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.
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
.
(i)
Annual 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.
(ii)
Annual 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.
(iii)
Equity 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:
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(a)
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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
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(b)
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welfare benefit plans, practices, policies and programs; and
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(c)
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prompt reimbursement for all
reasonable expenses incurred by Executive; and
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(d)
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fringe benefits and perquisites; and
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(e)
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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.
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LENNOX INTERNATIONAL INC.
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By:
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Date:
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EXECUTIVE
:
[NAME]
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By:
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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.
A-1
(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;
A-2
(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;
A-4
(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).
A-5
Exhibit 10.2
LENNOX INTERNATIONAL INC.
SUPPLEMENTAL RETIREMENT PLAN
(
As Amended and Restated as of January 1, 2009
)
THIS SUPPLEMENTAL RETIREMENT PLAN, made and executed in Richardson, Texas, by Lennox
International Inc., a Delaware corporation (the “Company”),
WITNESSETH THAT:
WHEREAS, the Company has maintained an unfunded supplemental retirement plan known as the
Lennox International Inc. Supplemental Retirement Plan (the “Plan”) to supplement the benefits
provided by the Lennox International Inc. Consolidated Pension Plan to certain executives and their
beneficiaries; and
WHEREAS, the Company now desires to amend and restate the Plan to make certain changes;
NOW, THEREFORE, pursuant to Section 6.2 thereof, the Plan is hereby amended and restated in
its entirety to read as follows:
Article 1. Definitions
1.1
Definitions
. Whenever used in the Plan, the following terms shall have the
respective meanings set forth below unless otherwise expressly provided herein, and when the
defined meaning is intended the term is capitalized:
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(a)
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“
Company
” means Lennox International Inc., a Delaware corporation.
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(b)
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“
Covered Compensation
” shall have the meaning assigned to the term
under the Qualified Pension Plan in effect as of December 31, 2008, had such Qualified
Pension Plan not been frozen.
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(c)
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“
Early Retirement Date
” of a Participant means the earlier of (i) the
first day on or after his or her 62nd birthday that he or she has completed 10 or more
Years of Vesting Service, or (ii) the first day on or after his or her 55th birthday
that his or her age and Years of Vesting Service total 80 or more.
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(d)
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“
Employer
” means the Company, Lennox Industries Inc., Heatcraft Inc.
and any other trade or business which may subsequently adopt the Plan with the consent
of the Chief Executive Officer of the Company.
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(e)
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“
Executive
” means (i) prior to January 1, 1998, any employee in the
employ of an Employer assigned an executive labor grade of 8 or above, John Dugan and
David Chase, (ii) during 1998 and 1999, any employee who was an Executive on December
31, 1997, and any other employee in the employ of an Employer who was a Vice
President-A or who filled a position after discontinuance of the labor grade system
that previously had been an executive labor grade of 8 or above, and (iii) after
December 31, 1999, any employee in the employ of an Employer (A) in the position of
either Chief Executive Officer or Chief Operating Officer of the Company or (B) in
an Executive Vice President position reporting directly to either such officer.
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(f)
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“
Final Average Compensation
” shall have the meaning assigned to the
term under the Qualified Pension Plan in effect as of December 31, 2008, had such
Qualified Pension Plan not been frozen, except that in determining Final Average
Compensation for purposes of this Plan (i) the dollar limitation imposed by Section
401(a)(17) of the Internal Revenue Code shall not apply, and (ii) any bonus paid to a
Participant during 1991 for personal services rendered to an Employer during 1990 shall
be included in determining the compensation paid to the Participant for both 1990 and
1991.
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(g)
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“
Normal Retirement Date
” of a Participant means his or her 65th
birthday.
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(h)
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“
Participant
” means any individual who has become a Participant in the
Plan under Article 2 and whose benefits under the Plan have not been fully distributed.
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(i)
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“
Plan
” means this Lennox International Inc. Supplemental Retirement
Plan, as from time to time in effect.
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(j)
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“
Qualified Pension Plan
” means the Lennox International Inc.
Consolidated Pension Plan (or any successor plan) as in effect on January 1, 2008, and
as from time to time in effect thereafter, except that the supplements to the Qualified
Pension Plan shall be disregarded for purposes of determining actuarial equivalence,
forms of benefits and benefit commencement dates under this Plan.
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(k)
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“
Separation from Service
” means with respect to a Participant, the
Participant’s separation from service (within the meaning of Section 409A of the
Internal Revenue Code and the regulations and other guidance issued thereunder) with
the group of employers that includes the Company and each Affiliated Company (as
hereinafter defined). An employee’s Separation from Service shall be deemed to occur
on the date as of which the employee and his or her employer reasonably anticipate that
no further services will be performed after such date or that the level of bona fide
services the employee will perform after such date (whether as an employee or an
independent contractor) will permanently decrease to no more than 20% of the average
level of bona fide services performed (whether as an employee or an independent
contractor) over the immediately preceding 36-month period (or the full period of
services to the employer if the employee has been providing services to the employer
less than 36 months). For purposes of this definition, “Affiliated Company” shall mean
any incorporated or unincorporated trade or business or other entity or person, other
than the Company, that along with the Company is considered a single employer under
Section 414(b) or Section 414(c
)
of the Internal Revenue Code.
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(l)
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“
Specified Employee
” means a Participant who is a specified employee
within the meaning of Section 409A(a)(2) of the Internal Revenue Code and the
regulations and other guidance issued thereunder. Specified Employees shall be
identified by the Compensation and Human Resources Committee of the Board of Directors
of the Company.
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(m)
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“
Year of Credited Service
” shall have the meaning assigned to the term
under the Qualified Pension Plan in effect as of December 31, 2008, had such Qualified
Pension Plan not been frozen, except that for purposes of determining the Years of
Credited Service under this Plan of a Participant who first becomes a Participant in
the Plan after January 1, 1991, any period of his or her employment before first
becoming an Executive shall be disregarded.
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(n)
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“
Year of Vesting Service
” shall have the meaning assigned to the term
under the Qualified Pension Plan.
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Article 2. Participation
2.1
Participation
. Each Executive shall become a Participant in this Plan on the
later of January 1, 1991 or the date he or she becomes an Executive.
Article 3. Benefits Not Subject to Section 409A
3.1
Application of this Article
. Any provision of this Article 3 to the contrary
notwithstanding, this Article shall apply only to the extent of any benefits of a Participant under
the Plan that are not subject to Section 409A of the Internal Revenue Code, as determined in
accordance with the regulations and other guidance issued thereunder, and benefits payable to or on
behalf of a Participant under this Article shall be calculated accordingly,
3.2
Normal Retirement Benefit Not Subject to Section 409A
.
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(a)
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Eligibility
. Subject to Section 3.5, a Participant shall be eligible
for a normal retirement benefit under this Article 3 upon termination of employment
from the Employers and their affiliates on or after his or her Normal Retirement Date.
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(b)
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Amount
. A Participant eligible for a normal retirement benefit under
this Article 3 shall be entitled to a monthly normal retirement benefit calculated as
follows:
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Step (1)
. There shall first be determined 2.0% of one-twelfth of the
Participant’s Final Average Compensation.
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Step (2)
. To the amount determined under Step (1) above, there shall be
added 1.2% of one-twelfth of the excess of the Participant’s Final Average
Compensation over his or her Covered Compensation.
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Step (3)
. The sum determined under Step (2) above shall be multiplied by
the Years of Credited Service (not in excess of 15) credited to the Participant at
his or her termination of employment.
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Step (4)
. From the amount thus determined, there shall be deducted the
actuarial equivalence (determined in accordance with the Lennox International Inc.
Pension Plan for Salaried Employees, but without regard to the Supplements thereto,
as in effect on December 31, 2004) of the monthly benefit under a single-premium
nontransferable single-life annuity which could be provided by the sum of (i) the
vested balance in the Participant’s Employer Account in the Lennox International
Inc. Profit Sharing Retirement Plan and (ii) the vested balance in the Participant’s
deferred compensation account, if any, in the Lennox International Inc. Profit
Sharing Restoration Plan, as of the date the Participant terminated employment.
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Step (5)
. From the amount thus determined, there shall be deducted the
monthly normal retirement benefit the Participant is entitled to receive in the form
of a single-life annuity under the Qualified Pension Plan, and the remainder shall
be the monthly normal retirement benefit in the form of a single-life annuity under
this Plan.
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(c)
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Commencement
. Normal retirement benefit payments under this Article 3
to a Participant shall commence at the same time that his or her normal retirement
benefit payments commence under the Qualified Pension Plan, or if no normal retirement
benefit payments are payable to him or her under the Qualified Pension Plan, at the
earliest time such payments would commence under the Qualified Pension Plan if such
payments were payable to him or her.
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3.3
Early Retirement Benefit Not Subject to Section 409A
.
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(a)
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Eligibility
. Subject to Section 3.5, a Participant shall be eligible
for an early retirement benefit under this Article 3 upon termination of employment
from the Employers and their affiliates on or after his or her Early Retirement Date
but prior to his or her Normal Retirement Date.
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(b)
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Amount
. A Participant eligible for an early retirement benefit under
this Article 3 shall be entitled to a monthly early retirement benefit calculated in
the same manner as a monthly normal retirement benefit under Section 3.2(b), except
that (i) prior to the deduction described in Step (5), the amount determined under Step
(4) shall be reduced by 0.5% for each month (or any fraction thereof) that the
Participant’s early retirement benefit under this Article commences prior to his or her
60th birthday, and (ii) instead of the monthly normal retirement benefit under the
Qualified Pension Plan, there shall be deducted under Step (5) the monthly early
retirement benefit the
Participant is entitled to receive in the form of a single-life annuity under the
Qualified Pension Plan, determined assuming that the early retirement benefit
commences under the Qualified Pension Plan on the same day that the Participant’s
early retirement benefit commences under this Article.
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(c)
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Commencement
. Early retirement benefit payments under this Article 3
to a Participant shall commence on the first day of the month following the later of
his or her 60th birthday or his or her termination of employment. However, in the case
of a Participant who terminated employment prior to his or her 60th birthday, (i) if he
or she elected to commence receiving early retirement benefit payments under the
Qualified Pension Plan on some day prior to his or her 60th birthday, with the consent
of the Company he or she may elect to commence receiving his or her early retirement
benefit payments under this Article on that same day, or (ii) if no early retirement
benefit payments are payable to him or her under the Qualified Pension Plan, with the
consent of the Company he or she may elect to commence receiving his or her early
retirement benefit payments under this Article on any day prior to his or her 60th
birthday that early retirement benefit payments to him or her could commence under the
Qualified Pension Plan if such payments were payable to him or her.
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3.4
Deferred Vested Retirement Benefit Not Subject to Section 409A
.
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(a)
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Eligibility
. Subject to Section 3.5, a Participant shall be eligible
for a deferred vested retirement benefit under this Article 3 upon termination of
employment from the Employers and their affiliates after completion of five Years of
Vesting Service but prior to his or her Early Retirement Date.
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(b)
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Amount
. A Participant eligible for a deferred vested retirement
benefit under this Article 3 shall be entitled to a monthly deferred vested retirement
benefit calculated in the same manner as a monthly normal retirement benefit under
Section 3.2(b), except that (i) prior to the deduction described in Step (5), the
amount determined under Step (4) shall be reduced by 0.5% for each month (or any
fraction thereof) that the Participant’s deferred vested retirement benefit under this
Article 3 commences prior to his or her 62nd birthday, and (ii) instead of the monthly
normal retirement benefit under the Qualified Pension Plan, there shall be deducted
under Step (5) the monthly deferred vested retirement benefit the Participant is
entitled to receive in the form of a single-life annuity under the Qualified Pension
Plan, determined assuming that the deferred vested retirement benefit commences under
the Qualified Pension Plan on the same day that the Participant’s deferred vested
retirement benefit commences under this Article.
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(c)
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Commencement
. Deferred vested retirement benefit payments under this
Article 3 to a Participant shall commence on the first day of the month following the
later of his or her 62nd birthday or his or her termination of employment. However, in
the case of a Participant who terminated employment prior to his or her 62nd birthday,
(i) if he or she elected to commence receiving deferred vested retirement benefit
payments under
the Qualified Pension Plan on some day prior to his or her 62nd birthday, with the
consent of the Company he or she may elect to commence receiving his or her deferred
vested retirement benefit payments under this Article on that same day, or (ii) if
no deferred vested retirement benefit payments are payable to him or her under the
Qualified Pension Plan, with the consent of the Company he or she may elect to
commence receiving his or her deferred vested retirement benefit payments under this
Article on any day prior to his or her 62nd birthday that deferred vested retirement
benefit payments to him or her could commence under the Qualified Pension Plan if
such payments were payable to him or her.
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3.5
Form of Retirement Benefits Not Subject to Section 409A
.
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(a)
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Single Participant
. If a Participant is not married on the date his or
her retirement benefit payments commence under this Article 3, his or her payments
shall be made in the form of a single-life annuity, except that if he or she is
entitled to early retirement benefit payments under this Article and he or she elected
a temporary annuity form of payment for his or her early retirement benefit payments
under the Qualified Pension Plan, with the consent of the Company he or she may elect a
temporary annuity form of payment for his or her early retirement benefit payments
under this Article.
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(b)
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Married Participant
. If a Participant is married on the date his or
her retirement benefit payments commence under this Article 3, his or her payments
shall be made in the form of a joint and 100% survivor annuity, except that (i) if he
or she has elected any other annuity form of payment for his or her retirement benefit
payments under the Qualified Pension Plan, with the consent of the Company but without
spousal consent he or she may elect that other form of payment for his or her
retirement benefit payments under this Article, and (ii) if no retirement benefit
payments are payable to him or her under the Qualified Pension Plan in an annuity form,
with the consent of the Company but without spousal consent he or she may elect any
other joint and survivor annuity form of payment available under the Qualified Pension
Plan for his or her retirement benefit payments under this Article, or with the consent
of the Company and with spousal consent he or she may elect a single-life annuity for
such benefit payments.
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(c)
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Actuarial Equivalence
. Whenever the amount of retirement benefit
payments under this Article 3 is calculated in the form of a single-life annuity but
such payments commence in any other annuity form, the amount so calculated shall be
adjusted on the basis of actuarial equivalence (as determined in accordance with the
Lennox International Inc. Pension Plan for Salaried Employees, but without regard to
the Supplements thereto, as in effect on December 31, 2004) and the adjusted amount
shall be the amount of the payments made in the other annuity form.
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3.6
Death Benefit Not Subject to Section 409A
.
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(a)
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Eligibility
. If a Participant dies on or after either his or her
Normal Retirement Date or his or her completion of five Years of Vesting Service but
prior to the date his or her retirement benefit commences under this Article 3, and if
either he or she had been married during the entire one-year period ending on the date
of his or her death or he or she had been an Executive to whom Article 7 of the Plan as
in effect on December 31, 2004, applies, his or her surviving spouse shall be eligible
for a death benefit under this Article.
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(b)
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Amount
. A surviving spouse eligible for a death benefit under this
Article 3 shall be entitled to a monthly death benefit calculated as the monthly
retirement benefit that would have been payable under this Article to the surviving
spouse under a joint and 50% survivor annuity had the Participant (i) terminated
employment on the date of his or her death (unless he or she was no longer in the
employ of the Employers and their affiliates on such date), (ii) subsequently commenced
receiving a deferred vested retirement benefit, early retirement benefit or normal
retirement benefit, whichever would be applicable, under this Article in the form of a
joint and 50% survivor annuity with his or her surviving spouse, and (iii) then died
immediately thereafter. The monthly payment of the retirement benefit described in
clause (ii) of the preceding sentence shall be calculated as if the Participant had
survived until the commencement of a retirement benefit of the same type under the
Qualified Pension Plan. Any early retirement death benefit payable to a surviving
spouse shall be calculated assuming that an early retirement benefit to the Participant
under the Qualified Pension Plan commenced on the day that the surviving spouse’s early
retirement death benefit commences under this Article.
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(c)
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Commencement
. Death benefit payments under this Article 3 to a
surviving spouse shall be paid during the spouse’s lifetime, commencing at the time the
deceased Participant would have commenced receiving the retirement benefit described in
clause (ii) of Section 3.6(b). However, in the case of a retirement benefit described
in clause (ii) of Section 3.6(b) that is an early retirement benefit for a Participant
who died prior to his or her 60th birthday, (i) if the surviving spouse elected to
commence receiving early retirement death benefit payments under the Qualified Pension
Plan on some day prior to the Participant’s 60th birthday, with the consent of the
Company the surviving spouse may elect to commence receiving early retirement death
benefit payments under this Article on that same day, or (ii) if no early retirement
death benefit payments are payable to the surviving spouse under the Qualified Pension
Plan, with the consent of the Company the surviving spouse may elect to commence
receiving early retirement death benefit payments under this Article on any day prior
to the Participant’s 60th birthday that early retirement death benefit payments to the
surviving spouse could commence under the Qualified Pension Plan if such payments were
payable.
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3.7
Company Consent
. Whenever the consent of the Company is required under this
Article 3, such consent may be given only by the Chief Executive Officer of the Company in his or
her sole discretion, except that with respect to any matters relating to the benefits payable under
this Article to or on behalf of the Chief Executive Officer, such consent may be given only by the
Board of Directors of the Company in its sole discretion.
3.8
Lump Sum Payments of Benefits Not Subject to Section 409A
.
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(a)
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Application of this Section
. This Section 3.8 shall apply only to an
Executive who on December 31, 2004, was in the group of Executives eligible to elect a
lump sum payment pursuant to Article 7 of the Plan as in effect on December 31, 2004.
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(b)
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Lump Sum Payments to Executives
. In the case of an Executive to whom
this Section 3.8 applies, such Executive may make an irrevocable election in writing to
receive a lump sum payment that is the actuarial equivalence of the retirement benefit
payments payable (or remaining payable, if payments have commenced) to him or her and
his or her spouse, if applicable, under this Article 3. If such Executive so elects,
the lump sum payment shall be made in lieu of such retirement benefit payments on the
following date: (i) if such Executive was in the employ of an Employer or any affiliate
thereof after 2002 and was born after 1941, the later of his or her termination of
employment from the Employers and their affiliates or the first anniversary date of his
or her election, (ii) if such Executive was not in the employ of an Employer or any
affiliate thereof after 2002 and his or her retirement benefit payments under the Plan
commence on or before January 1, 2006, the later of such date or the first anniversary
date of his or her election, and (iii) if such Executive was not in the employ of an
Employer or any affiliate thereof after 2002 and his or her retirement benefit payments
under the Plan do not commence on or before January 1, 2006, the later of January 1,
2008, or the first anniversary date of his or her election.
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(c)
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Lump Sum Payments after Death
. A lump sum payment shall be made under
this Section 3.8 with respect to an Executive who had elected to receive a lump sum
payment pursuant to either Section 3.8(b) above or Article 7 of the Plan as in effect
on December 31, 2004, but who is not living on the date the payment is due only if (i)
the Executive died married prior to the commencement of his or her retirement benefit
payments under this Article 3 (regardless of whether he or she had been married during
the entire one-year period ending on the date of his or her death), (ii) the Executive
died married while receiving retirement benefit payments under the Plan in the form of
a joint and survivor annuity and while married to the spouse to whom he or she was
married when the retirement benefit payments commenced, or (iii) the Executive died
unmarried. If such Executive died married, a lump sum payment shall be made to the
Executive’s surviving spouse on the date a lump sum payment was due to the Executive
pursuant to Section 3.8(b), based only on the benefit payments then remaining payable
to the surviving spouse. If such Executive died unmarried, a lump sum payment shall be
made to the Executive’s estate on the date a lump sum payment was due to the Executive
pursuant to Section 3.8(b), based on the benefit payments
that would have been payable to the Executive if he or she had remained unmarried
and not died.
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(d)
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Actuarial Equivalence
. For purposes of this Section 3.8, actuarial
equivalence shall be determined as of the date of the lump sum payment in accordance
with the actuarial assumptions in effect under the Lennox International Inc. Pension
Plan for Salaried Employees (but without regard to the Supplements thereto) as in
effect on December 31, 2004, for lump sum payments and based only on the form of
payments then remaining payable to the recipient and his or her spouse, if applicable.
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Article 4. Benefits Subject to Section 409A
4.1
Application of this Article
. Any provision of this Article 4 to the contrary
notwithstanding, this Article shall apply only to the extent of any benefits of a Participant under
the Plan that are subject to Section 409A of the Internal Revenue Code, as determined in accordance
with the regulations and other guidance issued thereunder. In no event shall benefits payable to
or on behalf of a Participant under this Article duplicate any benefits payable to or on behalf of
the Participant under Article 3.
4.2
Normal Retirement Benefit Subject to Section 409A
.
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(a)
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Eligibility
. Subject to Section 4.5, a Participant shall be eligible
for a normal retirement benefit under the Plan upon his or her Separation from Service
on or after his or her Normal Retirement Date for any reason other than death.
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(b)
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Amount
. A Participant eligible for a normal retirement benefit under
the Plan shall be entitled to a monthly normal retirement benefit calculated as of the
date of his or her Separation from Service, as follows:
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Step (1)
. There shall first be determined 2.0% of one-twelfth of the
Participant’s Final Average Compensation.
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Step (2)
. To the amount determined under Step (1) above, there shall be
added 1.2% of one-twelfth of the excess of the Participant’s Final Average
Compensation over his or her Covered Compensation.
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Step (3)
. The sum determined under Step (2) above shall be multiplied by
the Years of Credited Service (not in excess of 15) credited to the Participant at
his or her Separation from Service.
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Step (4)
. From the amount thus determined, there shall be deducted the
actuarial equivalence (determined in accordance with the Qualified Pension Plan) of
the monthly benefit under a single-premium nontransferable single-life annuity which
could be provided by the sum of (i) the vested balance in the Participant’s Employer
Account under the Profit Sharing Plan portion of the Lennox International Inc.
Merged Profit Sharing and 401(k) Retirement Plan and (ii) the vested balance in the
Participant’s deferred compensation account, if any, in the Lennox International
Inc. Profit Sharing Restoration Plan, as of the date of his or her Separation from
Service.
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Step (5)
. From the amount thus determined, there shall be deducted the
monthly normal retirement benefit the Participant would have been entitled to
receive in the form of a single-life annuity under the Qualified Pension Plan in
effect as of December 31, 2008, had participation and benefits under such Qualified
Pension Plan not been frozen, and the remainder shall be the monthly normal
retirement benefit in the form of a single-life annuity under this Plan.
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4.3
Early Retirement Benefit Subject to Section 409A
.
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(a)
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Eligibility
. Subject to Section 4.5, a Participant shall be eligible
for an early retirement benefit under the Plan upon his or her Separation from Service
on or after his or her Early Retirement Date but prior to his or her Normal Retirement
Date for any reason other than death.
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(b)
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Amount
. A Participant eligible for an early retirement benefit under
the Plan shall be entitled to a monthly early retirement benefit calculated in the same
manner as a monthly normal retirement benefit under Section 4.2(b), except that (i)
prior to the deduction described in Step (5), the amount determined under Step (4)
shall be reduced by 0.5% for each month (or any fraction thereof) that the
Participant’s early retirement benefit under the Plan commences prior to his or her
60th birthday, and (ii) instead of the monthly normal retirement benefit under the
Qualified Pension Plan, there shall be deducted under Step (5) the monthly early
retirement benefit the Participant would have been entitled to receive in the form of a
single-life annuity under the Qualified Pension Plan in effect as of December 31, 2008,
had participation and benefits under such Qualified Pension Plan not been frozen,
determined assuming that the early retirement benefit commences under the Qualified
Pension Plan on the same day that the Participant’s early retirement benefit commences
under this Article 4.
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4.4
Deferred Vested Retirement Benefit Subject to Section 409A
.
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(a)
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Eligibility
. Subject to Section 4.5, a Participant shall be eligible
for a deferred vested retirement benefit under the Plan upon his or her Separation from
Service after completion of five Years of Vesting Service but prior to his or her Early
Retirement Date for any reason other than death.
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(b)
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Amount
. A Participant eligible for a deferred vested retirement
benefit under the Plan shall be entitled to a monthly deferred vested retirement
benefit calculated in the same manner as a monthly normal retirement benefit under
Section 4.2(b), except that (i) prior to the deduction described in Step (5), the
amount determined under Step (4)
shall be reduced by 0.5% for each month (or any fraction thereof) that the
Participant’s deferred vested retirement benefit under the Plan commences prior to
his or her 62nd birthday, and (ii) instead of the monthly normal retirement benefit
under the Qualified Pension Plan, there shall be deducted under Step (5) the monthly
deferred vested retirement benefit the Participant would have been entitled to
receive in the form of a single-life annuity under the Qualified Pension Plan in
effect as of December 31, 2008, had participation and benefits under such Qualified
Pension Plan not been frozen, determined assuming that the deferred vested
retirement benefit commences under the Qualified Pension Plan on the same day that
the Participant’s deferred vested retirement benefit commences under this Article 4.
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4.5
Time and Form of Retirement Benefits Subject to Section 409A
.
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(a)
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Single Participant
. Except in the case of an Executive who has elected
to receive a lump sum payment pursuant to Section 4.5(e), if a Participant is not
married on the first day of the month following the later of his or her 62
nd
birthday or his or her Separation from Service, then monthly retirement benefit
payments shall be made to him or her in the form of a single-life annuity.
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(b)
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Married Participant
. Except in the case of an Executive who has
elected to receive a lump sum payment pursuant to Section 4.5(e), if a Participant is
married on the first day of the month following the later of his or her 62
nd
birthday or his or her Separation from Service, then monthly retirement benefit
payments shall be made to him or her (and following his or her death to the spouse to
whom he or she was married on such first day if such spouse survives him or her) in the
form of a joint and 50% survivor annuity with his or her spouse as the survivor
annuitant, or if the Participant so elects prior to such first day, in the form of a
single-life annuity, a joint and 75% survivor annuity with his or her spouse as the
survivor annuitant, or a joint and 100% survivor annuity with his or her spouse as the
survivor annuitant.
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(c)
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Commencement of Monthly Payments
. Monthly payments to a Participant
under this Section 4.5 shall commence being made on the first day of the month
following the later of his or her 62
nd
birthday or his or her Separation
from Service; provided, however, that if such Participant is a Specified Employee as of
the date of his or her Separation from Service, then any payments that would otherwise
be made to the Participant during the first six months following his or her Separation
from Service shall be accumulated and paid on the first day of the seventh month after
the date of his or her Separation from Service (or if earlier, the first day of the
month after his or her death). If a Participant dies while payments are being
accumulated pursuant to the preceding sentence, the accumulated payments shall be paid
to his or her surviving spouse, if any, or if none, to his or her estate.
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(d)
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Actuarial Equivalence
. Whenever the amount of retirement benefit
payments under this Article 4 is calculated in the form of a single-life annuity but
such payments commence in any other annuity form, the amount so calculated shall be
adjusted on
the basis of actuarial equivalence (as determined in accordance with the Qualified
Pension Plan) and the adjusted amount shall be the amount of the payments made in
the other annuity form.
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(e)
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Lump Sum Payments
. This subsection (e) shall apply only to an
Executive (A) in the position of either Chief Executive Officer or Chief Operating
Officer of the Company or (B) in an Executive Vice President position reporting
directly to either such officer. An Executive to whom this subsection applies may
elect in writing on or before the later of (i) the last day prior to the commencement
of his or her participation in the Plan or (ii) December 31, 2008, to have any
retirement benefits payable under the foregoing provisions of this Article 4 to or on
behalf of such Executive paid on the first day of the month following his or her
Separation from Service in a lump sum payment that is the actuarial equivalence of any
such benefits; provided, however, that if such Executive is a Specified Employee as of
the date of his or her Separation from Service, then any such payment shall be made on
the first day of the seventh month after the date of his or her Separation from Service
(or if earlier, the first day of the month after his or her death). An Executive who
elected a lump sum payment pursuant to Article 7 of the Plan as in effect on December
31, 2004, and whose Separation from Service occurred before January 1, 2008, shall be
deemed to have made the election described in this subsection. If an Executive
entitled to receive a lump sum payment pursuant to this subsection dies after his or
her Separation from Service but prior to the date such payment is made, such payment
shall be made to his or her surviving spouse, if any, or if none, to his or her estate.
For purposes of this subsection, actuarial equivalence shall be determined as of the
first day of the month following the month in which the Executive’s Separation from
Service occurs in accordance with the actuarial assumptions in effect under the
Qualified Pension Plan for lump sum payments.
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- 12 -
4.6
Death Benefit Subject to Section 409A
.
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(a)
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Eligibility
. Upon the death of a Participant after either his or her
Normal Retirement Date or his or her completion of five Years of Vesting Service, a
death benefit shall be payable under this Article 4 (i) in the case of a Participant
who had been an Executive to whom Section 4.5(e) applies and who had made the lump sum
payment election provided for therein, if he or she died prior to the first of the
month following his or her Separation from Service, or (ii) in the case of any other
Participant, if he or she had been married during the entire one-year period ending on
the date of his or her death and he or she died prior to the first day of the month
following the later of his or her 62
nd
birthday or his or her Separation
from Service.
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(b)
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Amount
. Except as provided in subsection (d) of this Section, a
surviving spouse of a Participant for whom a death benefit under this Article 4 is
payable shall be entitled to a monthly death benefit calculated as the monthly
retirement benefit that would have been payable under this Article 4 to the surviving
spouse under a joint and 50% survivor annuity had the Participant (i) had a Separation
from Service on the date of his or her death (unless he or she had an earlier
Separation from Service), (ii) subsequently commenced receiving a deferred vested
retirement benefit, early retirement benefit or normal retirement benefit, whichever
would be applicable, under the Plan in the form of a joint and 50% survivor annuity
with his or her surviving spouse, and (iii) then died immediately thereafter. The
monthly payment of the retirement benefit described in clause (ii) of the preceding
sentence shall be calculated as if the Participant had survived until the commencement
of a retirement benefit of the same type under the Qualified Pension Plan. Any early
retirement death benefit payable to a surviving spouse shall be calculated assuming
that an early retirement benefit to the Participant under the Qualified Pension Plan
commenced on the day that the surviving spouse’s early retirement death benefit
commences under this Article 4.
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(c)
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Commencement
. Except as provided in subsection (d) of this Section,
death benefit payments under the Plan to a surviving spouse shall be paid during the
spouse’s lifetime, commencing at the time the deceased Participant would have commenced
receiving the retirement benefit described in clause (ii) of Section 4.6(b),
disregarding any delay in payment required for a Specified Employee.
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(d)
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Lump Sum Payments
. A lump sum payment of any death benefit payable
under this Section 4.6 shall be made on behalf of an Executive who had elected to
receive a lump sum payment pursuant to Section 4.5(e). If such Executive died married
(regardless of whether he or she had been married during the entire one-year period
ending on the date of his death), a lump sum payment shall be made to the Executive’s
surviving spouse on the first day of the month following the Executive’s death, based
only on the actuarial equivalence (determined in accordance with Section 4.5(e)) of the
death benefits payable under subsection (b) of this Section to the Executive’s
surviving spouse. If such Executive died unmarried, a lump sum payment shall be made
to the Executive’s estate on the first day of the month following the Executive’s
death,
based on the actuarial equivalence (determined in accordance with Section 4.5(e)) of
the retirement benefit payments that would have been payable to the Executive under
this Article 4 if he or she had not died but otherwise had a Separation from Service
on the date of his death.
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4.7
Payment Election Changes
. Prior to January 1, 2009, a Participant may make a new
election with respect to the form of payment under this Article 4, provided that such election
complies with the transition relief requirements for changing a payment election prescribed by the
Internal Revenue Service in Notice 2007-86 (or in any other applicable guidance issued by the
Internal Revenue Service). After December 31, 2008, any change by a Participant with respect to
the time or form of payment under this Article shall become effective (i) not earlier than the date
that is 12 months after the filing of such change and (ii) only if the date for the payment or
commencement of payments being elected is at least five years after the date as of which such
benefit otherwise would have been paid or commenced being paid in the absence of such change, where
for this purpose annuity payments shall be treated as a single payment. Any election or change
under this Section shall be made by a Participant on a form prescribed by and filed with or as
directed by the Management Committee.
Article 5. General Benefits Provisions
5.1
Continuation of Normal Retirement Benefit
. If a Participant receiving a normal
retirement benefit under the Plan dies survived by a spouse and/or minor children prior to
attaining the age of 70 years, and if such Participant was receiving such benefit in the form of a
single-life annuity, the monthly normal retirement benefit payments that had been payable to him or
her under the Plan shall be continued to such spouse and/or minor children until the date the
Participant would have attained the age of 70 years.
5.2
Continuation of Early or Deferred Vested Retirement Benefit
. If a Participant
receiving either an early retirement benefit or a deferred vested retirement benefit under the Plan
dies survived by a spouse and/or minor children prior to attaining the age specified in the
following table that corresponds to such Participant’s age at the commencement of such benefit, and
if he or she was receiving such benefit in the form of a single-life annuity, the monthly
retirement benefit payments that had been payable to him or her under the Plan shall be continued
to such spouse and/or minor children until the date the Participant would have attained the age
specified in the following table that corresponds to his or her age at the commencement of such
benefit:
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Benefit Commencement Age
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Participant’s Age
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62 or less
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64
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63
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66
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64
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68
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5.3
Employment Agreement
. Any provision of this Section 5.3 to the contrary
notwithstanding, no provision of this Section shall apply to the extent such application would
cause any benefits under the Plan to be subject to the tax imposed under Section 409A of the
Internal
Revenue Code. The benefits provided under this Plan to any Executive who has entered into a Change
of Control Employment Agreement with his or her Employer shall be adjusted in accordance with the
terms of that Agreement. Any terms of a Change of Control Employment Agreement that apply to
increase an Executive’s age shall apply for all purposes under this Plan, including without
limitation an acceleration in the commencement date of the Executive’s benefit payments. If such
an acceleration causes the Executive’s retirement benefit under this Plan to commence before his or
her corresponding retirement benefit under the Qualified Pension Plan may commence, the deduction
provisions in Step (5) of Section 3.3(b) shall apply using whatever retirement benefit may commence
under the Qualified Pension Plan at the time the retirement benefit commences under this Plan (or
if no retirement benefit may commence under the Qualified Pension Plan at that time, using the
retirement benefit that may commence earliest under the Qualified Pension Plan, but without any
adjustment in the amount of the retirement benefit payable under the Qualified Pension Plan to
reflect the different commencement dates).
Article 6. Financing
6.1
Financing
. The benefits under the Plan shall be paid out of the general assets of
the Employers. The benefits shall not be funded in advance of payment in any way. This Article
shall be subject to the terms of the Grantor Trust Agreement dated November 16, 2000, by and
between the Company and Wachovia Bank N.A., as from time to time in effect, but such terms shall
not apply to the extent they would cause any benefits under the Plan to be subject to the tax
imposed under Section 409A of the Internal Revenue Code.
6.2
No Trust Created
. No provision of the Plan and no action taken under the Plan
shall create or be construed to create either a trust of any kind or a fiduciary relationship
between the Employers and any Participant, spouse of a Participant or any other person.
6.3
Unsecured Interest
. No Participant shall have any interest whatsoever in any
specific asset of the Employers. To the extent that any person acquires a right to receive
payments under the Plan, the right shall be no greater than the right of any unsecured general
creditor of the Employers.
Article 7. Administration
7.1
Administration
. The Plan shall be administered by the Company. The Management
Committee, which shall be appointed by and serve at the pleasure of the Chief Executive Officer of
the Company, shall be authorized to construe and interpret all of the provisions of the Plan, to
adopt rules and practices concerning the administration of the same and to make any determinations
necessary hereunder, which shall be binding and conclusive on all parties. The Plan is intended to
provide compensation and benefits that are not subject to the tax imposed under Section 409A of the
Internal Revenue Code and shall be interpreted and administered to the extent possible in
accordance with such intent. The Company may appoint one or more persons from members of
management whose functions shall be to act for the Company in the administration of the Plan and to
establish rules and regulations for such administration.
- 15 -
7.2
Expenses
. The cost of payments from the Plan and the expenses of administering
the Plan shall be borne by the Employers.
7.3
Tax Withholding
. Each Employer may withhold, or require the withholding, from any
payment which it is required to make, any federal, state or local taxes required by law to be
withheld with respect to such payment and such sum as the Employer may reasonably estimate as
necessary to cover any taxes for which the Employer may be liable and which may be assessed with
regard to such payment. Upon discharge or settlement of such tax liability, the Employer shall
distribute the balance of such sum, if any, to the Participant for whose payment it was withheld,
or if such Participant is then deceased, to the surviving spouse or estate of such Participant,
whichever is applicable. Prior to making any payment hereunder, each Employer may require such
documents from any taxing authority, or may require such indemnities or surety bond as the Employer
shall reasonably deem necessary for its protection.
7.4
Claims Procedure
. If any person (hereinafter called the “Claimant”) feels that he
or she is being denied a benefit to which he or she is entitled under the Plan, such Claimant may
file a written claim for said benefit with the Management Committee. Within 60 days of the receipt
of such claim (or within 120 days of the receipt of such claim if special circumstances require an
extension of the time for processing the claim, in which event the Management Committee or its
designated representative will furnish the Claimant with a written notice indicating the special
circumstances and the time by which a determination with respect to the claim will be made), the
Management Committee or its designated representative shall determine and notify the Claimant as to
whether he or she is entitled to such benefit. Such notification shall be in writing and, if
denying the claim for benefit, shall set forth the specific reason or reasons for the denial, make
specific reference to the pertinent provisions of the Plan, and advise the Claimant that he or she
may, within 60 days of the receipt of such notice, in writing request the Management Committee to
review such denial. In connection with such request for review, the Claimant and/or his or her
duly authorized representative may examine copies of any relevant documents and submit information
and comments in writing to support the granting of the benefit being claimed. The final decision
of the Management Committee with respect to the claim being reviewed shall be made within 60 days
following the receipt of the Claimant’s request for review unless special circumstances require an
extension of time for reviewing the claim, in which event (i) the Management Committee or its
designated representative will furnish a written notice of such extension to the Claimant, and (ii)
the final decision of the Management Committee shall be made as soon as possible but in no event
later than 120 days after the receipt of the Claimant’s request for review. The Management
Committee shall in writing notify the Claimant of its final decision, again specifying the reasons
therefor and the pertinent provisions of the Plan upon which such decision is based. The final
decision of the Management Committee with respect to a claim shall be conclusive and binding upon
the Claimant and all other parties having or claiming to have an interest in such claim.
- 16 -
Article 8. Miscellaneous
8.1
Nontransferability
. In no event shall an Employer make any payment under the Plan
to any assignee or creditor of a Participant or his or her spouse. Prior to the time of a payment
under the Plan, a Participant or his or her spouse shall have no rights by way of anticipation or
otherwise to assign or otherwise dispose of any interest under the Plan, nor shall rights be
assigned or transferred by operation of law (except pursuant to a qualified domestic relations
order within the meaning of Section 414(p) of the Internal Revenue Code).
8.2
Amendment or Termination
. The Board of Directors of the Company or the
Compensation and Human Resources Committee of said Board of Directors shall have the right and
power at any time and from time to time to amend this Plan, in whole or in part, and at any time to
terminate this Plan; provided, however, that (i) no such amendment or termination shall reduce the
benefits accrued to an Executive under this Plan on the date of such amendment or termination, or
further defer the due date of any payment of such benefits, without the consent of the affected
Executive, and (ii) no such amendment or termination shall impair any election available to an
Executive to receive a lump sum payment under Article 3 or 4 or reduce the actuarial equivalence of
such lump payment unless such amendment or termination is approved by the Board of Directors of the
Company or its Compensation and Human Resources Committee.
8.3
Superseded Plan Benefits
. Except as provided in Section 3.8 of this Plan, if a
participant in the Lennox Industries Inc. Supplemental Retirement Plan retired from Lennox
Industries Inc. prior to January 1, 1991, any supplemental retirement benefit payments to which he
or she and his or her spouse may be entitled shall be governed solely by the provisions of that
plan as in effect on the date he or she retired.
8.4
Employment Noncontractual
. The establishment of the Plan shall not enlarge or
otherwise affect the terms of any Executive’s employment with his or her Employer, and any Employer
may terminate the employment of an Executive as freely and with the same effect as if the Plan had
not been established.
8.5
Applicable Law
. This instrument shall be construed in accordance with and
governed by the internal laws (and not the principles relating to conflicts of laws) of the State
of Texas to the extent not superseded by the laws of the United States.
IN WITNESS WHEREOF, this amended and restated Plan has been executed this _____ day of ______, 2008, to be effective as of January 1, 2009.
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LENNOX INTERNATIONAL INC.
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By:
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Title:
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- 17 -
Exhibit 10.3
LENNOX INTERNATIONAL INC.
PROFIT SHARING RESTORATION PLAN
(
As Amended and Restated Effective as of January 1, 2009
)
THIS PROFIT SHARING RESTORATION PLAN, made and executed in Richardson, Texas, by LENNOX
INTERNATIONAL INC., a Delaware corporation (the “Company”),
WITNESSETH THAT:
WHEREAS, the Company has maintained an unfunded employee benefit plan known as the Lennox
International Inc. Profit Sharing Restoration Plan (the “Plan”) to supplement the benefits payable
under the Lennox International Inc. Profit Sharing Retirement Plan to or with respect to any
participant therein whose interest thereunder or under the prior Lennox Industries Inc. Profit
Sharing Retirement Plan has been limited because of (a) the maximum annual addition limitation
imposed by Section 415 of the Internal Revenue Code of 1986, as amended (the “Code”), and/or (b)
the annual compensation limitation imposed by Section 401(a)(17) of the Code; and
WHEREAS, the Company now desires to amend the Plan to make certain changes;
NOW, THEREFORE, pursuant to the provisions of Section 5 thereof, the Plan is hereby amended by
restatement in its entirety to read as follows:
Section 1.
Defined Terms
. As used herein,
(a) “Employers” means the Company, Lennox Industries Inc., Heatcraft Inc. and any other
trade or business which may adopt this Plan with the consent of the Chief Executive Officer
of the Company.
(b) “Executive” means (i) prior to January 1, 1998, any employee in the employ of an
Employer assigned an executive labor grade of 8 or above, (ii) during 1998 and 1999, any
employee who was an Executive on December 31, 1997, and any other employee in the employ of
an Employer who was a Vice President-A or who filled a position after discontinuance of the
labor grade system that previously had been an executive labor grade of 8 or above, and
(iii) after December 31, 1999, any employee who was an Executive on such date and any other
employee in the employ of an Employer (A) in the position of either Chief Executive Officer
or Chief Operating Officer of the Company or (B) in an Executive Vice President position
reporting directly to either such officer. An employee who satisfies the requirements to
become an Executive shall remain an Executive for purposes of this Plan until his or her
benefits under this Plan have been fully distributed.
(c) “Profit Sharing Plan” means the Lennox International Inc. Profit Sharing Retirement
Plan, except that for periods of time prior to January 1, 1991, such term means the Lennox
Industries Inc. Profit Sharing Retirement Plan and for periods of time after December 31,
2008, such term means the Profit Sharing Plan portion of the Lennox International Inc.
Merged Profit Sharing and 401(k) Retirement Plan for Salaried Employees.
(d) “Separation from Service” means with respect to an Executive, such Executive’s
separation from service (within the meaning of Section 409A of the Code and the regulations
and other guidance issued thereunder) with the group of employers that includes the Company
and each Affiliated Company. An employee’s Separation from Service shall be deemed to occur
on the date as of which the employee and his or her employer reasonably anticipate that no
further services will be performed after such date or that the level of bona fide services
the employee will perform after such date (whether as an employee or an independent
contractor) will permanently decrease to no more than 20% of the average level of bona fide
services performed (whether as an employee or an independent contractor) over the
immediately preceding 36-month period (or the full period of services to the employer if the
employee has been providing services to the employer less than 36 months). For purposes of
this definition, “Affiliated Company” shall mean any incorporated or unincorporated trade or
business or other entity or person, other than the Company, that along with the Company is
considered a single employer under Section 414(b) or Section 414(c
)
of the Code.
(e) “Specified Employee” means an Executive who is a specified employee within the
meaning of Section 409A(a)(2) of the Code and the regulations and other guidance issued
thereunder. Specified Employees shall be identified by the Compensation and Human Resources
Committee of the Board of Directors of the Company.
Unless the context clearly indicates otherwise, the other words and phrases used in this Plan shall
have the meanings assigned to them under the provisions of the Profit Sharing Plan.
Section 2.
Administration
. This Plan shall be administered by the Company in a
manner consistent with the administration of the Profit Sharing Plan, except that this Plan shall
be administered as an unfunded plan which is not intended to qualify under the provisions of
Section 401(a) of the Code. The Company shall perform and exercise all of the duties and powers
granted to it under the terms of this Plan. The Management Committee, which shall be appointed by
and serve at the pleasure of the Chief Executive Officer of the Company, shall interpret the
provisions of this Plan. The Plan is intended to provide compensation and benefits that are not
subject to the tax imposed under Section 409A of the Code and shall be interpreted and administered
to the extent possible in accordance with such intent. The Company may adopt such rules and
regulations for the administration of this Plan as are consistent with the terms hereof and shall
keep adequate records of its proceedings and acts with respect to the Plan. All interpretations
and decisions made and other action taken by the Management Committee shall be conclusive and
binding upon all parties having or claiming to have an interest under this Plan.
- 2 -
Section 3.
Deferred Compensation Accounts
. Each Employer shall establish and
maintain on its books a deferred compensation account for each Executive in its employ whose
allocable share of Employer contributions and/or forfeitures under the Profit Sharing Plan has been
limited in a Plan Year commencing after December 31, 1982, and before January 1, 2009, by the
maximum annual addition limitation imposed by Section 415 of the Code and/or the annual
compensation limitation imposed by Section 401(a)(17) of the Code. Such account shall be
designated by the name of the Executive for whom established and shall be credited as of the end of
each such Plan Year with an amount equal to the excess of (a) the total amount of Employer
contributions and forfeitures which would have been allocated to such Executive under the Profit
Sharing Plan for such year in the absence of said maximum annual addition limitation and annual
compensation limitation, over (b) the amount of Employer contributions and forfeitures actually
allocated to such Executive under the Profit Sharing Plan for such year. In addition, as of the
date of each valuation and adjustment of Accounts under the Profit Sharing Plan (including any such
date within a period during which installment distributions are being made pursuant to Section 4 of
this Plan and any such date within a payment delay prescribed by Section 4(b) of this Plan), such
Executive’s deferred compensation account shall be adjusted to reflect the same rate of increase or
decrease in value as is used to adjust his or her Employer Account under the Profit Sharing Plan
for the valuation and adjustment period ending as of such date. No contribution made by an Employer
to the Lennox International Inc. Merged Profit Sharing and 401(k) Retirement Plan for Salaried
Employees after December 31, 2008, shall constitute an Employer contribution for purposes of this
Plan.
Section 4.
Account Payments
.
(a) Upon the termination of an Executive’s employment with an Employer, any portion of
the amount credited to such Executive’s deferred compensation account that is not subject to
Section 409A of the Code shall be paid to such Executive (or, in the event of his or her
death, to the beneficiary or beneficiaries designated by such Executive for the purposes of
the Profit Sharing Plan) in approximately equal annual installments over a period of ten
years; provided, however, that with the consent of the Company, such Executive (or, in the
event of his or her death, the beneficiary or beneficiaries of such Executive) may elect to
receive such amount either in a single lump sum payment or in approximately equal annual
installments over a period of five years. For the purposes of this Plan, an Executive’s
employment with an Employer shall not be considered to have terminated so long as such
Executive is in the employ of any Employer or Affiliated Company.
- 3 -
(b) Upon an Executive’s Separation from Service, the portion of such Executive’s
deferred compensation account that is subject to Section 409A of the Code shall be paid to
such Executive (or, in the event of his or her death, to the beneficiary or beneficiaries
designated by such Executive for the purposes of the Profit Sharing Plan) in a single lump
sum payment on the first day of the month following the Executive’s Separation from Service
unless the Executive made an effective election to have such portion paid in (i) annual
installments over a period of five years or (ii) annual installments over a period of 10
years, with installments commencing in either case on the first day of the month following
the Executive’s Separation from Service and
continuing on anniversary dates thereof. The amount of any annual installment shall be
determined by dividing the total undistributed balance remaining to be paid by the number of
installments remaining to be paid. The foregoing provisions of this subsection (b) to the
contrary notwithstanding, if any Executive whose Separation from Service occurs is a
Specified Employee as of the date of his or her Separation from Service, then any payment
from such portion that would be made (without regard to this sentence) prior to the first
day of the seventh month after the date of such Executive’s Separation from Service shall
not be made until the first day of the seventh month after the date of the Separation from
Service of such Executive (or if earlier, the first day of the month after the death of such
Executive). Prior to January 1, 2009, an Executive may make a new election with respect to
the form of payment under this subsection (b), provided that such election complies with the
transition relief requirements for changing a payment election prescribed by the Internal
Revenue Service in Notice 2007-86 (or in any other applicable guidance issued by the
Internal Revenue Service). After December 31, 2008, any change by an Executive with respect
to the time or form of payment under this subsection (b) shall become effective (i) not
earlier than the date that is 12 months after the filing of such change and (ii) only if the
date for the payment or commencement of payments being elected is at least five years after
the date as of which such benefit otherwise would have been paid or commenced being paid
under this subsection (b) in the absence of such change, where for this purpose installment
payments shall be treated as a single payment. Any election or change under this subsection
(b) shall be made by an Executive on a form prescribed by and filed with or as directed by
the Management Committee.
(c) Any provision of this Section to the contrary notwithstanding, if an Executive is
not fully vested in the amount credited to his or her Employer Account under the Profit
Sharing Plan at the date of his or her Separation from Service, then the amount credited to
such Executive’s deferred compensation account under this Plan shall be reduced at the date
of such Separation from Service to an amount equal to (y) the amount then credited to his or
her deferred compensation account under this Plan, multiplied by (z) the vested percentage
applicable to such Executive’s Employer Account under Section 4.2 of the Profit Sharing Plan
as of the date of such Separation from Service.
Section 5.
Amendment and Termination
. The Board of Directors of the Company or the
Compensation and Human Resources Committee of said Board of Directors shall have the right and
power at any time and from time to time to amend this Plan, in whole or in part, on behalf of all
Employers, and at any time to terminate this Plan or any Employer’s participation hereunder;
provided, however, that no such amendment or termination shall reduce the amount actually credited
to an Executive’s deferred compensation account under this Plan on the date of such amendment or
termination, or further defer the due date for the payment of such amount, without the consent of
the affected Executive.
- 4 -
Section 6.
Nature of Plan and Rights
. This Plan is unfunded and maintained by the
Employers primarily for the purpose of providing deferred compensation for a select group of
management or highly compensated employees of the Employers. The deferred compensation
accounts established and maintained under this Plan by an Employer are for accounting purposes only
and shall not be deemed or construed to create a trust fund of any kind or to grant a property
interest of any kind to any Executive or his or her beneficiaries. The amounts credited by an
Employer to said accounts are and for all purposes shall continue to be a part of the general
assets of such Employer and, to the extent that an Executive or beneficiary acquires a right to
receive payments from such Employer pursuant to this Plan, such right shall be no greater than the
right of any unsecured general creditor of such Employer. This Section shall be subject to the
terms of the Grantor Trust Agreement dated November 16, 2000, by and between the Company and
Wachovia Bank N.A., as from time to time in effect, but such terms shall not apply to the extent
they would cause any benefits under the Plan to be subject to the tax imposed under Section 409A of
the Code.
Section 7.
Spendthrift Provision
. No account balance or other right or interest of
an Executive or beneficiary under this Plan may be assigned, transferred or alienated, in whole or
in part, either directly or by operation of law (except pursuant to a qualified domestic relations
order within the meaning of Section 414(p) of the Code), and no such balance, right or interest
shall be liable for or subject to any debt, obligation or liability of such Executive or
beneficiary.
Section 8.
Employment Noncontractual
. The establishment of this Plan shall not
enlarge or otherwise affect the terms of any Executive’s employment with his or her Employer, and
such Employer may terminate the employment of such Executive as freely and with the same effect as
if this Plan had not been established.
Section 9.
Applicable Law
. This Plan shall be governed by and construed in
accordance with the internal laws (and not the principles relating to conflicts of laws) of the
State of Texas, except where superseded by federal law.
Section 10.
Change of Control
. Any provision of this Plan to the contrary
notwithstanding, during the 90-day period following the occurrence of a Change of Control (as
defined in the Lennox International Inc. Grantor Trust Agreement), each Executive may elect
irrevocably that any amount of his or her deferred compensation account that is not subject to
Section 409A of the Code and that is payable upon his or her subsequent termination of employment
be paid either in a single lump sum payment or in approximately equal annual installments over a
period of five years, whichever form the Executive elects, and the consent of the Company shall not
be required for such election. The benefits provided under this Plan to any Executive who has
entered into a Change of Control Employment Agreement with his or her Employer shall be adjusted in
accordance with the terms of that Agreement, except to the extent that any such adjustment would
cause any benefits under the Plan to be subject to the tax imposed under Section 409A of the Code.
- 5 -
Section 11.
Claims Procedure
. If any person (hereinafter called the “Claimant”)
feels that he or she is being denied a benefit to which he or she is entitled under this Plan, such
Claimant may file a written claim for said benefit with the Management Committee. Within 60 days
of the receipt of such claim (or within 120 days of the receipt of such claim if special
circumstances require an extension of the time for processing the claim, in which event the
Management Committee or its designated representative will furnish the Claimant with a written
notice indicating the special circumstances and the time by which a determination with respect
to the claim will be made), the Management Committee or its designated representative shall
determine and notify the Claimant as to whether he or she is entitled to such benefit. Such
notification shall be in writing and, if denying the claim for benefit, shall set forth the
specific reason or reasons for the denial, make specific reference to the pertinent provisions of
this Plan, and advise the Claimant that he or she may, within 60 days of the receipt of such
notice, in writing request the Management Committee to review such denial. In connection with such
request for review, the Claimant and/or his or her duly authorized representative may examine
copies of any relevant documents and submit information and comments in writing to support the
granting of the benefit being claimed. The final decision of the Management Committee with respect
to the claim being reviewed shall be made within 60 days following the receipt of the Claimant’s
request for review unless special circumstances require an extension of time for reviewing the
claim, in which event (i) the Management Committee or its designated representative will furnish a
written notice of such extension to the Claimant, and (ii) the final decision of the Management
Committee shall be made as soon as possible but in no event later than 120 days after the receipt
of the Claimant’s request for review. The Management Committee shall in writing notify the
Claimant of its final decision, again specifying the reasons therefor and the pertinent provisions
of this Plan upon which such decision is based. The final decision of the Management Committee
with respect to a claim shall be conclusive and binding upon the Claimant and all other parties
having or claiming to have an interest in such claim.
IN WITNESS WHEREOF, this amended and restated Plan has been executed this
day of
, 2008, to be effective as of January 1, 2009.
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LENNOX INTERNATIONAL INC.
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By:
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Title:
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- 6 -
Exhibit 10.4
LENNOX INTERNATIONAL INC.
2009 Long-Term Incentive Award Agreement
U.S. Employees — Vice President
THIS AGREEMENT (“Agreement”) is made as of the December 11, 2008 (the “Award Date”), by and
between Lennox International Inc., a Delaware corporation (the “Company”), and «First» «Last»
(“Participant”).
The Company has adopted the 1998 Incentive Plan of Lennox International Inc. (the “Plan”), a
copy of which is attached hereto as
Exhibit A
and made a part hereof, for the benefit of
eligible employees and directors of the Company and its Subsidiaries. Capitalized terms used and
not otherwise defined herein shall have the meanings set forth in the Plan.
Pursuant to the Plan, the Compensation and Human Resources Committee (the “Committee”), which
has been assigned responsibility for administering the Plan, has determined that it is in the
interest of the Company and its stockholders to make the awards provided herein in order to
encourage Participant to remain in the employ of the Company or its Subsidiaries, to increase
Participant’s personal interest in the continued success and progress of the Company and to foster
and enhance the long-term profitability of the Company for the benefit of its shareholders by
offering the incentive of long-term rewards to be realized only upon attainment of established
goals.
The Company and Participant therefore agree as follows:
1.
Grant of Awards
. Subject to the terms and conditions herein, the Company grants to the
Participant:
(a)
PSU Award
— for the period beginning on January 1, 2009 and ending on
December 31, 2011 (the “Performance Period”), an award of
«Units»
units of Common Stock
(the “PSU Award”);
(b)
RSU Award
— for the period beginning on December 11, 2008 and ending on
December 11, 2011 (the “Retention Period”), an award of
«Units»
units of restricted Common
Stock (the “RSU Award”); and
(c)
SAR Award
— for the period beginning on December 11, 2008 and ending on
December 11, 2015 (the “SAR Period”), the right to the increase (if any) between the actual
selling price of
«Units»
shares of Common Stock (the “SAR Award”) on the date of exercise
over the “Fair Market Value” of such units on the Award Date. The “Fair Market Value” of the
units on the Award Date is
$______
per share.
2.
Conditions for Vesting and Exercise
.
(a)
PSU Award
— Fifty percent (50%) of the PSU Award is based upon satisfaction
of a core net income growth rate target (“Net Income”) for the three-year Performance
Period, and fifty percent (50%) of the PSU Award is based upon satisfaction
of a return on invested capital target (“ROIC”) for the three-year Performance Period.
Subject to paragraphs 5 and 6 herein, at the end of the Performance Period, the Company
shall apply the Company’s attained levels of performance to the PSU Award to calculate the
number of whole shares earned by the Participant (the “PSU Earned Awards”). The Committee
shall determine Participant’s total PSU Earned Award for such period by reference to the
following performance matrix:
Performance Share Program — Performance Standards
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Threshold
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Target
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Maximum
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Earned Award Payout
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50%
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100%
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200%
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Net Income - 3 year CAGR
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ROIC - 3 year weighted average*
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*
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lowest year ROIC weighted 20%, remaining years weighted 40% each
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If, at the end of the Performance Period, at least the threshold performance level has
been attained for either or both of the Net Income or ROIC performance measures, the PSU
Earned Award will be vested in accordance with the performance matrix set forth above. To
the extent that each PSU Earned Award payout level attained is less than 100%, the
difference between 100% and each PSU Earned Award distributed, if any, shall be forfeited.
(b)
RSU Award
— Subject to paragraphs 5 and 6 herein, at the end of the
Retention Period, the RSU Award shall vest and be distributed to the Participant (the “RSU
Earned Awards”).
(c)
SAR Award
— Subject to paragraphs 5 and 6 herein, the SAR Award may be
exercised only to the extent the SAR Award has become vested in accordance with the
following schedule:
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Date
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Shares Available for Purchase
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December 11, 2009
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33 1/3
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%
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December 11, 2010
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66 2/3
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%
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December 11, 2011
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100
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%
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To the extent the SAR Award becomes exercisable, such SAR Award may be exercised in
whole or in part (at any time or from time to time, except as otherwise provided herein)
until expiration of the SAR Period.
2
3.
Method and Time of Payment
.
(a)
PSU Award
— PSU Earned Awards shall be paid as soon as practicable
following the end of the Performance Period. PSU Earned Awards shall be paid in the form of
the nearest number of whole shares of Common Stock which is equal to or less than the units
determined by the reference to the matrix specified in paragraph 2(a) above. Subject to the
withholding referred to in paragraph 4 herein, the Company shall deliver to Participant
certificates issued in Participant’s name for the number of shares to be issued to
Participant.
(b)
RSU Awards
— RSU Earned Awards shall be paid as soon as practicable
following the end of the Retention Period. RSU Earned Awards shall be paid in whole shares
of Common Stock. Subject to the withholding referred to in paragraph 4 herein, the Company
shall deliver to Participant certificates issued in Participant’s name for the number of
shares to be issued to Participant.
(c)
SAR Award
— Subject to the withholding referred to in paragraph 4 herein,
the Company shall deliver to Participant certificates issued in Participant’s name for the
number of shares of Common Stock, in the form of the nearest number of whole shares of
Common Stock, which represent the increase (if any) between the actual selling price of the
Common Stock on the date of exercise over the Fair Market Value of the Common Stock on the
Award Date.
4.
Withholding for Taxes
. Participant acknowledges and agrees that the Company may deduct
from the shares of Common Stock otherwise deliverable in connection with a PSU Earned Award, a RSU
Earned Award, or an exercise of a vested SAR Award, a number of whole shares of Common Stock
(valued at their Fair Market Value on the date of distribution for a PSU Earned Award or a RSU
Earned Award, or at the actual selling price on the date of exercise for a SAR Award) that is at
least equal to the minimum statutory amount of all Federal, state and local taxes required to be
withheld by the Company in connection with such delivery, as determined by the Company.
3
5.
Termination of Employment
. Unless otherwise determined by the Committee in its sole
discretion, a PSU Award, a RSU Award or a SAR Award shall terminate at the times specified below:
(a) If Participant terminates employment with the Company and its Subsidiaries
voluntarily or is terminated by the Company or a Subsidiary for Cause (as defined in
any applicable employment agreement between the Company or Subsidiary and the
Participant or as determined by the Committee in its sole discretion in the absence
of any such employment agreement), then any PSU Award, RSU Award or SAR Award shall
terminate immediately and all units subject to such award shall be forfeited
immediately upon such termination of Participant’s employment.
(b) If Participant’s employment with the Company and its Subsidiaries is
terminated by the Company or a Subsidiary not for Cause, (i) any unearned or
unvested PSU Awards or RSU Awards shall terminate immediately and all unearned or
unvested units subject to such award shall be canceled immediately upon such
termination of Participant’s employment, and (ii) any SAR Award, to the extent
vested and exercisable, shall continue to be exercisable for a period not to exceed
90 days following Participant’s termination of employment, but to the extent not
vested and exercisable on the date of Participant’s termination from employment,
shall terminate immediately and all unvested units subject to such award shall be
forfeited immediately upon such termination of Participant’s employment.
(c) If Participant’s employment with the Company and its Subsidiaries is
terminated by the Company or a Subsidiary for any reason within one year following a
Change of Control (as defined in paragraph 17 herein), any SAR Award, to the extent
vested and exercisable, shall continue to exercisable for a period not to exceed 90
days following Participant’s termination of employment.
(d) If Participant’s employment with the Company and its Subsidiaries is
terminated by reason of Participant’s retirement under an employee pension benefit
plan maintained by the Company or a Subsidiary, Participant shall receive (i) a
prorata amount of Participant’s PSU Earned Award, based upon the portion of the
Performance Period the Participant actually served as an employee of the Company or
a Subsidiary determined as of the date of retirement, only to the extent the minimum
performance level of the Company has been attained in accordance with paragraph 2(a)
above, and the remaining amount of the PSU Award shall be forfeited; (ii) a prorata
amount of Participant’s RSU Award, based upon the portion of the Retention Period
the Participant actually served as an employee of the Company or a Subsidiary
determined as of the date of retirement, and the remaining amount of the RSU Award
shall be forfeited; and (iii) to the extent then vested and exercisable, the SAR
Award shall continue to be vested and exercisable for the remainder of the SAR
Period, and the remaining unvested and unexercisable portion of the SAR Award shall
be forfeited. In the case of a PSU Award or a RSU Award, the prorata amount shall
be payable as soon as practicable after the end of the Performance Period or the
Retention Period, as applicable.
(e) If Participant’s employment with the Company and its Subsidiaries is
terminated by reason of Participant’s death or Disability (as defined in paragraph
17 herein), Participant, or in the event of Participant’s death, Participant’s
beneficiary, shall receive (i) a prorata amount of Participant’s PSU Award, based
upon the Company’s attainment of its performance goals (as determined in the sole
discretion of the Committee), determined as of the date of death or Disability), and
the remaining amount of the PSU Award shall be forfeited; (ii) a prorata amount of
Participant’s RSU Award, based upon the portion of the Retention Period the
Participant actually served as an employee of
the Company or a Subsidiary determined as of the date of death or Disability,
and the remaining amount of the RSU Award shall be forfeited; and (iii) to the
extent then unvested, the SAR Award shall become fully vested and exercisable and
shall continue to be exercisable for the remainder of the SAR Period. In the case
of a PSU Award or a RSU Award, the prorata amount shall be payable as soon as
practicable.
4
6.
Change of Control
. Notwithstanding any other provision contained in this Agreement, upon
the occurrence of a Change of Control, PSU Awards and RSU Awards shall become fully vested and be
distributed to the Participant, and SAR Awards shall become fully vested and exercisable by the
Participant.
7.
Nontransferability of Award
. During Participant’s lifetime, a PSU Award, a RSU Award and a
SAR Award are not transferable (voluntarily or involuntarily) other than pursuant to a domestic
relations order and, except as otherwise required pursuant to a domestic relations order, are
payable only to Participant or Participant’s court appointed legal representative. Participant may
designate a beneficiary or beneficiaries to whom the benefits of the PSU Award, RSU Award or SAR
Award shall pass upon Participant’s death and may change such designation from time to time by
filing a written designation of beneficiary or beneficiaries with the Company or its designee,
provided that no such designation shall be effective unless so filed prior to the death of
Participant. If no such designation is made or if the designated beneficiary does not survive
Participant’s death, the benefits of the PSU Award, RSU Award or SAR Award shall pass by will or
the laws of descent and distribution.
8.
No Stockholder Rights
. Participant shall not be deemed for any purpose, including voting
rights and dividends, to be, or to have any of the rights of, a stockholder of the Company with
respect to any shares or units of Common Stock as to which this Agreement relates until such shares
shall have been issued to Participant by the Company. Furthermore, the existence of this Agreement
shall not affect in any way the right or power of the Company or its stockholders to accomplish any
corporate act, including, without limitation, the acts referred to in Section 15 of the Plan.
9.
Adjustments
. As provided in Section 13 of the Plan, certain adjustments may be made to
shares of Common Stock upon the occurrence of events or circumstances described in Section 13 of
the Plan.
10.
Restrictions Imposed by Law
. Without limiting the generality of Section 16 of the Plan,
Participant agrees that the Company will not be obligated to deliver any shares of Common Stock, if
counsel to the Company determines that such delivery would violate any applicable law or any rule
or regulation of any governmental authority or any rule or regulation of, or agreement of the
Company with, any securities exchange or association upon which the Common Stock may be listed or
quoted. The Company shall in no event be obligated to take any affirmative action in order to
cause the delivery of shares of Common Stock to comply with any such law, rule, regulation or
agreement.
5
11.
Notice
. Unless the Company notifies Participant in writing of a different procedure, any
notice or other communication to the Company with respect to this Agreement shall be in writing and
shall be (a) delivered personally to the following address:
Lennox International Inc.
c/o Corporate Secretary
2140 Lake Park Boulevard
Richardson, Texas 75080
or (b) sent by first class mail, postage prepaid and addressed as follows:
Lennox International Inc.
c/o Corporate Secretary
2140 Lake Park Boulevard
Richardson, Texas 75080
Any notice or other communication to Participant with respect to this Agreement shall be in writing
and shall be delivered personally, or shall be sent by first class mail, postage prepaid, to
Participant’s address as listed in the records of the Company on the Award Date, unless the Company
has received written notification from Participant of a change of address.
12.
Amendment
. Notwithstanding any other provisions hereof, this Agreement may be
supplemented or amended from time to time as approved by the Committee as contemplated by Section 6
of the Plan. Without limiting the generality of the foregoing, without the consent of Participant:
(a) this Agreement may be amended or supplemented (i) to cure any ambiguity or
to correct or supplement any provision herein which may be defective or inconsistent
with any other provision herein, or (ii) to add to the covenants and agreements of
the Company for the benefit of Participant or surrender any right or power reserved
to or conferred upon the Company in this Agreement; subject, however, to any
required approval of the Company’s stockholders and, provided, in each case, that
such changes or corrections shall not adversely affect the rights of Participant
with respect to the PSU Award, RSU Award or SAR Award evidenced hereby without the
Participant’s consent, (iii) to make changes to the number of shares of Common Stock
subject to Participant’s PSU Award, RSU Award or SAR Award or to change the
performance standards of paragraph 2(a) above, as equitably determined by the
Committee to reflect adjustment required by the effect of a major corporate event
such as the acquisition or disposition of a Subsidiary or major business activity or
substantial operating assets, or a “going public” event; or (iv) to make such other
changes as the Company, upon advice of counsel, determines are necessary or
advisable because of the adoption or promulgation of, or change in or to the
interpretation of, any law or governmental rule or regulation, including any
applicable Federal or state securities laws; and
(b) subject to Section 6 of the Plan and any required approval of the Company’s
stockholders, the PSU Award, RSU Award or SAR Award evidenced by this Agreement may
be canceled by the Committee and a new PSU Award, RSU Award or SAR Award made in
substitution therefore, provided that the PSU Award, RSU Award or SAR Award so
substituted shall satisfy all requirements of the Plan as of the date such new PSU
Award, RSU Award or SAR Award is made and no such action shall adversely affect an
PSU Award, RSU Award or SAR Award without Participant’s consent.
6
13.
Participant Employment
. Nothing contained in this Agreement, and no action of the Company
or the Committee with respect hereto, shall confer or be construed to confer on Participant any
right to continue in the employ of the Company or any of its Subsidiaries or interfere in any way
with the right of the Company or any employing Subsidiary to terminate Participant’s employment at
any time, with or without cause; subject, however, to the provisions of any employment agreement
between Participant and the Company or any Subsidiary.
14.
Governing Law
. This Agreement shall be governed by, and construed in accordance with, the
internal laws of the State of Delaware.
15.
Construction
. References in this Agreement to “this Agreement” and the words “herein,”
“hereof,” “hereunder” and similar terms include all Exhibits and Schedules appended hereto,
including the Plan. This Agreement is entered into, and the PSU Award, RSU Award and SAR Award
evidenced hereby is granted, pursuant to the Plan and shall be governed by and construed in
accordance with the Plan and the administrative interpretations adopted by the Committee
thereunder. All decisions of the Committee upon questions regarding the Plan or this Agreement
shall be conclusive. Unless otherwise expressly stated herein, in the event of any inconsistency
between the terms of the Plan and this Agreement, the terms of the Plan shall control. The
headings of the paragraphs of this Agreement have been included for convenience of reference only,
are not to be considered a part hereof and shall in no way modify or restrict any of the terms or
provisions hereof.
16.
Rules by Committee
. The rights of Participant and obligations of the Company hereunder
shall be subject to such reasonable rules and regulations as the Committee may adopt from time to
time hereafter.
17.
Definitions
. As used in this Agreement, the terms set forth below shall have the
following respective meanings:
(a) “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;
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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.
(b) “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.
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(c) “Common Stock” shall mean the common stock, par value $.01 per share, of the Company.
(d) “Disability” shall mean permanently disabled (completely unable to perform Participant’s
duties as defined in the benefit plans of the Company).
(e) “Exchange Act” shall mean the Securities Exchange Act of 1934, as amended.
(f) “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.
(g) “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.
(h) “Fair Market Value” means the fair market value of a share of Common Stock as most
recently fixed and determined (prior to the date of the event giving rise to the use and
application of such term) as follows: (i) if shares of Common Stock are listed on a national
securities exchange, the mean between the highest and lowest sales price per share of Common Stock
on the consolidated transaction reporting system for the principal national securities exchange on
which shares of Common Stock are listed on that date, or, if there shall have been no such sale so
reported on that date, on the last preceding date on which such a sale was so reported, (ii) if
shares of Common Stock are not so listed but are quoted on the Nasdaq National Market, the mean
between the highest and lowest sales price per share of Common Stock reported by the Nasdaq
National Market on that date, on the last preceding date on which such a sale was so reported,
(iii) if the Common Stock is not so listed or quoted, the mean between the closing bid and asked
price on that date, or, if there are no quotations available for such date, on the last preceding
date on which such quotations shall be available, as reported by the Nasdaq Stock market, or, if
not reported by the Nasdaq Stock Market, by the National Quotation Bureau Incorporated.
(i) “Person” shall mean any individual, firm, corporation, partnership, association, trust,
unincorporated organization or other entity.
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(k) “Subsidiary” mean, with respect to any Person, (i) a corporation a majority of whose
Voting Stock is at the time, directly or indirectly, owned by such Person, by one or more
Subsidiaries of such Person or by such Person and one or more Subsidiaries thereof or (ii) any
other Person (other than a corporation), including, without limitation, a joint venture, in which
such Person, one or more Subsidiaries thereof or such Person and one or more Subsidiaries thereof,
directly or indirectly, at the date of determination thereof, have at least majority ownership
interest entitled to vote in the election of directors, managers or trustees thereof (or other
Persons performing similar functions).
(l) “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).
18.
Entire Agreement
. Subject to the provisions of any applicable written employment
agreement between Participant and the Company or any Subsidiary, Participant and the Company hereby
declare and represent that no promise or agreement not herein expressed has been made and that this
Agreement contains the entire agreement between the parties hereto with respect to the PSU Award,
the RSU Award and the SAR Award and replaces and makes null and void any prior agreements, oral or
written, between Participant and the Company regarding the PSU Award, the RSU Award and the SAR
Award.
19.
Participant Acceptance
. Participant shall signify acceptance of the terms and conditions
of this Agreement by electronic signature or by signing in the space provided at the end hereof and
returning a signed copy to the Company.
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LENNOX INTERNATIONAL INC.
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By:
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Name:
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Title:
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ACCEPTED:
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Signed:
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«First» «Last»
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Date:
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«Date»
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