this Agreement. The Company shall have no further obligation
or liability to the Executive. The Pro-Rata Bonus shall be paid at the same time
that bonuses under the Bonus Plan are paid to active employees in accordance
with Section 4(c) of this Agreement. Other than the tax gross-up described in
Section 5(a)(v) herein, which shall be paid at the time provided in Section 4(g)
above, the expenses described in Section 5(a)(vi) herein, which shall be paid at
the time provided in Section 4(j), and any bonus described in
Sections 5(a)(iii), which shall be paid at the time provided in Section 4(c),
Final Compensation shall be paid to the Executive’s Designated Beneficiary or
estate, as applicable, within thirty (30) days following the date of death.
     (b) Disability.
     (i) The Company may terminate the Executive’s employment hereunder, upon
notice to the Executive, in the event that the Executive becomes disabled during
his employment hereunder through any illness, injury, accident or condition of
either a physical or psychological nature and, as a result, is unable to perform
substantially all of his duties and responsibilities hereunder (notwithstanding
the provision of any reasonable accommodation) for one

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hundred eighty (180) days during any period of three hundred and sixty-five
(365) consecutive calendar days. A termination on account of disability shall be
treated in the same manner as a termination due to the Executive’s death,
provided that references to Designated Beneficiary shall refer to the Executive
or his personal representative, as applicable.
     (ii) The Board may designate another employee to act in the Executive’s
place during any period of the Executive’s disability. Notwithstanding any such
designation, the Executive shall continue to receive the Base Salary in
accordance with Section 4(a) and to participate in Employee Benefit Plans in
accordance with Section 4(f), to the extent permitted by the then-current terms
of the applicable Employee Benefit Plans, until the Executive becomes eligible
for disability income benefits under the Company’s disability income plan, if
any, or until the termination of his employment, whichever shall first occur.
While receiving disability income payments under the Company’s disability income
plan, the Executive shall not be entitled to receive any Base Salary under
Section 4(a) hereof, but shall continue to participate in the Employee Benefit
Plans in accordance with Section 4(f) and the then-current terms of such plans,
until the termination of his employment hereunder.
     (iii) If any question shall arise as to whether during any period the
Executive is disabled through any illness, injury, accident or condition of
either a physical or psychological nature so as to be unable to perform
substantially all of his duties and responsibilities hereunder, the Executive
may, and at the request of the Company shall, submit to a medical examination by
a physician selected by the Company, to determine whether the Executive is so
disabled and such determination shall for the purposes of this Agreement be
conclusive. If such question shall arise and the Executive shall fail to submit
to such medical examination, the Company’s determination of the issue shall be
binding on the Executive.
     (c) By the Company for Cause. The Company may terminate the Executive’s
employment hereunder for Cause at any time upon notice to the Executive setting
forth in reasonable detail the nature of such Cause. The following shall
constitute Cause for termination:
     (i) other than the result of disability, the Executive’s willful failure to
perform, or gross negligence in the performance of, the Executive’s material
duties and responsibilities to the Company or any of its Affiliates, which
failure or neglect, if susceptible of cure, remains uncured or continues or
recurs fourteen (14) days after the Executive receives written notice from the
Company specifying in reasonable detail the nature of such failure or neglect;
     (ii) the Executive’s material breach of any of the terms of this Agreement
or any other agreement with the Company or any of its Affiliates, which breach,
if susceptible of cure, remains uncured or continues or recurs fourteen
(14) days after the Executive receives written notice from the Company
specifying in reasonable detail the nature of such breach;

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     (iii) the Executive’s indictment for or charge of a felony or other crime
involving moral turpitude; or
     (iv) the Executive’s engaging in illegal misconduct or gross misconduct
that is materially harmful to the Company or its Affiliates.
Upon the giving of notice of termination of the Executive’s employment hereunder
for Cause, the Company shall have no further obligation to the Executive, other
than for Final Compensation. Other than the tax gross-up described in
Section 5(a)(v) herein, which shall be paid at the time provided in Section 4(h)
above, the expenses described in Section 5(a)(vi), which shall be paid at the
time provided in Section 4(j), and any bonus described in Section 5(a)(iii),
which shall be paid at the time provided in Section 4(c), Final Compensation
shall be paid to the Executive within sixty (60) days following the date of
termination of employment.
     (d) By the Company Other Than for Cause. The Company may terminate the
Executive’s employment hereunder other than for Cause at any time upon notice to
the Executive. A termination of the Executive’s employment that occurs on the
last day of the Term following the Company’s notice to the Executive of
non-renewal of the Term under Section 2 hereof shall be treated as a termination
by the Company other than for Cause. In the event of such termination, in
addition to any Final Compensation due to the Executive, (i) the Company will
pay the Executive severance pay, at the same rate as the Base Salary in effect
on the date of termination, for a period of twenty-four (24) months following
the date of termination of his employment (the “Severance Pay”); (ii) if the
Executive’s employment is terminated prior to the first anniversary of the
Effective Date, the Executive shall be entitled to receive the Retention Bonus
in accordance with the terms of Section 4(b)(ii) of this Agreement; and (iii) if
the Executive timely elects COBRA continuation coverage, the Company will pay
the full amount of Executive’s monthly COBRA premiums for the eighteen
(18)-month period commencing on the day after the date of termination, such
payments to be made on a monthly basis within ten (10) days of the first day of
each month, to the extent permitted under the terms of the Company’s medical
plan and to the extent the making of such payments would not violate, or result
in any penalty or fine to the Company, under applicable law (the “Health Care
Coverage”). Other than the tax gross-up described in Section 5(a)(v) herein,
which shall be paid at the time provided in Section 4(g) above, the expenses
described in Section 5(a)(vi), which shall be paid at the time provided in
Section 4(j), and any bonus described in Section 5(a)(iii), which shall be paid
at the time provided in Section 4(c), Final Compensation shall be paid to the
Executive within sixty (60) days following the date of termination of
employment. Any obligation of the Company to provide the Severance Pay or Health
Care Coverage is conditioned, however, on the Executive signing and returning to
the Company (without revoking) a timely and effective separation agreement
containing a release of claims and other customary terms in the form provided by
the Company by the deadline specified therein, which in all events shall be no
later than the sixtieth (60th) day following the date of termination (any such
release submitted by such deadline, the “Release of Claims”) and on the
Executive’s continued compliance with the obligations of the Executive to the
Company and its Affiliates that survive termination of his employment, including
without limitation under Sections 7, 8 and 9 of this Agreement. All Severance
Pay to which the Executive is

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entitled hereunder shall be in the form of salary continuation, payable in
accordance with the normal payroll practices of the Company for its executives,
with the first payment, which shall be retroactive to the day immediately
following the date the Executive’s employment terminated, being due and payable
on the Company’s next regular payday for executives that follows the expiration
of sixty (60) calendar days from the date the Executive’s employment terminates.
The Release of Claims required for separation benefits in accordance with
Section 4(b)(ii), this Section 5(d) or Section 5(e) creates legally binding
obligations on the part of the Executive and the Company therefore advises the
Executive to seek the advice of an attorney before signing the Release of
Claims.
     (e) By the Executive for Good Reason. The Executive may terminate his
employment hereunder for Good Reason by (i) providing notice to the Company
specifying in reasonable detail the condition giving rise to the Good Reason no
later than the thirtieth (30th) day following the occurrence of that condition;
(ii) providing the Company a period of fourteen (14) days to remedy the
condition and so specifying in the notice and (iii) terminating his employment
for Good Reason within thirty (30) days following the expiration of the period
to remedy if the Company fails to remedy the condition. The following, if
occurring without the Executive’s consent, shall constitute “Good Reason” for
termination by the Executive: (a) any reduction of Executive’s Base Salary or
Target Bonus percentage; (b) failure to pay the Executive’s Base Salary in
accordance with the terms of this Agreement or failure to pay the Annual Bonus
to the extent due and payable under the Bonus Plan, in either case, which
failure to pay continues for more than two (2) weeks; (c) a material diminution
of Executive’s position, authority, duties or responsibilities; (d) relocation
of the Company’s principal executive offices, or any event that causes Executive
to have his principal place of work changed, to any location greater than fifty
(50) miles from Providence, Rhode Island, other than to Boston, Massachusetts;
and (e) any other material breach of this Agreement by the Company. A
termination of employment by the Executive under this Section 5(e) shall be
treated as a termination by the Company other than for Cause under Section 5(d)
above; provided that the Executive satisfies all conditions to such entitlement
as set forth in Section 5(d), including, without limitation, the signing of an
effective Release of Claims.
     (f) By the Executive Without Good Reason. The Executive may terminate his
employment hereunder at any time upon thirty (30) days’ prior written notice to
the Company. In the event of termination of the Executive’s employment pursuant
to this Section 5(f), the Board may elect to waive the period of notice, or any
portion thereof, and, if the Board so elects, the Company will pay the Executive
his Base Salary for the notice period (or for any remaining portion of the
period). The Company shall also pay the Executive the Final Compensation (other
than the tax gross-up described in Section 5(a)(v) herein, which shall be paid
at the time provided in Section 4(g) above, the expenses described in
Section 5(a)(vi), which shall be paid at the time provided in Section 4(j), and
any bonus described in Section 5(a)(iii), which shall be paid at the time
provided in Section 4(c)) in a lump sum within sixty (60) days following the
date of the termination of employment. A termination of the Executive’s
employment that occurs by reason of the Executive’s notice to the Company

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of non-renewal of the Term under Section 2 hereof will be treated as a
termination by the Executive without Good Reason.
     (g) Timing of Payments and Section 409A.
     (i) Notwithstanding anything to the contrary in this Agreement, if at the
time of the Executive’s termination of employment, the Executive is a “specified
employee,” as defined below, any and all amounts payable under this Agreement on
account of such separation from service that would (but for this provision) be
payable within six (6) months following the date of termination, shall instead
be paid on the next business day following the expiration of such six (6) month
period or, if earlier, upon the Executive’s death; except (A) to the extent of
amounts that do not constitute a deferral of compensation within the meaning of
Treasury regulation Section 1.409A-1(b) (including without limitation by reason
of the safe harbor set forth in Section 1.409A-1(b)(9)(iii), as determined by
the Company in its reasonable good faith discretion); (B) benefits which qualify
as excepted welfare benefits pursuant to Treasury regulation
Section 1.409A-1(a)(5); or (C) other amounts or benefits that are not subject to
the requirements of Section 409A.
     (ii) For purposes of this Agreement, all references to “termination of
employment” and correlative phrases shall be construed to require a “separation
from service” (as defined in Section 1.409A-1(h) of the Treasury regulations
after giving effect to the presumptions contained therein), and the term
“specified employee” means an individual determined by the Company to be a
specified employee under Treasury regulation Section 1.409A-1(i).
     (iii) Each payment made under this Agreement shall be treated as a separate
payment and the right to a series of installment payments under this Agreement
is to be treated as a right to a series of separate payments.
     (h) Post-Agreement Employment. In the event the Executive remains in the
employ of the Company or any of its Affiliates following the termination of this
Agreement, then such employment shall be at will on terms to be determined by
the Board or its designee.
     (i) Exclusive Right to Severance. The Executive’s right to severance
payments and benefits upon termination of employment shall be as expressly set
forth in this Agreement. In no event shall the Executive participate in, or
receive benefits under, any other plan, program or policy of the Company
providing for severance or termination pay or benefits.
     6. Effect of Termination. The provisions of this Section 6 shall apply to
any termination of the Executive’s employment under this Agreement.
     (a) Provision by the Company of Final Compensation, Severance Pay, Pro-Rata
Bonus and Health Care Coverage, if any, and the Retention Bonus, if applicable,
that are due to the Executive in each case under the applicable termination
provision of Section 5 shall constitute the entire obligation of the Company to
the Executive.

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     (b) Except for any right of the Executive to continue medical and dental
plan participation in accordance with applicable law and the Health Care
Coverage, if applicable under Section 5, the Executive’s participation in all
Employee Benefit Plans shall be determined pursuant to the terms of the
applicable plan documents based on the date of termination of the Executive’s
employment without regard to any continuation of Base Salary or other payment to
or on behalf of the Executive following such date of termination. The Executive
shall be entitled to retain any then vested benefits under the Employee Benefit
Plans in accordance with the terms of such plans.
     (c) Provisions of this Agreement shall survive any termination of the
Executive’s employment if so provided herein or if necessary or desirable fully
to accomplish the purposes of other surviving provisions, including without
limitation the obligations of the Executive under Sections 7, 8 and 9 hereof.
The obligation of the Company to provide Severance Pay hereunder, and the
Executive’s right to retain such payments, is expressly conditioned on the
Executive’s continued full performance in accordance with Sections 7, 8 and 9
hereof.
     7. Confidential Information.
     (a) The Executive acknowledges that the Company and its Affiliates
continually develop Confidential Information, that the Executive may develop
Confidential Information for the Company or its Affiliates and that the
Executive may learn of Confidential Information during the course of employment.
The Executive agrees that all Confidential Information which the Executive
creates or to which he has access as a result of his employment or service with
the Company or any of its Affiliates is and shall remain the sole and exclusive
property of the Company or its Affiliate, as applicable. The Executive shall
comply with the policies and procedures of the Company and its Affiliates for
protecting Confidential Information and shall never disclose to any Person
(except as required by applicable law or for the proper performance of his
duties and responsibilities to the Company and its Affiliates), or use for his
own benefit or gain or the benefit or gain of any other Person, any Confidential
Information obtained by the Executive incident to his employment or service with
the Company or any of its Affiliates. The Executive understands that this
restriction shall continue to apply after his employment terminates, regardless
of the reason for such termination. Further, the Executive agrees to furnish
prompt notice to the Company of any required disclosure of Confidential
Information sought pursuant to subpoena, court order or any other legal process
or requirement, and agrees to provide the Company a reasonable opportunity to
seek protection of the Confidential Information prior to any such disclosure.
The confidentiality obligation under this Section 7 shall not apply to
information that has become generally known through no wrongful act on the part
of the Executive or any other Person having an obligation of confidentiality to
the Company or any of its Affiliates.
     (b) All documents, records, tapes and other media of every kind and
description relating to the business, present or otherwise, of the Company or
any of its Affiliates and any copies or derivatives (including without
limitation electronic), in whole or in part, thereof (the “Documents”), whether
or not prepared by the Executive, shall be the sole and exclusive property of
the Company and its Affiliates. Except as required for

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the proper performance of the Executive’s regular duties for the Company or as
expressly authorized in writing in advance by the Board or its expressly
authorized designee, the Executive will not copy any Documents or remove any
Documents or copies or derivatives thereof from the premises of the Company. The
Executive shall safeguard all Documents and shall surrender to the Company at
the time his employment terminates, and at such earlier time or times as the
Board or its designee may specify, all Documents and other property of the
Company or any of its Affiliates and all documents, records and files of the
customers and other Persons with whom the Company or any of its Affiliates does
business (“Third-Party Documents”) and each individually a “Third-Party
Document”) then in the Executive’s possession or control; provided, however,
that if a Document or Third-Party Document is on electronic media, the Executive
may, in lieu of surrendering the Document or Third-Party Document, provide a
copy to the Company on electronic media and delete and overwrite all other
electronic media copies thereof. The Executive also agrees that, upon request of
any duly authorized officer of the Company, the Executive shall disclose all
passwords and passcodes necessary or desirable to enable the Company or any of
its Affiliates or the Persons with whom the Company or any of its Affiliates do
business to obtain access to the Documents and Third-Party Documents.
     8. Assignment of Rights to Intellectual Property. The Executive shall
promptly and fully disclose all Intellectual Property to the Company. The
Executive hereby assigns and agrees to assign to the Company (or as otherwise
directed by the Company) the Executive’s full right, title and interest in and
to all Intellectual Property. The Executive agrees to execute any and all
applications for domestic and foreign patents, copyrights or other proprietary
rights and to do such other acts (including without limitation the execution and
delivery of instruments of further assurance or confirmation) requested by the
Company to assign the Intellectual Property to the Company and to permit the
Company to enforce any patents, copyrights or other proprietary rights to the
Intellectual Property. The Executive will not charge the Company for time spent
in complying with these obligations. All copyrightable works that the Executive
creates shall be considered “work made for hire” and shall, upon creation, be
owned exclusively by the Company.
     9. Restricted Activities. The Executive agrees that the following
restrictions on his activities during and after his employment are necessary to
protect the goodwill, Confidential Information and other legitimate interests of
the Company and its Affiliates.
     (a) While the Executive is employed by the Company and for a period of
twenty-four (24) months after his employment terminates, regardless of the basis
or timing of that termination (the “Non-Competition Period”), the Executive
shall not, directly or indirectly, whether as owner, partner, investor,
consultant, agent, employee, co-venturer or otherwise, compete with the business
that the Company or any of its Affiliates conducts or conducted at any time
during the Executive’s employment or which the Company or any of its Affiliates
is actively engaged in planning to conduct at the time of the Executive’s
termination of employment (collectively, the “Business”) within any state of the
United States or any country in which the Company or its Affiliates conducts or,
at the time of the Executive’s termination of employment, is actively engaged in
planning to conduct the Business. Executive further agrees not to work or
provide services, in any capacity, whether as an employee, independent

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contractor or otherwise, whether with or without compensation, to any Person who
is engaged in the Business. The foregoing, however, shall not prevent the
Executive’s passive ownership of two percent (2%) or less of the equity
securities of any publicly traded company.
     (b) The Executive agrees that during his employment and during the
Non-Competition Period, the Executive will not hire or attempt to hire any
person employed by the Company or any of its Affiliates during the 24-month
period prior to the termination of Executive’s employment, assist such a hiring
by any other person or entity, encourage any such employee to terminate his
relationship with the Company (or any Affiliate) or solicit or encourage any
independent contractor, customer or vendor of the Company to terminate or reduce
its relationship with the Company. Nothing herein, however, shall prohibit the
Executive from soliciting business from customers or suppliers of the Company
not otherwise in violation of this Agreement.
     10. Notification Requirement. Until the conclusion of the Non-Competition
Period, the Executive shall give notice to the Company within 5 business days of
undertaking an activity related to or involving the Business. Such notice shall
state the name and address of the Person for whom such activity is undertaken
and the nature of the Executive’s business relationship(s) and position(s) with
such Person. The Executive shall provide the Company with such other pertinent
information concerning such business activity as the Company may reasonably
request in order to determine the Executive’s continued compliance with his
obligations under Sections 7, 8 and 9 hereof.
     11. Enforcement of Covenants. The Executive acknowledges that he has
carefully read and considered all the terms and conditions of this Agreement,
including the restraints imposed upon him pursuant to Sections 7, 8 and 9
hereof. The Executive agrees without reservation that each of the restraints
contained herein is necessary for the reasonable and proper protection of the
goodwill, Confidential Information and other legitimate interests of the Company
and its Affiliates; that each and every one of these restraints is reasonable in
respect to subject matter, length of time and geographic area; and that these
restraints, individually or in the aggregate, will not prevent him from
obtaining other suitable employment during the period in which the Executive is
bound by them. The Executive further acknowledges that, were he to breach any of
the covenants contained in Sections 7, 8 or 9 hereof, the damage to the Company
would be irreparable. The Executive therefore agrees that the Company, in
addition to any other remedies available to it, shall be entitled to apply for
preliminary and permanent injunctive relief against any breach or threatened
breach by the Executive of any of said covenants, without having to post bond,
and, to the extent the Company prevails in whole or in part on any claim related
to the provisions contained in Sections 7, 8 or 9 of this Agreement as
determined by a court or other tribunal of competent jurisdiction, including
without limitation an arbitrator, the Company will additionally be entitled to
an award of attorney’s fees incurred in connection with securing any relief
hereunder. The parties further agree that, in the event that any provision of
Sections 7, 8 or 9 hereof shall be determined by any court of competent
jurisdiction to be unenforceable by reason of its being extended over too great
a time, too large a geographic area or too great a range of activities, such
provision shall be deemed to be modified to permit its enforcement to the
maximum extent permitted by law. The Executive agrees that the Non-Competition
Period shall be tolled, and shall not run, during any period of time in which he
is in

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violation of the terms thereof, in order that the Company and its Affiliates
shall have all of the agreed-upon temporal protection recited herein. No failure
of the Company to provide the Executive with the severance payments and benefits
upon a termination of employment provided for under this Agreement based on the
Company’s good faith belief that the Executive has breached his obligations
hereunder, or any other claimed breach of contract or violation of law, or
change in the nature or scope of the Executive’s employment relationship with
the Company, shall operate to extinguish the Executive’s obligation to comply
with Sections 7, 8 and 9 hereof.
     12. No Conflicting Agreements. The Executive hereby represents and warrants
that the execution of this Agreement and the performance of his obligations
hereunder will not breach or be in conflict with any other agreement to which
the Executive is a party or is bound and that the Executive is not now subject
to any covenants against competition or similar covenants or any other
obligations to any Person or to any court order, judgment or decree that would
affect the performance of his obligations hereunder. The Executive will not
disclose to or use on behalf of the Company any proprietary information of a
third party without such party’s consent.
     13. Indemnification. The Company shall indemnify and hold harmless the
Executive from and against any damages, liabilities and expenses (including
without limitation fees and expenses of counsel) incurred by Executive and
provide the Executive with advancement of expenses to the fullest extent
permitted by applicable law and the Amended and Restated Certificate of
Incorporation of the Company. The Executive agrees to promptly notify the
Company of any actual or threatened claim arising out of or as a result of his
employment with the Company. The Company’s obligations under this Section 13
shall survive the termination of this Agreement to the extent provided by the
Amended and Restated Certificate of Incorporation of the Company and applicable
law.
     14. Definitions. Words or phrases which are initially capitalized or are
within quotation marks shall have the meanings provided in this Section 14 and
as provided elsewhere herein. For purposes of this Agreement, the following
definitions apply:
     (a) “Affiliates” means any person or entity directly or indirectly
controlling, controlled by or under common control with the Company, where
control may be by either management authority or equity interest.
     (b) “Confidential Information” means any and all information of the Company
and its Affiliates that is not generally known by Persons with whom they compete
or do business, or with whom they plan to compete or do business, and any and
all information, publicly known in whole or in part or not, which, if disclosed
by the Company or any of its Affiliates, would assist in competition against
them. Confidential Information includes without limitation such information
relating to (i) the development, research, testing, manufacturing, marketing and
financial activities of the Company and its Affiliates, (ii) the Products,
(iii) the costs, sources of supply, financial performance and strategic plans of
the Company and its Affiliates, (iv) the identity and special needs of the
customers of the Company and its Affiliates and (v) the people and organizations
with whom the Company and its Affiliates have business relationships and the
nature and substance of those relationships. Confidential Information also
includes information that the Company or any of its Affiliates has received, or
may receive hereafter, belonging to

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others or that was received by the Company or any of its Affiliates with any
understanding, express or implied, that it would not be disclosed.
     (c) “Designated Beneficiary” shall mean the beneficiary or beneficiaries
designated by the Executive to the Company from time to time by written notice
hereunder, and if no such designation is made, the Executive’s estate or
personal representative
     (d) “Intellectual Property” means inventions, discoveries, developments,
methods, processes, compositions, works, recipes, concepts and ideas (whether or
not patentable or copyrightable or constituting trade secrets) conceived, made,
created, developed or reduced to practice by the Executive (whether alone or
with others, whether or not during normal business hours or on or off Company
premises) during the Executive’s employment and during the period of two
(2) months immediately following termination of his employment that relate to
either the business or any prospective activity of the Company or any of its
Affiliates or that make use of Confidential Information or any of the equipment
or facilities of the Company or any of its Affiliates.
     (e) “Person” means an individual, a corporation, an association, a
partnership, an estate, a trust and any other entity or organization, other than
the Company or any of its Affiliates.
     (f) “Products” means all products planned, researched, developed, tested,
sold, licensed, leased, or otherwise distributed or put into use by the Company
or any of its Affiliates, together with all services provided or otherwise
planned by the Company or any of its Affiliates, during the Executive’s
employment.
     15. Withholding. All payments made by the Company under this Agreement
shall be reduced by any tax or other amounts required to be withheld by the
Company under applicable law.
     16. Assignment. Neither the Company nor the Executive may make any
assignment of this Agreement or any interest herein, by operation of law or
otherwise, without the prior written consent of the other; provided, however,
that the Company may assign its rights and obligations under this Agreement
without the consent of the Executive in the event that the Company shall
hereafter effect a reorganization, consolidate with, or merge into, an Affiliate
or any Person or transfer all or substantially all of its properties, stock, or
assets to an Affiliate or any Person. This Agreement shall inure to the benefit
of and be binding upon the Company and the Executive, and their respective
successors, executors, administrators, heirs and permitted assigns.
     17. Severability. If any portion or provision of this Agreement shall to
any extent be declared illegal or unenforceable by a court of competent
jurisdiction, then the remainder of this Agreement, or the application of such
portion or provision in circumstances other than those as to which it is so
declared illegal or unenforceable, shall not be affected thereby, and each
portion and provision of this Agreement shall be valid and enforceable to the
fullest extent permitted by law.

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     18. Waiver. No waiver of any provision hereof shall be effective unless
made in writing and signed by the waiving party. The failure of either party to
require the performance of any term or obligation of this Agreement, or the
waiver by either party of any breach of this Agreement, shall not prevent any
subsequent enforcement of such term or obligation or be deemed a waiver of any
subsequent breach.
     19. Notices. Any and all notices, requests, demands and other
communications provided for by this Agreement shall be in writing and shall be
effective when delivered in person, consigned to a reputable national courier
service or deposited in the United States mail, postage prepaid, registered or
certified, and addressed to the Executive at his last known address on the books
of the Company or, in the case of the Company, at its principal place of
business, attention of General Counsel and Secretary, with a copy to Ropes &
Gray LLP, Prudential Tower, 800 Boylston Street, Boston, MA 02199, Attention:
John B. Ayer and Renata J. Ferrari or to such other address as either party may
specify by notice to the other actually received.
     20. Entire Agreement. This Agreement and any other agreements specifically
referred to herein, constitutes the entire agreement between the parties and
supersedes and terminates all prior communications, agreements and
understandings, written or oral, with respect to the terms and conditions of the
Executive’s employment with the Company.
     21. Amendment. This Agreement may be amended or modified only by a written
instrument signed by the Executive and by an expressly authorized representative
of the Company.
     22. Headings. The headings and captions in this Agreement are for
convenience only and in no way define or describe the scope or content of any
provision of this Agreement.
     23. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be an original and all of which together shall
constitute one and the same instrument.
     24. Governing Law. This is a State of Rhode Island and Providence
Plantations contract and shall be construed and enforced under and be governed
in all respects by the laws of the State of Rhode Island and Providence
Plantations, without regard to the conflict of laws principles thereof. In the
event of any alleged breach or threatened breach of this Agreement, the
Executive hereby consents and submits to the jurisdiction of the federal and
state courts in and of the State of Rhode Island and Providence Plantations.
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     IN WITNESS WHEREOF, this Agreement, as amended and restated, has been
executed as a sealed instrument by each of Company, by its duly authorized
representative, and by the Executive, as of the Effective Date.

                      THE EXECUTIVE:       THE COMPANY:    
 
                   
By:
  /s/ MICHAEL J. CLARKE       By:   /s/ KEVIN W. DONNELLY    
 
                   
 
  Michael J. Clarke           Name: Kevin W. Donnelly    
 
             
Title: Senior Vice President, General Counsel and Secretary