Exhibit 10.1
FIRST OMNIBUS AMENDMENT TO OPERATIVE DOCUMENTS
     This FIRST OMNIBUS AMENDMENT TO OPERATIVE DOCUMENTS (this “Amendment”) is
being entered into as of September 22, 2008, among BTMU CAPITAL CORPORATION, a
corporation organized under the laws of the State of Delaware (“Lessor”), LENNOX
PROCUREMENT COMPANY INC., a corporation organized under the laws of the State of
Delaware (“Lessee”), LENNOX INTERNATIONAL INC., a Delaware corporation (“Parent
Guarantor”), LENNOX INDUSTRIES INC., an Iowa corporation, ALLIED AIR ENTERPRISES
INC., a Delaware corporation, SERVICE EXPERTS LLC, a Delaware limited liability
company, and LENNOX GLOBAL LTD., a Delaware corporation (collectively,
“Subsidiary Guarantors” and, together with the Parent Guarantor, collectively,
“Guarantors”), and COMPASS BANK, an Alabama banking corporation (“Compass”), as
successor Administrative Agent (“Agent”) to MHCB (USA) Leasing and Finance
Corporation (“MHCB”) (in its former capacity as Administrative Agent, “Original
Agent”), and as successor Lender (“Lender”) to MHCB (in its former capacity as
Lender, “Original Lender”).
RECITALS
     A. On June 22, 2006, Lessor acquired the Property (as defined in the
Participation Agreement, as defined below) and subsequently leased the Property
to Lessee pursuant to that certain Lease Agreement dated as of June 22, 2006
(the “Original Lease Agreement” and, as amended by this Amendment, the “Lease
Agreement”). In connection therewith Parent Guarantor, Lessee, Lessor, Original
Agent and Original Lender entered into that certain Participation Agreement,
dated as of June 22, 2006 (the “Original Participation Agreement” and, as
amended by this Amendment, the “Participation Agreement”) whereby the parties
documented the transaction, including the acquisition of the Property, the lease
and the financing of the acquisition of the Property by Original Lender.
Original Lender provided financing for the acquisition of the Property pursuant
to that certain Credit Agreement, dated as of June 22, 2006 (the “Original
Credit Agreement” and, as amended by this Amendment, the “Credit Agreement”),
originally entered into among Lessor, Original Agent and Original Lender, and
currently among Lessor, Agent and Lender. Capitalized terms used but not defined
herein have the meanings set forth in the Participation Agreement (including
Appendix A thereto, as amended hereby).
     B. Pursuant to that certain Assignment and Assumption Agreement (the
“Assignment Agreement”), dated as of the date hereof, between MHCB and Compass,
MHCB assigned all of its rights and obligations as Lender and Administrative
Agent under the Participation Agreement, Credit Agreement, Note and the other
Operative Documents to Compass.
     C. In connection with the Assignment Agreement, Lender has requested to
modify certain terms of the Operative Documents and, in consideration for
assuming the Loan, requires that Subsidiary Guarantors execute and deliver the
Subsidiary Guaranty.
     D. Lessee has informed Lessor, Agent and Lender that its parent, Parent
Guarantor, amended and restated its credit facility pursuant to that certain
Third Amended and Restated Revolving Credit Facility Agreement, dated as of
October 12, 2007 (the “Revolving Credit

 

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Facility Agreement”) among Parent Guarantor, the lenders party thereto and Bank
of America, N.A., as administrative agent, and, in connection therewith, Lessee
has requested that Lessor agree to amend certain Operative Documents in order to
be consistent with certain terms and provisions of the Revolving Credit Facility
Agreement.
     E. The parties hereto are willing to agree to such amendments, in each case
subject to the performance and observance in full of each of the covenants,
terms and conditions, and in reliance upon the representations and warranties,
set forth herein.
     NOW, THEREFORE, in consideration of the premises and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Lessor, the Lessee, the Agent and the Lenders hereby agree as
follows:
     Section 1. Amendments to the Original Lease Agreement. Subject to the
covenants, terms and conditions set forth in this Amendment, and in reliance
upon the representations and warranties contained herein, Lessee and Lessor
hereby amend the Original Lease Agreement as follows, and Lender and Agent
hereby consent to the following amendments:
     (a) Amendment to Schedule 1. Schedule 1 to the Original Lease Agreement
entitled the “Basic Rent Schedule” is hereby deleted in its entirety and
replaced with Schedule 1 attached hereto.
     (b) Amendment to Section 2.1. The references to the term “Permitted
Encumbrances” in the first paragraph of Section 2.1 of the Original Lease
Agreement shall be deleted and replaced with the term “Permitted Lien”.
     (c) Amendment to Assignment and Subleasing. The last paragraph of
Article IX of the Original Lease Agreement is hereby amended and restated in its
entirety to read as follows:
     “This Lease shall not be mortgaged or pledged by Lessee, nor shall Lessee
mortgage or pledge any interest in the Leased Property or any portion thereof,
other than as contemplated by this Lease. Any such mortgage or pledge shall be
void.”
     (d) Amendment to Events of Default. Clauses (f), (g), (k) and (l) of
Article XII of the Original Lease Agreement are hereby amended and restated in
their entirety to read as follows:
     “(f) Guarantor, Lessee or any Subsidiary of Guarantor (i) is generally not
paying, or admits in writing its inability to pay, its debts as they become due,
(ii) files, or consents by answer or otherwise to the filing against it of, a
petition for relief or reorganization or arrangement or any other petition in
bankruptcy, for liquidation or to take advantage of any bankruptcy, insolvency,
reorganization, moratorium or other similar law of any jurisdiction, (iii) makes
an assignment for the benefit of its creditors, (iv) consents to the appointment
of a custodian, receiver, trustee or other officer with similar powers with
respect to it or with respect to

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any substantial part of its property, (v) is adjudicated as insolvent or to be
liquidated, or (vi) takes corporate action for the purpose of any of the
foregoing; provided, however, that, except with respect to Lessee, this clause
(f) shall not apply to any Subsidiary of the Guarantor the book value of whose
total assets (determined in accordance with GAAP) is less than $25,000,000.”
     “(g) a court or Governmental Authority of competent jurisdiction enters an
order appointing, without consent by the Guarantor, Lessee or any of Guarantor’s
Subsidiaries, a custodian, receiver, trustee or other officer with similar
powers with respect to it or with respect to any substantial part of its
property, or constituting an order for relief or approving a petition for relief
or reorganization or any other petition in bankruptcy or for liquidation or to
take advantage of any bankruptcy or insolvency law of any jurisdiction, or
ordering the dissolution, winding–up or liquidation of the Guarantor, Lessee or
any of Guarantor’s Subsidiaries, or any such petition shall be filed against the
Guarantor, Lessee or any of Guarantor’s Subsidiaries and such petition shall not
be dismissed within 60 days; provided, however, that, except with respect to
Lessee, this clause (g) shall not apply to any Subsidiary of Guarantor the book
value of whose total assets (determined in accordance with GAAP) is less than
$25,000,000.”
     “(k) a final judgment or judgments for the payment of money aggregating in
excess of $40,000,000 (to the extent not covered by independent, third–party
insurance as to which the insurer does not dispute coverage) are rendered
against one or more of Guarantor and its Subsidiaries and which judgments are
not, within sixty (60) days after entry thereof, bonded, discharged or stayed
pending appeal, or are not discharged within sixty (60) days after the
expiration of such stay.”
     “(l) Guarantor or any Subsidiary: (i) is in default (as principal or as
guarantor or other surety) in the payment of any principal of, or premium or
make–whole amount or interest on, or other amount in respect of, any Subject
Indebtedness or (ii) is in default in the performance of or compliance with any
term of any evidence of any Subject Indebtedness or of any mortgage, indenture,
or other agreement relating thereto or any other condition exists, and as a
consequence of such default or condition, such Subject Indebtedness: (A) has
become, or has been declared, due and payable before its stated maturity or
before its regularly scheduled dates of payment; or (B) the holder or holders of
any such Indebtedness or any trustee or agent acting on its or their behalf is
permitted to declare such Indebtedness due and payable before its stated
maturity or before its regularly scheduled dates of payment or to terminate any
commitment relating thereto.”

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     Section 2. Amendment to the Original Participation Agreement. Subject to
the covenants, terms and conditions set forth in this Amendment, and in reliance
upon the representations and warranties contained herein, the parties hereto
hereby amend the Original Participation Agreement as follows:
     (a) Amendment to Initial Paragraph. The reference to “LENNOX INTERNATIONAL
INC., a Delaware corporation (together with its successors and permitted
assigns, “Guarantor”)” in the initial paragraph of the Original Participation
Agreement shall be deleted and replaced with the following: “LENNOX
INTERNATIONAL INC., a Delaware corporation (together with its successors and
permitted assigns, “Parent Guarantor”)”.
     (b) Amendment and Restatement of Section 5.3(d). Section 5.3(d) of the
Original Participation Agreement shall be amended and restated in its entirety
as follows:
          “(d) Provisions of the Lennox Revolver Incorporated by Reference.
Guarantor shall at all times comply with the following Sections of the Lennox
Revolver (as construed for purposes of this subsection in accordance with the
provisions set forth below), all of which Sections are hereby incorporated by
reference:
     (1) Section 5.01 (which is titled “Compliance with Laws”);
     (2) Section 5.02 (which is titled “Insurance”);
     (3) Section 5.03 (which is titled “Maintenance of Properties and Lines of
Business”);
     (4) Section 5.04 (which is titled “Payment of Taxes”);
     (5) Section 5.05 (which is titled “Corporate Existence, etc.”);
     (6) Section 5.08 (which is titled “Environmental Matters”);
     (7) subject to the qualification set out below, Section 5.09 (which is
titled “Transactions with Affiliates”);
     (8) Section 5.10 (which is titled “Merger, Consolidation, etc.”), subject
to the qualification that, immediately upon the expiration or termination of the
Lennox Revolver, (x) references in clauses (c) and (d) thereof to “in an
acquisition permitted by Section 5.23” shall be deemed to be replaced by the
phrase “in connection with any acquisition” and (y) the proviso at the end
thereof shall be deemed to have been deleted;
     (9) Section 5.11 (which is titled “Sale of Assets, etc.”);
     (10) Section 5.12 (which is titled “Indebtedness”), subject to the
qualification that the first proviso thereto shall be deemed to have been
deleted;
     (11) Section 5.13 (which is titled “Liens”);

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     (12) Section 5.14 (which is titled “Restricted Payments”);
     (13) Section 5.15 (which is titled “Financial Covenants”);
     (14) Section 5.16 (which is titled “Limitation on Restrictive Agreements”),
subject to the qualification that the provisions thereof shall not apply to any
of the Operative Documents;
     (15) Section 5.17 (which is titled “Preferred Stock of Subsidiaries”);
     (16) Section 5.18 (which is titled “Financial and Business Information”),
subject to the qualification that (x) references therein to the “Administrative
Agent” shall be deemed to refer to Lessor and the Administrative Agent and (y)
references therein to “Lender” shall be deemed to refer to Lessor or the
Administrative Agent;
     (17) Section 5.19 (which is titled “Inspection; Confidentiality”), subject
to the qualification that references therein to the “Administrative Agent” and
“Lender” shall in each case be deemed to refer to Lessor and the Administrative
Agent;
     (18) Section 5.20 (which is titled “Books and Records”); and
     (19) Section 5.21 (which is titled “New Material Subsidiaries”), subject to
the qualification that (x) references therein to the “Subsidiary Joinder
Agreement” shall be deemed to refer to the Subsidiary Joinder Agreement (as
defined in the Subsidiary Guaranty), (y) references therein to the “Subsidiary
Guaranty” shall be deemed to refer to the Subsidiary Guaranty and (z) references
therein to the “Administrative Agent” shall be deemed to refer to Lessor and the
Administrative Agent;
provided, however, (i) notwithstanding anything to the contrary set forth above,
Sections 5.12 (which is titled “Indebtedness”), 5.13 (which is titled “Liens”)
and 5.14 (which is titled “Restricted Payments”) of the Lennox Revolver shall
not be deemed to be incorporated by reference into Section 5.3(d) of this
Agreement until and unless the Lennox Revolver shall expire or terminate,
whereupon immediately following such expiration or termination such Sections
will automatically be deemed to be incorporated by reference into Section 5.3(d)
of this Agreement (subject to the qualifications set forth above) without any
action being taken by Guarantor, Lessor, Lessee, the Lenders, the Administrative
Agent or any other party, and (ii) notwithstanding the incorporation of
Section 5.09 of the Lennox Revolver into this Agreement by reference, for
purposes of this Agreement, such Section 5.09 will not be construed to restrict
any payments or transactions between Guarantor and any Subsidiary or between any
Subsidiaries of Guarantor that, according to Section 5.16 of the Lennox Revolver
(which is titled “Limitation on Restrictive Agreements”), are not to be
restricted.
For purposes of determining requirements, calculations, Lease Defaults or Lease
Events of Defaults established in this Agreement or other Operative Documents by
reference to the Lennox Revolver, the Lennox Revolver will be construed as if:

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     • the Lennox Revolver continued indefinitely (and obligations of Guarantor
remained outstanding thereunder), notwithstanding any expiration or termination
thereof;
     • no amendment, restatement or modification of, or waiver or consent under,
the Lennox Revolver (each, a “Lennox Revolver Amendment”) had been executed or
granted after September 22, 2008 other than a Lennox Revolver Amendment approved
in writing by Lessor and the Required Lenders; provided, however, that (i) if
the Lessor or any of its Affiliates is a party to the Lennox Revolver and Lessor
or such Affiliate provides its consent to a Lennox Revolver Amendment, then such
consent will constitute Lessor’s written approval of such Lennox Revolver
Amendment for purposes of this Agreement and the other Operative Documents
without the necessity of any further action and (ii) if any Lender or any of
such Lender’s Affiliates is a party to the Lennox Revolver and such Lender or
such Affiliate provides its consent to a Lennox Revolver Amendment, then such
consent will constitute such Lender’s written approval of such Lennox Revolver
Amendment for purposes of this Agreement and the other Operative Documents
without the necessity of any further action;
     • the Lennox Revolver required Lessee to deliver to Lessor and
Administrative Agent copies of the notices, certificates and other documents
required by the provisions listed above during the time frames prescribed by
such provisions for delivery to the administrative agent or lenders under the
Lennox Revolver (except that (i) in cases where the Lennox Revolver requires
notice of any Default or Event of Default, such requirement will be construed to
require notice of a Lease Default or Lease Event of Default, and (ii) any
certificate of compliance or similar notice required of Guarantor by the Lennox
Revolver will include such modifications as may be appropriate to allow Lessor
and Administrative Agent to determine compliance with the Operative Documents by
Lessee and Guarantor and applicable calculations required under the Operative
Documents, rather than Guarantor’s compliance with the Lennox Revolver and
calculations required under the Lennox Revolver);
     • the Lennox Revolver required Lessor’s and Required Lender’s approval or
consent to anything for which the Lennox Revolver requires the consent or
approval of any agent or lender thereunder, including any document, instrument
or provision that any of the Sections listed above describes as being “in form
and substance satisfactory to” (or by words of like effect) any agent or lender
thereunder.”
     Section 3. Amendment to the Original Credit Agreement. Subject to the
covenants, terms and conditions set forth in this Amendment, and the
representations contained herein, Lessor, Agent and Lender hereby amend the
Original Credit Agreement as follows, and Lessee and Guarantor consent to the
following amendments:
          (a) Amendment to Section 4.1. The following sentences shall be added
to the end of Section 4.1 of the Original Credit Agreement:
“In connection with that certain First Omnibus Amendment to Operative Documents,
dated as of September 22, 2008, Lessor hereby agrees to cause the existing
Interest Rate Swap Agreement to accurately reflect the

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Applicable Margin. For the avoidance of doubt, Lender hereby confirms that The
Bank of Tokyo, Ltd., a New York agency is a satisfactory counterparty to the
Interest Rate Swap Agreement.”
     Section 4. Amendments to Appendix A to the Operative Documents. Subject to
the covenants, terms and conditions set forth in this Amendment and in reliance
upon the representations and warranties contained herein, the parties hereto
hereby amend Appendix A to the Lease Agreement, Participation Agreement and
Credit Agreement (“Appendix A”) as follows:
     (a) Interpretation. With respect to each definition contained in Section 4
of this Amendment that is defined as “has the meaning set forth in the Lennox
Revolver”, all references to “Borrower” in the Lennox Revolver shall be deemed
to mean “Parent Guarantor” for purposes of such definition.
     (b) Amendment and Restatement of Definitions. The definitions of “Adjusted
EBITDA,” “Applicable Margin,” “Appraisal,” “Consolidated Indebtedness,”
“Consolidated Net Income,” “Debt to Adjusted EBITDA Ratio,” “EBITDA,” “Equity
Interests,” “Guarantor”, “Guarantor Document,” “Guaranty”, “Interest Expenses,”
“Lennox Revolver,” “Loan”, “Prime Rate”, “Subject Indebtedness” and “Surrender
Obligation” found in Appendix A are hereby amended and restated in their
entirety to read as follows:
     “‘Adjusted EBITDA’ has the meaning set forth in the Lennox Revolver.”
     “‘Applicable Margin’ with respect to interest on the Loan and Yield on the
Equity Investment, shall mean the applicable basis point spread set forth below
corresponding to the Debt to Adjusted EBITDA Ratio of Guarantor in effect as of
the most recent Calculation Date:

                                      Applicable         Applicable   Margin on
        Margin on   Equity Pricing   Debt to Adjusted   Loan   Investment Level
  EBITDA Ratio   (basis points)   (basis points) I  
Less than or equal to 1.00 to 1.00
    117.5       180   II  
Less than or equal to 1.50 to 1.0 but greater than 1.00 to 1.0
    125       200   III  
Less than or equal to 2.00 to 1.0 but greater than 1.50 to 1.0
    132.5       225   IV  
Less than or equal to 2.50 to 1.0 but greater than 2.00 to 1.0
    140       275   V  
Less than 3.00 to 1.00 but greater than 2.50 to 1.0
    152       300   VI  
Greater than 3.00 to 1.00
    167       325  

     The Applicable Margin for interest on the Loan and Yield on the Equity
Investment shall, in each case, be determined and adjusted as of each
Calculation Date. Each Applicable Margin shall be effective from one Calculation
date until the next Calculation Date. The initial Applicable Margin, which shall
be from and including September 22,

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2008, shall be based on Pricing Level I (as shown above) and shall remain at
Pricing Level I until the first Calculation Date after September 22, 2008 and,
thereafter, the Pricing Level shall be determined as set forth herein.”
     “‘Appraisal’ means an Appraisal as defined in Section 3(e) of the
Participation Agreement and which complies with 12 C.F.R. ¶ 323 et seq. and
FIRREA.”
     “‘Assignment of Guaranty’ means, collectively, the Assignment of Parent
Guaranty and the Assignment of Subsidiary Guaranty.
     “‘Consolidated Indebtedness’ has the meaning set forth in the Lennox
Revolver.”
     “‘Consolidated Net Income’ has the meaning set forth in the Lennox
Revolver.”
     “‘Debt to Adjusted EBITDA Ratio’ has the meaning set forth in the Lennox
Revolver.”
     “‘EBITDA’ has the meaning set forth in the Lennox Revolver.”
     “‘Equity Interests’ has the meaning set forth in the Lennox Revolver.”
     “‘Guarantor’ means, Parent Guarantor and/or Subsidiary Guarantors, as the
context may require, provided, however, in Section 13.3 of the Lease Agreement
references to Guarantor shall refer only to the Parent Guarantor.”
     “‘Guarantor Document’ is defined in Section 4.3(a) of the Participation
Agreement.”
     “‘Guaranty’ means, the Parent Guaranty and/or the Subsidiary Guaranty, as
the context may require; provided, however, in Section 13.3 of the Lease
Agreement references to Guaranty shall refer only to the Parent Guaranty.”
     “‘Interest Expenses’ has the meaning set forth in the Lennox Revolver.”
     “‘Lease Balance’ means, as of any date of determination and subject to
Section 2.5(c) of the Participation Agreement, an amount equal to the aggregate
sum of the outstanding principal amount of the Equity Investment and the Loan.
The Lease Balance as of September 22, 2008 equals $41,202,994.25.”

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     “‘Lennox Revolver’ means the Third Amended and Restated Revolving Credit
Facility Agreement dated as of October 12, 2007, among Guarantor, as borrower,
Bank of America, N.A., as administrative agent, 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, and 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, and the
lenders party thereto, as amended, supplemented or otherwise modified from time
to time.”
     “‘Loan” means the term loan made to Lessor by Lender in an amount equal to
$32,962,395.40.”
     “‘Prime Rate’ means the per annum rate announced from time to time in New
York City by The Bank of Tokyo – Mitsubishi UFJ, Ltd. as its prime rate,
changing as and when said prime rate shall change.
     “‘Subject Indebtedness’ has the meaning set forth in the Lennox Revolver.”
     (c) Amendment to Defined Term. The defined term “Permitted Allocation”
found in Appendix A is hereby amended by replacing the word “Allocation” with
the word “Alterations”.
     (d) Additional Definitions. Appendix A is hereby amended by adding the
following definitions in the correct alphabetical order thereto:
               “‘Assignment of Subsidiary Guaranty’ means the Assignment of
Subsidiary Guaranty, dated as of September 22, 2008, from Lessor to
Administrative Agent, and consented to by each Subsidiary Guarantor.
               “Assignment of Parent Guaranty” means the Assignment of Parent
Guaranty, dated as of June 22, 2006, from Lessor to Administrative Agent, and
consented to by Parent Guarantor.
               “‘Event of Default” means a Lease Event of Default, Loan Event of
Default and/or an Event of Default as defined in the Guaranty, as the context
may require.
               “‘Indebtedness’ has the meaning set forth in the Lennox
Revolver.”
     “‘Lennox Revolver Amendment’ is defined in Section 5.3(d) of the
Participation Agreement.”
     “‘Parent Guarantor’ means Lennox International Inc., a Delaware
corporation.

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     “‘Parent Guaranty’ means that certain Guaranty, dated as of June 22, 2006
by Parent Guarantor in favor of Lessor, the Lenders, Administrative Agent and
Indemnitees.
     “‘Subsidiary Guarantors’ means, collectively, Lennox Industries Inc., an
Iowa corporation, Allied Air Enterprises Inc., a Delaware corporation, Service
Experts LLC, a Delaware limited liability company, Lennox Global Ltd., a
Delaware corporation, and any other Subsidiary of the Parent Guarantor required
to become a party to the Subsidiary Guaranty, and ‘Subsidiary Guarantor’ means
any of the foregoing.”
     “‘Subsidiary Guaranty’ means that certain Subsidiary Guaranty, dated as of
September 22, 2008 by Subsidiary Guarantors in favor of Lessor, the Lenders,
Administrative Agent and Indemnitees.
     (e) Deletion of Definition. Appendix A is hereby amended by deleting the
first definition of “Lien” appearing therein.
     Section 5. Amendments to Operative Documents. Notwithstanding anything to
the contrary contained in any Operative Document, each of the Operative
Documents is hereby amended as follows: (1) all references in each Operative
Document to the “Participation Agreement” shall be deemed to refer to the
Original Participation Agreement as amended hereby, (2) all references in each
Operative Document to the “Lease Agreement” shall be deemed to refer to the
Original Lease Agreement as amended hereby, (3) all references in each Operative
Document to the “Credit Agreement” shall be deemed to refer to the Original
Credit Agreement as amended hereby, (4) all references in each Operative
Document to “Appendix A” shall be deemed to refer to Appendix A as amended
hereby, (5) all references in each Operative Document to the “Operative
Documents” shall be deemed to refer to the Operative Documents as such Operative
Documents been amended pursuant to the terms hereof and shall include the
Assignment of the Subsidiary Guaranty and all other amendments, documents and
assignment executed in connection herewith, and (6) all references in each
Operative Document to “Lender” or “Administrative Agent” shall mean Compass
Bank, an Alabama banking corporation, in its capacity as Lender or
Administrative Agent, as applicable.
     Section 6. Conditions Precedent. The parties hereto agree that this
Amendment shall not be effective until the satisfaction in full of each of the
following conditions precedent, each in a manner satisfactory to the Agent in
its reasonable discretion:
     (a) Execution and Delivery of this Amendment. The Agent shall have received
a counterpart of this Amendment executed and delivered by Lessor, each
Guarantor, Lessee, Agent and Lender.
     (b) Execution and Delivery of Other Documents. The Agent shall have
received a counterpart of the following documents executed and delivered by
Lessor, each Guarantor, Lessee, Agent and/or Lender, as applicable:
          (i) Allonge to Note;

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          (ii) Subsidiary Guaranty;
          (iii) Assignment of Subsidiary Guaranty;
          (iv) Assignment of Deed of Trust, Assignment of Leases and Rents,
Security Agreement and Fixture Filing; and
          (v) Assignment of and Amendment No. 1 to Assignment of Lease
Agreement.
     (c) Representations and Warranties. Each of the representations and
warranties made in this Amendment shall be true and correct on and as of the
date hereof, as if made on and as of such date, both before and after giving
effect to the amendments set forth herein.
     Section 7. Representations and Warranties.
     (a) Representations and Warranties of Lessee. To induce the parties hereto
to enter into this Amendment, Lessee represents and warrants to Lessor, Agent
and Lender as follows:
          (i) No Defaults. After giving effect to this Amendment, no Lease Event
of Default exists.
          (ii) Binding Effect. This Amendment, the Lease Agreement and the
Participation Agreement constitute the legal, valid and binding obligations of
the Lessee, and, as applicable, the Parent Guarantor, enforceable against the
Lessee, and, as applicable, the Parent Guarantor, in accordance with their
respective terms, except as enforceability may be limited by applicable
bankruptcy, insolvency, or similar laws affecting the enforcement of creditors’
rights generally or by equitable principles of general applicability.
          (iii) Authorization. The execution, delivery and performance of this
Amendment has been authorized by all requisite corporate action on the part of
the Lessee and Parent Guarantor and will not violate the Lessee’s charter or
by-laws.
          (iv) Bring-Down of Representation. All of the representations
contained in Section 4.1 of the Original Participation Agreement are true,
correct and complete as of the date hereof, provided, that, for the purposes of
the foregoing representation, references to “this Agreement” contained in the
representations in Section 4.1 shall be deemed to include a reference to this
Amendment; and all references to the “Operative Documents” therein shall refer
to the Operative Documents as amended pursuant to this Amendment and the other
amendments being executed and delivered in connection herewith.
     (b) Representations and Warranties of Lessor. To induce the parties hereto
to enter into this Amendment, Lessor represents and warrants to Lessee, each
Guarantor, Agent and Lender that all of the representations contained in
Section 4.2 of the Participation Agreement are true, correct and complete as of
the date hereof, provided, that, for the purposes of the foregoing
representation, references to “this Agreement” contained in the representations
in Section 4.2 shall be deemed to include a reference to this Amendment; and all
references to the “Operative

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Documents” therein shall refer to the Operative Documents as amended pursuant to
this Amendment and the other amendments being executed and delivered in
connection herewith.
     (c) Representations and Warranties of Parent Guarantor. To induce the
parties hereto to enter into this Amendment, Parent Guarantor represents and
warrants to Lessor, Agent and Lender as follows:
          (i) Each Subsidiary Guarantor is a wholly owned Subsidiary of Parent
Guarantor.
          (ii) All of the representations contained in Section 4.3 of the
Original Participation Agreement (other than the representation contained in
Section 4.3(f)(iv) thereof) are true, correct and complete as of the date
hereof, provided, that, for the purposes of the foregoing representation,
references to “Guarantor” contained therein shall be deemed to refer to Parent
Guarantor; references to the “Guaranty” contained therein shall be deemed to
refer to the Parent Guaranty; references to “this Agreement” contained therein
shall be deemed to include a reference to this Amendment; and all references to
the “Operative Documents” therein shall refer to the Operative Documents as
amended pursuant to this Amendment and the other amendments being executed and
delivered in connection herewith. With respect to the representation in
Sections 4.3(h) and (i) of the Participation Agreement, the references to
“December 31, 2005” shall be deleted and replaced with “December 31, 2007”.
          (iii) The expected post-retirement benefit obligation (determined as
of the last day of the Borrower’s most recently ended fiscal year in accordance
with Financial Accounting Standards Board Statement No. 106, without regard to
liabilities attributable to continuation coverage mandated by Section 4980B of
the Code) of Guarantor and its Subsidiaries was approximately $17,628,620 as of
December 31, 2007.
     (d) Representations and Warranties of Subsidiary Guarantors. To induce the
parties hereto to enter into this Amendment, each Subsidiary Guarantor
represents and warrants to Lessor, Agent and Lender as follows:
          (i) Organization; Corporate Powers. Each Subsidiary Guarantor (i) is a
corporation duly organized and validly existing under the laws of the state of
its existence, and (ii) has all requisite legal power and authority to enter
into this Amendment, the Subsidiary Guaranty and each other Operative Document
to which it is a party (the “Subsidiary Guarantor Documents”), to perform and
observe the terms and conditions hereof, and has all requisite legal power and
authority to own its properties and conduct its business as currently conducted
except for such licenses, permits and approvals which would not, individually or
in the aggregate, have a material adverse effect on such Subsidiary Guarantor’s
ability to perform the Guaranteed Obligations (as defined in the Subsidiary
Guaranty). Each Subsidiary Guarantor is qualified to do business as a foreign
corporation in all jurisdictions where its ownership of property or the nature
of its business required such qualification except where the failure to do so
could not reasonably be expected to have a Material Adverse Effect on such
Subsidiary Guarantor. Each Subsidiary Guarantor Document has been duly
authorized, executed and delivered by each Subsidiary Guarantor that is a party
thereto and constitutes the legal, valid and binding obligation of such
Subsidiary Guarantor enforceable against such Subsidiary Guarantor in accordance
with

12

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its terms, except as enforcement may be limited by bankruptcy, insolvency,
reorganization and other laws of general application relating to or affecting
the enforcement of creditors’ rights and general principles of equity.
          (ii) Litigation. No litigation, investigation or proceeding of or
before any arbitrator or Governmental Authority is pending against or, to the
knowledge of any Subsidiary Guarantor, threatened against or affecting any
Subsidiary Guarantor or any of its Subsidiaries (A) as to which there is a
reasonable possibility of an adverse determination that could reasonably be
expected to have, either individually or in the aggregate, a Material Adverse
Effect or (B) which in any manner draws into question the validity or
enforceability of this Amendment or any other Operative Document.
          (iii) Conflicts. No Subsidiary Guarantor is subject to any Contractual
Obligation or restriction or to any order, rule, regulation, writ, injunction or
decree of any court or Governmental Authority or to any Applicable Law which
materially and adversely affects its ability to perform the Guaranteed
Obligations (as defined in the Subsidiary Guaranty). The execution, delivery and
performance by each Subsidiary Guarantor of each Subsidiary Guarantor Document
to which it is a party do not and will not (i) conflict or result in a breach of
or constitute a default under (A) any Applicable Law in effect as of the date of
delivery of such Subsidiary Guarantor Documents, (B) the articles of
incorporation or by-laws of such Subsidiary Guarantor, (C) any material
agreement or instrument to which such Subsidiary Guarantor is a party or by
which it is bound, or (D) any order, writ, injunction or decree of any court or
other Governmental Authority, or (ii) result in the creation or imposition of
any Lien upon such Subsidiary Guarantor’s property pursuant to such agreement or
instrument.
          (iv) Approvals. The execution, delivery and performance by each
Subsidiary Guarantor of each Subsidiary Guarantor Document to which it is a
party do not require (i) any stockholder approval or the consent or approval of
any of such Subsidiary Guarantor’s creditors (except as have already been
obtained in writing), or (ii) any authorization, consents, or approvals of, or
filings with, any Governmental Authority, except for such authorization,
consents, approvals or filings which have been obtained and are in full force
and effect.
          (v) Solvency. Each Subsidiary Guarantor is and, upon consummation of
the transactions contemplated by this Amendment and the Subsidiary Guaranty,
will be, Solvent. Transactions are in furtherance of each Subsidiary Guarantor’s
ordinary business purposes and in furtherance of its corporate purposes with no
contemplation of insolvency and with no intent to hinder, delay or defraud any
of its present or future creditors.
     Section 8. Successor Administrative Agent. Pursuant to Section 6.3 of the
Credit Agreement, Lender hereby appoints Compass as successor Administrative
Agent under the Credit Agreement, and Compass Bank hereby accepts the
appointment as successor Administrative Agent and represents that it satisfies
the requirements for a successor Administrative Agent pursuant thereto.
     Section 9. Reaffirmation of the Parent Guaranty. Parent Guarantor hereby
acknowledges and consents to the amendments to the Operative Documents set forth
herein as well as the amendments executed in connection herewith and reaffirms
its obligations under the

13

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Parent Guaranty. The Parent Guaranty shall remain in full force and effect and
shall not be released, discharged or affected by (i) any extension granted by
any Guaranty Beneficiary of the time for any payment by the Subsidiary
Guarantors, (ii) any modification or amendment of the obligations of the
Subsidiary Guarantors under the Subsidiary Guaranty, (iii) the release of
Subsidiary Guarantors from their performance under the Subsidiary Guaranty, (iv)
any merger or consolidation of any Subsidiary Guarantor or the sale, lease or
transfer of any of the assets of any Subsidiary Guarantor, or (v) any change in
the corporate relationship between Guarantor and any Subsidiary Guarantor.
     Section 10. Miscellaneous.
     (a) Headings. Section and subsection headings in this Amendment are
included herein for convenience of reference only and shall not constitute a
part of this Amendment for any other purpose or be given any substantive effect.
     (b) Limitation of Liability. The parties hereto agree that notwithstanding
anything to the contrary contained herein, Lessor’s liability hereunder is
limited as set forth in Section 8.10 of the Participation Agreement.
     (c) APPLICABLE LAW. THIS AMENDMENT SHALL BE CONSTRUED IN ACCORDANCE WITH
AND GOVERNED BY THE LAW OF THE STATE OF NEW YORK.
     (d) Counterparts. This Amendment may be executed in any number of
counterparts and by any combination of the parties hereto in separate
counterparts, each of which counterparts shall be an original and all of which
taken together shall constitute one and the same Amendment. Delivery of this
Amendment may be made by telecopy or electronic transmission of a duly executed
counterpart copy hereof; provided that any such delivery by electronic
transmission shall be effective only if transmitted in .pdf format, .tif format
or other format in which the text is not readily modifiable by any recipient
thereof.
     (e) FINAL AGREEMENT. THIS AMENDMENT REPRESENTS THE FINAL AGREEMENT AMONG
THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS,
OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL
AGREEMENTS BETWEEN THE PARTIES.
[Remainder of this page blank; signature pages follow]

14

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     IN WITNESS WHEREOF, the undersigned have each caused this Amendment to be
duly executed and delivered and attested by their respective officers thereunto
duly authorized as of the day and year first above written.

                      BTMU CAPITAL CORPORATION, as Lessor    
 
               
 
      By:   /s/ Cheryl A. Behan
 
Name: Cheryl A. Behan    
 
          Title: Senior Vice President    

 

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                    LENNOX PROCUREMENT COMPANY INC.,         as Lessee    
 
               
 
      By:   /s/ Gary A. Larson
 
Name: Gary A. Larson    
 
          Title: Treasurer    
 
                    LENNOX INTERNATIONAL INC., as Parent Guarantor    
 
               
 
      By:   /s/ Gary A. Larson
 
Name: Gary A. Larson    
 
          Title: Treasurer    
 
                    LENNOX INDUSTRIES INC., as a Subsidiary Guarantor    
 
               
 
      By:   /s/ Gary A. Larson
 
Name: Gary A. Larson    
 
          Title: Treasurer    
 
                    ALLIED AIR ENTERPRISES INC., as a Subsidiary        
Guarantor    
 
               
 
      By:   /s/ Gary A. Larson
 
Name: Gary A. Larson    
 
          Title: Treasurer    

 

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                    SERVICE EXPERTS LLC, as a Subsidiary Guarantor    
 
               
 
      By:   /s/ Gary A. Larson
 
Name: Gary A. Larson    
 
          Title: Treasurer    
 
                    LENNOX GLOBAL LTD., as a Subsidiary Guarantor    
 
               
 
      By:   /s/ Gary A. Larson
 
Name: Gary A. Larson    
 
          Title: Treasurer    

 

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                    COMPASS BANK, as Agent and Lender    
 
               
 
      By:   /s/ Thomas Blake
 
Name: Thomas Blake    
 
          Title: Senior Vice President    

 

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SCHEDULE 1
BASIC RENT SCHEDULE

                                                              Basic Rent plus  
                  Additional   Additional Payment Date   Period   Basic Rent  
Payment   Payment
6/22/2006
    0                          
9/22/2006
    1       705,704.28       824,059.89       1,529,764.17  
12/22/2006
    2       564,563.43               564,563.43  
3/22/2007
    3       560,098.67               560,098.67  
6/22/2007
    4       559,602.59               559,602.59  
9/22/2007
    5       559,602.59               559,602.59  
12/22/2007
    6       559,602.59               559,602.59  
3/22/2008
    7       559,602.59               559,602.59  
6/22/2008
    8       664,456.29               664,456.29  
9/22/2008
    9       699,503.23               699,503.23  
12/22/2008
    10       741,283.07               741,283.07  
3/22/2009
    11       741,283.07               741,283.07  
6/22/2009
    12       741,283.07               741,283.07  
9/22/2009
    13       741,283.07               741,283.07  
12/22/2009
    14       741,283.07               741,283.07  
3/22/2010
    15       741,283.07               741,283.07  
6/22/2010
    16       741,283.07               741,283.07  
9/22/2010
    17       741,283.07               741,283.07  
12/22/2010
    18       741,283.07               741,283.07  
3/22/2011
    19       741,283.07               741,283.07  
6/22/2011
    20       741,283.07               741,283.07  
9/22/2011
    21       741,283.07               741,283.07  
12/22/2011
    22       741,283.07               741,283.07  
3/22/2012
    23       741,283.07               741,283.07  
6/22/2012
    24       741,283.07               741,283.07  
9/22/2012
    25       741,283.07               741,283.07  
12/22/2012
    26       741,283.07               741,283.07  
3/22/2013
    27       741,283.07               741,283.07  
6/22/2013
    28       741,283.07               741,283.07