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FINAL COPY
NORTEK HOLDINGS, INC.
(F/K/A "THL BUILDCOHOLDINGS, INC.")
DEFERRED COMPENSATION PLAN
WHEREAS,
the Board of Directors of Nortek Holdings, Inc., a Delaware
corporation formerly known as THL Buildco
Holdings, Inc. (together with its
successors, the "Company"), has adopted
resolutions approving the establishment
of a deferred compensation plan with the
terms set forth herein; and
WHEREAS,
each Participant has agreed to the terms set forth herein;
NOW,
THEREFORE, in consideration of the promises, covenants and
agreements
set forth herein, the Company hereby adopts
the following deferred compensation
plan.
1. PURPOSE. The Company
by means of this nonqualified deferred compensation
plan (the
"Plan") desires to grant certain employees, directors and
consultants of the Company or of one or more subsidiaries of the
Company
(the
"Participants") the right to participate in a deemed investment
in
Class A
Units of THL - Nortek Investors, LLC ("Investors LLC") in
exchange
for the
cancellation of certain stock options granted to Participants
under the
Nortek Holdings, Inc. 2002 Stock Option Plan ("Options") as
contemplated by that certain Stock Purchase Agreement dated as of
July 15,
2004, as
amended (the "Stock Purchase Agreement") and reflected in those
certain
Option Cancellation Agreements, dated as of August 27, 2004.
The
Plan shall
be effective as of August 27, 2004 (the "Effective Date").
2. DEFINITIONS.
The following terms shall have the
following meanings unless the context
indicates otherwise:
2.1.
"Affiliate" shall
mean, as to any Person, a person that directly, or
indirectly through one or more intermediaries, controls, or is
controlled by, or is under common control with, such Person.
2.2.
"Board" shall mean the
Board of Directors of the Company.
2.3.
"Change in Control"
shall mean the consummation of a transaction,
whether in a single transaction or in a series of related
transactions that are consummated contemporaneously (or
consummated
pursuant to contemporaneous agreements), with any other party
or
parties on an arm's-length basis, pursuant to which (a) such
party
or parties, directly or
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indirectly, acquire (whether by merger, stock purchase,
recapitalization, reorganization, redemption, issuance of
capital
stock or otherwise) more than 50% of the voting stock of the
Company, (b) such party or parties, directly or indirectly,
acquire
assets constituting all or substantially all of the assets of
the
Company and its subsidiaries on a consolidated basis, or (c)
prior
to an initial public offering of the Company common stock
pursuant
to an offering registered under the 1933 Act, Thomas H. Lee
Equity
Fund V, L.P., a Delaware limited partnership, and its
affiliates
cease to have the ability to elect, directly or indirectly, a
majority of the Board of Directors of the Company.
2.4.
"Committee" shall
mean, as the case may be, the Board of Directors
of the Company or a committee appointed by the Board of Directors
of
the Company.
2.5.
"Covered Sale" shall
have the meaning set forth for such term in the
Securityholders Agreement.
2.6.
"Debited Units" shall
have the meaning set forth in Section 4.2(b).
2.7.
"Deferred Compensation
Account" shall mean a notional account
established and maintained by the Company for a Participant
which
shall record the deemed investment in LLC Class A Units with
respect
to each Participant under Section 4.1 below. This notional
account
shall be established by the Company for bookkeeping purposes
only,
and no separate funds shall be segregated by the Company for
the
benefit of the Participant.
2.8.
"Excluded Permitted
Transferee" shall have the meaning set forth for
such term in the Securityholders Agreement.
2.9.
"Exit Event" shall
have the meaning set forth for such term in the
LLC Agreement.
2.10.
"Fraction" shall have the meaning set forth in Section 4.2(b).
2.11.
"Holdings Shares" shall mean shares of common stock of the
Company
or any successor parent corporation of the Company.
2.12.
"Investors LLC" shall have the meaning set forth in Section 1.
2.13. "LLC
Agreement" shall have the meaning set forth in Section 4.2(b).
2.14. "LLC
Class A Units" shall mean the Class A Units of Investors LLC.
2.15.
"Notional Class A Units" shall mean notional units credited
under
the Plan and pursuant to the Option Cancellation Agreements.
2
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2.16.
"Option" shall have the meaning set forth in Section 1.
2.17.
"Option Cancellation Agreement" shall mean an agreement between
a
Participant, THL Buildco, Inc., the Company and Investors LLC or
any
of their respective successors canceling Options pursuant to, or
as
contemplated by, the Stock Purchase Agreement, and providing for
the
establishment of deferred compensation amounts resulting from
the
cancellation of Options.
2.18.
"Option Cancellation Deferred Amount" shall mean, with respect
to
each Participant, the amount specified as such in such
Participant's
Option Cancellation Agreement.
2.19.
"Permitted Transferee" shall have the meaning set forth for
such
term in the Securityholders Agreement.
2.20.
"Person" shall mean any person or entity of any nature
whatsoever,
specifically including an individual, a firm, a company, a
corporation, a partnership, or a trust.
2.21.
"Securityholders Agreement" shall mean the Securityholders
Agreement
by and among Investors LLC, Thomas H. Lee Equity Fund V, L.P.
and
certain of its affiliates and co-investors and certain
Management
Securityholders (as defined therein), dated as of August 27,
2004.
2.22.
"Subsidiary" shall mean a corporation of which the Company
directly
or indirectly owns more than 50 percent of the voting stock or
any
other
business entity in which the Company directly or indirectly
has an ownership interest of more than 50 percent.
3. ELIGIBILITY AND
PARTICIPATION. Any employee, director or consultant of the
Company or
any of its Subsidiaries as of the Effective Date who has
entered
into an Option Cancellation Agreement.
4. DEFERRED COMPENSATION
ACCOUNT
4.1.
ESTABLISHMENT OF
DEFERRED COMPENSATION ACCOUNT. In partial
consideration for a Participant's entering into an Option
Cancellation Agreement, the Company shall establish a Deferred
Compensation Account for such Participant. The Deferred
Compensation
Account of each Participant shall initially be credited with a
notional amount (i.e., an actual cash amount will not be
deposited)
equal to such Participant's Option Cancellation Deferred Amount.
The
Option Cancellation Deferred Amount of each Participant shall
be
deemed invested (i.e., an actual investment will not be made), as
of
the Effective Date, in LLC Class A Units and such deemed
investment
shall be
