Happens to me too on AWN terminal applet. Marking as confirmed.
elo...@elopio-laptop:~$ top
TERM environment variable not set.
I'm using Maverick beta.
** Changed in: awn-extras
Status: New => Confirmed
** Tags added: maverick
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Embedded Terminal Emulator isn't giving a TERM variable
https://bugs.launchpad.net/bugs/621927
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