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EXECUTION COPY
NORTEK, INC., NORTEK HOLDINGS, INC. and RICHARD L. BREADY
AMENDED AND RESTATED EMPLOYMENT AGREEMENT
This
EMPLOYMENT AGREEMENT (this "Agreement") among NORTEK, INC, a
Delaware
corporation ("Nortek"), NORTEK HOLDINGS,
INC., a Delaware corporation ("Nortek
Holdings") (Nortek and Nortek Holdings,
collectively being referred to
hereinafter as "Employer"), and Richard L.
Bready, a resident of Rhode Island
(hereinafter called "Employee"), amends and
restates that certain Employment
Agreement among Nortek, Prior Holdings (as
defined below) and Employee dated as
of January 9, 2003 (the "Prior
Agreement").
WHEREAS,
on July 15, 2004, THL Buildco Holdings, Inc. and THL Buildco,
Inc., companies affiliated with Thomas H.
Lee Partners, L.P., entered into a
stock purchase agreement with affiliates of
Kelso & Company, L.P., Employee and
certain other parties (the "Stock Purchase
Agreement"), pursuant to which THL
Buildco, Inc. agreed to purchase all the
outstanding capital stock of the
then-existing Nortek Holdings, Inc. ("Prior
Holdings");
WHEREAS,
immediately following the Closing, as defined in the Stock
Purchase Agreement, (A) THL Buildco, Inc.
merged with and into Prior Holdings
and Prior Holdings merged with and into
Nortek, with Nortek continuing as the
surviving corporation, and (B) THL Buildco
Holdings, Inc. became the new parent
company of Nortek and was renamed "Nortek
Holdings, Inc" (which acquisition by
THL Buildco, Inc. and the related mergers
are collectively referred to
hereinafter as the "Acquisition.");
WHEREAS,
Employee was employed by Nortek and Prior Holdings as Chairman
and Chief Executive Officer and Employee
possesses intimate knowledge of the
business and affairs of Nortek and has
acquired certain confidential information
and data with respect to Nortek;
WHEREAS,
at the time of the Acquisition, Employee was employed by Nortek
and Prior Holdings under the Prior
Agreement;
WHEREAS,
Employer desires to assure that it will have the benefit of the
continued service and experience of
Employee as Chairman, President and Chief
Executive Officer of Employer and an
integral part of its management for a
period of time and Employee is willing to
enter into an agreement to such ends
upon the terms and conditions set forth in
this Agreement; and
WHEREAS,
Employee and Employer desire to enter into this Agreement,
which
shall amend and restate the Prior Agreement
and govern the terms of Employee's
employment with Employer as of the date of,
and immediately following, the
Acquisition (the "Effective Time"). In
consideration of the foregoing and the
mutual agreements herein contained, the
parties mutually agree as follows:
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1.
Employment
Period and Duties
(a) During
the Employment Period, Employer shall employ Employee, and
Employee shall serve as an employee of
Employer, provided, however, that if the
Stock Purchase Agreement is terminated
according to its terms, then at the time
of such termination, this Agreement shall
terminate and be of no force or
effect. For purposes of this Agreement,
"Employment Period" shall mean the
period of time commencing at the Effective
Time and ending, unless sooner
terminated pursuant to the provisions
hereof, on December 31, 2009; provided
that on December 31, 2009 and each
anniversary thereof, the Employment Period
shall automatically extend for one
additional year unless written notice of
intent not to extend is delivered by
Employer to Employee at least 90 days prior
to the scheduled end of the Employment
Period.
(b) During
the Employment Period, Employee shall serve as Chairman,
President and Chief Executive Officer of
Employer, or in such other executive
capacity at a similar level of
responsibility and with such other duties as the
board of directors of Nortek Holdings (the
"Board") and Employee may from time
to time mutually determine, and Employee
accepts employment on the terms and
conditions contained herein and agrees to
devote a substantial part of his
working time and energies to the business
of Employer and to faithfully and
diligently perform the customary duties of
his office and such other duties,
reasonable vacations (of not less than four
weeks per year) and time devoted to
charitable and community service, and
absences due to illness and holidays
excepted. Such other duties may include the
performance of services for any of
Employer's subsidiaries and, without
further remuneration (except as otherwise
agreed), may also include service as an
officer or director of one or more of
Employer's subsidiaries. Nothing herein
shall prohibit Employee from managing or
supervising his personal investments or
from devoting attention to his other
business interests that do not materially
interfere with his obligations to
Employer hereunder or compete with Employer
or its subsidiaries.
(c) During
the Employment Period, Employer shall maintain an appropriately
appointed executive office for Employee in
Providence, Rhode Island (or at such
other location as Employee and Employer
shall mutually agree) of not less than
the size of Employee's current office and
associated administrative space from
which Employee shall perform his duties and
shall provide Employee with
executive secretarial and other
administrative staff and services suitable to
his offices and duties, staffed by persons
approved by Employee and with such
staff members' salaries and benefits as
Employee shall approve.
(d) During
the Employment Period, Employer shall not, without obtaining
Employee's consent, terminate the
employment of any employee listed in Exhibit A
hereto.
2.
Compensation
(a) Basic
Salary. Employee shall receive a basic annual salary of not
less
than $3,500,000 or such greater amount as
determined from time to time at the
discretion of the Board (hereinafter called
the "Basic Salary") during the
Employment Period, payable in equal monthly
installments on the 15th day of each
month.
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(b)
Incentive Compensation.
(i) Employer shall pay Employee incentive compensation determined
by
multiplying $5,000,000 by a fraction, the
numerator of which is the number of
days from January 1, 2004 to the Effective
Time and the denominator of which is
366. Such incentive compensation shall be
paid in cash at the Effective Time.
(ii) Employee shall not be entitled to earn any incentive or
bonus
compensation during the Employment Period,
other than as set forth in Section
2(b)(i) immediately above. The Board,
however, may elect to award Employee
incentive or bonus compensation from time
to time; provided that it does so
through an award that specifically
designates Employee as the recipient and
provided further that any decision to make
such an award, the amount of any such
award made, and all other terms and
conditions thereof shall be at the
discretion of the Board. An award in one
year shall not entitle Employee to an
award in any other year. Employee
acknowledges that there is no direct or
implied agreement, promise or understanding
of any kind to grant him incentive
or bonus compensation, other than as
provided in Section 2(b)(i) hereof.
(c) Equity
Issuance. THL-Nortek Investors, LLC (the "LLC") shall issue to
Employee at the Effective Time 23,586.66
Class C Units of the LLC, subject to
the terms and conditions of the Management
Unit Subscription Agreement, dated as
of August 27, 2004, between Employee and
the LLC.
(d) Life
Time Medical Coverage.
(i) From and after the date upon which the Employment Period
expires
or
terminates for any reason (the "Triggering Date"), Employer
shall
provide
Employee and his Spouse for so long as they shall live with
lifetime
Medical Coverage at no cost to Employee. For purposes of this
Agreement,
(x) "Spouse" shall mean any individual married to Employee only
during the
time such individual is married to Employee, provided that an
individual
who is married to Employee at the time of Employee's death
shall be a
Spouse for the remainder of such individual's lifetime and (y)
"Medical
Coverage" shall mean all medical and dental benefits that are
provided
Employee at the Effective Time, any medical or dental expense
that would
be deductible by Employee under section 213 of the Internal
Revenue
Code of 1986, as amended (the "Code"), including insurance
premiums,
long term care benefits (determined without regard to any
limitation
under section 213 of the Code), co-payments and deducible
amounts
(all determined without regard to the deductible threshold set
forth in
section 213(a) of the Code) if paid by the Employee directly,
and
such other
reasonable medical and dental expenses that Employer may
approve
from time to time, but in no event shall Employer's
reimbursement
obligation
for Employee, his Spouse or dependents under this Section 2(d)
exceed
$1,000,000 (exclusive of any gross up for taxes pursuant to
Sections
2(d)(iii) or 8 hereof) in the aggregate during Employee's and
his
Spouse's
lifetimes. Such Medical Coverage shall be extended to any
dependent
of Employee but only for so long as such person remains a
"dependent" under the terms and conditions of Employer's health
plan in
existence
at the Effective Time. Employer shall make all reasonable
efforts
to
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include
Employee, his Spouse and dependents in any comprehensive
medical
and/or
dental plan provided to active employees from time to time.
Employee
must make all reasonable effort to obtain and to maintain (at
Employer's
expense as provided herein) any form of comprehensive medical
and/or
dental insurance that Employer may require from time to time.
If
Employee
is or becomes eligible for Medicare benefits, the coverage
provided
by this Section shall be supplemental to Medicare coverage,
Parts
A and B,
and the Employee shall be required to submit claims to Medicare
before
making any claim for medical care under this Section.
(ii) Upon the Triggering Date, or any time thereafter, upon the
written
request of Employee or his Spouse, Employer shall authorize a
lump
sum cash
payment in lieu of lifetime Medical Coverage in an amount
established by the Board that is reasonably sufficient to provide
the
lifetime
Medical Coverage. For illustrative purposes, a sample
calculation
of such
lump sum cash payment is set forth in Exhibit B hereto.
(iii) Employer agrees to make a "gross up" payment to Employee
to
cover any
and all state and federal income taxes that may be due as a
result of
the benefits provided under Section 2(d)(i) above and on any
lump sum
payment under Section 2(d)(ii) above (and the tax on any such
"gross up"
payment) as a consequence of providing such lifetime Medical
Coverage
to Employee, his Spouse and his dependents.
(iv) Following the Triggering Date, Employee shall notify the
Employer
of any change in (x) his marital status or (y) the status of
his
dependents
as "dependents," as soon as practicable following such change.
(e)
Benefits. Employee shall be eligible to participate in any
deferred
compensation, pension or other benefit plan
in which executive personnel of
Employer are eligible to participate. In
addition, other than as provided in
Section 16 hereof, Employee shall be
entitled to receive all other benefits or
participate in any employee benefit plans
generally available to executive
personnel of Employer, including without
limitation, any hospital, medical,
accident, disability, life insurance, and
dental coverage, any stock option or
savings plans, or any pension or other
retirement benefit plans.
(f)
Reimbursement and Perquisites. Employer shall promptly
reimburse
Employee for all business expenses incurred
by Employee during the Employment
Period; shall promptly pay or reimburse
Employee for club and professional
association dues, assessments and fees for
at least such clubs and associations
as Employee was a member of and Employer
was making such payments or
reimbursements at the Effective Time; and
shall provide to Employee for his
exclusive business and personal use two
automobiles of his selection, pay all
expenses of ownership, operation, repair
and maintenance of such vehicles,
provide a suitable substitute vehicle in
the event either automobile is not
available for use by Employee for any
reason and replace each such automobile
not less often than biannually with a new
vehicle at the option of Employee.
Employer shall provide Employee with use of
(or reimburse Employee for use of) a
private aircraft for business and personal
travel in a manner consistent with
Employer's practice prior to the Effective
Time, provided that, notwithstanding
the foregoing, Employee use of the
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private aircraft for personal travel shall
be limited to not more than fifty
(50) hours per year. Any tax liability to
Employee resulting from any of any of
payments, reimbursements or other provision
of perquisites provided pursuant to
this Section 2(f) shall be solely
Employee's responsibility.
3.
Termination
(a) If
Employee dies, the Employment Period or the Noncompete Period
(as
defined in Section 4 hereof) shall end and
his employment hereunder shall be
deemed to cease as of the date of his
death.
(b) If Employee
is incapacitated by accident, sickness, or otherwise so as
to render him, for a period of 365
consecutive days, mentally or physically
incapable of performing the services
required of him under this Agreement (such
incapacity, a "Disability") and, if
requested by Employee, the basis for such
incapacity is certified by a licensed
physician, Employer, acting through its
Board, may terminate the Employment
Period.
(c)
Employee shall have the right to terminate the Employment
Period
without Good Reason at any time by written
notice to the Board, not less than 20
business days in advance of such
termination.
(d)
Employer, acting through the Board, shall have the rig
