Exhibit 10.1
Execution version
SEVENTH AMENDMENT TO
SECOND AMENDED AND RESTATED RECEIVABLES PURCHASE AGREEMENT
THIS SEVENTH AMENDMENT TO SECOND AMENDED AND RESTATED RECEIVABLES PURCHASE
AGREEMENT(this “Amendment”), dated as of November 26, 2008, is entered into, by
and among LENNOX INDUSTRIES INC., an Iowa corporation, (“Lennox” or the “Master
Servicer”), LPAC CORP., a Delaware corporation (“LPAC” or the “Company”), MARKET
STREET FUNDING LLC (“Market Street”), the investors named in the Purchase
Agreement (defined below), PNC BANK, NATIONAL ASSOCIATION (“PNC”) YC SUSI TRUST
(“Yorktown”), BANK OF AMERICA, NATIONAL ASSOCIATION (the “Yorktown Agent”) and
THE YORKTOWN INVESTORS and consented to by LENNOX INTERNATIONAL INC. (the
“Assurance Provider”). Capitalized terms used and not otherwise defined herein
are used as defined in the Purchase Agreement (as defined below).
WHEREAS, LPAC, Lennox, Market Street, the investors named therein, PNC,
Yorktown, the Yorktown Agent, and the Yorktown Investors are party to that
certain Second Amended and Restated Receivables Purchase Agreement, dated as of
June 16, 2003 (as amended, supplemented or otherwise modified through the date
hereof, the “Original Purchase Agreement”); and
WHEREAS, the parties hereto desire to amend the Original Purchase Agreement as
set forth herein.
NOW THEREFORE, in consideration of the premises and the other mutual covenants
contained herein, the parties hereto agree as follows:
SECTION 1. Market Street Termination.
Upon the payment on the Effective Date by the Seller to the Market Street
Purchaser Agent for the benefit of the Market Street Investors of all CP Costs,
Earned Discount, Principal, Program Fees and Unused Fees accrued through
November 25, 2008, Market Street, the Market Street Purchaser Agent, the Market
Street Investors and the Market Street Purchaser Group shall cease to be parties
to the Transaction Documents for all purposes and, Market Street, the Market
Street Purchaser Agent, the Market Street Investors and the Market Street
Purchaser Group hereby assign all of their respective right, title and interest
in, to and under each Asset Tranche funded by the Market Street Purchaser Group
to the Seller and none of Market Street, the Market Street Purchaser Agent, the
Market Street Investors and the Market Street Purchaser Group shall have any
rights, obligations or duties under any of the Transaction Documents from and
after the Effective Date.

 

 

--------------------------------------------------------------------------------

 

SECTION 2. Amendments to the Original Purchase Agreement.
Effective as of the Effective Date, the Original Purchase Agreement is hereby
amended to reflect the changes marked in the conformed copy of the Receivables
Purchase Agreement attached as Exhibit A hereto.
SECTION 3. Representations and Warranties.
Each Seller Party hereby certifies that, subject to the effectiveness of this
Amendment, each of the representations and warranties set forth in Article VI of
the Receivables Purchase Agreement is true and correct on the date hereof, as if
each such representation and warranty were made on the date hereof.
SECTION 4. Purchase Agreement in Full Force and Effect as Amended.
Except as specifically amended hereby, the Purchase Agreement shall remain in
full force and effect. All references to the Purchase Agreement shall be deemed
to mean the Purchase Agreement as modified hereby. This Amendment shall not
constitute a novation of the Purchase Agreement, but shall constitute an
amendment thereof. The parties hereto agree to be bound by the terms and
conditions of the Purchase Agreement, as amended by this Amendment, as though
such terms and conditions were set forth herein.
SECTION 5. Consent of Assurance Provider.
The Assurance Provider hereby consents to the amendments to the Purchase
Agreement set forth in this Amendment.
SECTION 6. Effective Date.
This Amendment shall become effective as of the date (the “Effective Date”) on
which each of the parties hereto has executed this Amendment and the renewal fee
payable pursuant to the Fee Letter has been received by the Yorktown Purchaser
Agent.
SECTION 7. Miscellaneous.
(a) This Amendment may be executed in any number of counterparts, and by the
different parties hereto on the same or separate counterparts, each of which
shall be deemed to be an original instrument but all of which together shall
constitute one and the same agreement. Delivery of an executed counterpart of a
signature page by facsimile or other electronic transmission shall be effective
as delivery of a manually executed counterpart of this Amendment.
(b) The descriptive headings of the various sections of this Amendment are
inserted for convenience of reference only and shall not be deemed to affect the
meaning or construction of any of the provisions hereof.

 

2

--------------------------------------------------------------------------------

 

(c) This Amendment may not be amended or otherwise modified except as provided
in the Agreement.
(d) THIS AMENDMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES UNDER THIS
AMENDMENT SHALL BE GOVERNED BY AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF NEW YORK.
[remainder of page intentionally left blank]

 

3

--------------------------------------------------------------------------------

 

IN WITNESS WHEREOF, the parties have caused this Amendment to be executed by
their respective officers thereunto duly authorized, as of the date first above
written.

            LPAC CORP.,
as Seller
      By:           Name:           Title:      

            LENNOX INDUSTRIES INC.,
as Master Servicer
      By:           Name:           Title:      

[additional signatures to follow]
[Signature page to Seventh Amendment To Second Amended And Restated Receivables
Purchase Agreement]

 

--------------------------------------------------------------------------------

 

            MARKET STREET FUNDING LLC,
as a Purchaser
      By:           Name:           Title:      

            PNC BANK, NATIONAL ASSOCIATION,
as Market Street Purchaser Agent and
Market Street Investor
      By:           Name:           Title:      

[additional signatures to follow]
[Signature page to Seventh Amendment To Second Amended And Restated Receivables
Purchase Agreement]

 

--------------------------------------------------------------------------------

 

            YC SUSI TRUST,
as the Yorktown Purchaser
      By:   Bank of America, National Association,         as Administrative
Trustee            By:           Name:           Title:      

            BANK OF AMERICA, NATIONAL ASSOCIATION,
as the Yorktown Investor
      By:           Name:           Title:      

            BANK OF AMERICA, NATIONAL ASSOCIATION,
as the Yorktown Purchaser Agent
      By:           Name:           Title:      

[additional signatures to follow]
[Signature page to Seventh Amendment To Second Amended And Restated Receivables
Purchase Agreement]

 

--------------------------------------------------------------------------------

 

            Acknowledged and consented to by:

LENNOX INTERNATIONAL INC.,     as Assurance Provider       By:           Name:  
        Title:      

[end of signatures]
[Signature page to Seventh Amendment To Second Amended And Restated Receivables
Purchase Agreement]

 

--------------------------------------------------------------------------------

 

Exhibit A
COMPARISON OF CONFORMED RECEIVABLES PURCHASE AGREEMENT
REFLECTING AMENDMENTS
[see attached]

 

--------------------------------------------------------------------------------

 

Exhibit A
 
SECOND AMENDED AND RESTATED RECEIVABLES PURCHASE AGREEMENT
Dated as of June 16, 2003
Among
LPAC CORP.
as the Seller
and
LENNOX INDUSTRIES INC.,
as the Master Servicer
and
YC SUSI Trust
as a Purchaser
and
BANK OF AMERICA, NATIONAL ASSOCIATION
as Administrative Agent and Yorktown Purchaser Agent
 

 

 

--------------------------------------------------------------------------------

 

TABLE OF CONTENTS

              Page  
 
       
Article I Purchases and Reinvestments
    2  
Section 1.1 Commitments to Purchase; Limits on Purchasers’ Obligations
    2  
Section 1.2 Purchase Procedures; Assignment of the Purchasers’ Interests
    3  
Section 1.3 Reinvestments of Certain Collections; Payment of Remaining
Collections
    3  
Section 1.4 Asset Interest
    6  
Article II Computational Rules
    6  
Section 2.1 Selection of Asset Tranches
    6  
Section 2.2 Computation of Invested Amount and Purchaser’s Tranche Investment
    7  
Section 2.3 Computation of Concentration Limits and Unpaid Balance
    7  
Section 2.4 Computation of Earned Discount
    7  
Section 2.5 Estimates of Earned Discount Rate, Fees, Etc.
    8  
Article III Settlements
    8  
Section 3.1 Settlement Procedures
    8  
Section 3.2 Deemed Collections; Reduction of Invested Amount, Etc.
    12  
Section 3.3 Payments and Computations, Etc.
    13  
Section 3.4 Treatment of Collections and Deemed Collections
    14  
Article IV Fees and Yield Protection
    18  
Section 4.1 Fees
    18  
Section 4.2 Yield Protection
    18  
Section 4.3 Funding Losses
    20  
Article V Conditions of Purchases
    20  
Section 5.1 Reserved
    20  
Section 5.2 Conditions Precedent to All Purchases and Reinvestments
    20  
Article VI Representations and Warranties
    21  
Section 6.1 Representations and Warranties of the Seller Parties
    21  
Article VII General Covenants of the Seller Parties
    25  
Section 7.1 Affirmative Covenants of the Seller Parties
    25  
Section 7.2 Reporting Requirements of the Seller Parties
    27  
Section 7.3 Negative Covenants of the Seller Parties
    29  
Section 7.4 Separate Corporate Existence of the Seller
    31  
Article VIII Administration and Collection
    34  
Section 8.1 Designation of Master Servicer
    34  
Section 8.2 Duties of Master Servicer
    35  
Section 8.3 [Reserved]
    36  
Section 8.4 Servicer Defaults
    36  
Section 8.5 Rights of the Administrative Agent
    37  
Section 8.6 Responsibilities of the Seller Parties
    38  
Section 8.7 Further Action Evidencing Purchases and Reinvestments
    38  
Section 8.8 Application of Collections
    39  
Article IX Security Interest
    39  
Section 9.1 Grant of Security Interest
    39  
Section 9.2 Further Assurances
    40  
Section 9.3 Remedies
    40  

 

i

--------------------------------------------------------------------------------

 

              Page  
 
       
Article X Liquidation Events
    40  
Section 10.1 Liquidation Events
    40  
Section 10.2 Remedies
    43  
Article XI The Administrative Agent
    43  
Section 11.1 Administrative Authorization and Action
    43  
Section 11.2 Administrative Agent’s Reliance, Etc.
    44  
Section 11.3 Yorktown Purchaser Agent Authorization and Action
    44  
Section 11.4 Yorktown Purchaser Agent’s Reliance, Etc.
    44  
Article XII Assignment of The Purchaser’s Interest
    45  
Section 12.1 Restrictions on Assignments
    45  
Section 12.2 Rights of Assignee
    46  
Section 12.3 Terms and Evidence of Assignment
    46  
Section 12.4 Rights of Liquidity Banks
    46  
Article XIII Indemnification
    46  
Section 13.1 Indemnities by the Seller
    46  
Section 13.2 Indemnities by Master Servicer
    49  
Article XIV Miscellaneous
    49  
Section 14.1 Amendments, Etc
    49  
Section 14.2 Notices, Etc
    50  
Section 14.3 No Waiver; Remedies
    50  
Section 14.4 Binding Effect; Survival
    50  
Section 14.5 Costs, Expenses and Taxes
    51  
Section 14.6 No Proceedings
    52  
Section 14.7 Confidentiality of Seller Information
    52  
Section 14.8 Captions and Cross References
    54  
Section 14.9 Integration
    54  
Section 14.10 Governing Law
    54  
Section 14.11 Waiver Of Jury Trial
    55  
Section 14.12 Consent To Jurisdiction; Waiver Of Immunities
    55  
Section 14.13 Execution in Counterparts
    55  
Section 14.14 No Recourse Against Other Parties
    56  
Section 14.15 Severability of Provisions
    56  

APPENDIX

     
Appendix A
  Definitions

SCHEDULES

     
Schedule 6.1(i)
  Description of Material Adverse Changes
Schedule 6.1(n)
  List of Offices of the Master Servicer and the Seller where Records are Kept
Schedule 6.1(o)
  List of Lockbox Banks
Schedule 14.2
  Notice Addresses

 

ii

--------------------------------------------------------------------------------

 

EXHIBITS

     
Exhibit 1.2(a)
  Form of Purchase Request
Exhibit 3.1(a)
  Form of Information Package
Exhibit 3.1(a)-2
  Form of Weekly Report
Exhibit A-1
  Form of Lockbox Agreement
Exhibit B
  Form of Certificate of Financial Officer
Exhibit C
  Credit and Collection Policy of Lennox

 

iii

--------------------------------------------------------------------------------

 

SECOND AMENDED AND RESTATED RECEIVABLES PURCHASE AGREEMENT
Dated as of June 16, 2003
THIS IS A SECOND AMENDED AND RESTATED RECEIVABLES PURCHASE AGREEMENT (the
“Agreement”) among:
(1) LPAC CORP., a Delaware corporation (together with its successors and
permitted assigns, the “Seller”),
(2) LENNOX INDUSTRIES INC., an Iowa corporation (together with its successors,
“Lennox”), as master servicer hereunder (in such capacity, together with any
successor master servicer appointed pursuant to Section 8.1, the “Master
Servicer”, Lennox in its capacity as the Master Servicer, together with the
Seller, each a “Seller Party” and collectively the “Seller Parties”),
(3) YC SUSI Trust, a Delaware Statutory Trust (the “Yorktown Purchaser”), and
(4) BANK OF AMERICA, NATIONAL ASSOCIATION, a national banking association (“Bank
of America”), as administrative agent for the Purchasers (in such capacity,
together with any successors thereto in such capacity, the “Administrative
Agent”) and as purchaser agent for the Yorktown Purchaser and the Yorktown
Investors (in such capacity, together with any successors thereto in such
capacity, the “Yorktown Purchaser Agent”).
and amends and restates in its entirety that certain Amended and Restated
Receivables Purchase Agreement dated as of March 23, 2001 by and among the
parties, as the same may have been and may be amended from time to time (the
“Existing Agreement”).
Unless otherwise indicated, capitalized terms used in this Agreement are defined
in Appendix A.
Background
1. The Originators own 100% of the issued and outstanding capital stock of the
Seller.
2. The Originators are engaged in the heating, ventilating, air conditioning and
refrigeration businesses.
3. Each of the Originators and the Seller has entered into the Sale Agreement
pursuant to which the Originators have transferred, and hereafter will transfer,
to the Seller all of their respective right, title and interest in and to the
Pool Receivables and certain related property.

 

 

--------------------------------------------------------------------------------

 

4. The Seller has requested the Purchasers, and the Purchasers have agreed,
subject to the terms and conditions contained in this Agreement, to purchase
from the Seller from time to time undivided percentage interests, referred to
herein as the Asset Interest, in Pool Receivables and related property.
5. The Seller and the Purchasers also desire that, subject to the terms and
conditions of this Agreement, certain of the daily Collections in respect of the
Asset Interest be reinvested in Pool Receivables, which reinvestment shall
constitute part of the Asset Interest.
6. Bank of America has been requested, and is willing, to act as the
Administrative Agent and the Yorktown Purchaser Agent under this Agreement.
7. The parties wish to amend and restate the Existing Agreement as hereinafter
set forth.
NOW, THEREFORE, in consideration of the premises and the mutual agreements
herein contained, the parties hereto hereby agree as follows:
Article I
Purchases and Reinvestments
Section 1.1 Commitments to Purchase; Limits on Purchasers’ Obligations.
Upon the terms and subject to the conditions of this Agreement (including,
without limitation, Article V), from time to time during the Revolving Period,
prior to the Termination Date, the Seller may request that the Purchasers
purchase from the Seller ownership interests in Pool Receivables and Related
Assets, and the Yorktown Purchaser may, in its sole discretion, make such
purchase or, if Yorktown Purchaser shall decline to make such purchase, the
Yorktown Investors shall make such purchase (in any such case, each being a
“Purchase”); provided that no Purchase shall be made by any Purchaser if, after
giving effect thereto, i) the Invested Amount would exceed $125,000,000 (as
adjusted pursuant to Section 3.2(b)) (the “Purchase Limit”), ii) such Purchaser
Group’s Purchaser Group Invested Amount would exceed the related Purchaser Group
Limit or iii) the Asset Interest, expressed as a percentage of Net Pool Balance,
would exceed 100% (the “Allocation Limit”); and provided, further that each
Purchase made pursuant to this Section 1.1 shall have a purchase price equal to
at least $1,000,000 and shall be an integral multiple of $100,000.
Notwithstanding anything to the contrary herein, the amount available for any
Purchase hereunder shall be calculated based on the most recently delivered
Information Package and not based on the most recently delivered Interim
Information Package; provided, however that no Purchases shall be permitted
hereunder if the calculations in any Interim Information Package delivered after
the most recently delivered Information Package show that (i) the Invested
Amount would exceed the Purchase Limit, (ii) any Purchase Group Invested Amount
shall exceed the related Purchaser Group Limit, or (iii) the Asset Interest,
expressed as a percentage of Net Pool Balance would exceed the Allocation Limit.

 

2

--------------------------------------------------------------------------------

 

Section 1.2 Purchase Procedures; Assignment of the Purchasers’ Interests.
(a) Purchase Request. Each Purchase from the Seller by the Purchasers shall be
made on notice from the Seller to each Purchaser Agent (on behalf of the related
Purchaser) received by such Purchaser Agent not later than 12:00 noon (New York
City time) on the second Business Day preceding the date of such proposed
Purchase. Each such notice of a proposed Purchase shall be substantially in the
form of Exhibit 1.2(a) and shall specify, among other items, the desired amount
and date of such Purchase. Each Purchaser Agent shall promptly upon receipt
notify the related Purchaser of any such notice. The Seller shall not request
more than one Purchase in any calendar week.
(b) Funding of Purchase. On the date of each Purchase, each Purchaser shall,
upon satisfaction of the applicable conditions set forth in Article V, make
available to the Seller its Pro Rata Share of the amount of the Purchase in same
day funds by wire transfer to an account designated in writing by the Seller.
(c) Assignment of Asset Interests. The Seller hereby sells, assigns and
transfers to the Purchasers on a pro rata basis, effective on and as of the date
of each Purchase and each Reinvestment by the Purchasers hereunder, the Asset
Interest.
Section 1.3 Reinvestments of Certain Collections; Payment of Remaining
Collections.
(a) On the close of business on each day during the period from the date of the
first Purchase to the Termination Date, the Master Servicer will, out of all
Collections received on such day from Pool Receivables and Related Assets:
(i) determine the portion of the Collections attributable to the Asset Interest
by multiplying (A) the amount of such Collections times (B) the lesser of
(1) the Asset Interest and (2) 100%;
(ii) out of the portion of such Collections allocated to the Asset Interest
pursuant to clause (i) above, identify and hold in trust for the Purchasers
(provided that unless otherwise requested by any Purchaser Agent, on behalf of
the related Purchaser, such Collections shall not be required to be held in a
separate account) an amount equal to the sum of the estimated amount of Earned
Discount and CP Costs accrued in respect of each Asset Tranche (based on the
rate information provided by the Administrative Agent pursuant to Section 2.5),
all other amounts due to the Purchasers or the Agents hereunder and the
Purchasers’ Share of the Servicing Fee (in each case, accrued through such day)
and not so previously identified; and
(iii) apply the Collections allocated to the Asset Interest pursuant to clause
(i) above and not required to be identified and held in trust pursuant to clause
(ii) above to the purchase from the Seller of ownership interests in Pool
Receivables and Related Assets (each such purchase being a “Reinvestment”);
provided that:
(A) if, after giving effect to such Reinvestment, (1) the Asset Interest would
exceed the Allocation Limit, (2) any Purchaser Group Invested Amount shall
exceed the related Purchaser Group Limit or (3) the Invested Amount would exceed
the Purchase Limit, then the Master Servicer shall not make such Reinvestment,
but shall identify and hold in trust for the benefit of the Purchasers, a
portion of such Collections which, together with other Collections previously
identified and then so held, shall equal the amount necessary to reduce (x) the
Invested Amount to the Purchase Limit, (y) any Purchaser Group’s Purchaser Group
Invested Amount to such Purchaser Group’s Purchase Group Limit and (z) the Asset
Interest to the Allocation Limit; and

 

3

--------------------------------------------------------------------------------

 

(B) if any of the conditions precedent to Reinvestment in clause (a), (b) and
(d) of Section 5.2, subject to the proviso set forth in Section 5.2, are not
satisfied, then the Master Servicer shall not reinvest any of such remaining
Collections, but shall identify them and hold them in trust for the benefit of
the Purchasers;
(iv) out of the portion of Collections not allocated to the Asset Interest
pursuant to clause (i) above, pay to the Master Servicer or set aside (at the
option of the Master Servicer) the Seller’s Share of the Servicing Fee accrued
through such day and not previously paid; and
(v) pay to the Seller (A) the remaining portion of Collections not allocated to
the Asset Interest pursuant to clause (i) above and (B) the Collections applied
to Reinvestment pursuant to clause (iii) above.
(b) Unreinvested Collections. The Master Servicer shall identify and hold in
trust for the benefit of the Purchasers all Collections which, pursuant to
clause (iii) of Section 1.3(a), may not be reinvested in the Pool Receivables
and Related Assets, provided that unless otherwise requested by any Purchaser
Agent, such Collections need not be held in a segregated account. If, prior to
the date when such Collections are required to be paid to any Purchaser Agent
for the benefit of the related Purchaser pursuant to Section 1.3(c)(iv), the
amount of Collections so identified exceeds the amount, if any, necessary to
reduce (i) the Invested Amount to the Purchase Limit, (ii) each Purchaser
Group’s Invested Amount to the related Purchaser Group Limit and (iii) the Asset
Interest to the Allocation Limit, and the conditions precedent to Reinvestment
set forth in clauses (a), (b) and (d) of Section 5.2, subject to the proviso set
forth in Section 5.2, are satisfied, then the Master Servicer shall apply such
Collections (or, if less, a portion of such Collections equal to the amount of
such excess) to the making of a Reinvestment.
(c) Payment of Amounts.
(i) The Master Servicer shall pay all amounts identified pursuant to Section
1.3(a)(ii) in respect of Earned Discount on an Asset Tranche funded by a
Liquidity Funding or an Alternate Funding, as the case may be, to each Purchaser
Agent, on the related Purchaser’s behalf, on the last day of the then current
Yield Period for an Asset Tranche, as provided in Section 3.1.
(ii) The Master Servicer shall pay all amounts of Collections identified
pursuant to Section 1.3(a)(ii) in respect of Earned Discount on any Asset
Tranche funded by Commercial Paper Notes to each Purchaser Agent, on the related
Purchaser’s behalf, on the Settlement Date following the last day of each CP
Accrual Period for such Asset Tranche, as provided in Section 3.1.

 

4

--------------------------------------------------------------------------------

 

(iii) The Master Servicer shall pay all amounts of Collections identified
pursuant to Section 1.3(a)(ii) and not applied pursuant to clauses (i) or (ii)
above to each Purchaser Agent, on the related Purchaser’s behalf, on each
Settlement Date for each Collection Period, as provided in Section 3.1.
(iv) The Master Servicer shall pay all amounts identified pursuant to Section
1.3(b) to each Purchaser Agent (A) on the last day of the then current Yield
Period for any Asset Tranche funded by an Alternate Funding or a Liquidity
Funding of such Purchaser Group, as provided in Section 3.1(b), in an amount not
exceeding the related Purchaser’s Tranche Investment of such Asset Tranche, and
(B) on the last day of the then current CP Accrual Period for any Asset Tranche
funded by Commercial Paper Notes, as provided in Section 3.1, in an amount not
exceeding the related Purchaser’s Tranche Investment of such Asset Tranche.
(d) Funds Under Sale Agreement. Upon the written request of the Agents, on
behalf of the Purchasers, given at any time when (i) based on the most recent
Information Package, or Interim Information Package, as the case may be, either
(A) the Asset Interest would exceed the Allocation Limit, (B) any Purchaser
Group’s Invested Amount would exceed the related Purchaser Group Limit or,
(C) the Invested Amount would exceed the Purchase Limit, or (ii) a Liquidation
Event or Unmatured Liquidation Event shall have occurred and be continuing, the
Seller shall identify all funds that under the Sale Agreement would be applied
to repay principal of the Initial Seller Notes (as defined in the Sale
Agreement) owing to the Originators. The Seller may make withdrawals of such
funds only for the purposes of (1) at any time, purchasing Receivables from an
Originator in accordance with the Sale Agreement; (2) on the Settlement Date for
any Collection Period, making payments in accordance with the last sentence of
Section 3.1(c)(ii), and (3) on the Settlement Date for any Collection Period,
if, on the basis of the most recent Information Package or Interim Information
Package, as the case may be, and after giving effect to any payment made to the
Master Servicer on such date pursuant to the last sentence of
Section 3.1(c)(ii), (I) the Invested Amount does not exceed the Purchase Limit,
(II) no Purchaser Group Invested Amount exceeds the related Purchaser Group
Limit and (III) the Asset Interest does not exceed the Allocation Limit, and
provided that no Liquidation Event or Unmatured Liquidation Event shall have
occurred and be continuing, repaying principal of the Initial Seller Notes in
accordance with this Agreement and the Sale Agreement.

 

5

--------------------------------------------------------------------------------

 

Section 1.4 Asset Interest.
(a) Components of Asset Interest. On any date the Asset Interest will represent
the Investors’ undivided percentage ownership interest in all then outstanding
Pool Receivables and all Related Assets with respect to such Pool Receivables as
at such date.
(b) Computation of Asset Interest. On any date, the Asset Interest will be equal
to the percentage equivalent of the following fraction:
IA + RR
NPB
where:

             
 
IA =   the Invested Amount on the date of such computation;  
 
         
 
RR =   the Required Reserve on the date of such computation; and  
 
         
 
NPB =   the Net Pool Balance on the date of such computation;

provided, however, that the Asset Interest during the Liquidation Period shall
equal 100% and shall at no time exceed 100%.
(c) Frequency of Computation. The Asset Interest shall be computed (i) as
provided in Section 3.1, as of the Cut-Off Date for each Collection Period, and
(ii) on the Settlement Date following each Reporting Date, after giving effect
to the payments made pursuant to Section 3.1. In addition, at any time, any
Purchaser Agent, on behalf of the related Purchaser, may require the Master
Servicer to provide an interim report (an “Interim Information Package”), based
on the information then available to the Master Servicer, for purposes of
computing the Asset Interest, any Purchaser Group Limit or the Purchase Limit as
of any other date, and the Master Servicer agrees to do so within five (5) (or
three (3), if a Liquidation Event or a Credit Event has occurred and is
continuing) Business Days of its receipt of such Purchaser Agent’s request (such
date, the “Interim Reporting Date”).
Article II
Computational Rules
Section 2.1 Selection of Asset Tranches.
Each Purchaser Agent shall, from time to time for purposes of computing Earned
Discount on that portion of the Asset Interest funded with Alternate Fundings or
Liquidity Fundings made by the related Purchaser Group, as the case may be,
divide such portion of the Asset Interest into Asset Tranches. The applicable
Earned Discount Rate may be different for each Asset Tranche funded by a
Liquidity Funding or an Alternate Funding, as the case may be. The related
Purchaser Group Invested Amount shall be allocated to each Asset Tranche by the
related Purchaser Agent, on the related Purchaser’s behalf, to reflect the
funding sources for the Asset Interest, so that:
(a) there will be a single Asset Tranche equal to the excess of the related
Purchaser Group Invested Amount over the aggregate amount allocated at such time
pursuant to clause (b) below, which Asset Tranche shall reflect the portion of
the Asset Interest funded by Commercial Paper Notes of the related Purchaser;
and
(b) there may be one or more Asset Tranches, selected by a Purchaser Agent, on
the related Purchaser’s behalf, reflecting the portion or portions of the Asset
Interest funded by outstanding Alternate Fundings or Liquidity Fundings of such
Purchaser Group, as the case may be.

 

6

--------------------------------------------------------------------------------

 

Section 2.2 Computation of Invested Amount and Purchaser’s Tranche Investment.
In making any determination of the Invested Amount, any Purchaser Group Invested
Amount and any Purchaser’s Tranche Investment, the following rules shall apply:
(a) the Invested Amount and each Purchaser Group Invested Amount, as the case
may be, shall not be considered reduced by any allocation, setting aside or
distribution of any portion of Collections unless such Collections shall have
been actually delivered hereunder to the related Purchaser Agent, on the related
Purchaser’s behalf;
(b) the Invested Amount and each Purchaser Group Invested Amount, as the case
may be, shall not be considered reduced by any distribution of any portion of
Collections if at any time such distribution is rescinded or must otherwise be
returned for any reason; and
(c) if there is any reduction in the Invested Amount or any Purchaser Group
Invested Amount, as the case may be, there shall be a corresponding reduction in
the related Purchaser’s Tranche Investment with respect to one or more Asset
Tranches selected by a Purchaser Agent, on the related Purchaser’s behalf, in
its discretion.
Section 2.3 Computation of Concentration Limits and Unpaid Balance.
The Obligor Concentration Limits and the aggregate Unpaid Balance of Pool
Receivables of any Obligor and its Affiliated Obligors (if any) shall be
calculated as if such Obligor and its Affiliated Obligors were one Obligor.
Section 2.4 Computation of Earned Discount.
In making any determination of Earned Discount, the following rules shall apply:
(a) each Purchaser Agent, on the related Purchaser’s behalf, shall determine the
Earned Discount accruing with respect to each Asset Tranche funded by an
Alternate Funding or a Liquidity Funding of such Purchaser Group, as the case
may be, for each Yield Period, in accordance with the definition of Earned
Discount;
(b) no provision of this Agreement shall require the payment or permit the
collection of Earned Discount in excess of the maximum permitted by applicable
law; and
(c) the Earned Discount for any Asset Tranche shall not be considered paid by
any distribution if at any time such distribution is rescinded or must otherwise
be returned for any reason.
It is the intent of the Yorktown Purchaser to fund its portion of the Asset
Interest by the issuance of Commercial Paper Notes. If, for any reason, the
Yorktown Purchaser is unable, or determines that it is undesirable, to issue
Commercial Paper Notes to fund its portion of the Asset Interest, or is unable
to repay such Commercial Paper Notes upon the maturity thereof, such Purchaser
will draw on Liquidity Fundings or an Alternate Funding, to the extent
available. If any Purchaser funds itself through Liquidity Fundings or an
Alternate Funding, the Earned Discount payable by the Seller will be based on
the Bank Rate.

 

7

--------------------------------------------------------------------------------

 

Section 2.5 Estimates of Earned Discount Rate, Fees, Etc.
For purposes of determining the amounts required to be identified by Master
Servicer pursuant to Section 1.3, each Purchaser Agent, on the related
Purchaser’s behalf, shall notify the Master Servicer (and, if Lennox is not the
Master Servicer, the Seller) from time to time of the related Purchaser’s
Tranche Investment of each Asset Tranche, the Earned Discount Rate applicable to
each Asset Tranche funded by an Alternate Funding or Liquidity Funding of such
Purchaser Group, as the case may be, and the rates at which fees and other
amounts are accruing hereunder. It is understood and agreed that (a) the CP
Costs for any Asset Tranche funded by the issuance of Commercial Paper Notes for
any Purchaser Group are determined in arrears and may change from one applicable
CP Accrual Period to the next, (b) the Earned Discount Rate for any Asset
Tranche funded by an Alternate Funding or a Liquidity Funding of any Purchaser
Group may change from one applicable Yield Period to the next, and the Bank Rate
used to calculate the Earned Discount Rate may change from time to time during
an applicable Yield Period, (c) certain rate information provided by any
Purchaser Agent to the Master Servicer shall be based upon such Purchaser
Agent’s good faith estimate, (d) the amount of Earned Discount actually accrued
with respect to an Asset Tranche funded by an Alternate Funding or a Liquidity
Funding of any Purchaser Group during any Yield Period may exceed, or be less
than, the amount identified with respect thereto by Master Servicer, and (e) the
amount of fees or other amounts payable by the Seller hereunder which have
accrued hereunder with respect to any Collection Period may exceed, or be less
than, the amount identified with respect thereto by the Master Servicer. Failure
to identify any amount so accrued shall not relieve the Master Servicer of its
obligation to remit Collections to each Purchaser Agent, for the benefit of the
related Purchaser, with respect to such accrued amount, as and to the extent
provided in Section 3.1.
Article III
Settlements
Section 3.1 Settlement Procedures.
The parties hereto will take the following actions with respect to each
Collection Period:
(a) Information Package. On each Reporting Date the Master Servicer shall
deliver to each Purchaser Agent, on the related Purchaser’s behalf, the relevant
Information Package.
(b) Earned Discount and CP Costs; Other Amounts Due. Not later than 12:00 noon
(Atlanta, Georgia, time) on:
(i) the Business Day before the last day of each Yield Period, each Purchaser
Agent shall notify the Master Servicer of the amount of Earned Discount accrued
with respect to any Asset Tranche funded by an Alternate Funding or a Liquidity
Funding of the related Purchaser Group, as the case may be, corresponding to
such Yield Period;

 

8

--------------------------------------------------------------------------------

 

(ii) the fifth (5th) Business Day before each Reporting Date, each Purchaser
Agent shall notify the Master Servicer of the CP Costs accrued during the most
recently ended CP Accrual Period with respect to any Asset Tranche funded with
Commercial Paper Notes of such Purchaser Group during all or any portion of such
CP Accrual Period;
(iii) the last day of each Yield Period, the Master Servicer shall pay to each
Agent for the benefit of the related Purchaser the amount of the related Earned
Discount;
(iv) each Settlement Date, the Master Servicer shall pay to each Agent for the
benefit of the related Purchaser the amount of the CP Costs for the related CP
Accrual Period;
(v) the Business Day before each Reporting Date, each Purchaser Agent, on behalf
of the related Purchaser, shall notify the Master Servicer of all Broken Funding
Costs, fees and other amounts accrued and payable by the Seller under this
Agreement to the related Purchaser during the prior calendar month (other than
amounts described in clause (c) below); and
(vi) each Settlement Date, the Master Servicer shall pay to each Purchaser
Agent, for the benefit of the related Purchaser, the amount of any Broken
Funding Costs, fees and other amounts (to the extent of Collections attributable
to the Asset Interest funded by such Purchaser Group during such Collection
Period) for such Collection Period.
Such payments shall be made out of amounts identified pursuant to Section 1.3
for such payment; provided, however, that to the extent Collections attributable
to the Asset Interest funded by such Purchaser Group during such Collection
Period are not sufficient to make such payment, such payment shall be made out
of funds paid by the Master Servicer to the Seller (which amounts the Seller
hereby agrees to pay to the Master Servicer), up to the aggregate amount of
Collections applied to Reinvestments under Section 1.3(a) or (b) during the
related Reporting Period.
(c) Asset Interest Computations.
(i) On each Reporting Date, the Master Servicer shall compute, as of the related
Cut-Off Date and based upon the assumptions in the next sentence, (A) the Asset
Interest, (B) the amount of the reduction or increase (if any) in the Asset
Interest since the next preceding Cut-Off Date, (C) the excess (if any) of the
Asset Interest over the Allocation Limit, (D) the excess (if any) of any
Purchaser Group Invested Amount over such Purchaser Group Limit and (E) the
excess (if any) of the Invested Amount over the Purchase Limit. Such
calculations shall be based upon the assumptions that the (1) information in the
Information Package is correct, and (2) Collections identified pursuant to
Section 1.3(b) will be paid to each Purchaser Agent, for the benefit of the
related Purchaser, on the Settlement Date for such Collection Period.

 

9

--------------------------------------------------------------------------------

 

(ii) If, according to the computations made pursuant to clause (i) above, (A)
the Asset Interest exceeds the Allocation Limit, (B) any Purchaser Group
Invested Amount exceeds such Purchaser Group Limit or (C) the Invested Amount
exceeds the Purchase Limit, then on the related Settlement Date, the Master
Servicer shall pay to the applicable Purchaser Agent, for the benefit of the
related Purchaser, (to the extent of Collections during the related Collection
Period attributable to all Asset Tranches funded by such Purchaser Group and not
previously paid to such Purchaser Agent) the amount necessary to reduce (1) the
Invested Amount to the Purchase Limit, (2) any Purchaser Group Invested Amount
to such Purchaser Group Limit and (3) the Asset Interest to the Allocation
Limit. Such payment shall be made out of amounts identified pursuant to
Section 1.3 for such purpose and, to the extent such amounts were not so
identified, the Seller hereby agrees to pay such amounts to the Master Servicer
to the extent of Collections applied to Reinvestment under Section 1.3 during
the relevant Collection Period.
(iii) In addition to the payments described in clause (ii) above and clause (iv)
below, during the Liquidation Period, the Master Servicer shall pay to each
Agent, for the benefit of the related Purchaser, all amounts identified pursuant
to Section 1.3 on (A) the last day of the current Yield Period for any Asset
Tranche funded by an Alternate Funding or a Liquidity Funding funded by such
Purchaser Group, as the case may be, in an amount not exceeding such Purchaser’s
Tranche Investment of such Asset Tranche, and (B) the last day of the each CP
Accrual Period, in an amount not exceeding such Purchaser’s Tranche Investment
of the Asset Tranche funded by Commercial Paper Notes issued by such Purchaser
Group.
(iv) On the Interim Reporting Date for each Interim Reporting Period, the Master
Servicer shall compute, as of the related Interim Cut-Off Date and based upon
the assumptions in the next sentence, (A) the Asset Interest, (B) the amount of
the reduction or increase (if any) in the Asset Interest since the next
preceding Cut-Off Date or Interim Cut-Off Date, (C) the excess (if any) of the
Asset Interest over the Allocation Limit, (D) the excess (if any) of any
Purchaser Group Invested Amount over the related Purchaser Group Limit and
(E) the excess (if any) of the Invested Amount over the Purchase Limit. Such
calculations shall be based upon the assumptions that (1) the information in the
Interim Information Package is correct, and (2) Collections identified pursuant
to Section 1.3(b) will be paid to each Purchaser Agent, for the benefit of the
related Purchaser, on the Settlement Date for such Collection Period.
(v) If, according to the computations made pursuant to clause (iv) above, (A)
the Asset Interest exceeds the Allocation Limit, (B) any Purchaser Group
Invested Amount exceeds the related Purchaser Group Limit or (C) the Invested
Amount exceeds the Purchase Limit, then on the Interim Settlement Date for such
Interim Reporting Period, the Master Servicer shall pay to the applicable
Purchaser Agent, for the benefit of the related Purchaser, (to the extent of
Collections during the related Interim Reporting Period attributable to all
Asset Tranches funded by the related Purchaser Group and not previously paid to
such Purchaser Agent) the amount necessary to reduce (1) the Invested Amount to
the Purchase Limit, (2) any Purchaser Group Invested Amount to the related
Purchaser Group Limit and (3) the Asset Interest to the Allocation Limit. Such
payment shall be made out of amounts identified pursuant to Section 1.3 for such
purpose and, to the extent such amounts were not so identified, the Seller
hereby agrees to pay such amounts to the Master Servicer to the extent of
Collections applied to Reinvestment under Section 1.3 during the relevant
Interim Reporting Period.

 

10

--------------------------------------------------------------------------------

 

(d) Order of Application. Upon receipt by each Purchaser Agent, on the related
Purchaser’s behalf, of funds distributed pursuant to this Section 3.1, such
Purchaser Agent shall apply them to the items specified in the subclauses below,
in the order of priority of such subclauses:
(i) to accrued Earned Discount, CP Costs and Broken Funding Costs, plus any
previously accrued Earned Discount, CP Costs and Broken Funding Costs not paid,
to the extent owing to such Purchaser Group;
(ii) to the related Purchaser’s Share of the accrued and unpaid Servicing Fee
(if the Master Servicer is not Lennox or its Affiliate);
(iii) to such Purchaser Group’s Pro Rata Share of the Program Fee and the Unused
Fee accrued during such Collection Period, plus any previously accrued Program
Fee and the Unused Fee not paid on a prior Settlement Date;
(iv) to the reduction of the Invested Amount on a pro-rata basis and the
reduction of any Purchaser Group Invested Amount, to the extent such reduction
is required under Section 3.1(c);
(v) to other accrued and unpaid amounts owing to any Purchaser or any Agent
hereunder (except Earned Discount on any Asset Tranche funded by an Alternate
Funding or a Liquidity Funding of any Purchaser Group, as the case may be, which
has accrued but is not yet overdue under Section 1.3(c));
(vi) to the related Purchaser’s Share of the accrued and unpaid Servicing Fee
(if the Master Servicer is Lennox or its Affiliate); and
(vii) to purchase newly originated Receivables during the Revolving Period;
provided, however, that all amounts received on any Interim Settlement Date or
Weekly Settlement Date shall be applied (x) with respect to amounts received on
any Weekly Settlement Date, as provided in Section 3.1(c)(ii) and (y) with
respect to amounts received on any Interim Settlement Date, as provided in
Section 3.1(c)(v).
(e) Non-Distribution of Servicing Fee. Each Purchaser Agent hereby consents
(which consent may be revoked at any time), to the retention by the Master
Servicer of the amounts (if any) identified pursuant to Section 1.3 in respect
of the Servicing Fee, in which case no distribution shall be made in respect of
the Servicing Fee pursuant to clause (d) above.
(f) Delayed Payment. If on any day described in this Section 3.1 (or in
Section 1.3(c) in respect of accrued Earned Discount on Asset Tranches funded by
Alternate Fundings or Liquidity Fundings of any Purchaser Group, as the case may
be, or accrued CP Costs on Asset Tranches funded by the issuance of Commercial
Paper Notes issued by any Purchaser Group), because Collections during the
relevant CP Accrual Period or Yield Period were less than the aggregate amounts
payable, the Master Servicer shall not make any payment otherwise required, the
next available Collections in respect of the Asset Interest shall be applied to
such payment, and no Reinvestment shall be permitted hereunder until such amount
payable has been paid in full.

 

11

--------------------------------------------------------------------------------

 

Section 3.2 Deemed Collections; Reduction of Invested Amount, Etc.
(a) Deemed Collections. If on any day:
(i) the Unpaid Balance of any Pool Receivable is:
(A) reduced as a result of any defective, rejected or returned merchandise or
services, any cash discount, or any other adjustment by any Seller Party or any
Affiliate thereof, or as a result of any tariff or other governmental or
regulatory action, or
(B) reduced or canceled as a result of a setoff in respect of any claim by the
Obligor thereof (whether such claim arises out of the same or a related or an
unrelated transaction, including without limitation, any setoff or claim arising
as a result of any amount at any time owed by any Originator in connection with
any account receivable owed by any such Originator to such Obligor), or
(C) reduced on account of the obligation of any Seller Party or any Affiliate
thereof to pay to the related Obligor any rebate or refund, or
(D) less than the amount included in calculating the Net Pool Balance for
purposes of any Information Package or Interim Information Package, as the case
may be (for any reason other than such Receivable becoming a Defaulted
Receivable), or
(ii) any of the representations or warranties of the Seller set forth in Section
6.1(j), (l) or (p) were not true when made with respect to any Pool Receivable,
or any of the representations or warranties of the Seller set forth in
Section 6.1(l) are no longer true with respect to any Pool Receivable, or any
Pool Receivable is repurchased by an Originator pursuant to the Sale Agreement,
then, on such day, the Seller shall be deemed to have received a Collection of
such Pool Receivable
(A) in the case of clause (i) above, in the amount of such reduction or
cancellation or the difference between the actual Unpaid Balance and the amount
included in calculating such Net Pool Balance, as applicable; and
(B) in the case of clause (ii) above, in the amount of the Unpaid Balance of
such Pool Receivable.
Collections deemed received by the Seller under this Section 3.2(a) are herein
referred to as “Deemed Collections.”

 

12

--------------------------------------------------------------------------------

 

(b) Seller’s Optional Reduction of the Invested Amount. The Seller may at any
time elect to reduce the Invested Amount and each Purchaser Group Invested
Amount as follows:
(i) the Seller shall give each Purchaser Agent, on the related Purchaser’s
behalf, at least five (5) Business Days’ prior written notice of such reduction
(including the amount of such proposed reduction and the proposed date on which
such reduction will commence),
(ii) on the proposed date of commencement of such reduction and on each day
thereafter, the Master Servicer shall refrain from reinvesting Collections
pursuant to Section 1.3 until the amount thereof not so reinvested shall equal
the desired amount of reduction, and
(iii) the Master Servicer shall hold such Collections in trust for the
Purchasers, pending payment to the related Purchaser Agent, as provided in
Section 1.3;
provided that:
(A) the amount of any such reduction shall be in (1) an amount of $1,000,000,
(2) an integral multiple thereof or (3) an amount equal to the remaining
Invested Amount,
(B) the Seller shall use reasonable efforts to attempt to choose a reduction
amount, and the date of commencement thereof, so that such reduction shall
commence and conclude in the same Collection Period,
(C) unless the Invested Amount shall be reduced to zero, after giving effect to
such reduction, the Invested Amount will be at least $1,000,000, and
(D) each reduction of the Invested Amount shall be done on a pro rata basis and
shall result in a corresponding reduction in each Purchaser Group Invested
Amount.
Section 3.3 Payments and Computations, Etc.
(a) Payments. All amounts to be paid to any Purchaser Agent or any other Person
or deposited by the Seller or the Master Servicer hereunder (other than amounts
payable under Section 4.2) shall be paid or deposited in accordance with the
terms hereof no later than 12:00 noon (New York City time) on the day when due
in lawful money of the United States of America in same day funds to the related
Purchaser Agent Account, or to such other account at the bank named therein or
at such other bank as any Purchaser Agent on behalf of the related Purchaser may
designate by written notice to the Person making such payment.
(b) Late Payments. The Seller or the Master Servicer, as applicable, shall, to
the extent permitted by law, pay to the Person to whom payment is due interest
on all amounts not paid or deposited when due hereunder at 2% per annum above
the Base Rate, payable on demand, provided, however, that such interest rate
shall not at any time exceed the maximum rate permitted by applicable law.
(c) Method of Computation. All computations of interest, CP Costs, Broken
Funding Costs, Earned Discount, any fees payable under Section 4.1 and any other
fees payable by the Seller to any Purchaser or any Purchaser Agent hereunder
shall be made on the basis of a year of 360 days for the actual number of days
(including the first day but excluding the last day) elapsed.

 

13

--------------------------------------------------------------------------------

 

Section 3.4 Treatment of Collections and Deemed Collections.
The Seller shall forthwith deliver to the Master Servicer all Deemed
Collections, and the Master Servicer shall hold or distribute such Deemed
Collections as Earned Discount, CP Costs, Broken Funding Costs, accrued
Servicing Fee, repayment of the Invested Amount or any Purchaser Group Invested
Amount and to other accrued amounts owing hereunder to the same extent as if
such Deemed Collections had actually been received on the date of such delivery
to the Master Servicer. If Collections are then being paid to any Agent, on
behalf of the Purchasers, or its designee, or to lock boxes or accounts directly
or indirectly owned or controlled by the Administrative Agent on behalf of the
Purchasers, the Master Servicer shall forthwith cause such Deemed Collections to
be paid to each Purchaser Agent, on the related Purchaser’s behalf, or its
designee or to such lock boxes or accounts, as applicable, or as the Agents
shall request. So long as the Seller shall hold any Collections (including
Deemed Collections) required to be paid to the Master Servicer or any Agent, it
shall hold such Collections in trust for the benefit of the Agents, on behalf of
the Purchasers, and shall clearly mark its records to reflect such trust;
provided that unless the Administrative Agent shall have requested it in writing
to do so, the Seller shall not be required to hold such Collections in a
separate deposit account containing only such Collections.
Article IIIA
Additional Alternate Investor Provisions
Section 3A.1 Assignment to Alternate Investors.
(a) Assignment Amounts. At any time on or prior to the Funding Termination Date,
if the Purchaser Agent on behalf of the related Conduit Investor so elects, by
written notice to the Administrative Agent, the Seller hereby irrevocably
requests and directs that such designated Conduit Investor assign, and such
Conduit Investor does hereby assign effective on the Assignment Date referred to
below all or such portions as may be elected by such Conduit Investor of, its
interest in the related Purchaser Group Invested Amount and the Asset Interest
at such time to the Alternate Investors that are members of such Purchaser Group
pursuant to this Section 3A.1 (each such portion, an “Assignment Amount”) and
the Seller hereby agrees to pay the amounts described in Section 3A.1(b);
provided, however, that unless such assignment is an assignment of all of the
Conduit Investor’s interest in the related Purchaser Group Invested Amount and
the Asset Interest in whole on or after the Funding Termination Date, no such
assignment shall take place pursuant to this Section 3A.1 if a Liquidation Event
described in Section 10.1(j) shall then exist; and provided, further, that no
such assignment shall take place pursuant to this Section 3A.1 at a time when an
Event of Bankruptcy with respect to such Conduit Investor exists. No further
documentation or action on the part of a Conduit Investor or the Seller shall be
required to exercise the rights set forth in the immediately preceding sentence,
other than the giving of the

 

14

--------------------------------------------------------------------------------

 

notice by the Purchaser Agent on behalf of such Conduit Investor referred to in
such sentence and the delivery by the related Purchaser Agent of a copy of such
notice to each Alternate Investor that is a member of such Purchaser Group (the
date of any such notice being the “Assignment Date”). Each Alternate Investor in
a Purchaser Group hereby agrees, unconditionally and irrevocably and under all
circumstances, without setoff, counterclaim or defense of any kind, to pay the
full amount of its Assignment Amount on such Assignment Date to the related
Conduit Investor in immediately available funds to an account designated by the
related Purchaser Agent. Upon payment of its Assignment Amount, each such
Alternate Investor shall acquire an interest in the Asset Interest and the
related Purchaser Group Invested Amount equal to its pro rata share (based on
the outstanding portions of the related Purchaser Group Invested Amount funded
by it) of such Purchaser Group Invested Amount. Upon any assignment in whole by
a Conduit Investor to the Alternate Investors in the related Purchaser Group on
or after the Funding Termination Date as contemplated hereunder, such Conduit
Investor shall cease to make any additional Purchases or Reinvestments
hereunder. At all times prior to the Funding Termination Date, nothing herein
shall prevent any Conduit Investor from making a subsequent Purchase or
Reinvestment hereunder, in its sole discretion, following any assignment
pursuant to this Section 3A.1 or from making more than one assignment pursuant
to this Section 3A.1.
(b) Seller’s Obligation to Pay Certain Amounts; Additional Assignment Amount.
The Seller shall pay to each Purchaser Agent, for the account of the related
Conduit Investor, in connection with any assignment by such a Conduit Investor
to the related Alternate Investors pursuant to this Section 3A.1, an aggregate
amount equal to all Earned Discount to accrue through the end of the current
Earned Discount Period to the extent attributable to the portion of the related
Purchaser Group Invested Amount so assigned to such Alternate Investors (which
Earned Discount shall be determined for such purpose using the Yorktown CP Rate
most recently determined by the related Purchaser Agent), plus all other amounts
due and payable to such Conduit Investor hereunder (other than the related
Purchaser Group Invested Amount and other than any Earned Discount not described
above). If the Seller fails to make payment of such amounts at or prior to the
time of assignment by such Conduit Investor to the related Alternate Investors,
such amount shall be paid by the related Alternate Investors (in accordance with
their respective pro rata shares) to such Conduit Investor as additional
consideration for the interests assigned to such Alternate Investors and the
amount of the related Purchaser Group Invested Amount hereunder held by the
related Alternate Investors shall be increased by an amount equal to the
additional amount so paid by such Alternate Investors.
(c) Payments to Agent’s Account. After any assignment in whole by a Conduit
Investor to the related Alternate Investors pursuant to this Section 3A.1 at any
time on or after the Funding Termination Date, all payments to be made hereunder
by the Seller or the Servicer to any assigning Conduit Investor shall be made to
the related Purchaser Agent’s account as such account shall have been notified
to the Seller and the Servicer.
(d) Recovery of related Purchaser Group Invested Amount. In the event that the
aggregate of the Assignment Amounts paid by the Alternate Investors of any
Purchaser Group pursuant to this Section 3A.1 on any Assignment Date occurring
on or after the Funding Termination Date is less than the related Purchaser
Group Invested Amount of the related Conduit Investor on such Assignment Date,
then to the extent Collections thereafter received by the Agent hereunder in
respect of the related Purchaser Group Invested Amount exceed the aggregate of
the unrecovered Assignment Amounts and related Purchaser Group Invested Amount
funded by the Alternate Investors, such excess shall be remitted by the Agent to
the Conduit Investor (or to the Administrator on its behalf) for the account of
the Conduit Investor.

 

15

--------------------------------------------------------------------------------

 

Section 3A.2 Downgrade of Alternate Investor.
(a) If at any time on or prior to the Funding Termination Date, the short term
debt rating of any Alternate Investor shall be “A 2” or “P 2” from S&P or
Moody’s, respectively, with negative credit implications, such Alternate
Investor, upon request of the Purchaser Agent of the Purchaser Group of which
such Alternate Investor is a member, shall, within thirty (30) days of such
request, assign its rights and obligations hereunder to another financial
institution (which institution’s short term debt shall be rated at least “A 2”
or “P 2” from S&P or Moody’s, respectively, and which shall not be so rated with
negative credit implications and which is acceptable to the Conduit Investor and
the Agent). If the short term debt rating of an Alternate Investor shall be “A
3” or “P 3”, or lower, from S&P or Moody’s, respectively (or such rating shall
have been withdrawn by S&P or Moody’s), such Alternate Investor, upon request of
the Agent, shall, within five (5) Business Days of such request, assign its
rights and obligations hereunder to another financial institution (which
institution’s short term debt shall be rated at least “A 2” or “P 2”, from S&P
or Moody’s, respectively, and which shall not be so rated with negative credit
implications and which is acceptable to the related Conduit Investor and the
related Purchaser Agent). In either such case, if any such Alternate Investor
shall not have assigned its rights and obligations under this Agreement within
the applicable time period described above (in either such case, the “Required
Downgrade Assignment Period”), the related Purchaser Agent on behalf of the
related Conduit Investor shall have the right to require such Alternate Investor
to pay upon one (1) Business Day’s notice at any time after the Required
Downgrade Assignment Period (and each such Alternate Investor hereby agrees in
such event to pay within such time) to the related Purchaser Agent an amount
equal to such Alternate Investor’s unused commitment (a “Downgrade Draw”) for
deposit by the related Purchaser Agent into an account, in the name of such
Purchaser Agent (a “Downgrade Collateral Account”), which shall be in
satisfaction of such Alternate Investor’s obligations to make Purchases and to
pay its Assignment Amount upon an assignment from the related Conduit Investor
in accordance with Section 3A.1; provided, however, that if, during the Required
Downgrade Assignment Period, such Alternate Investor delivers a written notice
to the related Purchaser Agent of its intent to deliver a direct pay irrevocable
letter of credit pursuant to this proviso in lieu of the payment required to
fund the Downgrade Draw, then such Alternate Investor will not be required to
fund such Downgrade Draw. If any Alternate Investor gives the related Purchaser
Agent such notice, then such Alternate Investor shall, within one (1) Business
Day after the Required Downgrade Assignment Period, deliver to the related
Purchaser Agent a direct pay irrevocable letter of credit in favor of such
Purchaser Agent in an amount equal to the unused portion of such Alternate
Investor’s commitment, which letter of credit shall be issued through an United
States office of a bank or other financial institution (i) whose short term debt
ratings by S&P and Moody’s are at least equal to the ratings assigned by such
statistical rating organization to the commercial paper notes issued by the
related Conduit Investor and (ii) that is acceptable to the Conduit Investor and
the related Purchaser Agent. Such letter of credit shall provide that the
related Purchaser Agent may draw thereon for payment of any Purchase or
Assignment Amount payable by such Alternate Investor which is not paid hereunder
when required, shall expire no earlier than the Funding Termination Date and
shall otherwise be in form and substance acceptable to the related Purchaser
Agent.

 

16

--------------------------------------------------------------------------------

 

(b) If any Alternate Investor shall be required pursuant to Section 3A.2(a) to
fund a Downgrade Draw, then the related Purchaser Agent shall apply the monies
in the Downgrade Collateral Account applicable to such Alternate Investor’s pro
rata share of the Purchases required to be made by the related Alternate
Investors, to any Assignment Amount payable by such Alternate Investor pursuant
to Section 3A.1 at the times, in the manner and subject to the conditions
precedent set forth in this Agreement. The deposit of monies in such Downgrade
Collateral Account by any Alternate Investor shall not constitute a Purchase or
the payment of any Assignment Amount (and such Alternate Investor shall not be
entitled to interest on such monies except as provided below in this
Section 3A.2(b), unless and until (and then only to the extent that) such monies
are used to fund Purchases or to pay any Assignment Amount pursuant to the first
sentence of this Section 3A.2(b). The amount on deposit in such Downgrade
Collateral Account shall be invested by the related Purchaser Agent in such
investments selected by such Purchaser Agent in its sole discretion. The related
Purchaser Agent shall remit to such Alternate Investor, on the last Business Day
of each month, the income actually received thereon. Unless required to be
released as provided below in this subsection, Collections received by a
Purchaser Agent in respect of such Alternate Investor’s portion of the related
Purchaser Group Invested Amount shall be deposited in the Downgrade Collateral
Account for such Alternate Investor. Amounts on deposit in such Downgrade
Collateral Account shall be released to such Alternate Investor (or the stated
amount of the letter of credit delivered by such Alternate Investor pursuant to
subsection (a) above may be reduced) within one (1) Business Day after each
Reporting Date following the Funding Termination Date to the extent that, after
giving effect to the distributions made and received by the Investors on or
prior to such Reporting Date, the amount on deposit in such Downgrade Collateral
Account would exceed such Alternate Investor’s pro rata share (determined as of
the day prior to the Funding Termination Date) of 102% of the Purchaser Group
Invested Amount then funded by the related Conduit Investor. All amounts
remaining in such Downgrade Collateral Account shall be released to such
Alternate Investor no later than the Business Day immediately following the
earliest of (i) the effective date of any replacement of such Alternate Investor
or removal of such Alternate Investor as a party to this Agreement, (ii) the
date on which such Alternate Investor shall furnish the Agent with confirmation
that such Alternate Investor shall have short term debt ratings of at least “A
2” or “P 2” from S&P and Moody’s, respectively, without negative credit
implications, and (iii) the Funding Termination Date. Nothing in this
Section 3A.2 shall affect or diminish in any way any such downgraded Alternate
Investor’s commitment to the Seller or the Conduit Investor or such downgraded
Alternate Investor’s other obligations and liabilities hereunder and under the
other Transaction Documents.
(c) Notwithstanding the other provisions of this Section 3A.2, an Alternate
Investor shall not be required to make a Downgrade Draw (or provide for the
issuance of a letter of credit in lieu thereof) pursuant to Section 3A.2(a) at a
time when such Alternate Investor has a downgrade collateral account (or letter
of credit in lieu thereof) established pursuant to any document or agreement
providing liquidity or credit support to the related Conduit Investor relating
to the transactions contemplated by this Agreement to which it is a party in an
amount at least equal to the unused commitment of such Alternate Investor, and
the related Purchaser Agent may apply monies in such downgrade collateral
account in the manner described in Section 3A.2(b) as if such downgrade
collateral account were a Downgrade Collateral Account.

 

17

--------------------------------------------------------------------------------

 

Article IV
Fees and Yield Protection
Section 4.1 Fees.
The Seller shall pay to each Purchaser Agent for the benefit of the related
Purchaser Group the fees and other amounts set forth in the Fee Letters, all
such fees and other amounts to be paid from time to time in the amounts set
forth in each such Fee Letter.
Section 4.2 Yield Protection.
(a) If (i) Regulation D or (ii) any Regulatory Change occurring after June 19,
2000:
(A) shall subject an Affected Party to any tax, duty or other charge with
respect to the portion of the Asset Interest owned by or funded by it, or any
obligations or right to make Purchases or Reinvestments or to provide funding
therefor, or shall change the basis of taxation of payments to the Affected
Party of any portion of the Invested Amount or Earned Discount owned by, owed to
or funded in whole or in part by it or any other amounts due under this
Agreement in respect of the portion of the Asset Interest owned by or funded by
it or its obligations or rights, if any, to make Purchases or Reinvestments or
to provide funding therefor (except for (1) taxes based on, or measured by, net
income, or changes in the rate of tax on or determined by reference to the
overall net income, of such Affected Party imposed by the United States of
America, by the jurisdiction in which such Affected Party’s principal executive
office is located and, if such Affected Party’s principal executive office is
not in the United States of America, by the jurisdiction where such Affected
Party’s principal office in the United States is located or, (2) franchise
taxes, taxes on, or in the nature of, doing business taxes or capital taxes); or
(B) shall impose, modify or deem applicable any reserve (including, without
limitation, any reserve imposed by the Federal Reserve Board, but excluding any
reserve included in the determination of Earned Discount), special deposit or
similar requirement against assets of any Affected Party, deposits or
obligations with or for the account of any Affected Party or with or for the
account of any affiliate (or entity deemed by the Federal Reserve Board to be an
affiliate) of any Affected Party, or credit extended by any Affected Party; or
(C) shall change the amount of capital maintained or required or requested or
directed to be maintained by any Affected Party; or

 

18

--------------------------------------------------------------------------------

 

(D) shall impose any other condition affecting any Asset Interest owned or
funded in whole or in part by any Affected Party, or its obligations or rights,
if any, to make Purchases or Reinvestments or to provide funding therefor; or
(E) shall change the rate for, or the manner in which the Federal Deposit
Insurance Corporation (or a successor thereto) assesses, deposit insurance
premiums or similar charges;
and the result of any of the foregoing is or would be
(A) to increase the cost to or to impose a cost on (1) an Affected Party funding
or making or maintaining any Purchases or Reinvestments, any purchases,
reinvestments, or loans or other extensions of credit under any Liquidity
Agreement, or any commitment of such Affected Party with respect to any of the
foregoing, or (2) any Agent for continuing its or the Seller’s relationship with
any Purchaser, in each case, in an amount deemed to be material by such Affected
Party,
(B) to reduce the amount of any sum received or receivable by an Affected Party
under this Agreement or under any Liquidity Agreement, or
(C) in the reasonable determination of such Affected Party, to reduce the rate
of return on the capital of an Affected Party as a consequence of its
obligations hereunder or arising in connection herewith to a level below that
which such Affected Party could otherwise have achieved,
then, within thirty days after demand by such Affected Party (which demand shall
be accompanied by a certificate setting forth, in reasonable detail, the basis
of such demand and the methodology for calculating, and the calculation of, the
amounts claimed by the Affected Party), the Seller shall pay directly to such
Affected Party such additional amount or amounts as will compensate such
Affected Party for such additional or increased cost or such reduction;
provided, however, the Seller shall only be required to compensate any such
Affected Party for such amounts to the extent that such Affected Party is
requiring all of its other similarly situated customers to compensate it for
such amounts.
(b) Each Affected Party will promptly notify the Seller and each Agent of any
event of which it has knowledge (including any future event that, in the
judgment of such Affected Party, is reasonably certain to occur) which will
entitle such Affected Party to compensation pursuant to this Section 4.2;
provided, however, no failure to give or delay in giving such notification shall
adversely affect the rights of any Affected Party to such compensation.
(c) In determining any amount provided for or referred to in this Section 4.2,
an Affected Party may use any reasonable averaging and attribution methods
(consistent with its ordinary business practices) that it (in its reasonable
discretion) shall deem applicable. Any Affected Party when making a claim under
this Section 4.2 shall submit to the Seller the certificate (referred to in
subsection (a) above) as to such increased cost or reduced return (including
calculation thereof in reasonable detail), which statement shall, in the absence
of demonstrable error, be conclusive and binding upon the Seller.
(d) For the avoidance of doubt, any interpretation of Fin. 46R or FAS 140 by the
Financial Accounting Standards Board shall constitute an adoption, change,
request or directive subject to this Section 4.2.

 

19

--------------------------------------------------------------------------------

 

Section 4.3 Funding Losses.
In the event that any Purchaser or any Liquidity Bank shall actually incur any
loss or expense (including any loss or expense incurred by reason of the
liquidation or reemployment of deposits or other funds acquired by such
Purchaser through the issuance of Commercial Paper Notes to fund any Purchase,
such Liquidity Bank to make any Liquidity Funding or maintain any Liquidity
Funding or to make any Alternate Funding or maintain any Alternate Funding) as a
result of (a) any settlement with respect to the related Purchaser’s Tranche
Investment of the portion of any Asset Tranche being made by such Purchaser
Group on any day other than the scheduled last day of an applicable CP Accrual
Period or Yield Period with respect thereto (it being understood that the
foregoing shall not apply to any portion of the Invested Amount that is accruing
Earned Discount calculated by reference to the Base Rate), or (b) any Purchase
not being made in accordance with a request therefor under Section 1.2, then,
upon written notice from any Purchaser Agent to the Seller and the Master
Servicer, the Seller shall pay to the Master Servicer, and the Master Servicer
shall pay to such Purchaser Agent for the account of the related Purchaser or
such Liquidity Bank, as the case may be, the amount of such loss or expense.
Such written notice (which shall include the methodology for calculating, and
the calculation of, the amount of such loss or expense, in reasonable detail)
shall, in the absence of demonstrable error, be conclusive and binding upon the
Seller and the Master Servicer.
Article V
Conditions of Purchases
Section 5.1 Reserved.
Section 5.2 Conditions Precedent to All Purchases and Reinvestments.
Each Purchase and each Reinvestment shall be subject to the conditions precedent
that on the date of such Purchase or Reinvestment the following statements shall
be true (and the Seller, by accepting the amount of such Purchase or by
receiving the proceeds of such Reinvestment, and each other Seller Party, upon
such acceptance or receipt by the Seller, shall be deemed to have certified
that):
(a) the representations and warranties contained in Section 6.1 are correct in
all material respects on and as of such day as though made on and as of such day
and shall be deemed to have been made on such day,
(b) no event has occurred and is continuing, or would result from such Purchase
or Reinvestment, that constitutes a Liquidation Event or Unmatured Liquidation
Event,
(c) after giving effect to each proposed Purchase or Reinvestment, the Invested
Amount will not exceed the Purchase Limit, no Purchaser Group Invested Amount
will exceed the related Purchaser Group Limit and the Asset Interest will not
exceed the Allocation Limit,

 

20

--------------------------------------------------------------------------------

 

(d) the Termination Date shall not have occurred,
(e) in the case of a Purchase, each Purchaser Agent shall have timely received
an appropriate notice of the proposed Purchase in accordance with
Section 1.2(a),
(f) a completed Information Package or Interim Information Package (if
applicable) shall have been delivered by the Master Servicer to each Purchaser
Agent, on the related Purchaser’s behalf, as of the applicable Reporting Date or
Interim Reporting Date, as the case may be,
(g) both prior to and after giving effect to each proposed Purchase or
Reinvestment, the requirements of the Credit Agreement and any other agreement
evidencing any Material Indebtedness of Lennox International with respect to
transfers of assets and creation of liens shall not have been violated,
(h) after giving effect to each proposed Purchase or Reinvestment, the Weighted
Average Term (with respect to Receivables included in the Net Pool Balance)
shall not exceed 45 days, and
(i) such other agreements, instruments, certificates, opinions and other
documents as the Administrative Agent may reasonably request have been
delivered;
provided, however, the absence of the occurrence and continuance of an Unmatured
Liquidation Event shall not be a condition precedent to any Reinvestment or any
Purchase on any day which does not cause the Invested Amount, after giving
effect to such Reinvestment or Purchase, to exceed the Invested Amount as of the
opening of business on such day.
Article VI
Representations and Warranties
Section 6.1 Representations and Warranties of the Seller Parties.
Each Seller Party represents and warrants as to itself, except when specifically
provided, in which case, the specified Seller Party represents and warrants as
follows:
(a) Organization and Good Standing; Ownership. Its jurisdiction of organization
is correctly set forth in the preamble to this Agreement. It is duly organized
and is a “registered organization” as defined in the UCC under the laws of that
jurisdiction and no other state or jurisdiction, and such jurisdiction must
maintain a public record showing the organization to have been organized. It is
validly existing as a corporation in good standing under the laws of its state
of organization, with power and authority to own its properties and to conduct
its business as such properties are presently owned and such business is
presently conducted. The Seller had at all relevant times, and now has, all
necessary power, authority, and legal right to acquire and own the Pool
Receivables and Related Assets. The Originators own directly all the issued and
outstanding capital stock of the Seller.

 

21

--------------------------------------------------------------------------------

 

(b) Due Qualification. It is duly qualified to do business as a foreign
corporation in good standing, and has obtained all necessary licenses and
approvals, in all jurisdictions in which the ownership or lease of property or
the conduct of its business requires such qualification, licenses or approvals,
except where the failure to be so qualified or have such licenses or approvals
would not have a Material Adverse Effect.
(c) Power and Authority; Due Authorization. It (i) has all necessary power,
authority and legal right (A) to execute and deliver this Agreement and the
other Transaction Documents to which it is a party, (B) to carry out the terms
of the Transaction Documents to which it is a party, (C) in the case of the
Master Servicer, to service the Receivables and the Related Assets in accordance
with this Agreement and the Sale Agreement, and (D) in the case of the Seller,
sell and assign the Asset Interest on the terms and conditions herein provided,
and (ii) has duly authorized by all necessary corporate action the execution,
delivery and performance of this Agreement and the other Transaction Documents
and, in the case of the Seller, the sales and assignments described in clause
(i)(D) above.
(d) Valid Sale; Binding Obligations. (i) This Agreement constitutes a valid
sale, transfer, and assignment of the Asset Interest to the Purchasers,
enforceable against creditors of, and purchasers from, the Seller, and (ii) this
Agreement and each other Transaction Document signed by such Seller Party
constitutes, a legal, valid and binding obligation of such Seller Party,
enforceable in accordance with its terms, except as enforceability may be
limited by bankruptcy, insolvency, reorganization, or other similar laws from
time to time in effect affecting the enforcement of creditors’ rights generally
and by general principles of equity, regardless of whether such enforceability
is considered in a proceeding in equity or at law.
(e) No Violation. The execution, delivery and performance by it of this
Agreement and the other Transaction Documents to which it is a party and the
consummation by it of the transactions contemplated hereby and thereby will not
(i) conflict with, result in any breach of any of the terms and provisions of,
or constitute (with or without notice or lapse of time or both) a default under,
its articles or certificate of incorporation or by-laws, or any material
indenture, loan agreement, receivables purchase agreement, mortgage, deed of
trust, or other agreement or instrument to which it is a party or by which it or
any of its properties is bound (including, but not limited to, those agreements
or instruments evidencing Material Indebtedness of Lennox International),
(ii) result in the creation or imposition of any Lien upon any its properties
pursuant to the terms of any such material indenture, loan agreement,
receivables purchase agreement, mortgage, deed of trust, or other agreement or
instrument, other than this Agreement and the other Transaction Documents, or
(iii) violate any law or any order, rule, or regulation applicable to it of any
court or of any federal or state regulatory body, administrative agency, or
other governmental instrumentality having jurisdiction over it or any of its
properties.
(f) No Proceedings. There are no proceedings or investigations pending, or, to
its knowledge, threatened, before any Governmental Authority (i) asserting the
invalidity of this Agreement or any other Transaction Document, (ii) seeking to
prevent the sale and assignment of the Receivables under the Sale Agreement or
of the Asset Interest under this Agreement or the consummation of any of the
other transactions contemplated by this Agreement or any other Transaction
Document, or (iii) that would have a Material Adverse Effect.

 

22

--------------------------------------------------------------------------------

 

(g) Bulk Sales Act. No transaction contemplated hereby requires compliance with
any bulk sales act or similar law.
(h) Government Approvals. No authorization or approval or other action by, and
no notice to or filing with, any Governmental Authority or regulatory body is
required for the due execution, delivery and performance by it of this Agreement
and each other Transaction Document to which it is a party, except, in the case
of the Seller, for (i) the filing of the UCC financing statements referred to in
Article V, and (ii) the filing of any UCC continuation statements and amendments
from time to time required in relation to any UCC financing statements filed in
connection with this Agreement, as provided in Section 8.7, all of which, at the
time required in Article V or Section 8.7, as applicable, shall have been duly
made and shall be in full force and effect.
(i) Financial Condition. (i) The consolidated and consolidating balance sheets
of the Lennox International and its consolidated subsidiaries as at December 31,
2002, and the related statements of income and shareholders’ equity of Lennox
International and its consolidated subsidiaries for the fiscal year then ended,
certified by KPMG LLP, independent certified public accountants, copies of which
have been furnished to the Agents, fairly present in all material respects the
consolidated financial condition of Lennox International and its consolidated
subsidiaries as at such date and the consolidated results of the operations of
Lennox International and its consolidated subsidiaries for the period ended on
such date, all in accordance with GAAP consistently applied, (ii) since
December 31, 2002 there has been no material adverse change in any such
financial condition, business or operations except as described in
Schedule 6.1(i), (iii) the balance sheet of the Seller as at March 31, 2003,
certified by the chief financial officer or treasurer of the Seller by means of
a Certificate of Financial Officer in the form attached hereto as Exhibit B,
copies of which have been furnished to the Agents, fairly present in all
material respects the financial condition, assets and liabilities of the Seller
as at such date, all in accordance with GAAP consistently applied, and
(iv) since June 9, 2000 there has been no material adverse change in the
Seller’s financial condition, business or operations.
(j) Nature of Receivables. Each Receivable constitutes an “account” as such term
is defined in the UCC.
(k) Margin Regulations. The use of all funds obtained by such Seller Party under
this Agreement or any other Transaction Document will not conflict with or
contravene any of Regulation T, U and X promulgated by the Federal Reserve Board
from time to time.
(l) Quality of Title. (i) This Agreement creates a valid and continuing security
interest (as defined in the applicable UCC) in the Collateral in favor of the
Administrative Agent for the benefit of the Secured Parties, which security
interest is prior to all other Liens and is enforceable as such against
creditors of and purchasers from the Seller, (ii) the Seller owns and has good
and marketable title to the Collateral free and clear of any Lien (other than
any Lien arising solely as the result of any action taken by any Secured Parties
(or any assignee thereof) or by the Administrative Agent); (iii) when any
Purchaser makes a Purchase or Reinvestment, it shall have acquired and shall at
all times thereafter continuously maintain a valid and perfected first priority
undivided percentage ownership interest to the extent of the portion of the
Asset Interest funded by the related Purchaser

 

23

--------------------------------------------------------------------------------

 

Group in the Collateral, free and clear of any Lien (other than any Lien arising
as the result of any action taken by any Secured Party (or any assignee thereof
or by the Administrative Agent); (iv) other than the security interest granted
to the Administrative Agent for the benefit of the Secured Parties pursuant to
this Agreement, the Seller has not pledged, assigned, sold or granted a security
interest in, or otherwise conveyed any of the Collateral; (v) the Seller has not
authorized the filing of, and is not aware of any financing statements against
the Seller that include a description of Collateral and (vi) the Seller has not
authorized the filing of, and is not aware of any financing statements against
the Seller that include a description of collateral covering the Collateral
other than except such as may be filed (A) in favor of the Originators in
accordance with the Contracts, (B) in favor of the Seller in connection with the
Sale Agreement or (C) in favor of the Secured Parties or the Administrative
Agent in accordance with this Agreement or in connection with any Lien arising
solely as the result of any action taken by the Secured Parties (or any assignee
thereof) or by the Administrative Agent.
(m) Accurate Reports. No Information Package or Interim Information Package (if
prepared by such Seller Party, or to the extent information therein was supplied
by such Seller Party) or other information, exhibit, financial statement,
document, book, record or report furnished or to be furnished by or on behalf of
such Seller Party to any Agent or any Purchaser pursuant to this Agreement was
or will be inaccurate in any material respect as of the date it was or will be
dated or (except as otherwise disclosed to such Agent or Purchaser at such time)
as of the date so furnished, or contained or (in the case of information or
other materials to be furnished in the future) will contain any material
misstatement of fact or omitted or (in the case of information or other
materials to be furnished in the future) will omit to state a material fact or
any fact necessary to make the statements contained therein not materially
misleading in light of the circumstances made or presented.
(n) Offices. The principal places of business and chief executive offices of the
Master Servicer and the Seller are located at the respective addresses set forth
on Schedule 14.2, and the offices where the Master Servicer and the Seller keep
all their books, records and documents evidencing Pool Receivables, the related
Contracts and all purchase orders and other agreements related to such Pool
Receivables are located at the addresses specified in Schedule 6.1(n) (or at
such other locations, notified to each Purchaser Agent, on the related
Purchaser’s behalf, in accordance with Section 7.1(f), in jurisdictions where
all action required by Section 8.5 has been taken and completed).
(o) Lockbox Accounts. The names, addresses and jurisdictions of organization of
all the Lockbox Banks, together with the account numbers of the Lockbox Accounts
of the Seller at each Lockbox Bank and the post office box numbers of the
lockboxes, are listed on Schedule 6.1(o) (or have been notified to and approved
by the Agents in accordance with Section 7.3(d)). The Seller has not granted any
Person, other than the Administrative Agent for the benefit of the Secured
Parties as contemplated by this Agreement, dominion and control of any lockbox
or Lockbox Account, or the right to take dominion and control of any such
lockbox or Lockbox Account at a future time.
(p) Eligible Receivables. Each Receivable included in the Net Pool Balance as an
Eligible Receivable on the date of any Purchase, Reinvestment or computation of
Net Pool Balance shall be an Eligible Receivable on such date.

 

24

--------------------------------------------------------------------------------

 

(q) Servicing Programs. No license or approval is required for any Agent’s use
of any program used by the Master Servicer in the servicing of the Receivables,
other than those which have been obtained and are in full force and effect.
(r) Compliance with Credit and Collection Policy. With respect to each Eligible
Receivable, it has complied in all material respects with the Credit and
Collection Policy.
(s) [Reserved].
(t) Names. Since the date of its incorporation, the Seller has not used any
corporate names, trade names or assumed names other than the name in which it
has executed this Agreement.
(u) Ownership of the Seller. Collectively, the Originators own 100% of the
issued and outstanding capital stock of the Seller, free and clear of any Lien.
Such capital stock is validly issued, fully paid and nonassessable, and there
are no options, warrants or other rights to acquire securities of the Seller.
(v) Investment Company. The Seller is not an “investment company” within the
meaning of the Investment Company Act of 1940, as amended from time to time, or
any successor statute.
(w) Taxes. Each Seller Party has filed all material tax returns and reports
required by law to have been filed by it and has paid all taxes and governmental
charges thereby shown to be owing, except for immaterial amounts, unless such
immaterial amounts give rise to a Lien, and except for any such taxes which are
not yet delinquent or are being diligently contested in good faith by
appropriate proceedings and for which adequate reserves in accordance with
generally accepted accounting principles shall have been set aside on its books.
The Seller is not aware of any judgment or tax lien filings against it.
(x) Compliance with Laws. Each Seller Party is in compliance with all applicable
laws, rules, regulations and orders, including those with respect to the Pool
Receivables and related Contracts, except where the failure to so comply would
not individually or in the aggregate have a Material Adverse Effect.
Article VII
General Covenants of the Seller Parties
Section 7.1 Affirmative Covenants of the Seller Parties.
Until the Final Payout Date, unless each Agent shall otherwise consent in
writing:
(a) Compliance With Laws, Etc. Each Seller Party will comply in all material
respects with all applicable laws, rules, regulations and orders, including
those with respect to the Pool Receivables and related Contracts, except where
the failure to so comply would not individually or in the aggregate have a
Material Adverse Effect.

 

25

--------------------------------------------------------------------------------

 

(b) Preservation of Corporate Existence. Each Seller Party will preserve and
maintain its corporate existence, status as a “registered organization”, rights,
franchises and privileges in the jurisdiction of its incorporation, and qualify
and remain qualified in good standing as a foreign corporation in each
jurisdiction where the failure to preserve and maintain such existence, rights,
franchises, privileges and qualification would have a Material Adverse Effect.
(c) Audits. Each Seller Party will (i) at any time and from time to time upon
not less than five (5) Business Days’ notice (unless a Liquidation Event has
occurred and is continuing (or any Purchaser Agent, on the related Purchaser’s
behalf, believes in good faith that a Liquidation Event has occurred and is
continuing), in which case no such notice shall be required) during such Seller
Party’s regular business hours, permit each Purchaser Agent, on the related
Purchaser’s behalf, or any of its agents or representatives, (A) to examine and
make copies of and abstracts from all books, records and documents (including,
without limitation, computer tapes and disks) in the possession or under the
control of such Seller Party relating to Pool Receivables, including, without
limitation, the related Contracts and purchase orders and other agreements, and
(B) to visit the offices and properties of such Seller Party for the purpose of
examining such materials described in clause (i)(A) next above, and to discuss
matters relating to Pool Receivables or such Seller Party’s performance
hereunder with any of the officers or employees (with notification to and
coordination with the treasurer of such Seller or his designee) of such Seller
Party having knowledge of such matters; (ii) permit each Purchaser Agent or any
of its respective agents or representatives, upon not less than five
(5) Business Days’ notice from such Purchaser Agent and the consent (which
consent shall not unreasonably be withheld or delayed) of such Seller Party
(unless a Liquidation Event has occurred and is continuing (or such Purchaser
Agent believes in good faith that a Liquidation Event has occurred and is
continuing) in which case no such notice or consent shall be required), to meet
with the independent auditors of such Seller Party, to review such auditors’
work papers and otherwise to review with such auditors the books and records of
such Seller Party with respect to the Pool Receivables and Related Assets; and
(iii) without limiting the provisions of clause (i) or (ii) next above, from
time to time, at the expense of such Seller Party, permit certified public
accountants or other auditors acceptable to each Purchaser Agent to conduct a
review of such Seller Party’s books and records with respect to the Pool
Receivables and Related Assets; provided, that, so long as no Liquidation Event
has occurred and is continuing, such reviews shall not be done more than two
(2) times in any one calendar year, provided, further that the Seller Parties
shall be responsible for the costs and expenses of one such review in any one
calendar year.
(d) Keeping of Records and Books of Account. The Master Servicer will maintain
and implement administrative and operating procedures (including, without
limitation, an ability to recreate records evidencing Pool Receivables in the
event of the destruction of the originals thereof), and keep and maintain, all
documents, books, records and other information reasonably necessary or
advisable for the collection of all Pool Receivables (including, without
limitation, records adequate to permit the daily identification of outstanding
Unpaid Balances by Obligor and related debit and credit details of the Pool
Receivables).
(e) Performance and Compliance with Receivables and Contracts. Each Seller Party
will, at its expense, timely and fully perform and comply with all material
provisions, covenants and other promises, if any, required to be observed by it
under the Contracts related to the Pool Receivables and all agreements related
to such Pool Receivables.

 

26

--------------------------------------------------------------------------------

 

(f) Location of Records. Each Seller Party will keep its chief place of business
and chief executive office, and the offices where it keeps its records
concerning the Pool Receivables, all related Contracts and all agreements
related to such Pool Receivables (and all original documents relating thereto),
at the address(es) of the Master Servicer and the Seller referred to in
Section 6.1(n) or, upon 30 days’ prior written notice to the Administrative
Agent, at such other locations in jurisdictions where all action required by
Section 8.5 shall have been taken and completed.
(g) Credit and Collection Policies. Each Seller Party will comply in all
material respects with the Credit and Collection Policy in regard to each Pool
Receivable and the related Contract.
(h) Sale Agreement. The Seller will perform and comply in all material respects
with all of its covenants and agreements set forth in the Sale Agreement, and
will enforce the performance by the Originators of their respective obligations
under the Sale Agreement.
(i) Lockbox Agreements. The Seller and the Master Servicer shall enter into a
Lockbox Agreement with Bank of America with respect to each Lockbox Bank with
respect to each Lockbox Account, and shall instruct all Obligors to deposit all
Collections to the Lockbox Accounts. Upon the establishment of the Collection
Account, if any, the Master Servicer shall instruct each Lockbox Bank to deposit
all Collections to the Collection Account. The Seller will not give any contrary
or conflicting instructions, and will, upon the request of the Master Servicer
or the Administrative Agent, confirm such instructions by the Master Servicer or
take such other action as may be reasonably required to give effect to such
instructions.
Section 7.2 Reporting Requirements of the Seller Parties.
From the date hereof until the Final Payout Date, unless each Agent, on the
Purchasers’ behalf, shall otherwise consent in writing:
(a) Quarterly Financial Statements — Lennox International. The Master Servicer
will furnish to each Purchaser Agent, on the related Purchaser’s behalf, as soon
as available and in any event within 45 days after the end of each of the first
three quarters of each fiscal year of Lennox International, copies of its
consolidated, and, to the extent otherwise available, consolidating balance
sheets and related statements of income and statements of cash flow, showing the
financial condition of Lennox International and its consolidated Subsidiaries as
of the close of such fiscal quarter and the results of its operations and the
operations of such Subsidiaries during such fiscal quarter and the then elapsed
portion of the fiscal year, together with a Certificate of Financial Officer in
the form attached hereto as Exhibit B executed by the chief financial officer or
treasurer of the Lennox International.

 

27

--------------------------------------------------------------------------------

 

(b) Annual Financial Statements — Lennox International. The Master Servicer will
furnish to each Purchaser Agent, as soon as available and in any event within
90 days after the end of each fiscal year of Lennox International, copies of its
consolidated and consolidating balance sheets and related statements of income
and statements of cash flow, showing the financial condition of Lennox
International and its consolidated Subsidiaries as of the close of such fiscal
year and the results of its operations and the operations of such Subsidiaries
during such year, all audited by KPMG LLP or other independent public
accountants of recognized national standing acceptable to each Agent and
accompanied by an opinion of such accountants (which shall not be qualified in
any material respect) to the effect that such consolidated financial statements
fairly present the financial condition and results of operations of Lennox
International on a consolidated basis (except as noted therein) in accordance
with GAAP consistently applied;
(c) Reserved.;
(d) Annual Financial Statements — Seller. The Seller will furnish to the each
Purchaser Agent, as soon as available and in any event within 90 days after the
end of each fiscal year of the Seller, copies of the financial statements of the
Seller, consisting of at least a balance sheet of the Seller for such year and
statements of earnings, cash flows and shareholders’ equity, setting forth in
each case in comparative form corresponding figures from the preceding fiscal
year, together with a Certificate of Financial Officer in the form attached
hereto as Exhibit B executed by the chief financial officer or treasurer of the
Seller;
(e) Reports to Holders and Exchanges. In addition to the reports required by
subsections (a), (b), (c) and (d) above, promptly upon any Agent’s request, the
Master Servicer will furnish or cause to be furnished to such Agent, on the
related Purchaser’s behalf, copies of any reports specified in such request
which the Master Servicer sends to any of its securityholders, and any reports,
final registration statements (excluding exhibits), and each final prospectus
and all amendments thereto that the Master Servicer files with the Securities
and Exchange Commission or any national securities exchange other than
registration statements relating to employee benefit plans and registrations of
securities for selling securities;
(f) ERISA. Promptly after the filing or receiving thereof, each Seller Party
will furnish to each Purchaser Agent, on the related Purchaser’s behalf, copies
of all reports and notices with respect to any Reportable Event defined in
Article IV of ERISA which any Seller Party or ERISA Affiliate thereof files
under ERISA with the Internal Revenue Service, the Pension Benefit Guaranty
Corporation or the U.S. Department of Labor or which such Seller Party or ERISA
Affiliate thereof receives from the Pension Benefit Guaranty Corporation, which
Reportable Event(s) individually or in the aggregate could have a Material
Adverse Effect;
(g) Liquidation Events, Etc. As soon as possible and in any event within three
(3) Business Days after obtaining knowledge of the occurrence of any Liquidation
Event, any Unmatured Liquidation Event, or any Credit Event, each Seller Party
will furnish to each Purchaser Agent, on the related Purchaser’s behalf, a
written statement of the chief financial officer, treasurer or chief accounting
officer of such Seller Party setting forth details of such event and the action
that such Seller Party will take with respect thereto;
(h) Litigation. As soon as possible and in any event within ten (10) Business
Days of any Seller Party’s knowledge thereof, such Seller Party will furnish to
each Purchaser Agent, on the related Purchaser’s behalf, notice of (i) any
litigation, investigation or proceeding which may exist at any time which could
reasonably be expected to have a Material Adverse Effect and (ii) any
development in previously disclosed litigation which development could
reasonably be expected to have a Material Adverse Effect;

 

28

--------------------------------------------------------------------------------

 

(i) [Reserved];
(j) Change in Credit and Collection Policy. Prior to its effective date, each
Seller Party will furnish to each Purchaser Agent, on the related Purchaser’s
behalf, notice of (i) any material change in the character of such Seller
Party’s business, and (ii) any material change in the Credit and Collection
Policy;
(k) Credit Event. Within five (5) Business Days of the occurrence thereof, each
Seller Party will furnish to each Purchaser Agent, on the related Purchaser’s
behalf, notice of any Credit Event; and
(l) Other. Promptly, from time to time, each Seller Party will furnish to each
Purchaser Agent, on the related Purchaser’s behalf, such other information,
documents, records or reports respecting the Receivables or the condition or
operations, financial or otherwise, of such Seller Party as such Purchaser Agent
may from time to time reasonably request in order to protect the interests of
such Purchaser Agent or the related Purchaser under or as contemplated by this
Agreement.
Section 7.3 Negative Covenants of the Seller Parties.
From June 19, 2000 until the Final Payout Date, without the prior written
consent of the Administrative Agent:
(a) Sales, Liens, Etc. (i) The Seller will not, except as otherwise provided
herein and in the other Transaction Documents, sell, assign (by operation of law
or otherwise) or otherwise dispose of, or create or suffer to exist any Lien
upon or with respect to, any Pool Receivable or any Related Asset, or any
interest therein, or any account to which any Collections of any Pool Receivable
are sent, or any right to receive income or proceeds from or in respect of any
of the foregoing (except, prior to the execution of Lockbox Agreements, set-off
rights of any bank at which any such account is maintained), and (ii) the Master
Servicer will not assert any interest in the Receivables, except as Master
Servicer.
(b) Extension or Amendment of Receivables. No Seller Party will, except as
otherwise permitted in Section 8.2(c), extend, amend or otherwise modify the
terms of any Pool Receivable, or amend, modify or waive any material term or
condition of any Contract related thereto in any way that adversely affects the
collectibility of any Pool Receivable or the Purchaser’s rights therein.
(c) Change in Credit and Collection Policy. No Seller Party will make or permit
to be made any material change in the Credit and Collection Policy, which change
would impair the collectibility of any significant portion of the Pool
Receivables or otherwise adversely affect the interests or remedies of the
Purchaser under this Agreement or any other Transaction Document.

 

29

--------------------------------------------------------------------------------

 

(d) Change in Payment Instructions to Obligors. No Seller Party will add or
terminate any bank as a Lockbox Bank from those listed in Schedule 6.1(o) or,
after Lockbox Accounts have been delivered pursuant to Section 7.1(i), make any
change in its instructions to Obligors regarding payments to be made to the
Seller or Master Servicer or payments to be made to any Lockbox Bank (except for
a change in instructions solely for the purpose of directing Obligors to make
such payments to another existing Lockbox Bank.
(e) Deposits to Collection Account. No Seller Party will deposit or otherwise
credit, or cause or permit to be so deposited or credited, to the Collection
Account, any cash or cash proceeds other than Collections of Pool Receivables.
(f) Changes to Other Documents. The Seller will not enter into any amendment or
modification of, or supplement to, the Sale Agreement or the Seller’s
certificate of incorporation.
(g) [Reserved].
(h) Seller Indebtedness. The Seller will not incur or permit to exist any
Indebtedness or liability on account of deposits or advances or for borrowed
money or for the deferred purchase price of any property or services, except
(i) indebtedness of the Seller to the Originators incurred in accordance with
the Sale Agreement, (ii) current accounts payable arising under the Transaction
Documents and not overdue and (iii) other current accounts payable arising in
the ordinary course of business and not overdue, in an aggregate amount at any
time outstanding not to exceed $10,000.
(i) Negative Pledges. No Seller Party will enter into or assume any agreement
(other than this Agreement and the other Transaction Documents) prohibiting the
creation or assumption of any Lien upon any Pool Receivables or Related Assets,
whether now owned or hereafter acquired, except as contemplated by the
Transaction Documents, or otherwise prohibiting or restricting any transaction
contemplated hereby or by the other Transaction Documents.
(j) Change of Name; Jurisdiction of Organization; Offices and Records. No Seller
Party shall change (i) its name as it appears in official filings in the
jurisdiction of its organization, (ii) its status as a “registered organization”
(within the meaning of Article 9 of any applicable enactment of the UCC),
(iii) its organizational identification number, if any, issued by its
jurisdiction of organization, or (iv) its jurisdiction of organization unless it
shall have: (A) given the Agents at least forty-five (45) days’ prior written
notice thereof; (B) at least ten (10) days prior to such change, delivered to
the Agents all financing statements, instruments and other documents requested
by the Agents in connection with such change or relocation and (C) caused an
opinion of counsel acceptable to Agents and their respective assigns to be
delivered to the Agents and such assigns that Administrative Agent’s security
interest (for the benefit of the Secured Parties) is perfected and of first
priority, such opinion to be in form and substance acceptable to the Agents and
such assigns in their sole discretion.
(k) [Reserved].

 

30

--------------------------------------------------------------------------------

 

(l) Mergers, Consolidations and Acquisitions.
(i) The Master Servicer will not, nor will it permit any subservicer to merge
into or consolidate with any other Person, or permit any other Person to merge
into or consolidate with it, or purchase, lease or otherwise acquire (in one
transaction or a series of transactions) all or substantially all of the assets
of any other Person (whether directly by purchase, lease or other acquisition of
all or substantially all of the assets of such Person or indirectly by purchase
or other acquisition of all or substantially all of the capital stock of such
other Person) other than acquisitions in the ordinary course of their business,
except that if at the time thereof and immediately after giving effect thereto
no Liquidation Event or Unmatured Liquidation Event shall have occurred and be
continuing (A) the Master Servicer or such subservicer may merge or consolidate
with any Subsidiary (other than Seller) in a transaction in which such Master
Servicer or such subservicer is the surviving corporation, and (B) the Master
Servicer or such subservicer may purchase, lease or otherwise acquire from any
Subsidiary (other than Seller) all or substantially all of its assets and may
purchase or otherwise acquire all or substantially all of the capital stock of
any Person who immediately thereafter is a Subsidiary.
(ii) Seller will not merge into or consolidate with any other Person, or permit
any other Person to merge into or consolidate with it, or purchase, lease or
otherwise acquire (in one transaction or a series of transactions) all or
substantially all of the assets of any other Person (whether directly by
purchase, lease or other acquisition of all or substantially all of the assets
of such Person or indirectly by Purchase or other acquisition of all or
substantially all of the capital stock of such other Person) other than the
acquisition of the Receivables and Related Assets pursuant to the Sale Agreement
and the sale of an interest in the Pool Receivables and Related Assets
hereunder.
(m) [Reserved].
(n) Change in Business. No Seller Party will make or permit to be made any
material change in the character of its business, which change would impair the
collectibility of any significant portion of the Pool Receivables or otherwise
adversely affect the interests or remedies of the Purchasers under this
Agreement or any other Transaction Document.
Section 7.4 Separate Corporate Existence of the Seller.
Each Seller Party hereby acknowledges that the Purchaser and each Agent are
entering into the transactions contemplated hereby in reliance upon the Seller’s
identity as a legal entity separate from the Master Servicer and its other
Affiliates. Therefore, each Seller Party shall take all steps specifically
required by this Agreement or reasonably required by the Agents to continue the
Seller’s identity as a separate legal entity and to make it apparent to third
Persons that the Seller is an entity with assets and liabilities distinct from
those of its Affiliates, and is not a division of the Master Servicer or any
other Person. Without limiting the foregoing, each Seller Party will take such
actions as shall be required in order that:
(a) The Seller will be a limited purpose corporation whose primary activities
are restricted in its Certificate of Incorporation to purchasing or otherwise
acquiring from the Originators, owning, holding, granting security interests, or
selling interests, in Receivables in the Receivables Pool and Related Assets,
entering into agreements for the selling and servicing of the Receivables Pool,
and conducting such other activities as it deems necessary or appropriate to
carry out its primary activities;

 

31

--------------------------------------------------------------------------------

 

(b) At least one member of the Seller’s Board of Directors shall be an
Independent Director. The certificate of incorporation of the Seller shall
provide that (i) at least one member of the Seller’s Board of Directors shall be
an Independent Director, (ii) the Seller’s Board of Directors shall not approve,
or take any other action to cause the filing of, a voluntary bankruptcy petition
with respect to the Seller unless the Independent Director shall approve the
taking of such action in writing prior to the taking of such action and
(iii) the provisions requiring an Independent Director and the provisions
described in clauses (i) and (ii) of this paragraph (b) cannot be amended
without the prior written consent of the Independent Director;
(c) The Independent Director shall not at any time serve as a trustee in
bankruptcy for the Seller or any Affiliate thereof;
(d) Any employee, consultant or agent of the Seller will be compensated from the
Seller’s funds for services provided to the Seller. The Seller will not engage
any agents other than its attorneys, auditors and other professionals, and a
servicer and any other agent contemplated by the Transaction Documents for the
Receivables Pool (the parties acknowledge that the Master Servicer will be fully
compensated for its services by payment of the Servicing Fee), and certain
organizational expenses in connection with the formation of the Seller;
(e) The Seller will contract with the Master Servicer to perform for the Seller
all operations required on a daily basis to service the Receivables Pool. The
Seller will pay the Master Servicer the Servicing Fee pursuant hereto. The
Seller will not incur any material indirect or overhead expenses for items
shared with the Master Servicer (or any other Affiliate thereof) which are not
reflected in the Servicing Fee. To the extent, if any, that the Seller (or any
other Affiliate thereof) shares items of expenses not reflected in the Servicing
Fee, for legal, auditing and other professional services and directors’ fees,
such expenses will be allocated to the extent practical on the basis of actual
use or the value of services rendered, and otherwise on a basis reasonably
related to the actual use or the value of services rendered, it being understood
that Lennox shall pay or cause to be paid all expenses relating to the
preparation, negotiation, execution and delivery of the Transaction Documents,
including, without limitation, legal, rating agency and other fees;
(f) The Seller’s operating expenses will not be paid by any other Seller Party
or other Affiliate of the Seller;
(g) The Seller will have its own stationery;
(h) The books of account, financial reports and corporate records of the Seller
will be maintained separately from those of the Master Servicer and each other
Affiliate of the Seller;
(i) Any financial statements of any Seller Party or Affiliate thereof which are
consolidated to include the Seller will contain detailed notes clearly stating
that (i) all of the Seller’s assets are owned by the Seller, and (ii) the Seller
is a separate corporate entity with its own separate creditors that will be
entitled to be satisfied out of the Seller’s assets prior to any value in the
Seller becoming available to the Seller’s equity holders; and the accounting
records and the published financial statements of the Originators will clearly
show that, for accounting purposes, the Pool Receivables and Related Assets have
been sold by the Originators to the Seller;

 

32

--------------------------------------------------------------------------------

 

(j) The Seller’s assets will be maintained in a manner that facilitates their
identification and segregation from those of the Master Servicer and the other
Affiliates;
(k) Each Affiliate of the Seller will strictly observe corporate formalities in
its dealings with the Seller, and, except as permitted pursuant to this
Agreement with respect to Collections, funds or other assets of the Seller will
not be commingled with those of any of its Affiliates;
(l) No Affiliate of the Seller will maintain joint bank accounts with the Seller
or other depository accounts with the Seller to which any such Affiliate (other
than in its capacity as the Master Servicer hereunder or under the Sale
Agreement) has independent access, provided that prior to the occurrence of a
Credit Event, Collections may be deposited into general accounts of the Master
Servicer, subject to the obligations of the Master Servicer hereunder;
(m) No Affiliate of the Seller shall, directly or indirectly, name the Seller or
enter into any agreement to name the Seller as a direct or contingent
beneficiary or loss payee on any insurance policy covering the property of any
Affiliate of the Seller;
(n) Each Affiliate of the Seller will maintain arm’s length relationships with
the Seller, and each Affiliate of the Seller that renders or otherwise furnishes
services or merchandise to the Seller will be compensated by the Seller at
market rates for such services or merchandise;
(o) No Affiliate of the Seller will be, nor will it hold itself out to be,
responsible for the debts of the Seller or the decisions or actions in respect
of the daily business and affairs of the Seller. The Seller shall not
(i) guarantee or become obligated for the debts of any other entity or hold out
its credit as being available to satisfy the obligations of others, (ii) acquire
obligations of its shareholders or (iii) pledge its assets for the benefit of
any other entity or make any loans to any other entity. The Master Servicer and
the Seller will immediately correct any known misrepresentation with respect to
the foregoing and they will not operate or purport to operate as an integrated
single economic unit with respect to each other or in their dealing with any
other entity;
(p) The Seller will keep correct and complete books and records of account and
minutes of the meetings and other proceedings of its stockholder and board of
directors, as applicable, and the resolutions, agreements and other instruments
of the Seller will be continuously maintained as official records by the Seller;
and
(q) The Seller, on the one hand, and each Originator, on the other hand, will
conduct its business solely in its own corporate name and in such a separate
manner so as not to mislead others with whom they are dealing.

 

33

--------------------------------------------------------------------------------

 

Article VIII
Administration and Collection
Section 8.1 Designation of Master Servicer.
(a) Lennox as Initial Master Servicer. The servicing, administering and
collection of the Pool Receivables shall be conducted by the Person designated
as Master Servicer hereunder from time to time in accordance with this
Section 8.1. Until the Administrative Agent at the request of the Agents, on the
Purchasers’ behalf, gives to Lennox a Successor Notice (as defined in
Section 8.1(b)), Lennox is hereby designated as, and hereby agrees to perform
the duties and obligations of, the Master Servicer pursuant to the terms hereof.
Each of the Originators named in the Sale Agreement, has agreed to act as
subservicer for the purpose of performing certain duties and obligations with
respect to all Receivables purchased by the Seller from such Originator pursuant
to the terms of the Sale Agreement. In so acting as subservicer, each of the
Originators has agreed to comply with, and be bound by, all of the terms and
provisions of this Agreement applicable to such Originator in the performance of
its duties as subservicer; provided, however, that each such Originator
(i) shall cease to act as subservicer upon the Administrative Agent’s delivery
of a Successor Notice to Lennox, and (ii) shall not be entitled to receive any
Servicing Fee provided for herein (except that the Master Servicer may agree to
pay to the subservicers a proportional share of the Servicing Fee which
obligation shall be that of the Master Servicer).
(b) Successor Notice; Master Servicer Transfer Events. Upon Lennox’s receipt of
a notice from the Administrative Agent of the Administrative Agent’s designation
at the direction of the Purchaser Agents, on the Purchasers’ behalf, of a new
Master Servicer (a “Successor Notice”), Lennox agrees that it will terminate its
activities as Master Servicer hereunder in a manner that the Agents believe will
facilitate the transition of the performance of such activities to the new
Master Servicer, and the Administrative Agent (or its designee) shall assume
each and all of Lennox’s obligations to service and administer such Receivables,
on the terms and subject to the conditions herein set forth, and Lennox shall
use its best efforts to assist the Administrative Agent (or its designee) in
assuming such obligations. Without limiting the foregoing, Lennox agrees, at its
expense, to take all actions necessary to provide the new Master Servicer with
access to all computer software necessary or useful in collecting, billing or
maintaining records with respect to the Receivables.
(c) Subcontracts. The Master Servicer may, with the prior consent of the Agents,
subcontract with any other Person for servicing, administering or collecting the
Pool Receivables, provided that the Master Servicer shall remain liable for the
performance of the duties and obligations of the Master Servicer pursuant to the
terms hereof and such subservicing arrangement may be terminated at any Agent’s
request, on the related Purchaser’s behalf, at anytime after a Successor Notice
has been given.

 

34

--------------------------------------------------------------------------------

 

Section 8.2 Duties of Master Servicer.
(a) Appointment; Duties in General. Each of the Seller, the Purchasers and the
Agents hereby appoints as its agent the Master Servicer, as from time to time
designated pursuant to Section 8.1, to enforce its rights and interests in and
under the Pool Receivables, the Related Security and the related Contracts. The
Master Servicer shall take or cause to be taken all such actions as may be
necessary or advisable to collect each Pool Receivable from time to time, all in
accordance with applicable laws, rules and regulations, with reasonable care and
diligence, and in accordance with the Credit and Collection Policy.
(b) Allocation of Collections; Segregation. The Master Servicer shall identify
for the account of the Seller and Purchasers their respective allocable shares
of the Collections of Pool Receivables in accordance with Section 1.3 but shall
not be required (unless otherwise requested by the Administrative Agent, on the
Purchasers’ behalf) to segregate the funds constituting such portions of such
Collections prior to the remittance thereof in accordance with said Section. If
instructed by any Agent, on the Purchasers’ behalf, the Master Servicer shall
segregate and deposit into the Collection Account, the Purchasers’ Share of
Collections of Pool Receivables, on the second Business Day following receipt by
the Master Servicer of such Collections in immediately available funds.
(c) Modification of Receivables. So long as no Liquidation Event and no
Unmatured Liquidation Event shall have occurred and be continuing, Lennox, while
it is Master Servicer, may, in accordance with the applicable Credit and
Collection Policy, (i) extend the maturity or adjust the Unpaid Balance of any
Defaulted Receivable as the Master Servicer may reasonably determine to be
appropriate to maximize Collections thereof, and (ii) adjust the Unpaid Balance
of any Receivable to reflect the reductions or cancellations described in the
first sentence of Section 3.2(a); provided that such extension or adjustment
shall not alter the status of such Receivables as Delinquent Receivables or
Defaulted Receivables or limit the rights of any Agent or any Purchaser with
respect thereto.
(d) Documents and Records. Each Seller Party shall deliver to the Master
Servicer, and the Master Servicer shall hold in trust for the Seller and the
Purchaser in accordance with their respective interests, all documents,
instruments and records (including, without limitation, computer tapes or disks)
that evidence or relate to Pool Receivables.
(e) Certain Duties to the Seller. The Master Servicer shall, as soon as
practicable following receipt, turn over to the Seller (i) that portion of
Collections of Pool Receivables representing its undivided percentage interest
therein, less the Seller’s Share of the Servicing Fee, and, in the event that
neither Lennox nor any other Seller Party or Affiliate thereof is the Master
Servicer, all reasonable and appropriate out-of-pocket costs and expenses of the
Master Servicer of servicing, collecting and administering the Pool Receivables
to the extent not covered by the Servicing Fee received by it, and (ii) the
Collections of any Receivable which is not a Pool Receivable. The Master
Servicer, if other than Lennox or any other Seller Party or Affiliate thereof,
shall, as soon as practicable upon demand, deliver to the Seller all documents,
instruments and records in its possession that evidence or relate to Receivables
of the Seller other than Pool Receivables, and copies of documents, instruments
and records in its possession that evidence or relate to Pool Receivables.
(f) Termination. The Master Servicer’s authorization under this Agreement shall
terminate upon the Final Payout Date.

 

35

--------------------------------------------------------------------------------

 

(g) Power of Attorney. The Seller hereby grants to the Master Servicer an
irrevocable power of attorney, with full power of substitution, coupled with an
interest, to take in the name of the Seller all steps which are necessary or
advisable to endorse, negotiate or otherwise realize on any writing or other
right of any kind held or transmitted by the Seller or transmitted or received
by the Purchaser (whether or not from the Seller) in connection with any
Receivable.
Section 8.3 [Reserved].
Section 8.4 Servicer Defaults.
If any one of the following events (a “Servicer Default”) shall occur and be
continuing:
(a) any failure by the Master Servicer to make any payment, transfer or deposit
or to give instructions or notice to any Agent as required by this Agreement
including, without limitation, delivery of any Information Package or Interim
Information Package or any failure to make any payment or deposit required to be
made in order to reduce the Asset Interest to the Allocation Limit and, (i) in
the case of failure to deliver an Information Package or Interim Information
Package, s the case may be, such failure shall remain unremedied for two
(2) Business Days after the earliest to occur of (A) written notice thereof
shall have been given by any Agent to the Master Servicer or (B) the Master
Servicer shall have otherwise become aware of such failure and (ii) except with
respect to any payment or deposit required to be made in order to reduce the
Asset Interest to the Allocation Limit which shall be made when due, in the case
of failure to make any payment or deposit to be made by the Master Servicer such
failure shall remain unremedied for three (3) Business Days after the due date
thereof;
(b) any failure on the part of the Master Servicer duly to observe or perform in
any material respect any other covenants or agreements of the Master Servicer
set forth in this Agreement or any other Transaction Document to which the
Master Servicer is a party, which failure continues unremedied for a period of
30 days after the first to occur of (i) the date on which written notice of such
failure requiring the same to be remedied shall have been given to the Master
Servicer by any Agent and (ii) the date on which the Master Servicer becomes
aware thereof;
(c) any representation, warranty or certification made by the Master Servicer in
this Agreement or in any certificate delivered pursuant to this Agreement shall
prove to have been incorrect when made, which continues to be unremedied for a
period of 30 days after the first to occur of (i) the date on which written
notice of such incorrectness requiring the same to be remedied shall have been
given to the Master Servicer by any Agent and (ii) the date on which the Master
Servicer becomes aware thereof; provided, however, that in the case of any
representation, warranty or certification that was not made in writing, a
Servicer Default shall occur hereunder only if such representation, warranty or
certification was reasonably relied upon by any Agent and/or the Purchasers;
(d) a Credit Event shall occur or any bankruptcy, insolvency or similar event
occurs with respect to the Master Servicer; or

 

36

--------------------------------------------------------------------------------

 

(e) any change in the control of the Master Servicer which takes the form of
either a merger or consolidation in which the Master Servicer is not the
surviving entity.
Notwithstanding anything herein to the contrary, so long as any such Servicer
Default shall not have been remedied, the Agents, by written notice to the
Master Servicer (a “Termination Notice”), may terminate all of the rights and
obligations of the Master Servicer as Master Servicer under this Agreement and
appoint a successor Master Servicer satisfactory to the Agents (in the Agents’
sole discretion).
Section 8.5 Rights of the Administrative Agent.
(a) Notice to Obligors. At any time when a Liquidation Event has occurred and is
continuing, the Agents may notify the Obligors of Pool Receivables, or any of
them, of the ownership of the Asset Interest by the Purchasers.
(b) Notice to Lockbox Banks. At any time, the Administrative Agent is hereby
authorized to give notice to the Lockbox Banks, as provided in the Lockbox
Agreements, of the transfer to the Administrative Agent for the benefit of the
Secured Parties of dominion and control over the lockboxes and related accounts
to which the Obligors of Pool Receivables make payments. The Seller and the
Master Servicer hereby transfer to the Administrative Agent, effective when the
Administrative Agent shall give notice to the Lockbox Banks as provided in the
Lockbox Agreements, the exclusive dominion and control over such lockboxes and
accounts, and shall take any further action that the Administrative Agent may
reasonably request to effect such transfer.
(c) Rights on Servicer Transfer Event. At any time following the designation of
a Master Servicer other than Lennox pursuant to Section 8.1:
(i) The Administrative Agent may direct the Obligors of Pool Receivables, or any
of them, to pay all amounts payable under any Pool Receivable directly to the
Administrative Agent or its designee.
(ii) Any Seller Party shall, at the Administrative Agent’s request and at such
Seller Party’s expense, give notice of the Purchasers’ ownership and security
interests in the Pool Receivables to each Obligor of Pool Receivables and direct
that payments be made directly to the Administrative Agent or its designee.
(iii) Each Seller Party shall, at any Agent’s request, (A) assemble all of the
documents, instruments and other records (including, without limitation,
computer programs, tapes and disks) which evidence the Pool Receivables, and the
related Contracts and Related Security, or which are otherwise necessary or
desirable to collect such Pool Receivables, and make the same available to the
successor Master Servicer at a place selected by such Agent, and (B) segregate
all cash, checks and other instruments received by it from time to time
constituting Collections of Pool Receivables in a manner acceptable to the
Agents and promptly upon receipt, remit all such cash, checks and instruments,
duly endorsed or with duly executed instruments of transfer, to the successor
Master Servicer.

 

37

--------------------------------------------------------------------------------

 

(iv) Each Seller Party and each Purchaser hereby authorizes the Administrative
Agent, on such Purchaser’s behalf, and grants to the Administrative Agent an
irrevocable power of attorney (which shall terminate on the Final Payout Date),
to take any and all steps in such Seller Party’s name and on behalf of the
Seller Parties and Purchaser which are necessary or desirable, in the
determination of the Administrative Agent, to collect all amounts due under any
and all Pool Receivables, including, without limitation, endorsing any Seller
Party’s name on checks and other instruments representing Collections and
enforcing such Pool Receivables and the related Contracts.
Section 8.6 Responsibilities of the Seller Parties.
Anything herein to the contrary notwithstanding:
(a) Contracts. Each Seller Party shall remain responsible for performing all of
its obligations (if any) under the Contracts related to the Pool Receivables and
under the related agreements to the same extent as if the Asset Interest had not
been sold hereunder, and the exercise by the Administrative Agent or its
designee of its rights hereunder shall not relieve any Seller Party from such
obligations.
(b) Limitation of Liability. No Agent or Purchaser shall have any obligation or
liability with respect to any Pool Receivables, Contracts related thereto or any
other related agreements, nor shall any of them be obligated to perform any of
the obligations of any Seller Party or any Originator thereunder.
Section 8.7 Further Action Evidencing Purchases and Reinvestments.
(a) Further Assurances. Each Seller Party agrees that from time to time, at its
expense, it will promptly execute and deliver all further instruments and
documents, and take all further action that any Agent or its designee may
reasonably request in order to perfect, protect or more fully evidence the
Purchases hereunder and the resulting Asset Interest, or to enable the Secured
Parties or the Agents or any of their respective designees to exercise or
enforce any of their respective rights hereunder or under any Transaction
Document in respect thereof. Without limiting the generality of the foregoing,
each Seller Party will:
(i) upon the request of the Administrative Agent at the direction of the
Purchaser Agents on behalf of the Purchasers, execute and file such financing or
continuation statements, or amendments thereto or assignments thereof, and such
other instruments or notices, as may be necessary or appropriate, in accordance
with the terms of this Agreement;
(ii) upon the request of any Agent after the occurrence and during the
continuance of a Liquidation Event, mark conspicuously each Contract evidencing
each Pool Receivable with a legend, acceptable to the Agents, evidencing that
the Asset Interest has been sold in accordance with this Agreement; and
(iii) mark its master data processing records evidencing such Pool Receivables
and related Contracts with a legend, acceptable to the Agents, evidencing that
the Asset Interest has been sold in accordance with this Agreement.

 

38

--------------------------------------------------------------------------------

 

(b) Additional Financing Statements; Performance by Administrative Agent. Each
Seller Party hereby authorizes the Administrative Agent, on the Purchaser’s
behalf, or its designee to file one or more financing or continuation
statements, and amendments thereto and assignments thereof, relative to all or
any of the Pool Receivables and the Related Assets now existing or hereafter
arising in the name of any Seller Party. If any Seller Party fails to perform
any of its agreements or obligations under this Agreement, the Administrative
Agent or its designee may (but shall not be required to) itself perform, or
cause performance of, such agreement or obligation, and the reasonable expenses
of the Administrative Agent or its designee incurred in connection therewith
shall be payable by the Seller Parties as provided in Section 14.5.
(c) Continuation Statements; Opinion. Without limiting the generality of
subsection (a), the Seller will, not earlier than six (6) months and not later
than three (3) months prior to the fifth anniversary of the date of filing of
the financing statements referred to in Section 5.1(a) or any other financing
statement filed pursuant to this Agreement or in connection with any Purchase
hereunder, if the Final Payout Date shall not have occurred:
(i) if necessary, execute and deliver and file or cause to be filed an
appropriate continuation statement with respect to such financing statement; and
(ii) deliver or cause to be delivered to each Agent an opinion of the counsel
for the Seller Parties (which may be an opinion of in-house counsel for the
Seller Parties), in form and substance reasonably satisfactory to each Agent,
confirming and updating the opinion delivered pursuant to Section 5.1(a) to the
effect that the Asset Interest hereunder continues to be a valid and perfected
ownership or security interest, subject to no other Liens of record except as
provided herein or otherwise permitted hereunder.
Section 8.8 Application of Collections.
Any payment by an Obligor in respect of any indebtedness owed by it to any
Originator or Seller shall, except as otherwise specified by such Obligor or
required by the underlying Contract or law, be applied, first, as a Collection
of any Pool Receivable or Receivables then outstanding of such Obligor in the
order of the age of such Pool Receivables, starting with the oldest of such Pool
Receivables and, second, to any other indebtedness of such Obligor.
Article IX
Security Interest
Section 9.1 Grant of Security Interest.
To secure all obligations of the Seller arising in connection with this
Agreement and each other Transaction Document, whether now or hereafter
existing, due or to become due, direct or indirect, or absolute or contingent,
including, without limitation, all Indemnified Amounts, payments on account of
Collections received or deemed to be received and fees, in each case pro rata
according to the respective amounts thereof, the Seller hereby assigns and
pledges to the Administrative Agent, as agent for the Purchasers and their
respective successors and assigns, for the benefit of the Secured Parties, and
hereby grants to the Administrative Agent, as agent for the Purchasers, for the
benefit of the Secured Parties, a security interest in, all of the Seller’s
right, title and interest now or hereafter existing in, to and under all assets
of the Seller, including, without limitation, (a) all the Pool Receivables and
Related Assets (and including specifically any undivided interest therein
retained by the Seller hereunder), (b) the Sale Agreement and the other
Transaction Documents and (c) all proceeds of any of the foregoing
(collectively, the “Collateral”).

 

39

--------------------------------------------------------------------------------

 

Section 9.2 Further Assurances.
The provisions of Section 8.7 shall apply to the security interest granted under
Section 9.1 as well as to the Purchases, Reinvestments and all the Asset
Interests hereunder.
Section 9.3 Remedies.
Upon the occurrence of a Liquidation Event, each Purchaser shall have, with
respect to the Collateral granted pursuant to Section 9.1, and in addition to
all other rights and remedies available to such Purchaser or the Administrative
Agent under this Agreement and the other Transaction Documents or other
applicable law, all the rights and remedies of a secured party upon default
under the UCC.
Article X
Liquidation Events
Section 10.1 Liquidation Events.
The following events shall be “Liquidation Events” hereunder:
(a) The Master Servicer (if any Seller Party or Affiliate thereof is the Master
Servicer) or the Seller (in the case of clause (ii) below) (i) shall fail to
perform or observe any term, covenant or agreement that is an obligation of the
Master Servicer hereunder (other than as referred to in clause (ii) below or in
other paragraphs of this Section 10.1), and such failure shall remain unremedied
for fifteen (15) days after written notice thereof shall have been given by the
Administrative Agent to the Master Servicer or the Master Servicer shall have
otherwise become aware, or (ii) shall fail to make any payment or deposit to be
made by it hereunder when due which failure shall continue for one (1) Business
Day, if such payment or deposit is in connection with the reduction of the
Invested Amount or for two (2) Business Days for any other payment; or
(b) Any representation or warranty made or deemed to be made by any Seller Party
or Lennox International (or any of its officers) under this Agreement or any
other Transaction Document or any Information Package, Interim Information
Package or other information or report delivered pursuant hereto shall prove to
have been false or incorrect in any material respect when made provided,
however, that in the case of any representation, warranty or information that
was not made or provided in writing, a Liquidation Event shall occur hereunder
only if such representation, warranty or information was reasonably relied upon
by any Agent and/or any Purchaser; or

 

40

--------------------------------------------------------------------------------

 

(c) Any Seller Party shall fail to perform or observe any other term, covenant
or agreement contained in this Agreement or any of the other Transaction
Documents on its part to be performed or observed and any such failure shall
remain unremedied for fifteen (15) days after written notice thereof shall have
been given by any Agent to any Seller Party or such Seller Party shall have
otherwise become aware; or
(d) (i) Any Seller Party or Lennox International shall (A) fail to pay any
principal or interest, regardless of amount, due in respect of any Indebtedness
when the aggregate unpaid principal amount is in excess of in the case of the
Seller, $10,000, or in the case of Lennox International or the Master Servicer
$7,500,000 when and as the same shall become due and payable (after expiration
of any applicable grace period) or (B) fail to observe or perform any other
term, covenant, condition or agreement (after expiration of any applicable grace
period) contained in any agreement or instrument evidencing or governing any
such Indebtedness if the effect of any failure referred to in this clause (B) is
to cause such Indebtedness to become due prior to its stated maturity; (ii) any
default under any other agreement or instrument of the Seller, Master Servicer
or Lennox International relating to the purchase of receivables in an aggregate
amount in excess of in the case of the Seller, $10,000, or in the case of the
Master Servicer or Lennox International $50,000,000, or any other event, shall
occur and shall continue after the applicable grace period, if any, specified in
such agreement or instrument, if the effect of such default is to terminate the
commitment of any party to such agreement or instrument to purchase receivables
or the right of such Seller Party to reinvest in receivables the principal
amount paid by any party to such agreement or instrument for its interest in
receivables; or (iii) a default or trigger event shall occur under any asset
securitization agreement or arrangement entered into by any Seller Party for the
sale of receivables or an interest therein in excess of $10,000,000, if the
effect of such default or trigger event is to cause the amounts owing in
connection therewith to become payable prior to the stated maturity; or
(e) An Event of Bankruptcy shall have occurred and remain continuing with
respect to Lennox International or any Seller Party; or
(f) The Seller shall become an “investment company” within the meaning of the
Investment Company Act of 1940; or
(g) The rolling 3 month average Dilution Ratio at any Cut-Off Date exceeds
12.00%; or
(h) The rolling 3 month average Default Ratio at any Cut-Off Date exceeds 3.00%;
or
(i) The rolling 3 month average Delinquency Ratio at any Cut-Off Date exceeds
3.50%; or
(j) On any Settlement Date, after giving effect to the payments made under
Section 3.1(c), (i) the Asset Interest exceeds 100%, (ii) the Invested Amount
exceeds the Purchase Limit; or (iii) any Purchaser Group Invested Amount exceed
the related Purchaser Group Limit, and, in the case of any failure to make a
timely payment or deposit with respect thereto solely by reason of any
mechanical delay in or malfunction of the Fedwire system or due to an error on
the part of the initiating or receiving bank such failure shall continue for
more than one (1) Business Day; or

 

41

--------------------------------------------------------------------------------

 

(k) There shall have occurred any event which materially adversely impairs the
ability of the Originators to originate Receivables of a credit quality which
are at least of the credit quality of the Receivables included in the first
Purchase, or any other event occurs that is reasonably likely to have a Material
Adverse Effect; or
(l) Any Seller Party, Originator or Lennox International is subject to a Change
in Control; or
(m) The Internal Revenue Service shall file notice of a lien pursuant to
Section 6323 of the Internal Revenue Code with regard to any of the Receivables
or Related Assets and such lien shall not have been released within seven
(7) days, or the Pension Benefit Guaranty Corporation shall, or shall indicate
its intention to, file notice of a lien pursuant to Section 4068 of the Employee
Retirement Income Security Act of 1974 with regard to any of the Receivables or
Related Assets; or
(n) Any Seller Party or any Originator shall make any material change in the
policies as to origination of Receivables or in its Credit and Collection Policy
without prior written notice to and consent of the Agents; or
(o) The Administrative Agent for the benefit of the Secured Parties, for any
reason, does not have a valid, perfected first priority interest in the Pool
Receivables and the Related Assets; or
(p) A final judgment or judgments shall be rendered against Lennox
International, the Master Servicer, the Seller or any combination thereof for
the payment of money with respect to which an aggregate amount in excess of
$10,000 with respect to the Seller and $7,500,000 with respect to Lennox
International or the Master Servicer is not covered by insurance and the same
shall remain undischarged for a period of 30 consecutive days during which
execution shall not be effectively stayed, or any action shall be legally taken
by a judgment creditor to levy upon assets or properties of Lennox
International, the Master Servicer or the Seller to enforce any such judgment;
or
(q) A Reportable Event or Reportable Events, or a failure to make a required
installment or other payment (within the meaning of Section 412(n)(1) of the
Code), shall have occurred with respect to any Plan or Plans that reasonably
could be expected to result in liability of any Master Servicer or any ERISA
Affiliate to the Pension Benefit Guaranty Corporation (“PBGC”) or to a Plan in
an aggregate amount exceeding $5,000,000 and, within 30 days after the reporting
of any such Reportable Event to the Agents, on the Purchasers’ behalf, any Agent
shall have notified the Master Servicer in writing that (i) such Agent, on the
related Purchaser’s behalf, has made a determination that, on the basis of such
Reportable Event or Reportable Events or the failure to make a required payment,
there are reasonable grounds (A) for the termination of such Plan or Plans by
the PBGC, (B) for the appointment by the appropriate United States District
Court of a trustee to administer such Plan or Plans or (C) for the imposition of
a lien in favor of a Plan and (ii) as a result thereof a Liquidation Event
exists hereunder; or a trustee shall be appointed by a United States District
Court to administer any such Plan or Plans; or the PBGC shall institute
proceedings to terminate any Plan or Plans;

 

42

--------------------------------------------------------------------------------

 

(r) The occurrence of a Servicer Default;
(s) The Seller’s Net Worth shall be less than the Threshold Amount; or
(t) An Event of Default (as defined in the Credit Agreement) shall have
occurred, regardless of whether such Event of Default has been waived by the
parties to the Credit Agreement.
Section 10.2 Remedies.
(a) Optional Liquidation. Upon the occurrence of a Liquidation Event (other than
a Liquidation Event described in subsection (e) of Section 10.1), any Agent
shall, at the request, or may with the consent, of the related Purchaser, by
notice to the Seller declare the Funding Termination Date to have occurred and
the Liquidation Period to have commenced.
(b) Automatic Liquidation. Upon the occurrence of a Liquidation Event described
in subsection (e) of Section 10.1, the Funding Termination Date shall occur and
the Liquidation Period shall commence automatically.
(c) Additional Remedies. Upon the occurrence of the Termination Date, no
Purchases or Reinvestments thereafter will be made, and each of the Agents and
the Purchasers shall have, in addition to all other rights and remedies under
this Agreement or otherwise, all other rights and remedies provided under the
UCC of each applicable jurisdiction and other applicable laws, which rights
shall be cumulative.
(d) The Yorktown Purchaser Agent may, upon the occurrence of any Liquidation
Event, direct the Administrative Agent to take such action under any or all of
the Lockbox Agreements such that the Administrative Agent has control over each
related Lockbox Account and the Administrative Agent hereby agrees to take such
action, to the extent permitted by law, upon receipt of such notice.
Article XI
The Administrative Agent
Section 11.1 Administrative Authorization and Action.
Pursuant to agreements entered into with the Administrative Agent, each
Purchaser has appointed and authorized the Administrative Agent (or its
designees) to take such action as agent on its behalf and to exercise such
powers under this Agreement as are delegated to the Administrative Agent by the
terms hereof, together with such powers as are reasonably incidental thereto.

 

43

--------------------------------------------------------------------------------

 

Section 11.2 Administrative Agent’s Reliance, Etc.
The Administrative Agent and its directors, officers, agents or employees shall
not be liable for any action taken or omitted to be taken by it or them in good
faith under or in connection with the Transaction Documents (including, without
limitation, the servicing, administering or collecting Pool Receivables as
Master Servicer pursuant to Section 8.1), except for its or their own breach of
the terms of the applicable terms of the Transaction Documents or its or their
own gross negligence or willful misconduct. Without limiting the generality of
the foregoing, the Administrative Agent: (a) may consult with legal counsel
(including counsel for the Seller), independent certified public accountants and
other experts selected by it and shall not be liable for any action taken or
omitted to be taken in good faith by it in accordance with the advice of such
counsel, accountants or experts; (b) makes no warranty or representation to the
Purchasers or any other holder of any interest in Pool Receivables and shall not
be responsible to the Purchaser or any such other holder for any statements,
warranties or representations made by any Seller Party in or in connection with
any Transaction Document; (c) shall not have any duty to ascertain or to inquire
as to the performance or observance of any of the terms, covenants or conditions
of any Transaction Document on the part of any Seller Party or to inspect the
property (including the books and records) of any Seller Party; (d) shall not be
responsible to the Purchaser or any other holder of any interest in Pool
Receivables for the due execution, legality, validity, enforceability,
genuineness, sufficiency or value of any Transaction Document; and (e) shall
incur no liability under or in respect of this Agreement by acting upon any
notice (including notice by telephone where permitted herein), consent,
certificate or other instrument or writing (which may be by facsimile or telex)
in good faith believed by it to be genuine and signed or sent by the proper
party or parties.
Section 11.3 Yorktown Purchaser Agent Authorization and Action.
Pursuant to agreements entered into with the Yorktown Purchaser Agent, the
Yorktown Purchaser has appointed and authorized the Yorktown Purchaser Agent (or
its designees) to take such action as agent on its behalf and to exercise such
powers under this Agreement as are delegated to the Yorktown Purchaser Agent by
the terms hereof, together with such powers as are reasonably incidental
thereto.
Section 11.4 Yorktown Purchaser Agent’s Reliance, Etc.
The Yorktown Purchaser Agent and its directors, officers, agents or employees
shall not be liable for any action taken or omitted to be taken by it or them in
good faith under or in connection with the Transaction Documents (including,
without limitation, the servicing, administering or collecting Pool Receivables
as Master Servicer pursuant to Section 8.1), except for its or their own breach
of the terms of the applicable terms of the Transaction Documents or its or
their own gross negligence or willful misconduct. Without limiting the
generality of the foregoing, the Yorktown Purchaser Agent: (a) may consult with
legal counsel (including counsel for the Seller), independent certified public
accountants and other experts selected by it and shall not be liable for any
action taken or omitted to be taken in good faith by it in accordance with the
advice of such counsel, accountants or experts; (b) makes no warranty or
representation to the Yorktown Purchaser or any other holder of any portion of
the Yorktown Purchaser Group’s interest in Pool Receivables and shall not be
responsible to Yorktown or any such other holder for any statements, warranties
or representations made by any Seller Party in or in connection with any
Transaction Document; (c) shall not have any duty to ascertain or to inquire as
to the performance or observance of any of the terms, covenants or conditions of
any Transaction Document on the part of any Seller Party or to inspect the
property (including the books and records) of any Seller Party; (d) shall not be
responsible to the Yorktown Purchaser or any other holder of any of the Yorktown
Purchaser Group’s interest in Pool Receivables for the due execution, legality,
validity, enforceability, genuineness, sufficiency or value of any Transaction
Document; and (e) shall incur no liability under or in respect of this Agreement
by acting upon any notice (including notice by telephone where permitted
herein), consent, certificate or other instrument or writing (which may be by
facsimile or telex) in good faith believed by it to be genuine and signed or
sent by the proper party or parties.

 

44

--------------------------------------------------------------------------------

 

Article XII
Assignment of The Purchaser’s Interest
Section 12.1 Restrictions on Assignments.
(a) No Seller Party may assign its rights, or delegate its duties hereunder or
any interest herein without the prior written consent of the Agents (except a
Seller Party may delegate certain administrative duties to an Affiliate, such as
payroll, financial reporting, tax and the like, so long as such Seller Party
remains liable for performance of such duties). No Purchaser may assign its
rights hereunder (although it may delegate its duties hereunder as expressly
indicated herein) or the portion of the Asset Interest funded by the related
Purchaser Group (or any portion thereof) to any Person without the prior written
consent of the Seller, which consent shall not be unreasonably withheld;
provided, however, that
(i) Any Purchaser may assign all of its rights and interests in the Transaction
Documents, together with all its interest in the Asset Interest, to any
Liquidity Bank, Bank of America or any Affiliate thereof, or to any “bankruptcy
remote” special purpose entity, the business of which is administered by Bank of
America or any Affiliate thereof (which assignee shall then be subject to this
Article XII); and
(ii) Each Purchaser may assign and grant a security interest in all of its
rights in the Transaction Documents, together with all of its rights and
interest in the Asset Interest, to secure such Purchaser’s obligations under or
in connection with the Commercial Paper Notes, the related Liquidity Agreement,
and certain other obligations of such Purchaser incurred in connection with the
funding of the Purchases and Reinvestments hereunder, which assignment and grant
of a security interest shall not be considered an “assignment” for purposes of
Section 12.1(b) or, prior to the enforcement of such security interest, for
purposes of any other provision of this Agreement (other than Section 12.3).
(b) The Seller agrees to advise the Agents within five (5) Business Days after
notice to the Seller of any proposed assignment by any Purchaser of the Asset
Interest (or any portion thereof), not otherwise permitted under subsection (a),
of the Seller’s consent or non-consent to such assignment, and if it does not
consent, the reasons therefor. If Seller does not consent to such assignment,
each Purchaser may immediately or at any time thereafter assign such Asset
Interest (or portion thereof) to any Person or Persons permitted under clause
(i) of Section 12.1(a).

 

45

--------------------------------------------------------------------------------

 

Section 12.2 Rights of Assignee.
Upon the assignment by the Purchaser in accordance with this Article XII, the
assignee receiving such assignment shall have all of the rights of the related
Purchaser with respect to the Transaction Documents and the Asset Interest (or
such portion thereof as has been assigned).
Section 12.3 Terms and Evidence of Assignment.
Any assignment of the Asset Interest (or any portion thereof) to any Person
which is otherwise permitted under this Article XII shall be upon such terms and
conditions as the related Purchaser and the assignee may mutually agree, and may
be evidenced by such instrument(s) or document(s) as may be satisfactory to the
Purchaser, the related Purchaser Agent and the assignee.
Section 12.4 Rights of Liquidity Banks.
The Seller hereby agrees that, upon notice to the Seller, the Liquidity Banks
may exercise all the rights of the related Purchaser Agent and Purchaser
hereunder, with respect to the portion of the Asset Interest funded by the
related Purchaser Group (or any portions thereof), and Collections with respect
thereto, which are owned by the related Purchaser, and all other rights and
interests of the related Purchaser in, to or under this Agreement or any other
Transaction Document. Without limiting the foregoing, upon such notice or at any
time thereafter (but subject to any conditions applicable to the exercise of
such rights by the Agents), the Liquidity Banks may request the Master Servicer
to segregate Purchasers’ allocable shares of Collections from the Seller’s
allocable share, may give a Successor Notice pursuant to and in accordance with
Section 8.1(b), may give or require the Administrative Agent to give notice to
the Lockbox Banks as referred to in Section 8.5(b) and may direct the Obligors
of Pool Receivables to make payments in respect thereof directly to an account
designated by them, in each case, to the same extent as the Administrative Agent
might have done.
Article XIII
Indemnification
Section 13.1 Indemnities by the Seller.
(a) General Indemnity. Without limiting any other rights which any such Person
may have hereunder or under applicable law, the Seller hereby agrees to
indemnify Bank of America, both individually and as the Administrative Agent and
the Yorktown Purchaser Agent, the Purchasers, the Liquidity Banks, the Liquidity
Agent, each of their respective Affiliates, and all successors, transferees,
participants and assigns and all officers, directors, shareholders, controlling
persons, and employees of any of the foregoing, and any successor servicer and
subservicer not affiliated with Lennox (each an “Indemnified Party”), forthwith
on demand, from and against any and all damages, losses, claims, liabilities and
related costs and expenses, including attorneys’ fees and disbursements (all of
the foregoing being collectively referred to as “Indemnified Amounts”) awarded
against or incurred by any of them arising out of or relating to the Transaction
Documents or the ownership or funding of the Asset Interest or in respect of any
Receivable or any Contract, excluding, however, (x) Indemnified Amounts to the
extent

 

46

--------------------------------------------------------------------------------

 

determined by a court of competent jurisdiction to have resulted from gross
negligence or willful misconduct on the part of such Indemnified Party or
(y) recourse (except as otherwise specifically provided in this Agreement) for
Defaulted Receivables; the Seller further agrees to indemnify any agent (which
is not otherwise an Indemnified Party) of any of Bank of America, the Agents,
the Purchasers, the Liquidity Banks, and the Liquidity Agent forthwith on
demand, from and against any and all Indemnified Amounts awarded against or
incurred by any of them arising out of or caused by the gross negligence or
willful misconduct of the Seller (unless otherwise expressly agreed to in
writing by the Seller). Without limiting the foregoing, the Seller shall
indemnify each Indemnified Party for Indemnified Amounts arising out of or
relating to:
(i) the transfer by any Seller Party of any interest in any Receivable other
than the transfer of Receivables and related property by the Originators to the
Seller pursuant to the Sale Agreement, the transfer of an Asset Interest to the
Purchaser pursuant to this Agreement and the grant of a security interest to the
Purchaser pursuant to Section 9.1;
(ii) any representation or warranty made in writing by any Seller Party (or any
of its officers) under or in connection with any Transaction Document, any
Information Package, Interim Information Package or any other information or
report delivered by or on behalf of any Seller Party pursuant hereto, which
shall have been false, incorrect or misleading in any material respect when made
or deemed made or delivered, as the case may be; provided, however, that in the
case of any representation, warranty or information that was not made or
delivered in writing, indemnification shall be available to an Indemnified Party
hereunder only if such representation, warranty or information was reasonably
relied upon by such Indemnified Party;
(iii) the failure by any Seller Party to comply with any applicable law, rule or
regulation with respect to any Pool Receivable or the related Contract, or the
nonconformity of any Pool Receivable or the related Contract with any such
applicable law, rule or regulation;
(iv) the failure to vest and maintain vested in Purchaser an undivided
percentage ownership interest, to the extent of the Asset Interest, in the
Receivables in, or purporting to be in, the Receivables Pool, free and clear of
any Lien, other than a Lien arising solely as a result of an act of any
Purchaser or the Administrative Agent, whether existing at the time of any
Purchase or Reinvestment of such Asset Interest or at any time thereafter;
(v) the failure to file, or any delay in filing, financing statements or other
similar instruments or documents under the UCC of any applicable jurisdiction or
other applicable laws with respect to any Receivables in, or purporting to be
in, the Receivables Pool, whether at the time of any Purchase or Reinvestment or
at any time thereafter;

 

47

--------------------------------------------------------------------------------

 

(vi) any dispute, claim, offset or defense (other than discharge in bankruptcy)
of the Obligor to the payment of any Receivable in, or purporting to be in, the
Receivables Pool (including, without limitation, a defense based on such
Receivables or the related Contract not being a legal, valid and binding
obligation of such Obligor enforceable against it in accordance with its terms),
or any other claim resulting from the sale of the merchandise or services
related to such Receivable or the furnishing or failure to furnish such
merchandise or services;
(vii) any matter described in clause (i) or (ii) of Section 3.2(a);
(viii) any failure of any Seller Party, as the Master Servicer or otherwise, to
perform its duties or obligations in accordance with the provisions of
Article III or Article VIII;
(ix) any product liability claim arising out of or in connection with
merchandise or services that are the subject of any Pool Receivable;
(x) any claim of breach by any Seller Party of any related Contract with respect
to any Pool Receivable; or
(xi) any tax or governmental fee or charge (but not including franchise taxes or
taxes upon or measured by net income), all interest and penalties thereon or
with respect thereto, and all out-of-pocket costs and expenses, including the
reasonable fees and expenses of counsel in defending against the same, which may
arise by reason of the purchase or ownership of any Asset Interest, or any other
interest in the Pool Receivables or in any goods which secure any such Pool
Receivables.
(b) Contest of Tax Claim; After-Tax Basis. If any Indemnified Party shall have
notice of any attempt to impose or collect any tax or governmental fee or charge
for which indemnification will be sought from any Seller Party under
Section 13.1(a)(xi), such Indemnified Party shall give prompt and timely notice
of such attempt to the Seller and the Seller shall have the right, at its
expense, to participate in any proceedings resisting or objecting to the
imposition or collection of any such tax, governmental fee or charge.
Indemnification hereunder shall be in an amount necessary to make the
Indemnified Party whole after taking into account any tax consequences to the
Indemnified Party of the payment of any of the aforesaid taxes (including any
deduction) and the receipt of the indemnity provided hereunder or of any refund
of any such tax previously indemnified hereunder, including the effect of such
tax, deduction or refund on the amount of tax measured by net income or profits
which is or was payable by the Indemnified Party.
(c) Contribution. If for any reason the indemnification provided above in this
Section 13.1 (and subject to the exceptions set forth therein) is unavailable to
an Indemnified Party or is insufficient to hold an Indemnified Party harmless,
then the Seller shall contribute to the amount paid or payable by such
Indemnified Party as a result of such loss, claim, damage or liability in such
proportion as is appropriate to reflect not only the relative benefits received
by such Indemnified Party on the one hand and the Seller on the other hand but
also the relative fault of such Indemnified Party as well as any other relevant
equitable considerations.

 

48

--------------------------------------------------------------------------------

 

Section 13.2 Indemnities by Master Servicer.
Without limiting any other rights which any Indemnified Party may have hereunder
or under applicable law, the Master Servicer hereby agrees to indemnify each of
the Indemnified Parties forthwith on demand, from and against any and all
Indemnified Amounts awarded against or incurred by any of them arising out of or
relating to the Master Servicer’s performance of, or failure to perform, any of
its obligations under or in connection with any Transaction Document, or any
representation or warranty made by the Master Servicer (or any of its officers)
under or in connection with any Transaction Document, any Information Package,
Interim Information Package or any other information or report delivered by or
on behalf of the Master Servicer, which shall have been false, incorrect or
misleading in any material respect when made or deemed made or delivered, as the
case may be, or the failure of the Master Servicer to comply with any applicable
law, rule or regulation with respect to any Pool Receivable or the related
Contract; provided, however, that in the case of any representation, warranty or
information that was not made or delivered in writing, indemnification shall be
available to an Indemnified Party hereunder only if such representation,
warranty or information was reasonably relied upon by such Indemnified Party.
Notwithstanding the foregoing, in no event shall any Indemnified Party be
awarded any Indemnified Amounts (a) to the extent determined by a court of
competent jurisdiction to have resulted from gross negligence or willful
misconduct on the part of such Indemnified Party or (b) recourse for Defaulted
Receivables. The Master Servicer further agrees to indemnify any agent (which is
not otherwise an Indemnified Party) of any of Bank of America, the Agents, the
Purchasers, the Liquidity Banks, and the Liquidity Agents forthwith on demand,
from and against any and all Indemnified Amounts awarded against or incurred by
any of them arising out of or caused by the gross negligence or willful
misconduct of the Master Servicer (unless otherwise expressly agreed to in
writing by the Master Servicer).
If for any reason the indemnification provided above in this Section 13.2 (and
subject to the exceptions set forth therein) is unavailable to an Indemnified
Party or is insufficient to hold an Indemnified Party harmless, then the Master
Servicer shall contribute to the amount paid or payable by such Indemnified
Party as a result of such loss, claim, damage or liability in such proportion as
is appropriate to reflect not only the relative benefits received by such
Indemnified Party on the one hand and the Master Servicer on the other hand but
also the relative fault of such Indemnified Party as well as any other relevant
equitable considerations.
Article XIV
Miscellaneous
Section 14.1 Amendments, Etc.
No amendment or waiver of any provision of this Agreement nor consent to any
departure by any Seller Party therefrom shall in any event be effective unless
the same shall be in writing and signed by (a) each Seller Party, the Agents and
the Purchasers (with respect to an amendment), or (b) the Agents and the
Purchasers (with respect to a waiver or consent by them) or any Seller Party
(with respect to a waiver or consent by it), as the case may be, and then such
waiver or consent shall be effective only in the specific instance and for the
specific purpose for which given to the extent that any Purchaser is required to
obtain any confirmation from any rating agency, such confirmation shall be in
writing with respect to any material amendment, modification, waiver or consent.
The parties acknowledge that, before entering into such an amendment or granting
such a waiver or consent, any Purchaser may also be required to obtain the
approval of some or all of the related Liquidity Banks or to obtain confirmation
from certain rating agencies that such amendment, waiver or consent will not
result in a withdrawal or reduction of the ratings of the Commercial Paper Notes
to the extent that any Purchaser is required to obtain any confirmation from any
rating agency, such confirmation shall be in writing with respect to any
material amendment, modification, waiver or consent.

 

49

--------------------------------------------------------------------------------

 

Section 14.2 Notices, Etc.
All notices and other communications provided for hereunder shall, unless
otherwise stated herein, be in writing (including facsimile communication) and
shall be personally delivered or sent by express mail or courier or by certified
mail, postage prepaid, or by facsimile, to the intended party at the address or
facsimile number of such party set forth on Schedule 14.2 or at such other
address or facsimile number as shall be designated by such party in a written
notice to the other parties hereto. All such notices and communications shall be
effective, (a) if personally delivered or sent by express mail or courier or if
sent by certified mail, when received, and (b) if transmitted by facsimile, when
sent, receipt confirmed by telephone or electronic means; provided, however,
that the financial statements required to be delivered by Sections 7.2(a),
7.2(b), 7.2(c) and 7.2(d) shall be deemed delivered on the date such financial
statements are deposited in the United States mail with first class postage
prepaid, addressed to the intended party at the address as set forth on
Schedule 14.2 or at such other address as shall be designated by such party in a
written notice to the other parties hereto.
Section 14.3 No Waiver; Remedies.
No failure on the part of the Administrative Agent, any Affected Party, any
Indemnified Party, any Purchaser or any other holder of the Asset Interest (or
any portion thereof) to exercise, and no delay in exercising, any right
hereunder shall operate as a waiver thereof; nor shall any single or partial
exercise of any right hereunder preclude any other or further exercise thereof
or the exercise of any other right. The remedies herein provided are cumulative
and not exclusive of any remedies provided by law. Without limiting the
foregoing, Bank of America, individually, and as the Administrative Agent and
the Yorktown Purchaser Agent and each Liquidity Bank is hereby authorized by the
Seller at any time and from time to time, to the fullest extent permitted by
law, to set off and apply any and all deposits (general or special, time or
demand provisional or final) at any time held and other indebtedness at any time
owing by Bank of America and such Liquidity Bank to or for the credit or the
account of the Seller, against any and all of the obligations of the Seller now
or hereafter existing under this Agreement, to any Agent, any Affected Party,
any Indemnified Party or any Purchaser, or their respective successors and
assigns.
Section 14.4 Binding Effect; Survival.
This Agreement shall be binding upon and inure to the benefit of each Seller
Party, the Agents, the Purchasers and their respective successors and assigns,
and the provisions of Section 4.2 and Article XIII shall inure to the benefit of
the Affected Parties and the Indemnified Parties, respectively, and their
respective successors and assigns; provided, however, nothing in the foregoing
shall be deemed to authorize any assignment not permitted by Section 12.1. This
Agreement shall create and constitute the continuing obligations of the parties
hereto in accordance with its terms, and shall remain in full force and effect
until the Final Payout Date. The rights and remedies with respect to any breach
of any representation and warranty made by the Seller pursuant to Article VI and
the indemnification and payment provisions of Article XIII and Sections 4.2,
14.5, 14.6, 14.7 and 14.15 shall be continuing and shall survive any termination
of this Agreement.

 

50

--------------------------------------------------------------------------------

 

Section 14.5 Costs, Expenses and Taxes.
In addition to its obligations under Article XIII, the Seller Parties jointly
and severally agree to pay on demand:
(a) all costs and expenses incurred by the Agents, any Liquidity Bank, any
Purchaser and their respective Affiliates in connection with:
(i) the negotiation, preparation, execution and delivery of this Agreement, the
other Transaction Documents or the Liquidity Agreement, any amendment of or
consent or waiver under any of the Transaction Documents which is requested or
proposed by any Seller Party (whether or not consummated), or the enforcement by
any of the foregoing Persons of, or any actual or claimed breach of, this
Agreement or any of the other Transaction Documents, including, without
limitation, the reasonable fees and expenses of counsel to any of such Persons
incurred in connection with any of the foregoing or in advising such Persons as
to their respective rights and remedies under any of the Transaction Documents
in connection with any of the foregoing, and
(ii) the administration (including periodic auditing as provided for herein) of
this Agreement and the other Transaction Documents, including, without
limitation, all reasonable out-of-pocket expenses (including reasonable fees and
expenses of independent accountants), incurred in connection with any review of
any Seller Party’s books and records either prior to the execution and delivery
hereof but subject to the provisions of the Fee Letter or pursuant to
Section 7.1(c), subject to the limitations set forth in such Section 7.1(c); and
(b) all stamp and other taxes and fees payable or determined to be payable in
connection with the execution, delivery, filing and recording of this Agreement
or the other Transaction Documents (and the Seller Parties, jointly and
severally agree to indemnify each Indemnified Party against any liabilities with
respect to or resulting from any delay in paying or omission to pay such taxes
and fees).
(c) all losses, costs and expenses incurred by the Purchasers or the Agents in
connection with or as a result of any failure to make a timely payment or
deposit, including, without limitation, by reason of any mechanical delay in or
malfunction of the Fedwire system or due to an error on the part of the
initiating or receiving bank.

 

51

--------------------------------------------------------------------------------

 

Section 14.6 No Proceedings.
The Master Servicer hereby agrees that it will not institute against the Seller,
or join any Person in instituting against the Seller, and each Seller Party, the
Master Servicer, Bank of America (individually, as Administrative Agent and as
Yorktown Purchaser Agent) and each Purchaser, as to each other Purchaser, hereby
agrees that it will not institute against any Purchaser, or join any other
Person in instituting against any Purchaser, any insolvency proceeding (namely,
any proceeding of the type referred to in the definition of Event of Bankruptcy)
so long as any Commercial Paper Notes issued by such Purchaser shall be
outstanding or there shall not have elapsed one year plus one day since the last
day on which any such Commercial Paper Notes shall have been outstanding.
Section 14.7 Confidentiality of Seller Information.
(a) Confidential Seller Information. Each party hereto (other than Seller
Parties) acknowledges that certain of the information provided to such party by
or on behalf of the Seller Parties in connection with this Agreement and the
transactions contemplated hereby is or may be confidential, and each such party
severally agrees that, unless the Master Servicer shall otherwise agree in
writing, and except as provided in subsection (b), such party will not disclose
to any other person or entity:
(i) any information regarding, or copies of, any nonpublic financial statements,
reports, schedules and other information furnished by any Seller Party to any
Purchaser or any Agent (A) prior to the date hereof in connection with such
party’s due diligence relating to the Seller Parties and the transactions
contemplated hereby, or (B) pursuant to this Agreement, including without
limitation, Section 3.1, 5.1, 6.1(i), 7.1(c) or 7.2, or
(ii) any other information regarding any Seller Party which is designated by any
Seller Party to such party in writing as confidential
(the information referred to in clauses (i) and (ii) above, whether furnished by
any Seller Party or any attorney for or other representative thereof (each a
“Seller Information Provider”), is collectively referred to as the “Seller
Information”); provided, however, Seller Information shall not include any
information which is or becomes generally available to the general public or to
such party on a nonconfidential basis from a source other than any Seller
Information Provider, or which was known to such party on a nonconfidential
basis prior to its disclosure by any Seller Information Provider.
(b) Disclosure. Notwithstanding subsection (a), each party may disclose any
Seller Information:
(i) to any of such party’s independent attorneys, consultants and auditors, and
to any dealer or placement agent for such Purchaser’s Commercial Paper Notes,
who (A) in the good faith belief of such party, have a need to know such Seller
Information, and (B) are informed by such party of the confidential nature of
the Seller Information and the terms of this Section 14.7 and has agreed,
verbally or otherwise, to be bound by the provisions of this Section 14.7,

 

52

--------------------------------------------------------------------------------

 

(ii) to any Liquidity Bank, any actual or potential assignees of, or
participants in, any rights or obligations of any Purchaser, any Liquidity Bank
or the related Purchaser Agent under or in connection with this Agreement who
has agreed to be bound by the provisions of this Section 14.7,
(iii) to any rating agency that maintains a rating for such Purchaser’s
Commercial Paper Notes or is considering the issuance of such a rating, for the
purposes of reviewing the credit of such Purchaser in connection with such
rating,
(iv) to any other party to this Agreement (and any independent attorneys,
consultants and auditors of such party), for the purposes contemplated hereby,
(v) as may be required by any municipal, state, federal or other regulatory body
having or claiming to have jurisdiction over such party, in order to comply with
any law, order, regulation, regulatory request or ruling applicable to such
party,
(vi) subject to subsection (c), in the event such party is legally compelled (by
interrogatories, requests for information or copies, subpoena, civil
investigative demand or similar process) to disclose such Seller Information, or
(vii) in connection with the enforcement of this Agreement or any other
Transaction Document.
In addition, each Purchaser and each Agent may disclose on a “no name” basis to
any actual or potential investor in such Purchaser’s Commercial Paper Notes
information regarding the nature of this Agreement, the basic terms hereof
(including without limitation the amount and nature of such Purchaser’s
commitment and Invested Amount with respect to the Asset Interest funded by such
Purchaser Group and any other credit enhancement provided by any Seller Party
hereunder), the nature, amount and status of the Pool Receivables, and the
current and/or historical ratios of losses to liquidations and/or outstandings
with respect to the Receivables Pool.
(c) Legal Compulsion. In the event that any party hereto (other than any Seller
Party) or any of its representatives is requested or becomes legally compelled
(by interrogatories, requests for information or documents, subpoena, civil
investigative demand or similar process) to disclose any of the Seller
Information, such party will (or will cause its representative to):
(i) provide the Master Servicer with prompt written notice so that (A) the
Master Servicer may seek a protective order or other appropriate remedy, or
(B) the Master Servicer may, if it so chooses, agree that such party (or its
representatives) may disclose such Seller Information pursuant to such request
or legal compulsion; and
(ii) unless the Master Servicer agrees that such Seller Information may be
disclosed, make a timely objection to the request or compulsion to provide such
Seller Information on the basis that such Seller Information is confidential and
subject to the agreements contained in this Section 14.7.

 

53

--------------------------------------------------------------------------------

 

In the event such protective order or remedy is not obtained, or the Master
Servicer agrees that such Seller Information may be disclosed, such party will
furnish only that portion of the Seller Information which (in such party’s good
faith judgment) is legally required to be furnished and will exercise reasonable
efforts to obtain reliable assurance that confidential treatment will be
afforded the Seller Information.
(d) Notwithstanding anything herein to the contrary, any party to this Agreement
(and any employee, representative, or other agent of any party to this
Agreement) may disclose to any and all persons, without limitation of any kind,
the tax treatment and tax structure of the transactions contemplated by this
Agreement and all materials of any kind (including opinions and other tax
analyses) that are provided to it relating to such tax treatment and tax
structure. However, any such information relating to the tax treatment or tax
structure is required to be kept confidential to the extent necessary to comply
with any applicable federal or state securities laws.
(e) This Section 14.7 shall survive termination of this Agreement.
Section 14.8 Captions and Cross References.
The various captions (including, without limitation, the table of contents) in
this Agreement are provided solely for convenience of reference and shall not
affect the meaning or interpretation of any provision of this Agreement. Unless
otherwise indicated, references in this Agreement to any Section, Appendix,
Schedule or Exhibit are to such Section of or Appendix, Schedule or Exhibit to
this Agreement, as the case may be, and references in any Section, subsection,
or clause to any subsection, clause or subclause are to such subsection, clause
or subclause of such Section, subsection or clause.
Section 14.9 Integration.
This Agreement and the other Transaction Documents contain a final and complete
integration of all prior expressions by the parties hereto with respect to the
subject matter hereof and shall constitute the entire understanding among the
parties hereto with respect to the subject matter hereof, superseding all prior
oral or written understandings.
Section 14.10 Governing Law.
THIS AGREEMENT, INCLUDING THE RIGHTS AND DUTIES OF THE PARTIES HERETO, SHALL BE
GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF
NEW YORK WITHOUT REFERENCE TO PRINCIPLES OF CONFLICTS OF LAW (OTHER THAN SECTION
5-1401 OF THE NEW YORK GENERAL OBLIGATIONS LAW).

 

54

--------------------------------------------------------------------------------

 

Section 14.11 Waiver Of Jury Trial.
EACH PARTY HERETO HEREBY EXPRESSLY WAIVES ANY RIGHT TO A TRIAL BY JURY IN ANY
ACTION OR PROCEEDING TO ENFORCE OR DEFEND ANY RIGHTS UNDER THIS AGREEMENT, ANY
OTHER TRANSACTION DOCUMENT OR UNDER ANY AMENDMENT, INSTRUMENT OR DOCUMENT
DELIVERED OR WHICH MAY IN THE FUTURE BE DELIVERED IN CONNECTION HEREWITH OR
ARISING FROM ANY BANKING OR OTHER RELATIONSHIP EXISTING IN CONNECTION WITH THIS
AGREEMENT OR ANY OTHER TRANSACTION DOCUMENT AND AGREES THAT ANY SUCH ACTION OR
PROCEEDING SHALL NOT BE TRIED BEFORE A JURY.
Section 14.12 Consent To Jurisdiction; Waiver Of Immunities.
EACH PARTY HERETO HEREBY ACKNOWLEDGES AND AGREES THAT:
(a) IT IRREVOCABLY (i) SUBMITS TO THE JURISDICTION, FIRST, OF ANY UNITED STATES
FEDERAL COURT, AND SECOND, IF FEDERAL JURISDICTION IS NOT AVAILABLE, OF ANY NEW
YORK STATE COURT, AS APPROPRIATE, IN EITHER CASE SITTING IN NEW YORK COUNTY, NEW
YORK, IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT,
(ii) AGREES THAT ALL CLAIMS IN RESPECT OF SUCH ACTION OR PROCEEDING MAY BE HEARD
AND DETERMINED ONLY IN SUCH NEW YORK STATE OR FEDERAL COURT AND NOT IN ANY OTHER
COURT, AND (iii) WAIVES, TO THE FULLEST EXTENT IT MAY EFFECTIVELY DO SO, THE
DEFENSE OF AN INCONVENIENT FORUM TO THE MAINTENANCE OF SUCH ACTION OR
PROCEEDING.
(b) TO THE EXTENT THAT IT HAS OR HEREAFTER MAY ACQUIRE ANY IMMUNITY FROM THE
JURISDICTION OF ANY COURT OR FROM ANY LEGAL PROCESS (WHETHER THROUGH SERVICE OR
NOTICE, ATTACHMENT PRIOR TO JUDGMENT, ATTACHMENT IN AID TO EXECUTION, EXECUTION
OR OTHERWISE) WITH RESPECT TO ITSELF OR ITS PROPERTY, IT HEREBY IRREVOCABLY
WAIVES SUCH IMMUNITY IN RESPECT OF ITS OBLIGATIONS UNDER OR IN CONNECTION WITH
THIS AGREEMENT.
Section 14.13 Execution in Counterparts.
This Agreement may be executed in any number of counterparts and by the
different parties hereto in separate counterparts, each of which when so
executed shall be deemed to be an original and all of which when taken together
shall constitute one and the same Agreement. Delivery of an executed counterpart
of a signature page to this Agreement by facsimile shall be as effective as
delivery of a manually executed counterpart of a signature page of this
Agreement.

 

55

--------------------------------------------------------------------------------

 

Section 14.14 No Recourse Against Other Parties.
The obligations of each Purchaser under this Agreement are solely the corporate
obligations of such Purchaser. No recourse shall be had for the payment of any
amount owing by any Purchaser under this Agreement or for the payment by such
Purchaser of any fee in respect hereof or any other obligation or claim of or
against such Purchaser arising out of or based upon this Agreement, against Bank
of America or against any employee, officer, director, incorporator or
stockholder of such Purchaser. For purposes of this Section 14.15, the term
“Bank of America” shall mean and include Bank of America, National Association
and all affiliates thereof and any employee, officer, director, incorporator,
stockholder or beneficial owner of any of them; provided, however, for the
purposes of this paragraph, the Yorktown Purchaser shall not be considered to be
an affiliate of Bank of America. Each of the Seller, the Master Servicer and the
Agents agree that each Purchaser shall be liable for any claims that such party
may have against such Purchaser only to the extent such Purchaser has excess
funds and to the extent such assets are insufficient to satisfy the obligations
of such Purchaser hereunder, such Purchaser shall have no liability with respect
to any amount of such obligations remaining unpaid and such unpaid amount shall
not constitute a claim against such Purchaser. Any and all claims against any
Purchaser or the related Purchaser Agent shall be subordinate to the claims of
the holders of Commercial Paper Notes and the related Liquidity Banks.
Section 14.15 Severability of Provisions.
Any provision of this Agreement which is prohibited or unenforceable in any
jurisdiction, shall as to such jurisdiction, be ineffective to the extent of
such prohibition or unenforceability, without invalidating the remaining
provisions hereof or affecting the validity or enforceability of such provisions
in any other jurisdiction.
[remainder of page intentionally left blank]

 

56

--------------------------------------------------------------------------------

 

IN WITNESS WHEREOF, the parties have caused this Agreement to be executed by
their respective officers thereunto duly authorized, as of the date first above
written.

                      LPAC CORP.,         as Seller    
 
               
 
  By:                          
 
      Name:        
 
      Title:  
 
   
 
         
 
   
 
                    LENNOX INDUSTRIES INC.,         as Master Servicer    
 
               
 
  By:                          
 
      Name:        
 
      Title:  
 
   
 
         
 
   

[additional signatures to follow]

 

 

--------------------------------------------------------------------------------

 

                      YC SUSI TRUST,         as a Purchaser    
 
                    By: Bank of America, National Association,         as
Administrative Trustee    
 
               
 
  By:                          
 
      Name:        
 
      Title:  
 
   
 
         
 
   
 
                    BANK OF AMERICA, NATIONAL ASSOCIATION,         as
Administrative Agent and Yorktown Purchaser Agent    
 
               
 
  By:                          
 
      Name:        
 
      Title:  
 
   
 
         
 
   

[end of signatures]

 

 

--------------------------------------------------------------------------------

 

APPENDIX A
DEFINITIONS
This is Appendix A to the Second Amended and Restated Receivables Purchase
Agreement dated as of June 16, 2003 among LPAC Corp., as the Seller, Lennox
Industries, Inc., as the Master Servicer, YC SUSI Trust, as a Purchaser and Bank
of America, as the Administrative Agent and the Yorktown Purchaser Agent (as
amended, supplemented or otherwise modified from time to time, this
“Agreement”). Each reference in this Appendix A to any Section, Appendix or
Exhibit refers to such Section of or Appendix or Exhibit to this Agreement.
A. Defined Terms. As used in this Agreement, unless the context requires a
different meaning, the following terms have the meanings indicated below:
Adjusted Dilution Ratio: The 12-month rolling average of the Dilution Ratio.
Administrative Agent: As defined in the preamble.
Affected Party: Each of Purchasers, each Liquidity Bank, any assignee or
participant of any Purchaser or any Liquidity Bank, Bank of America, any
successor to Bank of America, as Administrative Agent or Yorktown Purchaser
Agent, or any sub-agent of any Agent.
Affiliate: With respect to any other Person controlling, controlled by, or under
common control with, such Person.
Affiliated Obligor: In relation to any Obligor, an Obligor that is an Affiliate
of such Obligor.
Agent: Any Purchaser Agent or the Administrative Agent, as the case may be.
Allocation Limit: As defined in Section 1.1.
Alternate Funding: A Yorktown Alternate Funding.
Alternate Investor: With respect to the Yorktown Purchaser Group, the Yorktown
Investors.
Asset Interest: An undivided percentage ownership interest in favor of the
Administrative Agent, as agent for the Secured Parties, determined from time to
time as provided in Section 1.4(b), in (i) all then outstanding Pool Receivables
and (ii) all Related Assets.
Asset Tranche: At any time, a portion of the Asset Interest funded by any
Purchaser Group selected by the related Purchaser Agent pursuant to Section 2.1.
Assurance Agreement: The Second Amended and Restated Assurance Agreement dated
as of November 26, 2008 made by Lennox International, as the same may be
amended, restated, supplemented or modified from time to time.

 

 

--------------------------------------------------------------------------------

 

Bank of America: As defined in the preamble.
Bank Rate: For any Yield Period with respect to any Asset Tranche:
(i) in the case of any Yield Period other than a Yield Period described in
clause (ii) below, an interest rate per annum equal to the sum of (A) the Bank
Rate Spread per annum, plus (B) Eurodollar Rate (Reserve Adjusted) for such
Yield Period;
(ii) in the case of
(A) any Yield Period commencing on or prior to the first day of which the
related Purchaser or any related Liquidity Bank shall have notified the related
Purchaser Agent that (1) the introduction of or any change in or in the
interpretation of any law or regulation makes it unlawful, or any central bank
or other Governmental Authority asserts that it is unlawful, for such Person to
fund such Asset Tranche at the rate described in clause (i) above, or (2) due to
market conditions affecting the interbank eurodollar market, funds are not
reasonably available to such Person in such market in order to enable it to fund
such Asset Tranche at the rate described in clause (i) above (and in the case of
subclause (1) or (2) above, such Person shall not have subsequently notified the
related Purchaser Agent that such circumstances no longer exist), or
(B) any Yield Period as to which the related Purchaser Agent does not receive
notice or determine, by no later than 12:00 noon (Atlanta, Georgia time) on the
third Business Day preceding the first day of such Yield Period, that the
related Asset Tranche will be funded by Alternate Fundings or Liquidity Fundings
of the related Purchaser Group, as the case may be, and not by the issuance of
Commercial Paper Notes,
an interest rate per annum equal to the Base Rate in effect from time to time
during such Yield Period; it being understood that, in the case of paragraph
(ii)(A) above, such rate shall only apply to the Person affected by the
circumstances described in such paragraph (ii)(A).
Bank Rate Spread: As defined in the Fee Letter.
Base Rate: For any day, the rate per annum equal to the higher as of such day of
(i) the Prime Rate, or (ii) one-half of one percent above the Federal Funds
Rate. For purposes of determining the Base Rate for any day, changes in the
Prime Rate or the Federal Funds Rate shall be effective on the date of each such
change. The Base Rate is not necessarily intended to be the lowest rate of
interest determined by Bank of America o in connection with extensions of
credit.
Broken Funding Costs: For any Asset Interest, the sum of Yorktown Broken Funding
Costs.

 

 

--------------------------------------------------------------------------------

 

Business Day: (i) with respect to any matters relating to the Eurodollar Rate, a
day on which banks are open for business in New York, New York, and in Atlanta,
Georgia and on which dealings in Dollars are carried on in the London interbank
market and (ii) for all other purposes, any day other than a Saturday, Sunday or
other day on which banking institutions or trust companies in New York, New
York, or Atlanta, Georgia are authorized or obligated by law, executive order or
governmental decree to be closed.
Capital Lease: At any time, a lease with respect to which the lessee is required
concurrently to recognize the acquisition of an asset and the incurrence of a
liability in accordance with GAAP.
Change in Control:
(i) in relation to either of the Master Servicer or Lennox International, the
acquisition after the date hereof by any person or group of persons (within the
meaning of Section 13 or 14 of the Exchange Act), of beneficial ownership
(within the meaning of Rule 13d-3 promulgated by the Securities and Exchange
Commission under the Exchange Act) of issued and outstanding shares of the
capital stock of such Person entitled (without regard to the occurrence of any
contingency) to vote for the election of members of the board of directors of
such Person and having a then present right to exercise 50% or more of the
voting power for the election of members of the board of directors of such
Person attached to all such outstanding shares of capital stock of such Person,
unless otherwise agreed in writing by the Agents; and
(ii) in relation to the Seller, the failure of Lennox International to own
(directly or through wholly-owned Subsidiaries of Lennox International) 100% of
the issued and outstanding shares of the capital stock (including all warrants,
options, conversion rights, and other rights to purchase or convert into such
stock) of the Seller on a fully diluted basis.
Code: The Internal Revenue Code of 1986, as the same may be amended from time to
time.
Collateral: As defined in Section 9.1.
Collection Account: The segregated account that may be established and
maintained with Bank of America in the name of the Seller.
Collection Period:
(i) the period from the date of the initial Purchase to the last day of the
calendar month in which such date occurs; and
(ii) thereafter, each period from the last day of the next preceding Collection
Period to the last day of the next following calendar month;
provided, however, that during any period during which Weekly Reports are
required to be delivered, the Collection Period related to each related
Settlement Date shall be related Weekly Reporting Period; provided, further,
however, that the last Collection Period shall end on the Final Payout Date.

 

 

--------------------------------------------------------------------------------

 

Collections: With respect to any Receivable, all funds which either (i) are
received by the Seller, the Originators or the Master Servicer from or on behalf
of the related Obligor in payment of any amounts owed (including, without
limitation, purchase prices, finance charges, interest and all other charges) in
respect of such Receivable, or applied to such amounts owed by such Obligor
(including, without limitation, insurance payments that the Seller, the
Originator or the Master Servicer applies in the ordinary course of its business
to amounts owed in respect of such Receivable and net proceeds of sale or other
disposition of repossessed goods or other collateral or property of the Obligor
or any other party directly or indirectly liable for payment of such Receivable
and available to be applied thereon), or (ii) are Deemed Collections; provided
that, prior to such time as Lennox shall cease to be the Master Servicer, late
payment charges, collection fees, extension fees and any other similar fees or
expenses billed to and collected from an Obligor shall not be deemed to be
Collections.
Commercial Paper Notes: The commercial paper promissory notes issued by any
Purchaser in the commercial paper market.
Conduit Investor: Any commercial paper conduit that from time to time is a
member of a Purchaser Group.
Contract: A contract between the Seller or the Originator and any Person, or an
invoice sent or to be sent by the Seller or the Originator, pursuant to or under
which a Receivable shall arise or be created, or which evidences a Receivable. A
‘related Contract’ or similar reference means rights to payment, collection and
enforcement, and other rights under a Contract to the extent directly related to
a Receivable in the Receivables Pool, but not any other rights under such
Contract.
CP Accrual Period: Each Collection Period during which any Asset Tranche is
funded with Commercial Paper Notes.
CP Costs: The Yorktown CP Costs.
Credit Agreement: That certain Third Amended and Restated Revolving Credit
Facility Agreement dated as of October 12, 2007 by and among Lennox
International Inc. as the borrower, certain financial institutions, as the
lenders, Bank of America, as administrative agent for the lenders, swingline
lender and as an issuing bank, JPMorgan Chase Bank, N.A. and Wachovia Bank,
National Association, as co-syndication agents, The Bank of Tokyo-Mitsubishi
UFJ, Ltd. and Wells Fargo Bank, N.A., as co-documentation agents, U.S. Bank
National Association and the Bank of Nova Scotia, as co-managing agents and Banc
of America Securities LLC and J.P. Morgan Securities, Inc., as joint lead
arrangers and joint book managers, as such agreement may be further amended,
restated, substituted or replaced from time to time.
Credit and Collection Policy: Collectively, those credit and collection policies
and practices of the Originators and the Master Servicer relating to Contracts
and Receivables as in effect on the date of this Agreement in the forms of
Exhibit C-1, C-2 and C-3 hereto, as may hereafter be modified without violating
Section 7.3(c), but subject to compliance with applicable tariffs or state
regulations in effect from time to time.
Credit Event: The earliest of (i) an Event of Bankruptcy with respect to Lennox
International, (ii) an Event of Bankruptcy with respect to Lennox or (iii) any
event described in subsection (d) of Section 10.1 hereof.

 

 

--------------------------------------------------------------------------------

 

Cut-Off Date: The last day of each fiscal month of the Servicer.
Days Sales Outstanding or DSO: As of any day, an amount equal to the product of
(i) 91 and (ii) a fraction the numerator of which is the aggregate Unpaid
Balance of Pool Receivables as of the most recent Cut-Off Date and the
denominator of which is the aggregate dollar amount of Receivables generated by
the Originators during the three Collection Periods including and immediately
preceding such Cut-Off Date.
Deemed Collections: As defined in Section 3.2(a).
Default Horizon Ratio: As of any Cut-Off Date, the ratio (expressed as a
percentage) of (i) the aggregate sales of the Originators during the immediately
preceding five (5) Collection Periods ending on such Cut-Off Date divided by
(ii) the Net Pool Balance on such Cut-Off Date.
Default Ratio: At any time, an amount (expressed as a percentage) equal to a
fraction (i) the numerator of which is equal to the sum of the Outstanding
Balances of Eligible Receivables, during the immediately preceding Collection
Period, as to which (A) any payment, or part thereof, remains unpaid for more
than 150 days from the original due date for such payment or (B) any portion of
the Outstanding Balance (including amounts related to an Event of Bankruptcy) or
other payment due in respect thereof was (or should have been) written off and
(ii) the denominator of which is the amount of sales generated during the
Collection Period six months prior to the immediately preceding Collection
Period.
Defaulted Receivable: A Receivable: (i) as to which any payment, or part
thereof, remains unpaid for more than 120 days from the original due date for
such payment, (ii) as to which any portion of the Outstanding Balance (including
amounts related to an Event of Bankruptcy) or other payment due in respect
thereof was (or should have been) written off.
Delinquency Ratio: At any time, the ratio (expressed as a percentage) computed
as of the Cut-Off Date for the next preceding Collection Period by dividing
(i) the aggregate Unpaid Balance of all Pool Receivables that are Delinquent
Receivables on such Cut-Off Date by (ii) the aggregate Unpaid Balance of Pool
Receivables on such Cut-Off Date.
Delinquent Receivable: A Pool Receivable (i) that is not a Defaulted Receivable
and (ii) as to which any payment, or part thereof, remains unpaid for 91 days or
more from the original due date for such payment.
Dilution: The amount of any reduction or cancellation of the Unpaid Balance of a
Pool Receivable as described in Section 3.2(a).
Dilution Horizon: For any day, the weighted average credit memo lag, in days,
set forth in the most recent review conducted pursuant to the provisions of
Section 7.1(c).
Dilution Horizon Ratio: As of any date, the product (calculated as of the most
recent Reporting Date) of (a) the decimal equivalent of a fraction, the
numerator of which is the aggregate dollar amount of all Receivables generated
by the Originators during the most recent Collection Period and the denominator
of which is the Net Pool Balance as of the most recent Cut-Off Date and (b) the
decimal equivalent of a fraction the numerator of which is the then current
Dilution Horizon and the denominator of which is 31.

 

 

--------------------------------------------------------------------------------

 

Dilution Ratio: As of any Cut-Off Date, the percentage equivalent of a fraction,
the numerator of which is the aggregate dollar amount of Dilutions that occurred
during the Collection Period ending on such date and the denominator of which is
the aggregate dollar amount of all Receivables originated by the Originators
during such Collection Period.
Dilution Reserve: The product of (i) the sum of (A) the product of (1) 2 and
(2) the Adjusted Dilution Ratio and (B) the Dilution Volatility Component and
(ii) the Dilution Horizon Ratio.
Dilution Volatility Component: The product of (i) the positive excess, if any,
of (A) the highest Dilution Ratio over the past 12 months over (B) the Adjusted
Dilution Ratio and (ii) a fraction, the numerator of which is the highest three
month rolling average Dilution Ratio over the past 12 months and the denominator
of which is the Adjusted Dilution Ratio.
Dollars: Means dollars in lawful money of the United States of America.
Downgraded Liquidity Bank: A Liquidity Bank with respect to which a Downgrading
Event shall have occurred.
Downgrading Event: With respect to any Person means the lowering of the rating
with regard to the short-term securities of such Person to below (i) A-1 by
Standard & Poor’s Ratings Group, or (ii) P-1 by Moody’s.
Earned Discount: For any Yield Period for any Asset Tranche funded with an
Alternate Funding or a Liquidity Funding by any Purchaser Group, as the case may
be:
IA x ER x ED + LF
360     
where:

             
 
  IA   =   the daily average (calculated at the close of business each day) of
the related Purchaser Group Invested Amount in such Asset Tranche during such
Yield Period,
 
           
 
  ER   =   the Earned Discount Rate for such Yield Period,
 
           
 
  ED   =   the actual number of days elapsed during such Yield Period, and
 
           
 
  LF   =   the Liquidation Fee, if any, during such Yield Period.

Earned Discount Rate: For any Yield Period for any Asset Tranche funded by an
Alternate Funding or a Liquidity Funding, as the case may be, the Bank Rate for
such Asset Tranche and such Yield Period.
provided, however, that on any day when any Liquidation Event or an Unmatured
Liquidation Event shall have occurred and be continuing, the Earned Discount
Rate for each Asset Tranche (including without limitation, Asset Tranches funded
through the issuance of Commercial Paper Notes) shall mean a rate per annum
equal to the Base Rate plus 2% per annum.

 

 

--------------------------------------------------------------------------------

 

Effective Date: December 13, 2007.
Eligible Receivable: At any time, a Receivable:
(i) which is a Pool Receivable arising out of the sale by an Originator in the
ordinary course of its business that has been sold or contributed to the Seller
pursuant to the Sale Agreement in a “true sale” transaction;
(ii) as to which the perfection of the Purchaser’s undivided ownership interest
therein is governed by the laws of a jurisdiction where the Uniform Commercial
Code — Secured Transactions is in force, and which constitutes an “account” as
defined in the Uniform Commercial Code as in effect in such jurisdiction;
(iii) the Obligor of which is a resident of the United States, or any of its
possessions or territories and is not an Affiliate or employee of any Seller
Party;
(iv) which is neither a Defaulted Receivable nor a Delinquent Receivable;
(v) with regard to which the representations and warranties of the Seller set
forth in Section 6.1(l) are true and correct;
(vi) the sale of an undivided interest in which does not contravene or conflict
with any law;
(vii) which is denominated and payable only in Dollars in the United States;
(viii) which arises under a Contract that has been duly authorized and that,
together with such Receivable, is in full force and effect and constitutes the
legal, valid and binding obligation of the Obligor of such Receivable
enforceable against such Obligor in accordance with its terms and is not subject
to any dispute, offset, counterclaim or defense whatsoever, provided, however,
that if such dispute, offset, counterclaim or defense affects only a portion of
the Unpaid Balance of such Receivable then such Receivable may be deemed an
Eligible Receivable to the extent of the portion of such Unpaid Balance which is
not so affected;
(ix) which, together with the Contract related thereto, does not contravene in
any material respect any laws, rules or regulations applicable thereto
(including, without limitation, laws, rules and regulations relating to usury,
truth in lending, fair credit billing, fair credit reporting, equal credit
opportunity, fair debt collection practices and privacy) and with respect to
which no party to the Contract related thereto is in violation of any such law,
rule or regulation in any material respect if such violation would impair the
collectibility of such Receivable;
(x) which satisfies in all material respects all applicable requirements of the
applicable Originator’s Credit and Collection Policy;

 

 

--------------------------------------------------------------------------------

 

(xi) which, according to the Contract related thereto, is due and payable within
120 days from the invoice date of such Receivable; provided, however, that on
any day when the Weighted Average Term shall exceed 45 days, the Contract
related thereto, shall be due and payable within 60 days from the invoice date
of such Receivable; provided, further that a Receivable that is otherwise an
“Eligible Receivable” shall not be an Eligible Receivable, if the Outstanding
Balance of such Receivable when added to the Outstanding Balance of all other
Receivables that are due and payable within 91-120 days from the invoice date of
such Receivable, would exceed 5% of the aggregate Outstanding Balance of all
Receivables;
(xii) not more than 35% of the aggregate Unpaid Balance of all Receivables of
the Obligor of which are Defaulted Receivables;
(xiii) the original term of which has not been extended and the Unpaid Balance
of which has not been adjusted more than one time;
(xiv) the Obligor of which is not a Governmental Authority as to which the
assignment of receivables owing therefrom requires compliance with the Federal
Assignment of Claims Act or other similar Legislation (unless the Seller has
complied therewith);
(xv) which is not classified by the “Terms Description” of the related
Originator’s Credit and Collection Policy or any other internal classification
procedures utilized by such Originator as (A) “Authorizer,” (B) “Cash
Application,” (C) “Check in Progress,” (D) “COD-Certified Check,” (E)
“COD-Company Check,” (F) “Consignment Shipment,” (G) “Direct Pay,” (H) “Due
Immediately,” (I) “Gratis,” (J) “Invoice to be Considered,” (K) “Paid in
Advance,” (L) “Payroll Deduction,” (M) “Warrant Gratis,” (N) “Warranty Parts,”
or (O) any other classification now existing or hereinafter created that has the
same or any similar definition as any of the foregoing;
(xvi) as to which the applicable Originator has satisfied and fully performed
all obligations on its part with respect to such Receivable required to be
fulfilled by it, and no further action is required to be performed by any Person
with respect thereto other than payment thereon by the applicable Obligor;
(xvii) as to which any Purchaser Agent has not notified Seller that such
Purchaser Agent has determined that such Receivable or class of Receivables is
not acceptable as an Eligible Receivable, including, without limitation, because
such Receivable arises under a Contract that is not acceptable to such Purchaser
Agent; and
(xviii) until such time as all of the Agents shall have provided to the Seller
and to each other their written consents otherwise, the Originator of which was
not Advanced Distributor Products LLC or Heatcraft Refrigeration Products LLC.
ERISA: The U.S. Employee Retirement Income Security Act of 1974, as amended from
time to time.

 

 

--------------------------------------------------------------------------------

 

ERISA Affiliate: Any trade or business (whether or not incorporated) that is a
member of a group of which the Master Servicer is a member and which is treated
as a single employer under Section 414 of the Code.
Eurodollar Business Day: A day of the year as defined in clause (i) of the
definition of Business Day.
Eurodollar Rate: For any Yield Period, the rate per annum determined on the
basis of the offered rate for deposits in Dollars of amounts equal or comparable
to the principal amount of the related Liquidity Funding or Alternate Funding,
as the case may be, offered for a term comparable to such Yield Period, which
rates appear on the Telerate Page 3750 effective as of 11:00 A.M., London time,
two Eurodollar Business Days prior to the first day of such Yield Period,
provided that if no such offered rates appear on such page, the Eurodollar Rate
for such Yield Period will be the arithmetic average (rounded upwards, if
necessary, to the next higher 1/100th of 1%) of rates quoted by not less than
two major banks in New York City, selected by the related Purchaser Agent, at
approximately 10:00 A.M., New York City time, two Eurodollar Business Days prior
to the first day of such Yield Period, for deposits in Dollars offered by
leading European banks for a period comparable to such Yield Period in an amount
comparable to the principal amount of such Liquidity Funding or Alternate
Funding, as the case may be.
Eurodollar Rate (Reserve Adjusted): With respect to any Yield Period means a
rate per annum equal to the quotient obtained (rounded upwards, if necessary, to
the next higher 1/100th of 1%) by dividing (i) the applicable Eurodollar Rate
for such Yield Period by (ii) 1.0 minus the Eurodollar Reserve Percentage.
Eurodollar Reserve Percentage: With respect to any Yield Period, the maximum
reserve percentage, if any, applicable to any Liquidity Bank under Regulation D
during such Yield Period (or if more than one percentage shall be applicable,
the daily average of such percentages for those days in such Yield Period during
which any such percentage shall be applicable) for determining the Liquidity
Bank’s reserve requirement (including any marginal, supplemental or emergency
reserves) with respect to liabilities or assets having a term comparable to such
Yield Period consisting or included in the computation of “Eurocurrency
Liabilities” pursuant to Regulation D. Without limiting the effect of the
foregoing, the Eurodollar Reserve Percentage shall reflect any other reserves
required to be maintained by the Liquidity Bank by reason of any Regulatory
Change against (i) any category of liabilities which includes deposits by
reference to which the “London Interbank Offered Rate” or “LIBOR” is to be
determined or (ii) any category of extensions of credit or other assets which
include LIBOR-based credits or assets.
Event of Bankruptcy: With respect to a Person if either:
(i) a case or other proceeding shall be commenced, without the application or
consent of such Person, in any court, seeking the liquidation, reorganization,
debt arrangement, dissolution, winding up, or composition or readjustment of
debts of such Person, the appointment of a trustee, receiver, custodian,
liquidator, assignee, sequestrator or the like for such Person or all or
substantially all of its assets, or any similar action with respect to such
Person under any law relating to bankruptcy, insolvency, reorganization, winding
up or composition or adjustment of debts, and such case or proceeding shall
continue undismissed, or unstayed and in effect, for a period of 60 consecutive
days; or an order for relief in respect of such Person shall be entered in an
involuntary case under the federal bankruptcy laws or other similar laws now or
hereafter in effect; or

 

 

--------------------------------------------------------------------------------

 

(ii) such Person shall commence a voluntary case or other proceeding under any
applicable bankruptcy, insolvency, reorganization, debt arrangement, dissolution
or other similar law now or hereafter in effect, or shall consent to the
appointment of or taking possession by a receiver, liquidator, assignee,
trustee, custodian, sequestrator (or other similar official) for, such Person or
for any substantial part of its property, or shall make any general assignment
for the benefit of creditors, or shall be adjudicated insolvent, or admit in
writing its inability to, pay its debts generally as they become due, or, if a
corporation or similar entity, its board of directors shall vote to implement
any of the foregoing.
Excess Concentration Amount: As of any date, the sum of the amounts by which the
aggregate Unpaid Balance of Receivables of each Obligor exceeds the Obligor
Concentration Limit for such Obligor.
Exchange Act: The Securities Exchange Act of 1934, as amended.
Existing Agreement: As defined in the Preamble.
Face Amount: With respect to any Commercial Paper Note, (i) the face amount
stated thereon in the case of any Commercial Paper Note issued on a discount
basis and (ii) the principal amount stated thereon plus the amount of all
interest scheduled to accrue on such Commercial Paper Note through its stated
maturity date in the case of any Commercial Paper Note issued on an interest
bearing basis.
Federal Funds Rate: For any day, the rate per annum (rounded upwards, if
necessary, to the next higher 1/100th of 1%) equal to the weighted average of
the rates on overnight Federal funds transactions with members of the Federal
Reserve System arranged by Federal funds brokers on such day, as published by
the Federal Reserve Bank of New York on the Business Day next succeeding such
day, provided that (i) if the day for which such rate is to be determined is not
a Business Day, the Federal Funds Rate for such day shall be such rate on such
transactions on the next preceding Business Day as so published on the next
succeeding Business Day, and (ii) if such rate is not so published for any day,
the Federal Funds Rate for such day shall be the average rate charged to Bank of
America on such day on such transactions, as reasonably determined by the Bank
of America.
Federal Reserve Board: The Board of Governors of the Federal Reserve System, or
any successor thereto or to the functions thereof.
Fee Letter: For each Purchaser Group, the fee letter (including all amendments,
modifications, restatements, replacements and addendums thereto) entered into
from time to time by the Seller and the members of such Purchaser Group.

 

 

--------------------------------------------------------------------------------

 

Final Payout Date: The date following the Termination Date on which the Invested
Amount shall have been reduced to zero and all other amounts payable by the
Seller under the Transaction Documents shall have been paid in full.
Funding Termination Date: The earliest of the following:
(i) November 25, 2009, or such later date as may, from time to time, be agreed
to in writing by the Agents;
(ii) the date on which the Agents declare a Funding Termination Date in a notice
to the Seller in accordance with Section 10.2(a); or
(iii) in accordance with Section 10.2(b), the Funding Termination Date occurs
automatically.
GAAP: Generally accepted accounting principles set forth in the opinions and
pronouncements of the Accounting Principles Board of the American Institute of
Certified Public Accountants and statements and pronouncements of the Financial
Accounting Standards Board or in such other statements by such accounting
profession, which are applicable to the circumstances as of the date of
determination.
Governmental Authority: Any nation or government, any state or other political
subdivision thereof, any central bank (or similar monetary or regulatory
authority) thereof, any body or entity exercising executive, legislative,
judicial, regulatory or administrative functions of or pertaining to government,
any court or arbitrator and any accounting board or authority (whether or not a
part of government) which is responsible for the establishment or interpretation
of national or international accounting principles, in each case whether foreign
or domestic.
Guaranty: With respect to any Person, any obligation (except the endorsement in
the ordinary course of business of negotiable instruments for deposit or
collection) of such Person guaranteeing or in effect guaranteeing any
Indebtedness, dividend or other obligation of any other Person in any manner,
whether directly or indirectly, including (without limitation) obligations
incurred through an agreement, contingent or otherwise, by such Person:
(i) to purchase such Indebtedness or obligation or any property constituting
security therefor;
(ii) to advance or supply funds (A) for the purchase or payment of such
Indebtedness or obligation, or (B) to maintain any working capital or other
balance sheet condition or any income statement condition of any other Person or
otherwise to advance or make available funds for the purchase of payment of such
Indebtedness or obligation;
(iii) to lease properties or to purchase properties or services primarily for
the purpose of assuring the owner of such Indebtedness or obligation of the
ability of any other Person to make payment of the Indebtedness or obligation;
or
(iv) otherwise to assure the owner of such Indebtedness or obligation against
loss in respect of thereof. In any computation of the Indebtedness or other
liabilities of the obligor under any Guaranty, the Indebtedness or other
obligations that are the subject of such Guaranty shall be assumed to be direct
obligations of such obligor.

 

 

--------------------------------------------------------------------------------

 

Indebtedness: With respect to any Person shall mean, at any time, without
duplication:
(i) its liabilities for borrowed money and its redemption obligations in respect
of mandatorily redeemable Preferred Stock;
(ii) its liabilities for the deferred purchase price of property acquired by
such Person (excluding accounts payable arising in the ordinary course of
business but including all liabilities created or arising under any conditional
sale or other title retention agreement with respect to any such property);
(iii) all liabilities appearing on its balance sheet in accordance with GAAP in
respect of Capital Leases;
(iv) all liabilities for borrowed money secured by any Lien with respect to any
property owned by such Person (whether or not it has assumed or otherwise become
liable for such liabilities);
(v) all its liabilities in respect of letters of credit or instruments serving a
similar function issued or accepted for its account by banks and other financial
institutions (whether or not representing obligations for borrowed money, but
excluding in any event obligations in respect of (A) trade or commercial letters
of credit issued for the account of such Person in the ordinary course of its
business and (B) stand-by letters of credit issued to support obligations of
such Person that are not of a type described in any of clauses (i), (ii), (iii),
(iv), (vi) or (vii) of this definition;
(vi) Swaps of such Person; and
(vii) any Guaranty of such Person with respect to liabilities of a type
described in any of clauses (i) through (vi) hereof.
Indebtedness of any Person shall include all obligations of such Person of the
character described in clauses (i) through (vii) above to the extent such Person
remains legally liable in respect hereof notwithstanding that any such
obligation is deemed to be extinguished under GAAP.
Indemnified Amounts: As defined in Section 13.1.
Indemnified Party: As defined in Section 13.1.
Independent Director: A Person who is a director of the Seller and who is not at
such time, and has not been at any time during the preceding five (5) years:
(i) a creditor, supplier, director, officer, employee, family member, manager,
member, limited partner, partner or contractor of Lennox International, the
Servicer any Originator or any of their respective Subsidiaries or Affiliates
(other than Seller), (ii) a direct or indirect or beneficial owner, excluding de
minimus ownership interests, (at the time of such individual’s appointment as an
Independent Director or at any time thereafter while serving as an Independent
Director) of any of the outstanding common shares of the Seller, Lennox
International, the Servicer, any Originator, or any of their respective
Subsidiaries or Affiliates, having general voting rights, or (iii) a person who
controls (whether directly, indirectly or otherwise) Lennox International, the
Servicer, any Originator or any of their respective Subsidiaries or Affiliates
(other than Seller) or any creditor, supplier, employee, officer, director,
manager, member, limited partner, partner or contractor of Lennox International,
the Servicer, any Originator or any of their respective Subsidiaries or
Affiliates (other than Seller). Such Person is subject to the written approval
of the Agents.

 

 

--------------------------------------------------------------------------------

 

Information Package: A report in the form of Exhibit 3.1(a) and, during any
period during which a Weekly Report is required to be delivered, each such
Weekly Report, provided, however, that, if a Liquidation Event has occurred and
is continuing, such Information Package shall be accompanied by an electronic
file in a form satisfactory to each Purchaser Agent.
Initial Cut-Off Date: May 31, 2000.
Initial Due Diligence Auditor: Such person designated by the Administrative
Agent as the initial due diligence auditor.
Initial Seller Note: As defined in the Sale Agreement.
Interim Cut-Off Date: Such date as may be specified by any Agent in any request
to provide an Interim Information Package pursuant to Section 1.4(c).
Interim Information Package: As defined in Section 1.4(c).
Interim Reporting Date: As defined in Section 1.4(c).
Interim Reporting Period: Such period as may be specified by any Agent in any
request to provide an Interim Information Package pursuant to Section 1.4(c).
Interim Settlement Date: One Business Day following each Interim Reporting Date.
Invested Amount: At any time with respect to the Asset Interest an amount equal
to (i) the aggregate of the amounts theretofore paid to Seller for Purchases
pursuant to Sections 1.1 and 1.2, less (ii) the aggregate amount of Collections
theretofore received and actually distributed to the Investors on account of
such Invested Amount pursuant to Section 1.3.
Investors: The Purchasers and the Liquidity Banks.
Lennox: As defined in the Preamble.
Lennox International: Lennox International Inc., a Delaware corporation.
Lien: With respect to any Person, any mortgage, lien, pledge, charge, security
interest, or other encumbrance, or any interest or title of any vendor, lessor,
lender or other secured party to or of such Person under any conditional sale or
other title retention agreement or Capital Lease, upon or with respect to any
property or asset of such Person (including in the case of stock, stockholder
agreements, voting trust agreements and all similar arrangements).

 

 

--------------------------------------------------------------------------------

 

Liquidation Event: As defined in Section 10.1.
Liquidation Fee: For each Asset Tranche (or portion thereof) funded through a
Liquidity Funding or an Alternate Funding, as the case may be, for each day in
any Yield Period (computed without regard to clause (iii) of the proviso of the
definition of “Yield Period”), the amount, if any, by which:
(i) the additional Earned Discount (calculated without taking into account any
Liquidation Fee) which would have accrued on the reductions of the related
Purchaser’s Tranche Investment with respect to such Asset Tranche during such
Yield Period (as so computed) if such reductions had not been made, exceeds
(ii) the income, if any, received by the related Purchaser from investing the
proceeds of such reductions of such Purchaser’s Tranche Investment.
Liquidation Period: The period commencing on the date on which a Liquidation
Event has occurred or is continuing and the Agents shall have notified Seller
and the Master Servicer in writing that the Liquidation Period has commenced,
and ending on the Final Payout Date; provided, hereunder, upon the occurrence of
a Liquidation Event described in Section 10.1(e), the Liquidation Period shall
commence automatically.
Liquidity Agent: With respect to the Yorktown Purchaser Group, Bank of America,
as agent for the Liquidity Banks under the Yorktown Liquidity Agreement, or any
successor to Bank of America in such capacity
Liquidity Bank: Any Yorktown Liquidity Bank.
Liquidity Funding: A purchase made by any Liquidity Bank (or simultaneous
purchases made by the Liquidity Banks) pursuant to any Liquidity Agreement.
Lockbox Account: An account maintained for the purpose of receiving Collections
at a bank or other financial institution which has executed a Lockbox Account.
Lockbox Agreement: A letter agreement, in substantially the form of Exhibit A-1,
among the Master Servicer, the Administrative Agent, the Seller and any Lockbox
Bank.
Lockbox Bank: Any of the banks holding one or more lockboxes or Lockbox Accounts
receiving Collections from Pool Receivables.
Loss Reserve: At any time, means the product of (1) 2.0 and (2) the highest
rolling three month average Default Ratio during the immediately preceding
twelve (12) months and (3) the most recently calculated Default Horizon Ratio.
Master Servicer: As defined in the preamble.

 

 

--------------------------------------------------------------------------------

 

Material Adverse Effect: With respect to any event or circumstance, a material
adverse effect on:
(i) (A) the assets, operations, business or financial condition of the Seller or
(B) the business, assets, operations or financial condition of Lennox
International and its Subsidiaries, taken as a whole, which could reasonably be
expected to have a material adverse effect on the creditworthiness of any
Originator;
(ii) the ability of the Seller, the Master Servicer, any Originator or any
Affiliate thereof to perform in all material respects its obligations under this
Agreement or any other Transaction Document; or
(iii) the validity or enforceability of this Agreement or any other Transaction
Document, or the validity, enforceability or collectibility of a material
portion of the Receivables Pool; or
(iv) the status, existence, perfection, priority or enforceability of the
Secured Parties’ and the Administrative Agent’s interest in the Receivables
Pool.
Material Indebtedness: Indebtedness, the aggregate principal amount of which is
greater than $25,000,000.
Moody’s: Moody’s Investors Service, Inc.
Net Pool Balance: On any date, an amount equal to (i) the aggregate Unpaid
Balance of all Eligible Receivables in the Receivables Pool on such date, minus
(ii) the Excess Concentration Amount on such date.
Net Worth: With respect to the Seller on any date, an amount equal to the
aggregate Outstanding Balance of all Pool Receivables minus the sum of (i) the
aggregate Outstanding Balance of all Defaulted Receivables on such day, (ii) the
aggregate principal amount outstanding of the Initial Seller Notes on such day,
together with all accrued and unpaid interest thereon on such day, and (iii) an
amount equal to the Net Pool Balance times the Asset Interest on such day.
Obligor: A Person obligated to make payments with respect to a Receivable,
including any guarantor thereof.
Obligor Concentration Limit: At any time, in relation to the aggregate Unpaid
Balance of Receivables owed by any single Obligor and its Affiliated obligors
(if any):
(i) for Obligors who have a short term unsecured debt rating currently assigned
to them by either S&P or Moody’s, the applicable concentration limit shall be
determined according to the following table (and, if such Obligor is rated by
both S&P and Moody’s and has a split rating, the applicable rating will be the
lower of the two):

                              Allowable % of   S&P Rating   Moody’s Rating    
Eligible Receivables  
A-1+
    P-1       10 %
A-1
    P-1       8 %
A-2
    P-2       6 %
A-3
    P-3       3 %

 

 

--------------------------------------------------------------------------------

 

If such Obligor is rated by only S&P, the applicable rating will be deemed to be
one ratings tier below the actual rating by S&P, and, if such Obligor is rated
by only Moody’s, the applicable rating will be deemed to be one ratings tier
below the actual rating by Moody’s, it being understood that if, for example,
Moody’s has assigned a P-1 rating to such Obligor and S&P has not rated it, the
applicable rating will be deemed to be P-2.
(ii) for Obligors who do not have a debt rating listed above or who are not
rated, 2% of the aggregate Unpaid Balance of Eligible Receivables at such time.
provided, however that at the Originator’s request and in the Agents’ sole
discretion, the Agents may permit certain obligors to have an Obligor
Concentration Limit in excess of those described in clauses (i) and (ii) above
(“Special Obligor”); provided, however, that any such Special Obligor
designation shall not take effect without the confirmation of approval to the
Agents by each of Fitch Investors Service, Moody’s and S&P of such designation,
if any Agent, in its sole discretion, determines that such confirmation of
approval shall be required.
Originator: Each of Lennox and any other Person who is a seller under the Sale
Agreement.
Outstanding Balance: With respect to any Receivable, the outstanding balance of
such Receivable in Dollars.
Person: An individual, partnership, corporation (including a business trust),
joint stock company, trust, unincorporated association, joint venture,
government or any agency or political subdivision thereof or any other entity.
Plan: Any pension plan subject to the provisions of Title IV of ERISA or
Section 412 of the Code which is maintained for employees of Lennox or any ERISA
Affiliate.
Pool Receivable: A Receivable in the Receivables Pool.
Pooled Commercial Paper: Commercial Paper Notes of Purchaser subject to any
pooling arrangement by Purchaser, but excluding Commercial Paper Notes issued by
Purchaser for a tenor and in an amount specifically requested by any Person in
connection with any agreement effected by Purchaser.
Preferred Stock: Any class of capital stock of a corporation that is preferred
over any other class of capital stock of such corporation as to the payment of
dividends or the payment of any amount upon liquidation or dissolution of such
corporation.
Prime Rate: Refers to that interest rate so denominated and set by Bank of
America from time to time as an interest rate basis for borrowings. The Prime
Rate is but one of several interest rate bases used by Bank of America. Bank of
America lends at interest rates above and below the Prime Rate.

 

 

--------------------------------------------------------------------------------

 

Program Fee: The aggregate “Program Fee” set forth in each Fee Letter.
Pro Rata Share: At any time with respect to a Purchaser Group, (a) with respect
to any payment to be made to such Purchaser Group, the percentage equivalent of
a fraction the numerator of which is equal to such Purchaser Group’s Purchaser
Group Invested Amount at such time and the denominator of which is equal to the
Invested Amount at such time and (b) with respect to any Purchase to be made by
such Purchaser Group, the percentage equivalent of a fraction, the numerator of
which is equal to the related Purchaser Group Limit and the denominator of which
is equal to the Purchase Limit.
Purchase: As defined in Section 1.1.
Purchase Limit: As defined in Section 1.1.
Purchaser: The Yorktown Purchaser and each Yorktown Investor, as the case may
be.
Purchaser Agent: The Yorktown Purchaser Agent.
Purchaser Agent Account: The Yorktown Purchaser Account.
Purchaser Group: The Yorktown Purchaser Group.
Purchaser Group Invested Amount: With respect to a Purchaser Group, the
aggregate of the portions of the Invested Amount outstanding at such time that
were funded by such Purchaser Group.
Purchaser Group Limit: The Yorktown Purchaser Group Limit.
Purchasers’ Share: With respect to any amount, at any time, the lesser of
(i) the most recently calculated Asset Interest and (ii) 100%.
Purchaser’s Tranche Investment: In relation to any Asset Tranche, the amount of
the Invested Amount allocated by the Administrative Agent to that Asset Tranche
pursuant to Section 2.1, provided, that at all times the aggregate amounts
allocated to all Asset Tranches shall equal the Invested Amount.
Qualifying Liquidity Bank: A Liquidity Bank with a rating of its short-term
securities equal to or higher than (i) A-1 by Standard & Poor’s and (ii) P-1 by
Moody’s.
Receivable: Any right to payment from a Person (other than an Affiliate),
whether constituting an account, chattel paper, instrument or general intangible
and includes the right to payment of any interest or finance charges and other
amounts with respect thereto.
Receivables Pool: At any time all then outstanding Receivables which have been
sold or contributed as capital, or purported to have been sold or contributed as
capital, by an Originator to the Seller, other than those reconveyed to an
Originator pursuant to Section 3.5 of the Sale Agreement.

 

 

--------------------------------------------------------------------------------

 

Regulation D: Regulation D of the Federal Reserve Board, as the same may be
amended or supplemented from time to time.
Regulatory Change: Any change after the date of this Agreement in United States
(federal, state or municipal) or foreign laws or regulations (including
Regulation D) or the adoption or making after such date of any interpretations,
directives or requests applying to a class of banks (including the Liquidity
Banks) of or under any United States (federal, state or municipal) or foreign,
laws, or regulations (whether or not having the force of law) by any
Governmental Authority or monetary authority charged with the interpretation or
administration thereof.
Reinvestment: As defined in Section 1.3(a)(iii).
Related Assets: (i) all rights to, but not any obligations under, all related
Contracts and other Related Security related to any Pool Receivables, (ii) all
rights and interests of the Seller under the Sale Agreement in relation to any
Pool Receivables, (iii) all books and records evidencing or otherwise relating
to any Pool Receivables, (iv) all Lockbox Accounts and all cash and investments
therein, to the extent constituting or representing the items in the following
clause (v) and (v) all Collections in respect of, and other proceeds of, any
Pool Receivables or any other Related Assets.
Related Security: With respect to any Pool Receivable, all of the Seller’s (in
the case of usage in the Receivables Purchase Agreement) or the Originator’s (in
the case of usage in the Sale Agreement) right, title and interest in and to:
(i) all Contracts that relate to such Pool Receivable; (ii) all merchandise
(including returned merchandise), if any, relating to the sale which gave rise
to such Pool Receivable; (iii) all security deposits and other security
interests or liens and property subject thereto from time to time purporting to
secure payment of such Pool Receivable, whether pursuant to the Contract related
to such Pool Receivable or otherwise; (iv) all UCC financing statements covering
any collateral securing payment of such Pool Receivable (but only to the extent
of the interest of the Purchaser in the respective Pool Receivable); (v) all
guarantees and other agreements or arrangements of whatever character from time
to time supporting or securing payment of such Pool Receivable whether pursuant
to the Contract related to such Pool Receivable or otherwise; and (vi) all
insurance policies, and all claims thereunder, related to such Pool Receivable,
in each case to the extent directly related to rights to payment, collection and
enforcement, and other rights with respect to such Pool Receivable. The interest
of the Purchaser in any Related Security is only to the extent of the
Purchaser’s undivided percentage interest, as more fully described in the
definition of Asset Interest.
Reportable Event: Any reportable event as defined in Section 4043(b) of ERISA or
the regulations issued thereunder with respect to a Plan (other than a Plan
maintained by an ERISA Affiliate which is considered an ERISA Affiliate only
pursuant to subsection (m) or (o) of Section 414 of the Code).
Reporting Date: The eighth day of each month or if such day is not a Business
Day, the next succeeding Business Day; provided however, that if the senior
unsecured debt ratings of Lennox International Inc. by Moody’s or S&P are
reduced below Ba2 or BB, respectively, or are withdrawn by either of Moody’s or
S&P or if either Moody’s or S&P no longer provides a senior unsecured debt
rating for Lennox International Inc. and, in any such case, the aggregate
Invested Amount is greater than $0.00, then, in any such case, the Reporting
Date will be the first Business Day of each week.

 

 

--------------------------------------------------------------------------------

 

Required Reserve: On any day during a Collection Period, an amount equal to the
product of (i) the Net Pool Balance and (ii) the sum of (a) the Yield Reserve on
such day, (b) the Servicing Reserve on such day and (c) the greater of
(I) Required Reserve Factor Floor on such day and (II) the sum of the Loss
Reserve on such day and the Dilution Reserve on such day.
Required Reserve Factor Floor: The sum of (i) 8.0% and (ii) the product of the
Adjusted Dilution Ratio times the Dilution Horizon Ratio.
Revolving Period: Means the period beginning on the date hereof and ending on
the earlier of (i) November 25, 2009 and (ii) the Termination Date.
S&P: Standard & Poor’s Ratings Service.
Sale Agreement: The Purchase and Sale Agreement dated as of June 19, 2000 among
the Originators and the Seller as it may be amended, supplemented or otherwise
modified.
Sale Amendment: As defined in Section 5.1(a)(i).
SEC: The Securities and Exchange Commission.
Secured Parties: The Purchasers, the Agents, the Indemnified Parties and the
Affected Parties.
Seller: As defined in the preamble.
Seller Information: As defined in Section 14.7(a).
Seller Information Provider: As defined in Section 14.7(a).
Seller Party: As defined in the preamble.
Seller’s Share: With respect to any amount means 100% minus the lesser of
(i) the most recently calculated Asset Interest and (ii) 100%.
Servicer Default: As defined in Section 8.4.
Servicer Transfer Event: As defined in Section 8. 1(b).
Servicing Fee: Accrued for any day in a Collection Period means: (i) an amount
equal to the product of (A) the Servicing Fee rate, (B) the aggregate Unpaid
Balance of the Pool Receivables at the close of business on the first day of
such Collection Period, and (C) 1/360; or (ii) on and after the Master
Servicer’s reasonable request made at any time when Lennox shall no longer be
Master Servicer, an alternative amount specified by Master Servicer not
exceeding (A) 110% of Master Servicer’s costs and expenses of performing its
obligations under the Agreement during the Collection Period when such day
occurs divided by (B) the number of days in such Collection Period.

 

 

--------------------------------------------------------------------------------

 

Servicing Fee Rate: 1.00% per annum.
Servicing Reserve: The product of (i) the Servicing Fee Rate and (ii) a
fraction, the numerator of which is the Twelve Month DSO and the denominator of
which is 360.
Settlement Date: Two Business Days following each Reporting Date; provided,
however, during any period during which a Weekly Report is required to be
delivered, the Settlement Date shall also be two Business Days immediately
following the related Weekly Reporting Date.
Special Obligor: As defined in the definition of Obligor Concentration Limit.
Structuring Fee: As defined in the Fee Letter.
Subsidiary: With respect to any Person means (i) a corporation more than 50% of
whose stock of any class or classes having by the terms thereof ordinary voting
power to elect a majority of the directors of such corporation (irrespective of
whether or not at the time stock of any class or classes of such corporation
shall have or might have voting power by reason of the happening of any
contingency) is at the time owned or controlled by such Person, directly or
indirectly through Subsidiaries, and (ii) any partnership, association, joint
venture or other entity in which such Person, directly or indirectly through
Subsidiaries, has more than a 50% equity interest at the time.
Successor Notice: As defined in Section 8.1(b).
Swaps: With respect to any Person, payment obligations with respect to interest
rate swaps, currency swaps and similar obligations obligating such Person to
make payments, whether periodically or upon the happening of a contingency. For
the purpose of this Agreement, the amount of the obligation under any Swap shall
be an amount determined in respect thereof as of the end of the then most
recently ended fiscal quarter of such Person, based on the assumption that such
Swap had terminated at the end of such fiscal quarter, and in making such
determination, if any agreement relating to such Swap provides for the netting
of amounts payable by and to such Person thereunder or if any such agreement
provides for the simultaneous payment of amounts by and to such Person, then in
each such case, the amount of such obligation shall be the net amount so
determined.
Termination Date: The earliest of:
(i) the date of termination (whether by scheduled expiration, termination on
default or otherwise) of the Liquidity Banks’ commitments under the Liquidity
Agreement (unless such commitments are renewed, extended or replaced on or
before such date);
(ii) the Funding Termination Date;
(iii) the date designated by the Seller as the “Termination Date” on not less
than thirty (30) days’ notice to the Administrative Agent, provided that on such
date the Invested Amount has been reduced to zero, all accrued Earned Discount,
CP Costs, Broken Funding Costs and fees have been paid in full and all other
amounts due to the Purchaser and the Administrative Agent have been paid in
full; and

 

 

--------------------------------------------------------------------------------

 

(iv) the date on which any of the following shall occur:
(A) A Downgrading Event with respect to a Liquidity Bank shall have occurred and
been continuing for not less than 45 days, (x) the Downgraded Liquidity Bank
shall not have been replaced by a Qualifying Liquidity Bank pursuant to a
Liquidity Agreement in form and substance acceptable to the Purchaser and the
Administrative Agent, and (y) the commitment of such Downgraded Liquidity Bank
under the Liquidity Agreement shall not have been funded or collateralized in
such a manner that such Downgrading Event will not result in a reduction or
withdrawal of the credit rating applied to the Commercial Paper Notes by any of
the rating agencies then rating the Commercial Paper Notes; or
(B) Purchaser shall become an “investment company” within the meaning of the
Investment Company Act of 1940, as amended.
Termination Notice: As defined in Section 8.4.
Threshold Amount: $3,900,000, or such other amount to which the Administrative
Agent may agree in writing from time to time.
Transaction Documents: This Agreement, the Lockbox Agreements, the Sale
Agreement, the Assurance Agreement, the Fee Letter, and the other documents to
be executed and delivered in connection herewith.
Transaction Fees: Subject to the limitations set forth in the Fee Letter, all
reasonable expenses of the Agents incurred in connection with the consummation
of this Agreement and each other Transaction Document, including but not limited
to (i) the legal fees of Hunton & Williams LLP, counsel to the Administrative
Agent, (ii) expenses incurred in connection with any due diligence audit and
(iii) out-of-pocket expenses of the Agents.
Twelve Month DSO: For any day, the highest Days Sales Outstanding that occurred
during the twelve (12) month period ending on such date of calculation.
UCC: The Uniform Commercial Code, as from time to time in effect in the
applicable jurisdiction or jurisdictions.
Unmatured Liquidation Event: Any event which, with the giving of notice or lapse
of time, or both, would become a Liquidation Event.
Unpaid Balance: With respect to any Receivable means at any time the unpaid
amount thereof, but excluding all late payment charges, delinquency charges and
extension or collection fees.
Unused Fee: The aggregate “Unused Fee” set forth in the Fee Letter.

 

 

--------------------------------------------------------------------------------

 

Weekly Report: A report (for the week most recently ended) in the form of
Exhibit 3.1(a)-2.
Weekly Reporting Date: For any period during which Weekly Reports are required
to be delivered, the first Business Day of each calendar week.
Weekly Reporting Period: For any Weekly Reporting Date, the calendar week ended
on the Friday immediately preceding such Weekly Reporting Date.
Weekly Settlement Date: One Business Day following each Weekly Reporting Date.
Weighted Average Term: On any day, the weighted average of the stated terms of
all Receivables (excluding Receivables owed by an Affiliate or employee of any
Seller Party) owned by Seller on such date, weighted on the basis of the Unpaid
Balance of each such Receivable, as of such date of calculation.
Yield Period: With respect to any Asset Tranche funded by a Liquidity Funding or
an Alternate Funding, as the case may be,
(a) the period commencing on the date of the initial Purchase of the Asset
Interest, the making of such Liquidity Funding or Alternate Funding, as the case
may be, or the creation of such Asset Tranche pursuant to Section 2.1 (whichever
is latest) and ending such number of days thereafter as the Administrative Agent
shall select; and
(b) each period commencing on the last day of the immediately preceding Yield
Period for the related Asset Tranche and ending such number of days thereafter
as the Administrative Agent shall select;
provided, however, that
(i) any such Yield Period (other than a Yield Period consisting of one day)
which would otherwise end on a day that is not a Business Day shall be extended
to the next succeeding Business Day (unless the related Asset Tranche shall be
accruing Earned Discount at a rate determined by reference to Eurodollar Rate
(Reserve Adjusted), in which case if such succeeding Business Day is in a
different calendar month, such Yield Period shall instead be shortened to the
next preceding Business Day);
(ii) in the case of Yield Periods of one day for any Asset Tranche, (A) the
initial Yield Period shall be the date such Yield Period commences as described
in clause (a) above; and (B) any subsequently occurring Yield Period which is
one day shall, if the immediately preceding Yield Period is more than one day,
be the last day of such immediately preceding Yield Period, and if the
immediately preceding Yield Period is one day, shall be the next day following
such immediately preceding Yield Period; and

 

 

--------------------------------------------------------------------------------

 

(iii) in the case of any Yield Period for any Asset Tranche which commences
before the Termination Date and would otherwise end on a date occurring after
such Termination Date, such Yield Period shall end on such Termination Date and
the duration of each such Yield Period which commences on or after the
Termination Date for such Asset Tranche shall be of such duration as shall be
selected by the related Purchaser Agent.
Yield Reserve: On any date of determination, the product of (i) 1.5, (ii) the
Base Rate and (iii) a fraction the numerator of which is the Twelve Month DSO
and the denominator of which is 360.
B. Other Terms. All accounting terms not specifically defined herein shall be
construed in accordance with GAAP. All terms used in Article 9 of the UCC in the
State of New York, and not specifically defined herein, are used herein as
defined in such Article 9.
C. Computation of Time Periods. Unless otherwise stated in this Agreement, in
the computation of a period of time from a specified date to a later specified
date, the word “from” means “from and including” and the words “to” and “until”
each mean “to but excluding”.
Yorktown Alternate Funding: The portion of the outstanding Invested Amount of
any Asset Tranche that is funded by the Yorktown Investors pursuant to either
Section 1.1 or Section 3A.1.
Yorktown Broken Funding Costs: For any Asset Tranche funded by any Yorktown
Investor which: (i) has its Purchaser Group Invested Amount reduced without
compliance by the Seller with the notice requirements hereunder, (ii) does not
become subject to a reduction following the delivery of any reduction notice
pursuant to Section 3.2(b), or (iii) is assigned under an Yorktown Liquidity
Agreement or terminated prior to the date on which it was originally scheduled
to end, including by the written notice of Seller that it wishes to terminate
the facility evidenced by this Agreement; an amount equal to the excess, if any,
of (A) the Yorktown CP Costs or Earned Discount (as applicable) that would have
accrued during the remainder of the Yield Periods or the tranche periods for
Commercial Paper determined by the Yorktown Purchaser Agent to relate to such
Asset Tranche (as applicable) subsequent to the date of such reduction,
assignment or termination (or in respect of clause (ii) above, the date such
reduction was designated to occur pursuant to the reduction notice) of the
Yorktown Invested Amount of such Asset Tranche if such reduction, assignment or
termination had not occurred or such Reduction Notice had not been delivered,
over (B) the sum of (x) to the extent all or a portion of such Yorktown Invested
Amount is allocated to another Asset Tranche, the amount of Yorktown CP Costs or
Earned Discount actually accrued during the remainder of such period on such
Yorktown Invested Amount for the new Asset Tranche, and (y) to the extent such
Yorktown Invested Amount is not allocated to another Asset Tranche, the income,
if any, actually received during the remainder of such period by the holder of
such Asset Tranche from investing the portion of such Yorktown Invested Amount
not so allocated. All Yorktown Broken Funding Costs shall be due and payable
hereunder upon after written demand.

 

 

--------------------------------------------------------------------------------

 

Yorktown CP Costs: For any CP Accrual Period for any Asset Tranche owned by the
Yorktown Purchaser if and to the extent the Yorktown Purchaser funds the
Purchase or maintenance of its Asset Tranche by the issuance of commercial paper
notes during such period, the per annum rate equivalent to the “weighted average
cost” (as defined below) related to the issuances of commercial paper notes that
are allocated, in whole or in part, by the Yorktown Purchaser (or by its
administrator) to fund or maintain the Asset Tranche (and which may also be
allocated in part to the funding of other assets of the Yorktown Purchaser);
provided, however, that if any component of such rate is a discount rate, in
calculating the “CP Rate” for such CP Accrual Period, the Yorktown Purchaser
shall for such component use the rate resulting from converting such discount
rate to an interest bearing equivalent rate per annum. As used in this
definition, the Yorktown Purchaser’s “weighted average cost” shall consist of
(w) the actual interest rate (or discount) paid to purchasers of the Yorktown
Purchaser’s commercial paper notes, together with dealer fees or commissions, to
the extent allocated, in whole or in part, to the Yorktown Purchaser’s
commercial paper notes by the Yorktown Purchaser (or its administrator),
(x) certain documentation and transaction costs associated with the issuance of
such commercial paper notes, (y) any incremental carrying costs incurred with
respect to commercial paper notes maturing on dates other than those on which
corresponding funds are received by the Yorktown Purchaser and (z) other
borrowing by the Yorktown Purchaser, including borrowings to fund small or odd
dollar amounts that are not easily accommodated in the commercial paper market.
Yorktown Investors: Bank of America, National Association and such other
financial institutions from time to time identified as “Yorktown Investors”.
Yorktown Liquidity Agreement: The Liquidity Asset Purchase Agreement, dated as
of May 5, 2004, by and among the Yorktown Purchaser and the Yorktown Liquidity
Banks.
Yorktown Liquidity Bank: The commercial lending institutions that are at any
time parties to the Yorktown Liquidity Agreement.
Yorktown Purchaser: YC SUSI Trust.
Yorktown Purchaser Agent: Bank of America, National Association and its
successors.
Yorktown Purchaser Account: .
Yorktown Purchaser Group: The Yorktown Purchaser, each Yorktown Investor, each
Yorktown Liquidity Bank, the Yorktown Purchaser Agent, together with their
respective successors, assigns and participants.
Yorktown Purchaser Group Limit: $125,000,000.