Form of Employment Agreement

First Amendment to Employment Agreement

Form of Change in Control Agreement

 

 

Exhibit 10.30

                    , 200                    

[Name of Employee]
[Address]
[Address]

Dear                     :

Lennox International Inc. (“Lennox”) recognizes you as a key employee, important to its future profitability, growth and financial strength. Accordingly, Lennox proposes to enter into an agreement with you to establish certain terms of your employment, including a specified duration or term of employment, the basis for your compensation and assignments, certain post-employment covenants, mechanisms to resolve disputes and certain benefits and income to you in the event you leave the employ of Lennox under certain specified circumstances (the “Agreement”). We believe the Agreement benefits both you and Lennox by clarifying your employment relationship so that we all understand its terms. The Agreement provides you with greater certainty and security with various aspects of your employment relationship, as well as provides you with information to assist you with future financial planning. In that same regard, the Agreement assists Lennox in its own financial and business planning. The purpose of this letter is to describe the terms of your employment with Lennox after the effective date of this Agreement. The term “Employee” will be used to refer to you in this Agreement where appropriate. The controlling terms of this Agreement are set forth in the body of this letter Agreement as well as in the Exhibits to this Agreement which are incorporated by reference. The specific terms of the Exhibits are controlling should there be any confusion or conflict between them and this letter. With the signing by both parties of this Agreement, you and Lennox will have agreed to the following:

1.

 

Nature of Employment. You and Lennox have agreed that your employment relationship with Lennox will no longer be “at will” and terminable by either party at any time. Instead, this employment relationship will be governed by the terms of this Agreement for as long as it remains in effect and even after its termination for any provisions, which by their terms survive. The terms agreed upon by you and Lennox provide the consideration and inducement for each party to enter into this Agreement and are described more fully throughout the body of this Agreement and the attached Exhibits A through C.

 

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2.

 

Term of Agreement; Termination Date. This Agreement will commence on the date of signing this Agreement by both parties (the “Effective Date”) and will be in effect until December 31 of that year and thereafter for a series of one-year terms.

 

 

 

3.

 

Termination of Employment. Your employment with Lennox may be terminated for a number of reasons prior to the expiration of any term of this Agreement as described below. The rights of each party under each circumstance will vary and are described in the attached Exhibits. More specifically, if Lennox terminates your employment for any reason other than for “Cause”, as defined in Section B.3 of Exhibit A, you will be entitled to receive, in addition to any other compensation or benefits described in Section B.2 of Exhibit A, severance benefits consisting of either the Normal Severance Payment defined in Section 2 of Exhibit C or the Enhanced Severance Payment defined in Section 3 of Exhibit C as determined by those provisions. However, the provisions of Sections C.2(a)-(d) of Exhibit A will continue to be effective after the termination of this Agreement regardless of the reason for your termination.

 

a.

 

Termination by Employee. You may terminate your employment at any time upon 30 days notice to Lennox (or a lesser period if approved by Lennox) of your intent to terminate or not to renew this Agreement and, in that event, Lennox shall be obligated only to pay you your Base Salary and other applicable benefits provided to employees in your position that are effective at the time of the voluntary resignation up to the effective date of the termination only.

 

 

 

 

 

b.

 

Termination For Cause. Lennox may terminate your employment, at any time, for Cause, as defined in Section B.3 of Exhibit A, to be effective immediately upon delivery to you of notice of termination. If Lennox terminates you for Cause, you are only entitled to receive your Base Salary and other applicable benefits provided to employees in your position that are effective at the time of termination up through the effective date of termination.

 

 

 

 

 

c.

 

Termination Other Than For Cause. Your employment may also be terminated by Lennox other than for Cause at any time (including Lennox’ non-renewal of the Agreement) but such a decision triggers certain defined benefits for you. In the event Lennox elects to terminate you under this provision, Lennox agrees to pay either the Normal Severance Payment as defined in Section 2 of Exhibit C or, solely at your option, the Enhanced Severance Payment as defined in Section 3 of Exhibit C, provided you comply with all requirements described in Section 3 of Exhibit C. These benefits are contractually defined by this Agreement and are not dependent on the other benefits policies of Lennox at the time of your termination.

 

 

 

 

 

d.

 

Termination As A Result Of Disability Or Death. Should you die or become permanently disabled (completely unable to perform your duties as defined in the benefit plans of Lennox) during the term of this Agreement, your employment will be terminated effective as of the date of your death or permanent disability.

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e.

 

Withholdings From Payment/Offset. Any payments made by Lennox to you under Section 3 will be subject to all applicable local, state, federal or foreign taxes, including, without limitation, income tax, withholding tax, and social security tax. Further, to the extent you have, on the date of termination, any outstanding debts or financial obligations to Lennox, including, but not limited to, loans, overpayment of wages, bonuses or other forms of incentive payments, unauthorized travel or purchasing expenses, or theft of Lennox’ funds or property, you agree that Lennox shall be entitled to set off against and withhold from such payments due you for such debts or obligations.

4.

 

Nonpayment Upon Breach. Notwithstanding anything in this Agreement to the contrary, at any time after the date of termination, if you, by any intentional or grossly negligent action or omission to act, breach any covenant, agreement, condition or obligation contained herein, Lennox is entitled to cease making any payments and to cease providing any of the benefits to you under this Agreement. Additionally, Lennox reserves the right to seek repayment of any amounts previously paid hereunder along with recovery of any other damages caused by you.

 

 

 

5.

 

Resolution of Disputes. In the event that any employment dispute as defined in Section A of Exhibit B arises between Lennox and any Employee, the parties involved will make all efforts to resolve any such dispute through informal means. If these informal attempts at resolution fail, Lennox and the Employee agree to and shall submit the dispute to final and binding arbitration pursuant to the policy and terms outlined in Exhibit B, to which the parties expressly agree to be bound. The parties fully and completely understand and agree that arbitration is the exclusive forum for all such arbitrable disputes and that the parties are giving up all rights to a court trial or jury trial; however, the parties, by agreeing to the policy for resolution of disputes outlined in Exhibit B are not waiving any substantive rights or remedies to which they would otherwise be entitled.

 

 

 

6.

 

Waiver, Modification, and Integration. The waiver by any party hereto of a breach of any provision of this Agreement shall not operate or be construed as a waiver of any subsequent breach by any party. This Agreement, which includes all Exhibits referenced or attached, expresses the entire agreement of the parties concerning matters contained herein and supersedes all prior and contemporaneous representations, understandings and agreement, either oral or in writing, between the parties hereto with respect to such matters and all such prior or contemporaneous representations, understandings and agreements, both oral and written, are hereby terminated. This Agreement may not be modified, altered or amended except by written agreement of the Employee and the Chief Executive Officer, except when the Chief Executive Officer is involved, and in that event, an official designated by the Board of Directors for Lennox.

 

 

 

7.

 

Binding Effect. This Agreement shall be binding and effective upon Lennox and its successors and permitted assigns, and upon the Employee, Employee’s heirs and representatives. The Employee hereby represents and warrants to Lennox that Employee

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has not previously assumed any obligations inconsistent with those contained in this Agreement, including, but not limited to, covenants not to compete with another person, firm, corporation or other entity.

8.

 

Governing Law, Venue and Personal Jurisdiction. It is the intention of the parties that the laws of the State of Texas should govern the validity of this Agreement, the construction of its terms, and the interpretation of the rights and duties of the parties hereto. The parties agree that venue for all disputes shall be in Dallas County, Texas. The parties further agree to submit to personal jurisdiction in Dallas County, Texas.

 

 

 

 

 

 

Sincerely,


LENNOX INTERNATIONAL INC.
 

 

 

By:  

 

 

 

 

[Name] 

 

 

 

 

 

 

ACCEPTED AND AGREED this                      day of                     , 200                    .

 

 

 

 

 

EMPLOYEE

 

 

 

 

 

 

 

 

 

 

 

 

[Name]

 

 

 

 

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EXHIBIT A

TERMS OF EMPLOYMENT

The following are the specific agreements of Lennox and the Employee providing the details and basis for this Agreement and are intended by each as its consideration to induce the other party to enter into this Agreement. Each party agrees that the consideration provided by the other is adequate for its agreements to the following terms:

A.

 

Renewal. On January 1 of each year (the “Anniversary Date”) after the end of the first term and for each year thereafter, this Agreement will be automatically renewed for an additional year, unless either party notifies the other, in writing, at least 30 days prior to the Anniversary Date, that it does not wish to renew the Agreement. No reason need be given by either party for the non-renewal of the Agreement. If Lennox elects not to renew, however, Employee is nevertheless entitled to the benefits provided in this Agreement, subject to all of its provisions. If Employee elects not to renew, Employee will receive only those benefits provided upon voluntary termination as described in Section 3(a) of the letter agreement.

 

 

 

B.

 

Agreements by Lennox.

 

1.

 

Employee Duties. Lennox will assign to the Employee such duties and responsibilities that would appropriately be performed by an employee holding Employee’s position and/or job title on a permanent basis as it deems consistent with the Employee’s qualifications and experience provided, however, that Lennox can assign other duties on a temporary basis. Lennox retains the right to change such duties and to change the location of the Employee’s assignment as and when it deems appropriate.

 

 

 

 

 

2.

 

Employee Compensation. Employee shall receive a salary of that amount in effect at the initial effective or subsequent renewal dates of this Agreement (as may be, from time to time, adjusted in accordance with Lennox’ applicable salary policies which may be changed by Lennox in its sole discretion), payable in accordance with the then applicable payroll policies and subject to all required and authorized withholdings and deductions (“Base Salary”). When calculated on an annual basis, this is referred to as Annual Base Salary, and when calculated on a monthly basis, this is referred to as Monthly Base Salary. The Base Salary will be set in accordance with Lennox’ policy regarding salaries and will not be reduced during the annual term of the Agreement unless Employee’s job duties are changed, in which circumstance Lennox reserves the right to lessen Employee’s compensation by no more than ten percent for the remainder of the year without such change amounting to a breach or termination of this Agreement. Employee is also entitled to such short term bonuses, stock options, long-term incentive program payments and fringe benefits as are applicable to

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employees in your position pursuant to Lennox’ then applicable policies and plans. Benefits may be subject to periodic review and may be changed by Lennox in its sole discretion.

 

3.

 

Termination for Cause Defined. Lennox may terminate Employee’s employment, at any time, for Cause as set forth in Section 3(b) of the body of the Letter Agreement. “Cause” is defined as (a) any violation by an Employee of Lennox’ written policies as they may exist or be created or modified from time to time in the future, including, as examples and not as a limitation of the policies to which an Employee may be subject, those policies prohibiting discrimination in the workplace, including the prohibition of harassment, on the ground of race, sex, religion, age or any other prohibited basis; (b) any state or federal criminal conviction, including, but not limited to, entry of a plea of nolo contendere or deferred adjudication upon a felony or misdemeanor charge; (c) the commission by Employee of any material act of misconduct or dishonesty; (d) any intentional or grossly negligent action or omission to act which breaches any covenant, agreement, condition or obligation contained in this Agreement; or (e) acts that in any way have a direct, substantial and adverse effect on Lennox’ reputation.

Lennox’ termination for Cause determination is subject to the Employee’s rights to a resolution of a dispute of that determination as provided in Exhibit B of this Agreement.

 

4.

 

Payments Upon Disability or Death. In the event Employee dies or becomes permanently disabled during the term of the Agreement, Employee or Employee’s designated beneficiaries will be entitled to the payments described in Section 3(c) of the Agreement, together with any other benefits provided to employees in an equivalent position in effect at that time. Should Employee die during the severance period, all payments of severance amounts shall cease upon the later of Employee’s death or the expiration of the twenty-fourth month after the date of Employee’s termination in the event the employee has agreed to the terms of the enhanced severance benefit. Any payments after Employee’s death that may be due hereunder will be paid to Employee’s beneficiary named in connection with Exhibit D of this Agreement, or if no such designation has been made by Employee, then to Employee’s executors, administrators, heirs, personal representatives, successors, or assigns, as the case may be.

C.

 

Agreements by Employee.

 

 

1.

 

Effort and Cooperation. Employee agrees to devote his or her full efforts and time to the performance of this Agreement and shall not, without the prior written consent of the Chief Executive Officer, or in the event the Chief Executive Officer is involved, a designee assigned by the Board of Directors, engage in any other employment, business or other activity that would materially interfere with the performance of his or her duties under this Agreement. Employee further

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agrees that following his or her termination from employment, Employee will provide reasonable cooperation with and assistance to Lennox in all respects, including, but not limited to, the transition of his or her duties and responsibilities, cooperation on any project for a reasonable period not to exceed six months, or any litigation involving Lennox related to your employment at Lennox at any time such litigation may occur. Lennox will reimburse the Employee any reasonable expenses incurred.

 

2.

 

Protective Covenants. Employee recognizes that Employee’s employment by Lennox is one of the highest trust and confidence. In return for the Employee’s agreement to the protective covenants herein, Lennox agrees that the (i) Employee will become fully familiar with many aspects of Lennox’ business, including future changes customarily related to the performance of the duties of Employee’s position during the term of the Agreement, (ii) Employee will be given access to proprietary confidential information of Lennox or its customers and other information which is of special and peculiar commercial or competitive value to Lennox or its customers for use in connection with Lennox’ business, which proprietary confidential information is for the sole and exclusive benefit of Lennox, (iii) Employee will be given all specialized training necessary to perform his or her assigned duties, and (iv) Employee will be provided with Lennox’ goodwill in dealing with customers, vendors and potential business contacts.

Employee acknowledges and agrees that if any such proprietary and confidential information of either Lennox or its customers were to become known by any persons outside of Lennox with a need to have such information, hardship, loss or irreparable injury and damage could result to Lennox or its customers which would be difficult if not impossible to measure. Therefore, Employee agrees that (i) it is necessary for Lennox to protect its business and that of its customers from such damage, (ii) that the information is of a confidential nature, (iii) that the following covenants constitute a reasonable and appropriate means, consistent with the best interests of both Employee and Lennox, to protect Lennox and its customers against such damage and to protect the value of their confidential proprietary information, (iv) that the following covenants are agreed to as a term and condition of Employee’s continued employment with Lennox and are supported by adequate consideration from Lennox, and (v) shall apply to and be binding upon Employee as provided herein:

 

a.

 

Trade Secrets, Proprietary and Confidential Information. Employee will have access to, and contact with certain trade secrets and confidential and proprietary information of Lennox, including, without limitation, unique skills, concepts, sales presentations, marketing programs, marketing strategy, business practices, methods of operation, systems, sales methods, proposals, customer lists, customer leads, documents identifying past, present and future customers, hiring and training methods, financial and other customer data, lists of agents, and other confidential information

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(“Trade Secrets”). Employee agrees to protect and safeguard the Trade Secrets, business practices, and confidential and proprietary information of Lennox. Employee further agrees and covenants that, except as may be required by Lennox in connection with this Agreement, or with the prior written consent of Lennox, Employee shall not, either during his or her employment with Lennox or thereafter, directly or indirectly, use for Employee’s own benefit or for the benefit of another, disclose, disseminate, or distribute to another, any Trade Secret, business practice, or confidential or proprietary information (whether or not acquired, learned, obtained, or developed by Employee alone or in conjunction with others) of Lennox or of others with whom Lennox has a business relationship. Such Trade Secrets, business practices, and confidential and proprietary information include, but are not limited to, Lennox’ patents, trademarks, licenses and technical information concerning its operations, data bases, Lennox’ sales information and marketing strategy, the identities of Lennox’ customers, contractors, suppliers, and others with whom Lennox has a business relationship, Lennox arrangements with such parties, Lennox’ customer list and Lennox’ pricing policies and strategy. All memoranda, notes, records, drawings, documents, or other writings whatsoever made, compiled, acquired, or received by Employee during the term of Employee’s employment with Lennox, arising out of, in connection with, or related to any activity or business of Lennox, including, but not limited to, Lennox’ customers, contractors, suppliers, or others with whom Lennox has a business relationship, Lennox’ arrangements with such parties, and Lennox’ pricing policies and strategy, are, and shall continue to be, the sole and exclusive property of Lennox, and shall, together with all copies thereof and all advertising literature, be returned and delivered to Lennox by Employee immediately, without demand, upon the termination of the Employee’s employment with Lennox or shall be returned at any time upon Lennox demand.

 

b.

 

Restrictions on Diverting Employees of Lennox. Employee agrees that during employment with Lennox, and for a period of 24 complete calendar months following the termination of employment, Employee will not, either directly or indirectly, call on, solicit, induce or attempt to induce any of the employees or officers of Lennox that Employee had knowledge of or association with during Employee’s employment with Lennox to terminate their association with Lennox either personally or through the efforts of his or her subordinates.

 

 

 

 

 

c.

 

Restrictions on Diverting Vendors or Contractors. Employee agrees that during his or her employment with Lennox, and for a period of 24 complete calendar months following his or her termination of employment, Employee will not, either directly or indirectly, call on, solicit, or induce any of Lennox’ vendors or suppliers that Employee had

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contact with, direct knowledge of through his or her position with Lennox, or associated with in the course of employment with Lennox to terminate their association with Lennox either personally or through the efforts of his or her subordinates.

 

d.

 

Restrictions on Soliciting Customers. For a period of 24 calendar months following the termination of employment, Employee will not directly or indirectly call on, service, or solicit competing business or provide consulting services regarding the same from customers of Lennox that Employee had (i) direct contact with or (ii) access to information and files about as part of Employee’s duties with Lennox within the previous 24 months. This restriction is limited, by geography, to the specific places, addresses, or locations where a covered customer is present and available for solicitation or servicing.

A competing business is defined as a business that is the same or so substantially similar in nature to Lennox so as to have the possibility to affect or usurp Lennox’ business opportunities.

 

e.

 

Remedies. In the event of breach or threatened breach by Employee of any provision of Paragraph C.2 hereof, Lennox shall be entitled to (i) cease any payments under this Agreement as set forth in Section 4 of the body of the Agreement, (ii) relief by temporary restraining order, temporary injunction, and/or permanent injunction, (iii) recovery of all attorneys fees and costs incurred by Lennox in obtaining such relief, and (iv) any other legal and equitable relief to which it may be entitled, including any and all monetary damages. Lennox has the right to pursue partial enforcement and/or to seek declaratory relief regarding the enforceable scope of this Agreement without penalty and without waiving Lennox’ right to pursue any other available remedy.

 

 

 

 

 

f.

 

Survival of Covenants. Each covenant of Employee set forth in Paragraph C.2 shall survive the termination of Employee’s employment. The existence of any claim or cause of action by Employee against Lennox, whether related to this Agreement or otherwise, shall not constitute a defense to the enforcement of the covenants in Paragraph C.2. In the event an enforcement remedy is necessary under Paragraph C.2, the restricted time periods provided for in Paragraph C.2 shall commence on the date enforcement is ordered and complied with by Employee and shall be extended by the period of noncompliance.

 

 

 

 

 

g.

 

Acknowledgment of Ancillary Agreements and Consideration. Employee acknowledges that his or her agreement to be bound by the protective covenants set forth in Paragraph C.2 is the inducement for Lennox (i) to enter into the other terms of this Agreement (ii) to modify existing

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employment agreements or other contracts, if any, affected by this Agreement, (iii) to initiate or continue the employment of Employee pursuant to the terms of this Agreement, (iv) to provide Employee with initial or continued use or access to confidential proprietary information of Lennox, and (v) to provide the Employee with unique and specialized training regarding Lennox’ Trade Secrets, business practices and marketing strategy, to provide use of goodwill as a representative of Lennox and to ensure business expertise in developing relations with third parties. Employee agrees that each agreement set forth in this Agreement is otherwise enforceable and independently sufficient to support all the protective covenants in Paragraph C.2.

D.

 

Severability. If any provision contained in this Agreement is determined to be void, illegal or unenforceable, in whole or in part, then it will be treated as though it never was contained herein and all other provisions shall remain in full force and effect.

 

 

 

E.

 

Notices. All communications required or allowed under this Agreement shall be in writing and shall be deemed to have been delivered on the date personally delivered or on the date deposited in the United States Postal Service, postage prepaid, by certified mail, return receipt requested, addressed to you at the address provided above and to Lennox at:

       Lennox International Inc.
2140 Lake Park Blvd.
               Richardson, Texas 75080-2254

      Attn: Chief Legal Officer

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EXHIBIT B

POLICY FOR RESOLUTION OF DISPUTES

A.

 

Agreement to Arbitrate.

 

1.

 

Arbitrable Disputes. This Policy covers any legal dispute between the parties, as set forth below, except for Lennox’s right to seek enforcement of Employee’s protective covenants set forth in Paragraph C.2 of Exhibit A or Employee’s claims related to workers compensation and/or unemployment insurance. The disputes subject to this policy are all those disputes between the parties arising from any breach or alleged breach of this Agreement or as to Employee’s termination or as to any allegation by the Employee that Lennox has violated any of the Employee’s rights under state or federal employment or civil rights laws, or any other laws, statutes or constitutional provisions, including, but not limited to, the following: unlawful discrimination or harassment; claims based on any purported breach of contractual obligations; claims based on any purported breach of duty arising in tort, including violations of public policy; as well as any actions recognized under common law or the combination of any of these claims; and any claims against supervisors or agents of Lennox for which the supervisors or agents were acting in the course and scope of their employment or making any decisions or comments related to or connected with employment, even if the supervisor or agent was not acting within the course and scope of employment, shall be resolved in accordance with the provisions of this Policy for Resolution of Disputes as set forth herein. All arbitrable disputes are subject to applicable statutes of limitations and other affirmative defenses recognized by law. Employee or Lennox may seek a court order to enforce or compel arbitration pursuant to the terms of this Policy.

 

 

 

 

 

2.

 

Acceptance of Policy. By accepting or continuing employment with Lennox, for the provision of a term of employment provided by Lennox, for Lennox’ agreement to pay a severance package, and for Lennox’ agreement to provide Employee access to confidential information, Employee and Lennox agree that arbitration is the exclusive remedy for all arbitrable disputes.

 

 

 

 

 

3.

 

Governing Law/Waiver of Rights. THIS POLICY AND AGREEMENT TO ARBITRATE IS MADE PURSUANT TO THE FEDERAL ARBITRATION ACT AND APPLICABLE STATE LAWS REGARDING ARBITRATION AND IS A FULL AND COMPLETE WAIVER OF THE PARTIES’ RIGHTS TO A CIVIL COURT ACTION AND RIGHTS TO A TRIAL BY JURY.

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B.

 

Request for Arbitration.

 

1.

 

Attempt at Informal Resolution of Disputes.

 

 

a.

 

Prior to submission of any dispute to arbitration, Lennox and the Employee shall attempt to resolve the dispute informally as set forth below.

 

 

 

 

 

b.

 

Lennox and the Employee will select a mutually acceptable mediator from a list provided by an American Arbitration Association Employment Dispute Division or other similar agency who will assist the parties in attempting to reach a settlement of the dispute. The mediator may make settlement suggestions to the parties but shall not have the power to impose a settlement upon them. If the dispute is resolved in mediation, the matter shall be deemed closed. If the dispute is not resolved in mediation and goes to the next step (binding arbitration), any proposals or compromises suggested by either of the parties or the mediator shall not be referred to or have any bearing on the arbitration procedure. The mediator cannot also serve as the arbitrator in the subsequent proceeding unless all parties expressly agree in writing.

 

2.

 

Arbitration Procedures. The Employee or his/her representative must submit a “Request for Arbitration” in writing to the Chief Executive Officer of Lennox within the greater of 300 days or the applicable statute of limitation that would apply if the claim had been brought in court of (i) the termination of employment (including resignation), (ii) the incident giving rise to the dispute or claim, or (iii) in the case of unlawful discrimination, including sexual or other unlawful harassment, the alleged conduct. This time limitation will not be extended for any reason and shall not be subject to tolling, equitable or otherwise. If the “Request for Arbitration” is not submitted in accordance with the aforementioned time limitations, the Employee will not be able to bring his/her claim to this or any other forum. The Employee can obtain a “Request for Arbitration” form from the Human Resource Department of Lennox International Inc. or other party designated by the Chief Executive Officer. Alternatively, the Employee can create his/her own “Request for Arbitration” form, as long as it clearly states “Request for Arbitration” at the beginning of the first page. The “Request for Arbitration” must include the following information:

 

 

a.

 

A factual description of the dispute in sufficient detail to advise Lennox of the nature of the dispute;

 

 

 

 

 

b.

 

The date when the dispute first arose;

 

 

 

 

 

c.

 

The names, work locations, telephone numbers of any co-workers or supervisors with knowledge of the dispute; and

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d.

 

The relief requested by the Employee.

Lennox will respond in a timely manner to this “Request for Arbitration,” so that the parties can begin the process of selecting an arbitrator. Such response may include any counterclaims that Lennox chooses to bring against the Employee.

 

3.

 

Selection of the Arbitrator. All disputes will be resolved by a single arbitrator. The arbitrator will be mutually selected by Lennox and the Employee. If the parties cannot agree on an arbitrator, then a list of seven arbitrators, experienced in employment matters, shall be provided by the American Arbitration Association. The arbitrator will be selected by the parties who will alternately strike names from the list. The last name remaining on the list will be the arbitrator selected to resolve the dispute. Upon selection, the arbitrator shall set an appropriate time, date, and place for the arbitration, after conferring with the parties to the dispute.

 

 

 

 

 

4.

 

Arbitrator’s Authority. The arbitrator shall have the powers enumerated below:

 

a.

 

Ruling on motions regarding discovery, and ruling on procedural and evidentiary issues arising during the arbitration;

 

 

 

 

 

b.

 

Issuing protective orders on the motion of any party or third party witness (such protective orders may include, but not be limited to, sealing the record of the arbitration, in whole or in part (including discovery proceedings and motions, transcripts, and the decision and award), to protect the privacy or other constitutional or statutory rights of parties and/or witnesses);

 

 

 

 

 

c.

 

Determining only the issue(s) submitted to him/her (the issue(s) must be identified in the “Request for Arbitration” or counterclaims, and any issue(s) not so identified in those documents shall be deemed to be and is/are outside the scope of the arbitrator’s jurisdiction, and any award involving those issue(s) shall be subject to a motion to vacate);

 

 

 

 

 

d.

 

Shall have no authority to violate state or federal law; and

 

 

 

 

 

e.

 

Issuing written opinions on the issues raised in the Arbitration.

 

 

5.

 

Pleadings.

 

a.

 

A copy of the “Request for Arbitration” shall be forwarded to the arbitrator within five calendar days of his/her selection.

 

 

 

 

 

b.

 

Within 10 calendar days following submission of the “Request for Arbitration” to the arbitrator, Lennox shall respond in writing to the

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“Request for Arbitration” to the arbitrator, Lennox shall respond in writing to the “Request for Arbitration” by answer and/or demurrer. The answer or demurrer shall be served on the arbitrator and the Employee.

 

c.

 

The answer to the “Request for Arbitration” shall include the following information:

 

(1)

 

a response, by admission or denial, to each claim set forth in the “Request for Arbitration”;

 

 

 

 

 

(2)

 

all affirmative defenses asserted by Lennox to each claim; and

 

 

 

 

 

(3)

 

all counterclaims Lennox asserts against the Employee and any related third party claims.

 

 

d.

 

If Lennox contends that some or all of the Employee’s claims set forth in the “Request for Arbitration” are barred as a matter of law, it may respond by demurrer setting forth the legal authorities in support of its position. If Lennox demurs to less than the entire “Request for Arbitration,” Lennox must answer those claims to which it does not demur at the same time that it submits its demurrer.

 

 

 

 

 

e.

 

The Employee shall have 20 calendar days to oppose Lennox’ demurrer. Any opposition must be in writing and served on the arbitrator and Lennox.

 

 

 

 

 

f.

 

If the answer alleges a counterclaim, within 20 days of service of the answer, the Employee shall answer and/or demur to the counterclaim in writing and serve the answer and/or demurrer on the arbitrator and Lennox. If the Employee demurs to any counterclaim, Lennox shall have 20 calendar days from its receipt of the demurrer to submit a written opposition to the demurrer to the Employee and the arbitrator.

 

 

 

 

 

g.

 

The arbitrator shall rule on demurrer(s) to any claims and/or counterclaims within 15 calendar days of service of the moving and opposition papers.

 

 

 

 

 

h.

 

If any demurrer is overruled, the moving party must answer those claims to which it demurred within five calendar days of the receipt of the arbitrator’s ruling. The answer must be served on the arbitrator and the opposing party.

 

 

 

 

 

i.

 

When all claims and counterclaims have been answered, the arbitrator shall set a time and place for hearing which shall be no earlier than three months from the day on which the parties are notified of the date of

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hearing and no later than 12 months from the date on which the arbitrator sets the date for the hearing.

 

6.

 

Discovery. The discovery process shall proceed and be governed as follows:

 

a.

 

Parties may obtain discovery by any of the following methods:

 

 

(1)

 

depositions upon oral examination, one per side as of right, with more permitted if leave is obtained from the arbitrator;

 

 

 

 

 

(2)

 

written interrogatories, up to a maximum combined total of 20, with the responding party having 20 days to respond;

 

 

 

 

 

(3)

 

request for production of documents or things or permission to enter upon land or other property for inspection, with the responding party having 20 days to produce the documents and allow entry or to file objections to the request; and

 

 

 

 

 

(4)

 

physical and mental examination, in accordance with the Federal Rules of Civil Procedure, Rule 35(a).

 

b.

 

Any motion to compel production, answers to interrogatories or entry onto land or property must be made to the arbitrator within 15 days of receipt of objections.

 

 

 

 

 

c.

 

All discovery requests shall be submitted no less than 60 days before the hearing date.

 

 

 

 

 

d.

 

The scope of discoverable evidence shall be in accordance with Federal Rule of Civil Procedure 26(b)(1).

 

 

 

 

 

e.

 

The arbitrator shall have the power to enforce the aforementioned discovery rights and obligations by the imposition of the same terms, conditions, consequences, liabilities, sanctions, and penalties as can or may be imposed in like circumstances in a civil action by a federal court under the Federal Rules of Civil Procedure, except the power to order the arrest or imprisonment of a person.

 

 

7.

 

Hearing Procedure. The hearing shall proceed according to the American Arbitration Association’s Rules with the following amendments:

 

a.

 

The arbitrator shall rule at the outset of the arbitration on procedural issues that bear on whether the arbitration is allowed to proceed.

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b.

 

Each party has the burden of proving each element of its claim or counterclaims, and each party has the burden of proving any of its affirmative defenses.

 

 

 

 

 

c.

 

In addition to, or in lieu of, closing arguments, either party shall have the right to present post-hearing briefs, and the due date for exchanging post-hearing briefs shall be mutually agreed on by the parties and the arbitrator.

 

8.

 

Substantive Law. The applicable substantive law shall be the law of the State of Texas or federal law. If both federal and state law speak to a cause of action, the Employee shall have the right to elect his/her choice of law. However, choice of law in no way affects the procedural aspects of the arbitration, which are exclusively governed by the provisions of this Policy.

 

 

 

 

 

9.

 

Opinion and Award. The arbitrator shall issue a written opinion and award, in conformance with the following requirements:

 

 

a.

 

The opinion and award must be signed and dated by the arbitrator.

 

 

 

 

 

b.

 

The arbitrator’s opinion and award shall decide all issues submitted.

 

 

 

 

 

c.

 

The arbitrator’s opinion and award shall set forth the legal principles supporting each part of the opinion.

 

 

 

 

 

d.

 

The arbitrator shall have the same authority to award remedies and damages as provided to a judge and/or jury under parallel circumstances.

 

10.

 

Enforcement of Arbitrator’s Award. Following the issuance of the arbitrator’s decision, any party may petition a court to confirm, enforce, correct or vacate the arbitrator’s opinion and award under the Federal Arbitration Act, and/or applicable state law.

 

 

 

 

 

11.

 

Fees and Costs. Fees and costs shall be allocated in the following manner:

 

 

a.

 

Each party shall be responsible for its own attorneys’ fees, except as provided by law.

 

 

 

 

 

b.

 

The Employee will pay a $150 filing fee to be paid to the arbitration agency. Lennox will bear the remainder of the arbitrator’s fees and any costs associated with the facilities for the arbitration.

 

 

 

 

 

c.

 

Lennox and the Employee shall each bear an equal one-half of any court reporters’ fees, assuming both parties want a transcript of the proceeding. If one party elects not to receive a transcript of the proceedings, the other party will bear all of the court reporters’ fee. However, such an election

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must be made when the arrangements for the court reporter are being made.

 

d.

 

Each party shall be responsible for its costs associated with discovery.

 

C.

 

Severability. In the event that any provision of this Policy is determined by a court of competent jurisdiction to be illegal, invalid, or unenforceable to any extent, such term or provision shall be enforced to the extent permissible under the law and all remaining terms and provisions of this Policy shall continue in full force and effect.

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EXHIBIT C

SEVERANCE TERMS

1.

 

Effect of Protective Covenants. The provisions of Paragraphs C2(a)-(d) of Exhibit A of this Agreement will continue in full force and effect regardless of whether Employee continues to be employed by Lennox and regardless of the reason Employee’s employment is terminated and regardless of the severance compensation to which Employee is entitled as set forth below, if any.

 

 

 

2.

 

Normal Severance Compensation. Should Employee be terminated by Lennox prior to the expiration of the term specified in Section 2 of the body of the Agreement or the Agreement is not renewed by Lennox for any reason other than for Cause as defined in Section B.3 of Exhibit A, and provided the Employee does not elect and qualify for the Enhanced Severance Payment described in Section 3 of Exhibit C set forth below, Employee will be entitled to receive monthly payments of the greater of the Employee’s Monthly Base Salary for the remainder of the Agreement’s term or three months of Employee’s Monthly Base Salary in addition to any other compensation or benefits applicable to an employee at Employee’s level to the extent the Employee would be eligible for such compensation or benefits under the terms of those formal programs which are applicable to all employees at Employee’s level in effect at the time of termination and, for any benefits which continue after termination, subject to any modification which is made to such programs applicable to the all of the participants at such time.

 

 

 

3.

 

Enhanced Severance Benefits. If Lennox terminates an Employee other than for Cause (including Lennox’ non-renewal of the Agreement) and that Employee elects and meets the conditions of this Paragraph 3 of Exhibit C, Lennox agrees to pay an Enhanced Severance Payment and provide the other benefits described below (“Enhanced Severance Benefits”). The Employee must agree to execute a written General Release of any and all possible claims against Lennox existing at the time of termination in exchange for which Lennox agrees to the following severance provisions:

 

(i)

 

Severance Payment. Lennox agrees to pay Employee’s Monthly Base Salary for a period of 12 months following the date of termination, if the termination occurs within the first three years of the Employee’s employment or if it occurs thereafter, 24 months. In addition, Lennox agrees to pay to the Employee, within 45 days of termination, in a lump sum, the total of any short-term bonus payments actually paid to the Employee over the twelve (12) month period prior to the date of termination, if the termination occurs within the first three years of the Employee’s employment or if it occurs thereafter, over the twenty four (24) month period. The severance payments will be paid in installments in accordance with the regular payroll policies of Lennox

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then in effect and each installment will be subject to regular payroll deductions and all applicable taxes.

 

(ii)

 

Perquisites. Within 45 days following the date of termination, the Employee will receive in addition to (i) above, in a lump sum, a payment of a sum equal to 10% of the Employee’s Annual Base Salary in effect at the time of termination in lieu of the continuation of or payment for any perquisites, including, without limitation, automobile, club membership, tax preparation, physical examination or others being received by the Employee at the time of termination.

 

 

 

 

 

(iii)

 

COBRA Continuation. Lennox agrees to pay COBRA premiums to allow Employee to continue to participate in Lennox group health plan on the same terms as other Lennox employees for up to 18 months while Employee is unemployed and not eligible for other group health insurance coverage. Should Employee remain unemployed at the end of 18 months, the equivalent of the COBRA premium will be paid to the employee on a month-to-month basis for up to six additional months for his or her use in obtaining health insurance coverage outside the group health plan.

 

 

 

 

 

(iv)

 

Outplacement. Lennox agrees to provide Employee with outplacement services in accordance with Lennox’ then applicable policy. In lieu of such outplacement services, Lennox agrees to pay Employee a lump sum payment of 10% of Employee’s Annual Base Salary within 45 days following the date of termination should Employee elect not to receive outplacement services.

 

 

 

 

 

(v)

 

Death Benefit. Employee’s beneficiary, as set forth in Exhibit D, will receive, in a lump sum, a death benefit equivalent to six months of Employee’s Monthly Base Salary in the event that the Employee should die during the period in which the Employee is entitled to any severance payment described above.

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Nothing herein shall be construed to limit Employee’s right to receive any benefits and entitlements under Lennox’ ERISA or other employee benefit plans, with all such benefits being received by the Employee only to the extent allowed by and subject to the terms of any such plan as it may from time to time exist or be modified. Further, this Agreement is not intended and the parties agree that it will not be interpreted as creating any obligation for Lennox to create or maintain any employee benefit, compensation, perquisite or other plan, policy or program for its employees and Lennox retains the sole discretion to eliminate or modify any existing plan, program or policy as it deems to be appropriate.

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EXHIBIT D

DESIGNATION OF BENEFICIARY

The following represent the designation of Beneficiary for the Employee named below:

EMPLOYEE:                          

 

 

 

 

 

 

Primary Beneficiary(s):

 

 

 

 

 

 

 

 

 

 

%*

 

Name

 

 

Relationship

 

 

Percent

 

 

 

 

 

 

%*

 

Name

 

Relationship

 

 

Percent

 

 

 

 

 

*The total should add to 100%

 

 

 

 

 

 

 

 

 

Contingent Beneficiary(s):

 

 

 

 

 

 

 

 

 

 

%*

 

Name

 

 

Relationship

 

 

Percent

 

 

 

 

 

 

%*

 

Name

 

 

Relationship

 

 

Percent

 

 

 

 

 

*The total should add to 100%

This is to confirm the designation of my Beneficiary(s) to receive any benefits provided under this Agreement which are not otherwise covered by Employee benefit plans with other designations of beneficiary which I intend to supersede any designation made above.

 

 

 

 

 

 

 

EMPLOYEE

 

 

 

 

 

 

 

 

 

 

Signature

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Printed Name

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Date

 

 

  #Top of the Document

EX-10.2 3 c71756exv10w2.htm EXHIBIT 10.2

 

Exhibit 10.2

AMENDMENT TO
EMPLOYMENT AGREEMENT

This Amendment to Employment Agreement is by and between Lennox International Inc., a Delaware corporation (the “Company”), and                      (the “Executive”), dated as of the 7th day of December, 2007.

WHEREAS, the Company and the Executive executed that certain Employment Agreement dated as of                      (as amended from time to time, the “Agreement”; capitalized terms not otherwise defined herein shall have the meaning given to them in the Agreement); and

WHEREAS, Section 409A of the Internal Revenue Code (“Section 409A”) imposes new requirements for certain nonqualified deferred compensation arrangements; and

WHEREAS, the Internal Revenue Service in April 2007 published final regulations under Section 409A; and

WHEREAS, the Company has determined that amending certain of the Company’s plans, agreements and programs containing nonqualified deferred compensation arrangements is necessary to comply with the new requirements under Section 409A; and

WHEREAS, Executive and the Company desire that certain changes be made to the Agreement to comply with the new requirements under Section 409A.

IN CONSIDERATION of the mutual covenants and agreements hereinafter set forth, and for good and valuable consideration the receipt and sufficiency of which are hereby acknowledged, the Company and the Executive hereby agree has follows:

1. Exhibit C – Severance Terms. Exhibit C of the Agreement shall be revised and replaced with the provision set forth below:

EXHIBIT C

SEVERANCE TERMS

 

1.

 

Effect of Protective Covenants. The provisions of Paragraphs C2(a)-(d) of Exhibit A of this Agreement will continue in full force and effect regardless of whether Employee continues to be employed by Lennox and regardless of the reason Employee’s employment is terminated and regardless of the severance compensation to which Employee is entitled as set forth below, if any.

1

 

 

 

 

2.

 

Normal Severance Compensation. Should Employee be terminated by Lennox prior to the expiration of the term specified in Section 2 of the body of the Agreement or the Agreement is not renewed by Lennox for any reason other than for Cause as defined in Section B.3 of Exhibit A, and provided the Employee does not elect and qualify for the Enhanced Severance Payment described in Section 3 of Exhibit C set forth below, Employee will be entitled to receive monthly payments of the greater of the Employee’s Monthly Base Salary for the remainder of the Agreement’s term or three months of Employee’s Monthly Base Salary; provided that (i) if more that six months severance is required, the first six such monthly payments shall be paid in a lump sum on the date six months, two days after the date of termination, and the remaining severance payments paid monthly thereafter, or, (ii) if there are fewer than six monthly payments, all such monthly payments, shall be payable in a lump sum on the date six months, two days after the date of termination. Any such payments shall be in addition to any other compensation or benefits applicable to an employee at Employee’s level to the extent the Employee would be eligible for such compensation or benefits under the terms of those formal programs which are applicable to all employees at Employee’s level in effect at the time of termination and, for any benefits which continue after termination, subject to any modification which is made to such programs applicable to the all of the participants at such time.

 

 

3.

 

Enhanced Severance Benefits. If Lennox terminates an Employee other than for Cause (including Lennox’ non-renewal of the Agreement) and that Employee elects and meets the conditions of this Paragraph 3 of Exhibit C, Lennox agrees to pay an Enhanced Severance Payment and provide the other benefits described below (“Enhanced Severance Benefits”). The Employee must agree to execute a written General Release of any and all possible claims against Lennox existing at the time of termination in exchange for which Lennox agrees to the following severance provisions:

 

 

(i)

 

Severance Payment. Lennox agrees to pay Employee’s Monthly Base Salary for a period of 12 months following the date of termination, if the termination occurs within the first three years of the Employee’s employment or if it occurs thereafter, 24 months; provided that the first six such monthly payments shall be payable in a lump sum on the date six months, two days after the date of termination. In addition, Lennox agrees to pay to the Employee, on the date six months, two days after the date of termination, in a lump sum, the total of any short-term bonus payments actually paid to the Employee over the twelve (12) month period prior to the date of termination, if the termination occurs within the first three years of the Employee’s employment or if it occurs thereafter, over the twenty four (24) month period. The severance payments will be paid in accordance with the regular payroll policies of Lennox then in effect and each installment will be subject to regular payroll deductions and all applicable taxes.

2

 

 

 

 

(ii)

 

Perquisites. In addition to (i) above, Employee will receive on the date six months, two days after the date of termination, in a lump sum, a payment of a sum equal to 10% of the Employee’s Annual Base Salary in effect at the time of termination in lieu of the continuation of or payment for any perquisites, including, without limitation, automobile, club membership, tax preparation, physical examination or others being received by the Employee at the time of termination.

 

 

(iii)

 

COBRA Continuation. Lennox agrees to pay COBRA premiums to allow Employee to continue to participate in Lennox group health plan on the same terms as other Lennox employees for up to 18 months while Employee is unemployed and not eligible for other group health insurance coverage. Should Employee remain unemployed at the end of 18 months, the equivalent of the COBRA premium will be paid to the employee on a month-to-month basis for up to six additional months for his or her use in obtaining health insurance coverage outside the group health plan.

 

 

(iv)

 

Outplacement. Lennox agrees to provide Employee with outplacement services in accordance with Lennox’ then applicable policy; provided that such outplacement expense is paid by the Company no later than the end of the second calendar year following the calendar year in which the date of termination occurred. Should Employee elect not to receive outplacement services, then in lieu of such outplacement services, Lennox agrees to pay Employee a lump sum payment of 10% of Employee’s Annual Base Salary on the date six months, two day after the date of termination.

 

 

(v)

 

Death Benefit. Employee’s beneficiary, as set forth in Exhibit D, will receive, in a lump sum, a death benefit equivalent to six months of Employee’s Monthly Base Salary in the event that the Employee should die during the period in which the Employee is entitled to any severance payment described above.

 

 

4.

 

Section 409A; Payments to be Separate. This Agreement is intended to comply with Section 409A of the Internal Revenue Code of 1986, as amended, and shall be construed in a manner to give effect to such intention. The parties shall, if necessary, amend the terms of this Agreement to the limited extent necessary in order to comply with the requirements of Section 409A. Each payment due hereunder will be considered to be separate payments due to Employee and not one of a series of payments for purposes of Section 409A.

3

 

 

Nothing herein shall be construed to limit Employee’s right to receive any benefits and entitlements under Lennox’ ERISA or other employee benefit plans, with all such benefits being received by the Employee only to the extent allowed by and subject to the terms of any such plan as it may from time to time exist or be modified. Further, this Agreement is not intended and the parties agree that it will not be interpreted as creating any obligation for Lennox to create or maintain any employee benefit, compensation, perquisite or other plan, policy or program for its employees and Lennox retains the sole discretion to eliminate or modify any existing plan, program or policy as it deems to be appropriate.”

2. Other Provisions Not Changed. The Agreement, except as modified in this Amendment to Employment Agreement, shall be and remain in full force and effect in accordance with its terms.

IN WITNESS WHEREOF, the Executive has hereunto set his hand and, pursuant to the authorization from its Board of Directors, the Company has caused these presents to be executed in its name on its behalf, all as of the day and year first above written.

LENNOX INTERNATIONAL INC.

By:                                                                   
Name:
Title:

EXECUTIVE

 

 

 

                                                                         

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TOP OF DOCUMENT

EX-10.1 2 c78431exv10w1.htm EXHIBIT 10.1

Exhibit 10.1

LENNOX INTERNATIONAL INC.
CHANGE IN CONTROL AGREEMENT

THIS CHANGE IN CONTROL AGREEMENT (this “Agreement”), effective as of December 11, 2008 (the “Effective Date”) is made by and between Lennox International Inc., a Delaware corporation (the “Company”), and [Name] (“Executive”).

WHEREAS, the Company considers it essential to the best interests of its stockholders to foster the continued employment of key management personnel;

WHEREAS, the Board (as defined in Appendix A hereto) recognizes that, as is the case with many publicly held corporations, the possibility of a change in control exists and that such possibility, and the uncertainty and questions which may raise among management, may result in the departure or distraction of management personnel to the detriment of the Company and its stockholders;

WHEREAS, the Board has determined that appropriate steps should be taken to reinforce and encourage the continued attention and dedication of key members of the Company’s management, including Executive, to their assigned duties without the distraction of potentially disturbing circumstances arising from the possibility of a change in control;

WHEREAS, the Company wishes to enter into this Agreement to protect Executive’s reasonable expectations regarding compensation and duties if a change in control of the Company occurs, thereby encouraging Executive to remain in the employ of the Company notwithstanding the possibility of a change in control;

WHEREAS, it is understood that if Executive has an existing employment agreement (the “Employment Agreement”) with the Company, then this Agreement is intended to provide certain protections to Executive that are not afforded by the Employment Agreement; provided however, this Agreement is not intended to provide benefits that are duplicative of Executive’s current benefits; and

WHEREAS, upon the Effective Date, this Agreement will supersede all previous agreements, if any, between the Company and Executive that provides benefits to Executive upon a change in control of the Company;

NOW, THEREFORE, in consideration of the premises and the mutual covenants herein contained, the Company and Executive hereby agree as follows:

1. Term of Agreement. The term of this Agreement shall commence on the Effective Date and shall continue in effect through December 31, 2009; provided, however, that commencing on January 1, 2010 and each January 1 thereafter, this Agreement shall automatically be extended for one additional year (collectively, the “Term”); and further provided, however, that if a Change in Control (as defined in Appendix A hereto) shall have occurred during the Term, the Term shall expire two years following the event which constitutes a Change in Control.

 

 

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2. Company’s Obligations.

2.1 General Obligations. The Company agrees, under the conditions described herein, to pay Executive the Severance Payments (as defined in Section 5.1 herein) and the other payments and benefits described herein. No Severance Payments shall be payable under this Agreement unless there shall have been a termination of Executive’s employment as described in Section 5.1.

2.2 Equity and Other Performance Based Awards. Notwithstanding anything to the contrary in this Agreement, upon a Change in Control, each and every stock option, stock appreciation right, restricted stock award, restricted stock unit award, performance share unit award and other equity-based award and any other performance award granted to Executive that is outstanding immediately prior to the Change in Control shall (i) immediately vest and become exercisable and any restrictions on the sale or transfer of such shares (other than any such restriction arising by operation of law) with respect to such shares shall terminate, and (ii) be considered to have vested at the highest possible award level with respect to each such award.

2.3 Notice of Change in Control. The Company shall promptly notify Executive in writing of the occurrence of a Change in Control.

3. Terms of Employment Post-CIC.

3.1 Employment Period. Upon a Change in Control, the Company hereby agrees to continue Executive in its employ, and Executive hereby agrees to remain in the employ of the Company, in accordance with, and subject to, the terms and provisions of this Agreement, for the period commencing on the date upon which there occurs a Change in Control and ending on the second anniversary of the Change in Control (the “CIC Employment Period”).

3.2 Position and Duties.

(i) During the CIC Employment Period, (A) Executive’s position (including status, offices, titles and reporting requirements), authority, duties and responsibilities shall be at least commensurate in all material respects with the most significant of those held, exercised and assigned by or to Executive at any time during the 90-day period immediately preceding the Change in Control, and (B) Executive’s services shall be performed at the location where Executive was employed immediately preceding the Change in Control or at another location within 35 miles thereof.

(ii) During the CIC Employment Period, and excluding any periods of vacation and sick leave to which Executive is entitled, Executive agrees to devote reasonable attention and time to the business and affairs of the Company and, to the extent necessary to discharge the responsibilities assigned to Executive hereunder, to use Executive’s reasonable best efforts to perform faithfully and efficiently such responsibilities. It is expressly understood and agreed that to the extent that any activities (including, but not limited to, service on corporate, civic or charitable boards or committees) have been conducted by Executive prior to the Change in Control, the continued conduct of such activities (or the conduct of activities similar in nature and scope thereto) subsequent to the Change in Control shall not be deemed to interfere with the performance of Executive’s responsibilities to the Company.

 

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3.3 Compensation and Benefits.

(iAnnual Base Salary. During the CIC Employment Period, Executive shall receive an annual base salary not less than the base salary in effect immediately prior to the Change in Control (“Annual Base Salary”), which shall be paid in accordance with the normal business practice of the Company. During this period, the Annual Base Salary shall be reviewed at least annually and shall be increased at any time and from time to time as shall be substantially consistent with increases in base salary generally awarded in the ordinary course of business to executives of the Company and its affiliated companies. Any increase in Annual Base Salary shall not serve to limit or reduce any other obligation to Executive under this Agreement. Annual Base Salary shall not be reduced after any such increase and the term “Annual Base Salary” as utilized in this Agreement shall refer to Annual Base Salary as so increased. As used in this Agreement, the term “affiliated companies” shall include, when used with reference to the Company, any company controlled by, controlling or under common control with the Company.

(iiAnnual Bonus. In addition to Annual Base Salary, Executive shall be awarded, for each fiscal year or portion thereof during the CIC Employment Period, an annual bonus (the “Annual Bonus”) in cash equal to no less than the Executive’s target short-term incentive bonus percentage immediately prior to the Change in Control multiplied by the Executive’s Annual Base Salary, prorated for any period consisting of less than twelve full months. The Annual Bonus awarded for a particular fiscal year shall be paid no later than the fifteenth day of the third month following the end of such year.

(iiiEquity and Performance Based Awards. During the CIC Employment Period, Executive shall be granted on an annual basis a long-term incentive package consisting of stock options, stock appreciation rights, restricted stock awards, restricted stock unit awards, performance share unit awards and other equity-based awards and performance awards, as selected by the Company, with an aggregate value (as determined by an independent consulting firm selected by Executive and reasonably acceptable to the Company) that shall be not less than the aggregate value of the most valuable long-term incentive package awarded Executive in any of the three years immediately preceding the Change in Control.

(iv) Benefits. During the CIC Employment Period, Executive shall be entitled to the following benefits, in each such case, no less favorable, in the aggregate, than the most favorable plan, practice, program or policy of the Company and its affiliates applicable to similarly situated executives immediately in effect prior to the commencement of the Change in Control or in effect at any time after the Change in Control:

 

(a)

 

profit-sharing, savings and retirement plans that are tax-qualified under Section 401(a) of the Code (as defined in Appendix A hereto), and all plans that are supplemental to any such tax-qualified plans; and

 

 

(b)

 

welfare benefit plans, practices, policies and programs; and

 

 

(c)

 

prompt reimbursement for all reasonable expenses incurred by Executive; and

 

 

(d)

 

fringe benefits and perquisites; and

 

 

(e)

 

paid vacation.

 

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4. Termination of Employment for Disability, Death and Cause.

4.1 Disability. During the CIC Employment Period, during any period that Executive fails to perform Executive’s duties with the Company as a result of incapacity due to physical or mental illness, the Company shall pay Executive’s salary to Executive at the rate in effect at the commencement of any such period, together with all compensation and benefits payable to Executive under the terms of the Company’s written plans as in effect during such period, until Executive’s employment is terminated by the Company for Disability (as defined in Appendix A hereto).

4.2 Death. During the CIC Employment Period, in the event of Executive’s death, the Company shall pay to Executive’s estate, Executive’s salary, together with all compensation and benefits payable to Executive under the terms of the Company’s written plans as in effect immediately prior to the date of death, through the date Executive’s employment is terminated by death.

4.3 Cause. During the CIC Employment Period, the Company may terminate Executive’s employment for Cause (as defined in Appendix A hereto). In such event, the Company shall pay Executive’s salary, together with all compensation and benefits payable to Executive under the terms of the Company’s written plans as in effect immediately prior to the date the Executive’s employment is terminated for Cause.

5. Termination of Employment by Company without Cause or by Executive for Good Reason.

5.1 Payments to Executive. If Executive’s employment is terminated following a Change in Control and during the CIC Employment Period either (i) by the Company without Cause or (ii) by Executive with Good Reason (as defined in Appendix A hereto), then the Company shall pay Executive the amounts, and provide Executive the benefits, set forth in this Section 5.1 (collectively referred to as, “Severance Payments”).

(A) Cash Payment. In lieu of (x) any further salary and bonus payments to Executive for periods subsequent to the Date of Termination (as defined in Section 7.2 herein), and (y) any severance benefit otherwise payable to Executive under the Employment Agreement, if any, the Company shall pay to Executive a lump sum severance payment, in cash, on the date that is six months and two days after Executive’s date of termination (the “Designated Date”) from the Company equal to:

(i) three (3) times the Executive’s Annual Base Salary, plus

(ii) three (3) times the Executive’s target short-term incentive bonus percentage immediately prior to the Change in Control or in effect at any time after the Change in Control, whichever is greater, multiplied by the Executive’s Annual Base Salary, plus

 

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(iii) an amount equal to Executive’s target short-term incentive bonus percentage immediately prior to the Change in Control or in effect at any time after the Change in Control, whichever is greater, multiplied by the Executive’s Annual Base Salary, prorated for any period consisting of less than twelve full months, plus

(iv) any deferred compensation previously awarded to or earned by Executive (together with any accrued interest or earnings thereon); provided any amounts paid to Executive will be paid in accordance with the applicable deferred compensation plan, plus

(v) payment in lieu of any accrued but unused vacation as of Executive’s Date of Termination, plus

(vi) an amount equal to 15% of Executive’s Annual Base Salary (this amount being paid in lieu of outplacement services), plus

(vii) an amount equal to 45% of Executive’s Annual Base Salary (this amount being paid in lieu of the perquisites).

(B) Health and Welfare Benefit Plans. For the 36-month period immediately following the Date of Termination, the Company shall provide Executive and covered dependents as of Executive’s Date of Termination, medical and health benefits and group life and supplemental group life substantially similar to those provided to Executive and such covered dependents immediately prior to the Date of Termination (such continuation of such benefits shall be hereinafter referred to as “Welfare Benefit Contribution”). The Company shall timely pay or provide to Executive and/or Executive’s family any other amounts or benefits required to be paid or provided or which Executive and/or Executive’s family is eligible to receive pursuant to this Agreement and under any plan, program, policy or practice or contract or agreement of the Company and its affiliated companies as in effect and applicable generally to other executives and their families on the Date of Termination.

(C) Non-Qualified Pension. For purposes of calculating benefits under the Company’s Supplemental Retirement Plan and Profit Sharing Restoration Plan, the Company shall add an additional three years of vesting service and credited service to Executive’s years of vesting and credited service, as well as an incremental three years added to Executive’s age.

 

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(D) Certain Pre-Change in Control Terminations. Any provision in this Agreement to the contrary notwithstanding, if a Change in Control occurs and if Executive’s employment with the Company has been terminated by the Company without Cause or by Executive with Good Reason in either case within six (6) months prior to the date on which the Change in Control occurs, then Executive shall be entitled to the severance and other benefits as if Executive’s termination had been following a Change in Control, payable on the Designated Date.  Any amounts to be paid to Executive shall be reduced by and offset dollar-for-dollar by any severance benefits payable to Executive under the Employment Agreement or any other separation agreement in connection with such termination.

5.2 Gross-Up Payment.

(A) Whether or not Executive becomes entitled to the Severance Payments, if any payments or benefits received or to be received by Executive whether pursuant to the terms of this Agreement or any other plan, arrangement or agreement with the Company, or with any Person whose actions result in a Change in Control or any Person affiliated with the Company or such Person (such payments or benefits, excluding the Gross-Up Payment (as defined below), being hereinafter referred to as the “Total Payments”) are subject to the Excise Tax (any excise tax imposed under Section 4999 of the Code ), the Company shall pay to Executive an additional amount (the “Gross-Up Payment”) such that the net amount retained by Executive, after deduction of any Excise Tax on the Total Payments and any federal, state and local income and employment taxes and Excise Tax upon the Gross-Up Payment, shall be equal to the Total Payments.

(B) For purposes of determining whether any of the Total Payments will be subject to the Excise Tax and the amount of such Excise Tax, (i) all of the Total Payments shall be treated as “parachute payments” (within the meaning of Code Section 280G(b)(2)) unless, in the opinion of the Company, such payments or benefits (in whole or in part) do not constitute parachute payments, including by reason of Code Section 280G(b)(4)(A), (ii) all “excess parachute payments” within the meaning of Code Section 280G(b)(1) shall be treated as subject to the Excise Tax unless, in the opinion of the Company, such excess parachute payments (in whole or in part) represent reasonable compensation for services actually rendered (within the meaning of Code Section 280G(b)(4)(B)) in excess of the Base Amount allocable to such reasonable compensation, or are otherwise not subject to the Excise Tax, and (iii) the value of any noncash benefits or any deferred payment or benefit shall be determined by the Company in accordance with the principles of Code Section 280G(d)(3) and (4). The Company and Executive agree that the determinations described in this Section 4.2(B) shall take the form of a letter from the Company accompanied by calculations prepared by the Company and certified by a national accounting firm selected by the Company.

 

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(C) The Gross-Up Payment (or portion thereof) will be paid to Executive on the day of the payment of the Total Payments (or portion thereof) that give rise to the Excise Tax; provided, however, that if the amount of such Gross-Up Payment (or portion thereof) cannot be fully determined on or before the date on which payment is due, the Company will pay to Executive by such date an amount estimated in good faith by the Company to be the minimum amount of such Gross-Up Payment (or portion thereof) and will pay the remainder of such Gross-Up Payment (or portion thereof) (together with interest at the rate provided in Code Section 1274(b)(2)(B)) as soon as the amount thereof can be determined, but in no event later than 45 days after complete payment of the Total Payments. Further, in the event that on the day of payment of the Total Payments (or portion thereof) (or the 45-day period following such payments), no Gross-Up Payment (or portion thereof) is determined by the Company to be due and it is subsequently determined that a Gross-Up Payment (or portion thereof) is owing to Executive, such Gross-Up Payment (or portion thereof) will be made by the Company to Executive at the date that such Gross-Up Payment amount (or portion thereof) is determined by the Company to be payable to Executive.

(D) In the event that the Excise Tax is finally determined to be less than the amount taken into account hereunder in calculating the Gross-Up Payment, Executive shall repay to the Company, within five business days following the later of the date that the amount of such reduction in the Excise Tax is fully determined and the date that such amount is fully refunded to Executive by the Internal Revenue Service, the portion of the Gross-Up Payment attributable to such reduction (plus that portion of the Gross-Up Payment attributable to the Excise Tax and federal, state and local income and employment taxes imposed on the Gross-Up Payment) being repaid by Executive, to the extent that such repayment results in a reduction in the Excise Tax and a dollar-for-dollar reduction in Executive’s taxable income and wages for purposes of federal, state and local income and employment taxes. In the event that the Excise Tax is determined to exceed the amount originally remitted by Executive which was taken into account hereunder in calculating the Gross-Up Payment and Executive is obliged to remit additional Excise Taxes, Executive shall provide the Company with written notice advising as to the amount of additional Excise Taxes which were so remitted and the date on which they were so remitted. As soon as practicable following receipt of such notice (but not later than the end of the taxable year following the year in which the additional Excise Taxes were remitted by Executive), the Company shall make an additional Gross-Up Payment in respect of such excess (plus any interest, penalties or additions payable by Executive with respect to such excess Excise Taxes). Executive and the Company shall each reasonably cooperate with the other in connection with any administrative or judicial proceedings concerning the existence or amount of liability for Excise Tax with respect to the Total Payments.

6. Non-exclusivity of Rights. Except as provided in Section 5 of this Agreement, nothing in this Agreement shall prevent or limit Executive’s continuing or future participation in any plan, program, policy or practice provided by the Company or any of its affiliated companies and for which Executive may qualify, nor shall anything herein limit or otherwise affect such rights as Executive may have under any contract or agreement with the Company or any of its affiliated companies. Amounts which are vested benefits or which Executive is otherwise entitled to receive under any plan, policy, practice or program of or any contract or agreement with the Company or any of its affiliated companies at or subsequent to the Date of Termination shall be payable in accordance with such plan, policy, practice or program or contract or agreement except as such plan, policy, practice or program is expressly superseded by this Agreement.

 

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7. Termination Procedures.

7.1 Notice of Termination. Any termination by the Company for Cause, or by Executive for Good Reason, shall be communicated by Notice of Termination to the other party hereto given in accordance with Section 11 of this Agreement. The failure by Executive or the Company to set forth in the Notice of Termination any fact or circumstance which contributes to a showing of Good Reason or Cause shall not waive any right of Executive or the Company hereunder or preclude Executive or the Company from asserting such fact or circumstance in enforcing Executive’s or the Company’s rights hereunder. For purposes of this Agreement, a “Notice of Termination” shall mean a notice which shall indicate the specific termination provision in this Agreement relied upon and shall set forth the Date of Termination.

7.2 Date of Termination. For purposes of this Agreement, the term “Date of Termination” means (i) if Executive’s employment is terminated by the Company for Cause, or by Executive for Good Reason, the date of receipt of the Notice of Termination or any later date specified therein, as the case may be, (ii) if Executive’s employment is terminated by the Company other than for Cause, the Date of Termination shall be the date specified by the Company when it notifies Executive of such termination and (iii) if Executive’s employment is terminated by reason of death or Disability, the Date of Termination shall be the date of death of Executive or the date of Disability, as the case may be.

8. Full Settlement. Subject to the offset provided for in Section 5.1, the Company’s obligation to make payments provided for in this Agreement and otherwise to perform its obligations hereunder shall not be affected by any set-off, counterclaim, recoupment, defense, mitigation or other claim, right or action which the Company may have against Executive or others. The Company agrees to pay promptly as incurred, to the full extent permitted by law, all legal fees and expenses which Executive may reasonably incur as a result of any contest (unless Executive’s claim is found by a court of competent jurisdiction to have been frivolous) by the Company, Executive or others of the validity or enforceability of, or liability under, any provision of this Agreement (other than Section 10 hereof) or any guarantee of performance thereof (including as a result of any contest by Executive about the amount of any such payment pursuant to this Agreement), plus in each case interest on any delayed payment at the “applicable federal rate” provided for in Section 7872(f)(2)(A) of the Code; provided that any such reimbursement payment by the Company pursuant to this sentence shall be made on or before the last day of the calendar year immediately following the calendar year in which any such fee or expense was incurred.

9. Successors; Binding Agreement.

9.1 This Agreement is personal to Executive and without the prior written consent of the Company shall not be assignable by Executive otherwise than by will or the laws of descent and distribution. This Agreement shall inure to the benefit of and be enforceable by Executive’s heirs, executors and other legal representatives.

9.2 This Agreement shall inure to the benefit of and be binding upon the Company and may only be assigned to a successor described in Section 9.3.

 

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9.3 The Company will require any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business and/or assets of the Company to assume expressly and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform it if no such succession had taken place. As used in this Agreement, “Company” shall mean the Company as earlier defined and any successor to its business and/or assets which assumes and agrees to perform this Agreement by operation of law, or otherwise.

10. Confidential Information; Certain Prohibited Activities.

10.1 Executive shall hold in a fiduciary capacity for the benefit of the Company all secret or confidential information, knowledge or data relating to the Company or any of its affiliated companies, and their respective businesses, which shall have been obtained by Executive during Executive’s employment by the Company or any of its affiliated companies and which shall not be or become public knowledge (other than by acts by Executive or representatives of Executive in violation of this Agreement). After Executive’s Date of Termination, Executive shall not, without the prior written consent of the Company or as may otherwise be required by law or legal process, communicate or divulge any such information, knowledge or data to anyone other than the Company and those designated by it. Except as provided in Subsection 10.3 below, in no event shall an asserted violation of the provisions of this Section 10 constitute a basis for deferring or withholding any amounts otherwise payable to Executive under this Agreement. Also, within 14 days of the termination of Executive’s employment for any reason, Executive shall return to the Company all documents and other tangible items of or containing Company information which are in Executive’s possession, custody or control.

10.2 Executive agrees that for a period of 24 complete calendar months following Executive’s Date of Termination, Executive will not, either directly or indirectly, call on, solicit, induce or attempt to induce any of the employees or officers of the Company whom Executive had knowledge of or association with during Executive’s employment with the Company to terminate their association with the Company either personally or through the efforts of his or her subordinates.

10.3 In the event of a breach by Executive of any provision of this Section 10, the Company shall be entitled to (i) cease any Welfare Benefit Contribution entitlement provided pursuant to Section 5.1(B) hereof, (ii) relief by temporary restraining order, temporary injunction and/or permanent injunction, (iii) recovery of all attorneys’ fees and costs incurred in obtaining such relief and (iv) any other legal and equitable relief to which it may be entitled, including monetary damages.

 

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11. Notices. For the purpose of this Agreement, notices and all other communications provided for in the Agreement shall be in writing and shall be deemed to have been duly given when delivered or mailed by United States registered mail, return receipt requested, postage prepaid, addressed, if to Executive, to the address inserted below Executive’s signature on the final page hereof and, if to the Company, to the address set forth below, or to such other address as either party may have furnished to the other in writing in accordance herewith, except that notice of change of address shall be effective only upon actual receipt:

To the Company:

Lennox International Inc.
2140 Lake Park Blvd.
Richardson, TX 75080
Attention: Chief Human Resources Officer

12. Miscellaneous. This Agreement may not be amended or modified otherwise than by a written agreement executed by the parties hereto or their respective successors and heirs, executors and other legal representatives. Executive’s or the Company’s failure to insist upon strict compliance with any provision hereof or any other provision of this Agreement or the failure to assert any right Executive or the Company may have hereunder, including, without limitation, the right of Executive to terminate employment for Good Reason pursuant to Section 5.1 of this Agreement, shall not be deemed to be a waiver of such provision or right or any other provision or right of this Agreement. This Agreement shall be governed by and construed in accordance with the laws of the State of Texas, without reference to principles of conflict of laws that would require the application of the laws of any other state or jurisdiction. The captions of this Agreement are not part of the provisions hereof and shall have no force or effect. All references to sections of the Exchange Act or the Code shall be deemed also to refer to any successor provisions to such sections. The Company may withhold from any amounts payable under this Agreement such federal, state or local taxes as shall be required to be withheld pursuant to any applicable law or regulation.

13. Validity. The invalidity or unenforceability of any provision of this Agreement shall not affect the validity or enforceability of any other provision of this Agreement, which shall remain in full force and effect.

14. Section 409A. This Agreement is intended to comply with Section 409A of the Internal Revenue Code of 1986, as amended, and shall be construed in a manner to give effect to such intention. The parties shall, if necessary, amend the terms of this Agreement to the limited extent necessary and possible in order to comply with the requirements of Section 409A. Each payment due hereunder will be considered to be separate payments due to Executive and not one of a series of payments for purposes of Section 409A.

IN WITNESS WHEREOF, the parties hereto have executed this Agreement effective as of the date above first written.

 

 

 

 

 

 

LENNOX INTERNATIONAL INC.
 

 

 

By:  

 

 

 

 

Date: 

 

 

 

 

 

 

 

EXECUTIVE: [NAME]
 

 

 

By:  

 

 

 

Date:

 

 

 

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Appendix A

(A) “Affiliate” shall have the meaning set forth in Rule 12b-2 promulgated under Section 12 of the Exchange Act.

(B) “Base Amount” shall have the meaning set forth in Section 280G(b)(3) of the Code.

(C) “Beneficial Owner” shall mean, with reference to any securities, any Person if:

(i) such Person is the “beneficial owner” (as determined pursuant to Rule 13d-3 of the General Rules and Regulations under the Exchange Act, as in effect on the date of this Agreement) of such securities; provided, however, that a Person shall not be deemed the “Beneficial Owner” of, or to “beneficially own,” any security under this subsection (i) as a result of an agreement, arrangement or understanding to vote such security if such agreement, arrangement or understanding: (x) arises solely from a revocable proxy or consent given in response to a public (i.e., not including a solicitation exempted by Rule 14a-2(b)(2) of the General Rules and Regulations under the Exchange Act) proxy or consent solicitation made pursuant to, and in accordance with, the applicable provisions of the General Rules and Regulations under the Exchange Act and (y) is not then reportable by such Person on Schedule 13D under the Exchange Act (or any comparable or successor report); or

(ii) such Person is a member of a group (as that term is used in Rule 13d-5(b) of the General Rules and Regulations under the Exchange Act) that includes any other Person (other than an Exempt Person) that beneficially owns such securities;

provided, however, that nothing in this definition shall cause a Person engaged in business as an underwriter of securities to be the Beneficial Owner of, or to “beneficially own,” any securities acquired through such Person’s participation in good faith in a firm commitment underwriting until the expiration of forty (40) days after the date of such acquisition. For purposes hereof, “voting” a security shall include voting, granting a proxy, consenting or making a request or demand relating to corporate action (including, without limitation, a demand for a stockholder list, to call a stockholder meeting or to inspect corporate books and records) or otherwise giving an authorization (within the meaning of Section 14(a) of the Exchange Act) in respect of such security.

(D) “Board” shall mean the Board of Directors of the Company.

 

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(E) “Cause” shall have the same meaning as set forth in the Employment Agreement, or, if no employment agreement exists, shall mean (a) any violation by Executive of the Company’s written policies as they may exist or be created or modified and made available to Executive from time to time in the future, including, as examples and not as a limitation of the policies to which Executive may be subject, those policies prohibiting discrimination in the workplace, including the prohibition of harassment, on the ground of race, sex, religion, age or any other prohibited basis; (b) any state or federal criminal conviction, including, but not limited to, entry of a plea of nolo contendere or deferred adjudication upon a felony or misdemeanor charge; (c) the commission by Executive of any material act of misconduct or dishonesty related to Executive’s employment; (d) any intentional or grossly negligent action or omission to act which breaches any covenant, agreement, condition or obligation contained in this Agreement; or (e) acts that in any way have a direct, substantial and adverse effect on the Company’s reputation.

(F) “Change in Control” shall be deemed to have occurred if the event set forth in any one of the following paragraphs shall have occurred:

(i) Any Person (other than an Exempt Person) shall become the Beneficial Owner of 35% or more of the shares of Common Stock then outstanding or 35% or more of the combined voting power of the Voting Stock of the Company then outstanding; provided, however, that no Change in Control shall be deemed to occur for purposes of this subsection (i) if such Person shall become a Beneficial Owner of 35% or more of the shares of Common Stock or 35% or more of the combined voting power of the Voting Stock of the Company solely as a result of (x) an Exempt Transaction or (y) an acquisition by a Person pursuant to a reorganization, merger or consolidation, if, following such reorganization, merger or consolidation, the conditions described in clauses (x), (y) and (z) of subsection (iii) of this definition are satisfied;

(ii) Individuals who, as of the Effective Date, constitute the Board (the “Incumbent Board”) cease for any reason to constitute at least a majority of the Board; provided, however, that any individual becoming a director subsequent to the Effective Date whose election, or nomination for election by the Company’s shareholders, was approved by a vote of at least a majority of the directors then comprising the Incumbent Board shall be considered as though such individual were a member of the Incumbent Board; provided, further, that there shall be excluded, for this purpose, any such individual whose initial assumption of office occurs as a result of any election contest with respect to the election or removal of directors or other solicitation of proxies or consents by or on behalf of a person other than the Board;

 

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(iii) Approval by the shareholders of the Company of a reorganization, merger or consolidation, in each case, unless, following such reorganization, merger or consolidation, (x) more than 65% of the then outstanding shares of common stock of the corporation resulting from such reorganization, merger or consolidation and the combined voting power of the then outstanding Voting Stock of such corporation is beneficially owned, directly or indirectly, by all or substantially all of the Persons who were the Beneficial Owners of the outstanding Common Stock immediately prior to such reorganization, merger or consolidation (ignoring, for purposes of this clause (x), the first proviso in subsection (i) of the definition of “Beneficial Owner” set forth above) in substantially the same proportions as their ownership immediately prior to such reorganization, merger or consolidation of the outstanding Common Stock, (y) no Person (excluding any Exempt Person or any Person beneficially owning, immediately prior to such reorganization, merger or consolidation, directly or indirectly, 35% or more of the Common Stock then outstanding or 35% or more of the combined voting power of the Voting Stock of the Company then outstanding) beneficially owns, directly or indirectly, 35% or more of the then outstanding shares of common stock of the corporation resulting from such reorganization, merger or consolidation or the combined voting power of the then outstanding Voting Stock of such corporation and (z) at least a majority of the members of the board of directors of the corporation resulting from such reorganization, merger or consolidation were members of the Incumbent Board at the time of the execution of the initial agreement or initial action by the Board providing for such reorganization, merger or consolidation; or

(iv) Approval by the shareholders of the Company of (x) a complete liquidation or dissolution of the Company, unless such liquidation or dissolution is approved as part of a plan of liquidation and dissolution involving a sale or disposition of all or substantially all of the assets of the Company to a corporation with respect to which, following such sale or other disposition, all of the requirements of clauses (y)(A), (B) and (C) of this subsection (iv) are satisfied, or (y) the sale or other disposition of all or substantially all of the assets of the Company, other than to a corporation, with respect to which, following such sale or other disposition, (A) more than 65% of the then outstanding shares of common stock of such corporation and the combined voting power of the Voting Stock of such corporation is then beneficially owned, directly or indirectly, by all or substantially all of the Persons who were the Beneficial Owners of the outstanding Common Stock immediately prior to such sale or other disposition (ignoring, for purposes of this clause (y)(A), the first proviso in subsection (i) of the definition of “Beneficial Owner” set forth above) in substantially the same proportions as their ownership, immediately prior to such sale or other disposition, of the outstanding Common Stock, (B) no Person (excluding any Exempt Person and any Person beneficially owning, immediately prior to such sale or other disposition, directly or indirectly, 35% or more of the Common Stock then outstanding or 35% or more of the combined voting power of the Voting Stock of the Company then outstanding) beneficially owns, directly or indirectly, 35% or more of the then outstanding shares of common stock of such corporation and the combined voting power of the then outstanding Voting Stock of such corporation and (C) at least a majority of the members of the board of directors of such corporation were members of the Incumbent Board at the time of the execution of the initial agreement or initial action of the Board providing for such sale or other disposition of assets of the Company.

(G) “Code” shall mean the Internal Revenue Code of 1986, as amended.

(H) “Committee” shall mean the Compensation and Human Resources Committee of the Board.

 

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(I) “Common Stock” shall mean the common stock, par value $.01 per share, of the Company, and shall include stock of any successor, within the meaning of Section 9.1.

(J) “Company” shall mean Lennox International Inc. and, except in determining under Section (G) hereof whether or not any Change in Control of the Company has occurred, shall include any successor to its business and/or assets which assumes and agrees to perform this Agreement by operation of law, or otherwise.

(K) “Disability” shall mean permanently disabled (completely unable to perform Executive’s duties as defined in the benefit plans of the Company).

(L) “Exchange Act” shall mean the Securities Exchange Act of 1934, as amended from time to time.

(M) “Exempt Person” shall mean the Company, any subsidiary of the Company, any employee benefit plan of the Company or any subsidiary of the Company, and any Person organized, appointed or established by the Company for or pursuant to the terms of any such plan.

(N) “Exempt Transaction” shall mean an increase in the percentage of the outstanding shares of Common Stock or the percentage of the combined voting power of the outstanding Voting Stock of the Company beneficially owned by any Person solely as a result of a reduction in the number of shares of Common Stock then outstanding due to the repurchase of Common Stock by the Company, unless and until such time as such Person shall purchase or otherwise become the Beneficial Owner of additional shares of Common Stock constituting 3% or more of the then outstanding shares of Common Stock or additional Voting Stock representing 3% or more of the combined voting power of the then outstanding Voting Stock.

(O) “Good Reason” shall mean:

(i) any change in Executive’s position (including status, offices, titles and reporting requirements), authority, duties or responsibilities, excluding for this purpose any de minimus changes and excluding an isolated, insubstantial and inadvertent action not taken in bad faith and which is remedied by the Company promptly after receipt of notice thereof given by Executive, or any other assignment to Executive of any duties inconsistent in any respect with such position, authority, duties or responsibilities, other than de minimus inconsistencies or other than, in each case, any such change in duties or such assignment that would clearly constitute a promotion or other improvement in Executive’s position;

(ii) any failure by the Company to comply with any of the provisions of this Agreement, other than an isolated, insubstantial and inadvertent failure not occurring in bad faith and which is remedied by the Company promptly after receipt of notice thereof given by Executive;

 

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(iii) the Company’s requiring Executive to be based at any office or location other than at the location where Executive was employed immediately preceding the Change in Control or at another location within 35 miles thereof;

(iv) any failure by the Company to comply with and satisfy the requirements of Section 9.3 of this Agreement, provided that (x) the successor described in Section 9.3 has received, at least ten days prior to the Date of Termination, written notice from the Company or Executive of the requirements of such provision and (y) such failure to be in compliance and satisfy the requirements of Section 9.3 shall continue as of the Date of Termination;

(v) in the event that Executive is serving as a member of the Board immediately prior to the Change in Control, any failure to reelect Executive as a member of the Board, unless such reelection would be prohibited by the Company’s By-laws as in effect immediately prior to the Change in Control.

(P) “Person” shall mean any individual, firm, corporation, partnership, association, trust, unincorporated organization or other entity.

(Q) “Voting Stock” shall mean, with respect to a corporation, all securities of such corporation of any class or series that are entitled to vote generally in the election of directors of such corporation (excluding any class or series that would be entitled so to vote by reason of the occurrence of any contingency, so long as such contingency has not occurred).

 

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