Document:

exv10w1

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

 

 

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

11

 

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

12

 

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

13

 

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

14

 

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.

15

 

     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.

[The remainder of this page has been left blank intentionally.]

16

 

     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 Secretaryexv10w2

Exhibit 10.2

NORTEK, INC. 2012 SHORT-TERM CASH INCENTIVE PLAN

FOR NORTEK EXECUTIVES

(Under the Nortek, Inc. 2009 Omnibus Incentive Plan)

     The purpose of this 2012 Short-Term Cash Incentive Plan for Nortek Executives (Under the
Nortek, Inc. 2009 Omnibus Incentive Plan) (the “Plan”) is to provide incentives for certain
executives of Nortek, Inc. (the “Company”) to achieve a sustained, high level of financial success
and other measures of success for the Company. Awards under the Plan are granted pursuant to
Article 10 of the Nortek, Inc. 2009 Omnibus Incentive Plan.

I. ADMINISTRATION

     The Plan will be administered by the Compensation Committee of the Board of Directors of the
Company. The Compensation Committee is referred to herein as the “Committee.” The Committee may
delegate to other persons administrative functions that do not involve discretion. The Committee
shall have the authority to interpret this Plan, and any interpretation or decision by the
Committee with regard to any questions arising under the Plan shall be final and conclusive on all
participants in the Plan.

II. ELIGIBILITY; PARTICIPANTS

     The Board of Directors of the Company (the “Board”) shall select, from among those executive
officers of the Company, the persons who shall participate in the Plan (the “Participants”).

III. GRANT OF AWARDS

     The term “Award” as used in the Plan means a cash award opportunity that is granted to a
Participant with respect to the Company’s 2012 fiscal year. A Participant who is granted an Award
shall be entitled to a payment, if any, under the Award only if all conditions to payment have been
satisfied in accordance with the Plan and the terms of the Award. The Board or the Committee shall
establish the Performance Goals (as defined in Section IV below) applicable to each Award and the
amount or amounts that will be payable if the Performance Goals are achieved. The Committee shall
establish such other terms and conditions as it deems appropriate with respect to the Award.

IV. PERFORMANCE GOALS

     As used in the Plan, the term “Performance Goals” means each of (A) the Company’s 2012 fiscal
year financial performance goal as measured by Company Adjusted EBIDTA, as established by the Board
(the “Adjusted EBIDTA Goal”), and (B) one or more individual, personal objectives to be achieved in
fiscal year 2012 as established for each Participant by the Board (the “Personal Goals”).

     Adjusted EBITDA Goal. The Board shall establish the minimum, target and maximum
Adjusted EBIDTA Goals applicable to each Award and seventy percent (70%) of each Award shall be
based on the Company’s achievement of such Adjusted EBITDA Goals. The Board

 

 

shall also establish an Absolute Minimum Adjusted EBITDA amount, below which no Award under
the Plan, with respect to either Performance Goal, shall be paid.

     Personal Goals. With respect to Personal Goals, the Board shall, in its sole
discretion, establish a list of objectives for each Participant and assign a percentage to each,
with the assigned percentages totaling 30% (i.e., thirty percent (30%) of each Award shall be based
on the Participant’s achievement of his Personal Goals).

V. AMOUNT PAYABLE UNDER AWARDS

     At such time as the Company’s 2012 audited financial statements are approved by the Audit
Committee of the Board, the Committee, in its good faith judgment, shall determine whether and to
what extent, if at all, the Performance Goals applicable to each Award granted for such fiscal year
have been satisfied, including, but not limited to, the percentage achievement of the Adjusted
EBITDA Goal based upon the Company’s actual 2012 Adjusted EBITDA. The Committee shall then
determine the actual payment, if any, under each Award, by multiplying the percentage assigned to
each Performance Goal by the Participant’s target bonus, as established by the Board (the “Target
Bonus”). Appendix A sets forth the principles the Committee will use in determining the actual
payment, if any, under each Award.

VI. PAYMENT UNDER AWARDS

     A Participant’s right to payment will be treated as having vested if the Participant is
employed by the Company or one of its subsidiaries on December 31, 2012. If the Participant is not
employed by the Company or one of its subsidiaries on December 31, 2012, then any Award granted to
such Participant under the Plan will be immediately forfeited upon the Participant’s termination of
employment, without payment. All vested payments under the Plan will be made prior to March 15,
2013.

VII. MISCELLANEOUS

     (a) All payments under the Plan shall be subject to reduction for applicable tax and other
legally or contractually required withholdings.

     (b) The Committee may amend the Plan at any time and from time to time; provided, however,
that no such amendment shall adversely affect an Award granted to a Participant without such
Participant’s prior written consent.

     (c) Payments hereunder are intended to fall under the short-term deferral exception to Section
409A of the Internal Revenue Code of 1986, as amended, and the regulations thereunder, and shall be
construed and administered accordingly.

     (d) No person shall have any claim or right to be granted an Award, nor shall the selection
for participation in the Plan for the Company’s 2012 fiscal year be construed as giving a
Participant the right to be retained in the employ of the Company for that period or for any other
period.

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