exv10w1



 





 




    EXHIBIT 10.1



 



    AGREEMENT AND PLAN OF REORGANIZATION







BY AND BETWEEN



    A.O.C. CORPORATION




    AND




    LENNOX INTERNATIONAL INC.




    March 16, 2007



 



    

     








 







    TABLE OF
    CONTENTS



 


	 	 	 	 	 
	
 
	
 
	
    Page

	 

	
    ARTICLE I DEFINED TERMS
    
	
 
	
	
    5
    
	

	

    1.1    Certain
    Defined Terms
    


	
 
	
	
    5
    
	

	
 
	
 
	
	
 
	

	
 
	
 
	
	
 
	 
	
    ARTICLE II PLAN OF
    REORGANIZATION
    
	
 
	
	
    7
    
	

	

    2.1    Sale of
    Assets; Consideration; No Liability
    


	
 
	
	
    7
    
	

	

    2.2    AOC
    Liquidating Distribution; Dissolution
    


	
 
	
	
    7
    
	

	

    2.3    Reorganization
    


	
 
	
	
    7
    
	

	

    2.4    Dissenter’s
    Rights
    


	
 
	
	
    7
    
	

	

    2.5    Stock
    Transfer Books
    


	
 
	
	
    8
    
	

	

    2.6    Fractional
    Shares
    


	
 
	
	
    8
    
	

	
 
	
 
	
	
 
	

	
 
	
 
	
	
 
	 
	
    ARTICLE III THE CLOSING
    
	
 
	
	
    8
    
	

	
 
	
 
	
	
 
	

	
 
	
 
	
	
 
	 
	
    ARTICLE IV REPRESENTATIONS
    AND WARRANTIES OF AOC
    
	
 
	
	
    9
    
	

	

    4.1    Organization
    and Existence
    


	
 
	
	
    9
    
	

	

    4.2    Capitalization
    


	
 
	
	
    9
    
	

	

    4.3    Power
    and Authority
    


	
 
	
	
    9
    
	

	

    4.4    Financial
    Statements
    


	
 
	
	
    9
    
	

	

    4.5    Absence
    of Certain Changes
    


	
 
	
	
    9
    
	

	

    4.6    No
    Violation; Consents and Approvals
    


	
 
	
	
    9
    
	

	

    4.7    Litigation
    


	
 
	
	
    10
    
	

	

    4.8    Title
    to Assets
    


	
 
	
	
    10
    
	

	

    4.9    Governmental
    Approvals
    


	
 
	
	
    10
    
	

	

    4.10  Tax Matters
    


	
 
	
	
    10
    
	

	

    4.11  No Brokers
    


	
 
	
	
    10
    
	

	

    4.12  No Employees; No
    Employee Benefit Plans
    


	
 
	
	
    10
    
	

	

    4.13  No Reliance
    


	
 
	
	
    10
    
	

	
 
	
 
	
	
 
	

	
 
	
 
	
	
 
	 
	
    ARTICLE V REPRESENTATIONS AND
    WARRANTIES OF LII
    
	
 
	
	
    10
    
	

	

    5.1    Organization
    and Existence
    


	
 
	
	
    10
    
	

	

    5.2    Capitalization
    


	
 
	
	
    10
    
	

	

    5.3    Power
    and Authority
    


	
 
	
	
    10
    
	

	

    5.4    No
    Violations; Consents and Approvals
    


	
 
	
	
    11
    
	

	

    5.5    No
    Litigation
    


	
 
	
	
    11
    
	

	

    5.6    Listing
    


	
 
	
	
    11
    
	

	

    5.7    No
    Brokers
    


	
 
	
	
    11
    
	

	

    5.8    No
    Reliance
    


	
 
	
	
    11
    
	

	
 
	
 
	
	
 
	





    

    2








 





	 	 	 	 	 
	
 
	
 
	
    Page

	 

	
    ARTICLE VI ADDITIONAL
    AGREEMENTS; COVENANTS OF PARTIES
    
	
 
	
	
    11
    
	

	

    6.1    Operation
    in the Ordinary Course of Business
    


	
 
	
	
    11
    
	

	

    6.2    Press
    Releases
    


	
 
	
	
    11
    
	

	

    6.3    Listing
    


	
 
	
	
    11
    
	

	

    6.4    Fees
    and Expenses
    


	
 
	
	
    11
    
	

	

    6.5    LII
    Annual Meeting; Proxy Statement
    


	
 
	
	
    12
    
	

	

    6.6    AOC
    Special Meeting
    


	
 
	
	
    12
    
	

	

    6.7    Private
    Placement
    


	
 
	
	
    12
    
	

	

    6.8    Cooperation
    and Information
    


	
 
	
	
    13
    
	

	

    6.9    Tax-Free
    Reorganization
    


	
 
	
	
    13
    
	

	
 
	
 
	
	
 
	

	
 
	
 
	
	
 
	 
	
    ARTICLE VII CONDITIONS TO
    OBLIGATIONS OF AOC
    
	
 
	
	
    13
    
	

	

    7.1    Representations
    and Warranties True
    


	
 
	
	
    13
    
	

	

    7.2    Covenants
    and Agreements Performed by LII
    


	
 
	
	
    13
    
	

	

    7.3    Compliance
    Certificate
    


	
 
	
	
    13
    
	

	

    7.4    Tax
    Ruling
    


	
 
	
	
    13
    
	

	

    7.5    Shareholder
    Approval
    


	
 
	
	
    14
    
	

	

    7.6    Regulatory
    Approvals
    


	
 
	
	
    14
    
	

	

    7.7    Stock
    Exchange Listing
    


	
 
	
	
    14
    
	

	

    7.8    Legal
    Proceedings
    


	
 
	
	
    14
    
	

	

    7.9    Stock
    Certificates; Cash in Lieu of Fractional Shares
    


	
 
	
	
    14
    
	

	

    7.10  Registration
    Rights Agreement
    


	
 
	
	
    14
    
	

	

    7.11  Dissenters
    


	
 
	
	
    14
    
	

	
 
	
 
	
	
 
	

	
 
	
 
	
	
 
	 
	
    ARTICLE VIII CONDITIONS TO
    OBLIGATIONS OF LII
    
	
 
	
	
    14
    
	

	

    8.1    Representations
    and Warranties True
    


	
 
	
	
    14
    
	

	

    8.2    Covenants
    and Agreements Performed by AOC
    


	
 
	
	
    14
    
	

	

    8.3    Compliance
    Certificate
    


	
 
	
	
    14
    
	

	

    8.4    Tax
    Ruling
    


	
 
	
	
    15
    
	

	

    8.5    Shareholder
    Approval
    


	
 
	
	
    15
    
	

	

    8.6    Regulatory
    Approvals
    


	
 
	
	
    15
    
	

	

    8.7    Legal
    Proceedings
    


	
 
	
	
    15
    
	

	

    8.8    LII
    Certificate
    


	
 
	
	
    15
    
	

	

    8.9    Consideration
    Certificate
    


	
 
	
	
    15
    
	

	

    8.10  Dissenters
    


	
 
	
	
    15
    
	

	

    8.11  Registration
    Rights Agreement
    


	
 
	
	
    15
    
	

	

    8.12  Non-Accredited
    Investors
    


	
 
	
	
    15
    
	

	

    8.13  Investment
    Certificate
    


	
 
	
	
    15
    
	

	
 
	
 
	
	
 
	

	
 
	
 
	
	
 
	 
	
    ARTICLE IX TERMINATION
    
	
 
	
	
    16
    
	

	

    9.1    Termination
    Prior to Closing
    


	
 
	
	
    16
    
	

	

    9.2    Effect
    of Termination
    


	
 
	
	
    16
    
	

	
 
	
 
	
	
 
	





    

    3








 





	 	 	 	 	 
	
 
	
 
	
    Page

	 

	
    ARTICLE X MISCELLANEOUS
    
	
 
	
	
    16
    
	

	

    10.1    Survival
    of Representations and Warranties
    


	
 
	
	
    16
    
	

	

    10.2    Notices
    


	
 
	
	
    16
    
	

	

    10.3    Entire
    Agreement; Incorporation By Reference
    


	
 
	
	
    17
    
	

	

    10.4    Amendment
    


	
 
	
	
    17
    
	

	

    10.5    Binding
    Effect; Assignment; No Third Party Benefit
    


	
 
	
	
    17
    
	

	

    10.6    Severability
    


	
 
	
	
    17
    
	

	

    10.7    Governing
    Law
    


	
 
	
	
    18
    
	

	

    10.8    Headings
    


	
 
	
	
    18
    
	

	

    10.9    Counterparts
    


	
 
	
	
    18
    
	









 



    EXHIBIT A — Registration Rights Agreement




    EXHIBIT B — Representations to the IRS in
    Connection with the Private Letter Ruling




    EXHIBIT C — Accredited Investor Certificate




    EXHIBIT D — Non-Accredited Investor Certificate




    

    4








 







    AGREEMENT
    AND PLAN OF REORGANIZATION



 



    This AGREEMENT AND PLAN OF REORGANIZATION (this
    “Agreement”) is made and entered into as of
    this 16th day of March, 2007, by and between A.O.C.
    Corporation, a Texas corporation (“AOC”) and
    Lennox International Inc., a Delaware corporation
    (“LII”).



 




    RECITALS



 



    A. As of the date hereof, the assets of AOC consist of
    (i) 2,695,770 shares of common stock, par value
    $.01 per share, of LII (“LII Common
    Stock”), and (ii) cash.



 



    B. Prior to the closing of the transactions contemplated
    hereby (the “Closing”), AOC intends to
    distribute to its shareholders as a pro rata dividend, all of
    its cash, less $1,000,000 retained to discharge AOC’s
    existing liabilities, including payments to dissenters, if any
    (the “Cash Dividend”).



 



    C. AOC desires to sell all of its assets remaining after
    giving effect to the Cash Dividend, consisting of
    2,695,770 shares of LII Common Stock (the
    “Assets”) to LII and LII desires to purchase
    the Assets on the terms and subject to the conditions contained
    in this Agreement.



 



    D. For federal income tax purposes, the parties intend that
    the Reorganization shall qualify as a “reorganization”
    within the meaning of Section 368(a) of the Code and the
    regulations promulgated thereunder and that the execution of
    this Agreement will constitute adoption of a plan of
    reorganization under Section 368(a) of the Code and the
    regulations promulgated thereunder.



 



    NOW, THEREFORE, in consideration of the foregoing and the mutual
    agreements hereinafter set forth, the parties hereby, intending
    to be legally bound, agree as follows:



 




    ARTICLE I

    



 




    DEFINED TERMS
    



 



    1.1  Certain Defined
    Terms.  As used in this Agreement, the terms
    set forth below have the following meanings:



 



    “Accredited Investor” means “accredited
    investor” within the meaning of Rule 501 of
    Regulation D under the Securities Act.



 



    “Agreement” has the meaning set forth in the
    preamble to this Agreement.



 



    “Applicable Law” means any federal, state,
    local, municipal, foreign, international, multinational or other
    administrative statute, law, rule, or regulation or any
    judgment, order, writ, injunction, or decree of any Governmental
    Authority to which a specified person or property is subject.



 



    “Assets” has the meaning set forth in the
    Recitals.



 



    “AOC” has the meaning set forth in the preamble
    to this Agreement.



 



    “AOC Common Stock” has the meaning set forth in
    Section 4.2.



 



    “AOC Financial Statements” has the meaning set
    forth in Section 4.4.



 



    “AOC Special Meeting” has the meaning set forth
    in Section 6.6.



 



    “Cash Dividend” has the meaning set forth in
    the Recitals.



 



    “Closing” has the meaning set forth in the
    Recitals.



 



    “Closing Date” has the meaning set forth in
    Article III.



 



    “Code” means the Internal Revenue Code of 1986,
    as amended through the date hereof.



 



    “Consideration Certificate” has the meaning set
    forth in Section 2.1(b).




    

    5








 





 



    “Exchange Act” means the Securities Exchange
    Act of 1934, as amended, together with the rules and regulations
    promulgated thereunder.



 



    “IRS” means the Internal Revenue Service of the
    United States or any successor entity.



 



    “LII” has the meaning set forth in the preamble
    to this Agreement.



 



    “LII Annual Meeting” has the meaning set forth
    in Section 6.5(i).



 



    “LII Certificate” has the meaning set forth in
    Section 4.8.



 



    “LII Common Stock” has the meaning set forth in
    the Recitals.



 



    “Liabilities” has the meaning set forth in
    Section 2.1.



 



    “Material Adverse Effect” means any change,
    circumstance, effect, event or fact that has a material and
    adverse effect on the business, assets, financial condition or
    results of operations, taken as a whole.



 



    “New LII Shares” has the meaning set forth in
    Section 2.1.



 



    “NYSE” means the New York Stock Exchange.



 



    “NYSE Rules” means the NYSE Listed Company
    Manual.



 



    “PPM” has the meaning set forth in
    Section 6.7.



 



    “Private Letter Ruling” has the meaning set
    forth in Section 7.4.



 



    “Proceeding” means any action, suit or
    proceeding, whether civil, criminal, administrative, arbitrative
    or investigative, any appeal in such an action, suit or
    proceeding, and any inquiry or investigation that could lead to
    such an action, suit or proceeding.



 



    “Pro Rata Share” means with respect to an AOC
    Shareholder, a fraction, expressed as a percentage, the
    numerator of which is the number of shares of AOC Common Stock
    owned by such AOC Shareholder, and the denominator of which is
    the total number of shares of AOC Common Stock owned by all AOC
    Shareholders, in each case as determined on the Closing Date.



 



    “Proxy Statement” has the meaning set forth in
    Section 6.5(ii).



 



    “Registration Rights Agreement” means that
    certain Registration Rights Agreement between LII and each AOC
    Shareholder, providing for piggyback registration rights,
    substantially in the form attached hereto as
    Exhibit A.



 



    “Reorganization” has the meaning set forth in
    Section 2.3.



 



    “Securities Act” means the Securities Act of
    1933, as amended, together with the rules and regulations
    promulgated thereunder.



 



    “Tax” or “Taxes” means any and
    all taxes of any kind (together with any and all interest,
    penalties, additions to tax and additional amounts imposed with
    respect thereto) imposed by any Taxing Authority, plus all
    amounts due with respect to unclaimed property.



 



    “Taxing Authority” means any government or
    subdivision, agency, commission or authority thereof having
    jurisdiction over the assessment, determination, collection or
    other imposition of Taxes.



 



    “Tax Returns” means any and all statements,
    returns, reports and forms (including elections, declarations,
    claims for refund, amendments, schedules, information returns or
    attachments thereto) filed or required to be filed with a Taxing
    Authority relating to Taxes.



 



    “TBCA” means the Texas Business Corporation Act.




    

    6








 





 




    ARTICLE II

    



 




    PLAN OF
    REORGANIZATION
    



 



    2.1  Sale of Assets; Consideration; No
    Liability.



 



    (i) At the Closing and subject to the terms and conditions
    set forth in this Agreement, AOC shall convey, transfer and
    deliver the Assets to LII. In consideration therefor, at the
    Closing and subject to the terms and conditions set forth in
    this Agreement, LII shall deliver to AOC 2,239,589 shares
    (subject to reduction pursuant to section 2.6(i)) of LII
    Common Stock (the “New LII Shares”) issued in
    the names of the AOC Shareholders in such amounts as set forth
    in the Consideration Certificate. The New LII Shares will
    contain the following or similar legend:



 



    “THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT
    BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR
    UNDER THE APPLICABLE SECURITIES LAWS OF ANY STATE, AND MAY NOT
    BE OFFERED FOR SALE, SOLD, ASSIGNED, TRANSFERRED, PLEDGED OR
    OTHERWISE DISPOSED OF EXCEPT PURSUANT TO (A) AN EFFECTIVE
    REGISTRATION STATEMENT IN COMPLIANCE WITH THE REQUIREMENTS OF
    ALL SUCH LAWS OR (B) AN EXEMPTION FROM SUCH
    REGISTRATION AND AN OPINION OF COUNSEL IN A
    FORM SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS
    NOT REQUIRED BY SUCH LAWS.”



 



    (ii) At least two business days prior to the Closing, AOC
    shall deliver to LII a certificate executed on behalf of AOC by
    its Chairman or President setting forth (a) the names and
    addresses of the AOC shareholders of record on the Closing Date
    (the “AOC Shareholders”); (b) the number
    of shares of AOC Common Stock owned by the AOC Shareholders on
    the Closing Date; (c) the number of New LII Shares to be
    issued to each AOC Shareholder in accordance with his or her Pro
    Rata Share and the exact name that should appear on each stock
    certificate representing that number of whole New LII Shares to
    be issued to each AOC Shareholder pursuant to this
    Section 2.1 and Section 2.2; (d) the decision by
    AOC either to distribute cash in lieu of fractional shares or to
    round the New LII Shares upward or downward pursuant to
    Section 2.6; and (e) the respective cash amounts in
    lieu of fractional shares payable to each AOC Shareholder or the
    results of such rounding pursuant to Section 2.6 (the
    “Consideration Certificate”).



 



    (iii) LII shall not assume or become liable for any debts,
    liabilities or obligations of AOC, whether absolute or
    contingent, known or unknown, accrued or unaccrued or otherwise
    (collectively, the “Liabilities”).



 



    2.2  AOC Liquidating Distribution;
    Dissolution.  Prior to the Closing, AOC shall
    distribute the Cash Dividend to its shareholders pro rata. As
    soon as practicable after the Closing Date but not later than
    30 days thereafter, AOC shall distribute to the AOC
    Shareholders in accordance with their respective Pro Rata Share
    and in liquidation of AOC (i) the stock certificates
    representing the whole New LII Shares, (ii) the cash (if
    any) paid by LII in lieu of fractional shares pursuant to
    Section 2.6, and (iii) the assets (if any) of AOC
    remaining after the satisfaction of all of its Liabilities. Such
    distribution in liquidation of AOC shall be structured so that
    the issuance of the New LII Shares to the AOC Shareholders is
    exempt from registration under the Securities Act pursuant to
    Rule 506 of Regulation D promulgated thereunder. AOC
    agrees to take all steps necessary to dissolve AOC in a
    reasonable amount of time after the liquidating distribution and
    in no event later than 180 days following the Closing Date.



 



    2.3  Reorganization.  The
    transfer by AOC of the Assets to LII in exchange for the New LII
    Shares, the pro rata distribution of the New LII Shares, cash in
    lieu of fractional New LII Shares and remaining assets to the
    AOC Shareholders in liquidation of AOC and the subsequent
    dissolution of AOC is referred to herein as the
    “Reorganization.”



 



    2.4  Dissenter’s
    Rights.  Notwithstanding anything in this
    Agreement to the contrary, shares of AOC Common Stock
    outstanding immediately prior to the Closing Date and held by an
    AOC Shareholder who has not voted in favor of the Reorganization
    or consented thereto in writing and who has delivered to AOC a




    

    7








 






    written objection to the Reorganization in accordance with
    Article 5.12 of the TBCA shall be entitled to payment of
    the fair value of such shares in accordance with the provisions
    of Articles 5.11 through 5.13, inclusive, of the TBCA;
    provided that if such AOC Shareholder fails to perfect or
    effectively withdraws or loses his or her right to payment of
    the fair value of his shares under the TBCA, such shares shall
    be treated as if they had been voted in favor of the
    Reorganization. AOC shall give LII prompt notice of any
    objections or demands received by AOC from any shareholder
    exercising his right to dissent, and, prior to the Closing Date,
    LII shall have the right to participate in all negotiations and
    proceedings with respect thereto. Prior to the Closing Date, AOC
    shall not, except with the prior written consent of LII, make
    any payment with respect to, or settle or offer to settle, any
    such objections or demands.



 



    2.5  Stock Transfer
    Books.  AOC shall close its stock transfer
    books for a reasonable period prior to Closing, but in no event
    more than fifty (50) days, for the purpose of determining
    the AOC Shareholders entitled to receive New LII Shares pursuant
    to Section 2.2 and the number of AOC Shareholders who are
    not Accredited Investors. AOC shall provide LII with notice of
    any registration of transfers of AOC Common Stock that occur
    between the date of this Agreement and the closing of its stock
    transfer books.



 



    2.6  Fractional
    Shares.  Notwithstanding any other provision
    of this Agreement, solely for the purpose of saving LII the
    expense and inconvenience of issuing and transferring fractional
    shares, no fractional shares of LII Common Stock will be issued.
    AOC shall determine, in its sole discretion, at least two
    business days prior to the Closing Date, whether to distribute
    cash in lieu of fractional shares or to round the fractional
    shares that would otherwise be received by each AOC Shareholder
    upward or downward, in each case, as described in this
    Section 2.6.



 



    (i) If AOC determines to distribute cash in lieu of
    fractional shares, (a) any AOC Shareholder entitled to
    receive a fractional share of LII Common Stock but for this
    Section 2.6 shall be entitled to receive a cash payment in
    lieu thereof in an amount equal to the percentage of a whole
    share of LII Common Stock represented by such fractional share
    multiplied by $29.00, (b) LII shall deliver at Closing a
    check made payable to AOC in the aggregate amount of such cash
    payments to the AOC Shareholders in lieu of fractional shares,
    and (c) the aggregate number of New LII Shares to be
    delivered to AOC pursuant to Section 2.1 shall be reduced
    by such number of shares equal to the sum of all of all
    fractional shares for which cash is paid in lieu thereof
    pursuant to this Section 2.6(i).



 



    (ii) If AOC determines to round the fractional shares,
    (a) each fractional share of LII Common Stock that any AOC
    Shareholder would otherwise receive but for this
    Section 2.6, shall be rounded upward or downward to the
    next whole number of New LII Shares, as determined by AOC in its
    sole discretion, and the aggregate number of shares to be
    received by such AOC Shareholder pursuant to this Agreement
    shall be adjusted accordingly as determined by AOC in its sole
    discretion and (b) the aggregate number of New LII Shares
    to be delivered to AOC pursuant to Section 2.1 shall not
    change.



 



    (iii) The (i) decision by AOC either to
    (A) distribute cash in lieu of fractional shares or
    (B) round the New LII Shares upward or downward, and
    (ii) respective cash amounts payable to each AOC
    Shareholder or the results of such rounding, as applicable,
    shall be set forth in the Consideration Certificate.



 




    ARTICLE III

    



 




    THE CLOSING
    



 



    The Closing shall occur at the offices of Thompson &
    Knight LLP, 1700 Pacific Avenue, Suite 3300, Dallas, Texas,
    75201 at 9:00 a.m. on the third business day following the
    satisfaction or waiver of each of the conditions to the
    obligations of the parties set forth in Articles VII and
    VIII hereof to complete the Reorganization or such later date as
    the parties may mutually agree. The date on which the Closing
    takes place is herein referred to as the “Closing
    Date”.




    

    8








 





 




    ARTICLE IV

    



 




    REPRESENTATIONS
    AND WARRANTIES OF AOC
    



 



    AOC represents and warrants to LII as of the date of this
    Agreement as follows:



 



    4.1  Organization and
    Existence.  AOC is a corporation duly
    organized, validly existing and in good standing under the laws
    of the State of Texas.



 



    4.2  Capitalization.  The
    authorized capital of AOC consists of 50,000 shares of
    common stock, par value $10.00 per share (the “AOC
    Common Stock”), of which 12,315 shares of AOC
    Common Stock are issued and outstanding. All of the outstanding
    shares of AOC Common Stock have been duly authorized and are
    validly issued, fully paid and non assessable and not subject to
    preemptive rights.



 



    4.3  Power and Authority.  The
    Board of Directors of AOC has adopted a resolution declaring the
    advisability of, and recommending that the AOC shareholders
    approve this Agreement and the Reorganization. AOC has full
    corporate power and authority to execute, deliver and perform
    this Agreement, and to consummate the transactions contemplated
    hereby, including the Reorganization. The execution, delivery
    and performance by AOC of this Agreement, and the consummation
    by AOC of the transactions contemplated hereby, including the
    Reorganization, have been duly authorized by all necessary
    corporate action (other than the approval of the Reorganization
    by the holders of AOC Common Stock in accordance with the TBCA
    and the AOC bylaws). This Agreement has been duly executed and
    delivered by AOC and constitutes, and each other agreement,
    instrument or document executed or to be executed by AOC in
    connection with the Reorganization has been, or when executed
    will be, duly executed and delivered by AOC and constitutes, or
    when executed and delivered will constitute, a valid and legally
    binding obligation of AOC enforceable against it in accordance
    with its terms, except that such enforceability may be limited
    by (a) applicable bankruptcy, insolvency, fraudulent
    transfer, reorganization, moratorium and similar laws affecting
    creditors’ rights generally and (b) general principles
    of equity (regardless of whether such enforceability is
    considered in a proceeding in equity or at law).



 



    4.4  Financial
    Statements.  AOC has furnished LII with true
    and complete copies of the unaudited statement of assets and
    liabilities of AOC as of December 31, 2006 and the related
    unaudited statements of income of AOC for the quarterly period
    then ended (the “AOC Financial Statements”).
    The AOC Financial Statements have been prepared in accordance
    with generally accepted accounting principles applied on a
    consistent basis during the periods involved and fairly present
    the financial position of AOC as at the date thereof and the
    results of its operations and changes in financial position for
    the period then ended.



 



    4.5  Absence of Certain
    Changes.  Except as reflected on the AOC
    Financial Statements, AOC has no debts, liabilities or
    obligations of any nature, whether accrued, absolute, contingent
    or otherwise. Except as contemplated hereby, since
    December 31, 2006, AOC has not incurred any material
    liability, except in the ordinary course of its business
    consistent with its past practice, nor has there been any
    change, or any event involving a prospective change, in the
    business, assets, financial condition or results of operations
    of AOC which has had, or is reasonably likely to have, a
    Material Adverse Effect on AOC. On the Closing Date, AOC will
    have no debts, liabilities, or obligations of any nature,
    whether accrued, absolute, contingent or otherwise, except those
    debts, liabilities or obligations for which cash amounts have
    been set aside in connection with this Agreement.



 



    4.6  No Violation; Consents and
    Approvals.  Neither the execution, delivery
    and performance of this Agreement nor the consummation by AOC of
    the transactions contemplated herein will (i) violate any
    provision of the articles of incorporation or bylaws of AOC,
    (ii) violate any statute, law, judgment, writ, decree,
    order, regulation or rule of any court or Governmental Authority
    applicable to AOC or (iii) result in a violation or breach
    of, or constitute a default under, or result in the creation or
    imposition of any lien, charge or encumbrance upon the Assets
    pursuant to, any material contract, indenture, mortgage, loan
    agreement, note, lease or other instrument or obligation to
    which AOC is subject.




    

    9








 





 



    4.7  Litigation.  There are no
    Proceedings pending or, to the knowledge of AOC, threatened
    against AOC.



 



    4.8  Title to Assets.  The
    Assets are represented by one or more LII Common Stock
    certificate(s) issued in the name of AOC (the “LII
    Certificate”). The Assets are owned by AOC free and
    clear of any liens, claims, charges, options and encumbrances,
    except for the restricted legend on the LII Certificate. The
    Assets and cash represent all of the assets of AOC.



 



    4.9  Governmental
    Approvals.  Except as may be obtained under
    state securities or “Blue Sky” laws, no consent,
    approval, order or authorization of, or declaration, filing or
    registration with, any Governmental Authority is required to be
    obtained or made by AOC in connection with the execution,
    delivery or performance of this Agreement by AOC or the
    consummation of this Agreement.



 



    4.10  Tax Matters.  AOC has
    duly filed all Tax Returns required to be filed with the IRS or
    other applicable Taxing Authority, and no extensions of the
    applicable statute of limitations with respect to any such Tax
    Return has been requested or granted and all such Tax Returns
    were true and correct in all material respects. AOC has timely
    paid all material Taxes and assessments currently due and
    payable by AOC. No notice of any proposed Tax deficiency,
    assessment or levy has been received by AOC that has not been
    fully resolved. AOC has withheld and paid all material Taxes
    required to have been withheld and paid in connection with
    amounts paid or owing to any employee, independent contractor,
    creditor, stockholder, member or other third party.



 



    4.11  No Brokers.  AOC has not
    retained any financial advisor, broker, agent, or finder or paid
    or agreed to pay any financial advisor, broker, agent, or finder
    on account of the Reorganization.



 



    4.12  No Employees; No Employee Benefit
    Plans.  AOC has no employees and no employee
    benefit plans.



 



    4.13  No Reliance.  Except for
    the representations and warranties made by AOC in this
    Agreement, including in any Exhibit hereto or in any other
    document, certificate or instrument delivered to LII at Closing
    by or on behalf of AOC in connection with this Agreement, AOC
    will not make any representation or warranty with respect to its
    business, operations, assets, liabilities, condition (financial
    or otherwise) or prospects. Without limiting the generality of
    the foregoing, LII acknowledges that no representations or
    warranties are made with respect to any projections, forecasts,
    estimates, budgets or prospect information that may have been
    made available to LII or any of their respective representatives.



 




    ARTICLE V

    



 




    REPRESENTATIONS
    AND WARRANTIES OF LII
    



 



    LII represents and warrants to AOC as of the date of this
    Agreement as follows:



 



    5.1  Organization and
    Existence.  LII is a corporation duly
    organized, validly existing and in good standing under the laws
    of Delaware.



 



    5.2  Capitalization.  The
    authorized capital of LII consists of 200,000,000 shares of
    common stock, par value $.01 per share (the “LII
    Common Stock”), and 25,000,000 shares of preferred
    stock, par value $.01 per share. As of March 15, 2007,
    68,059,113 shares of LII Common Stock and no shares of
    preferred stock are issued and outstanding. All of the
    outstanding shares of LII Common Stock have been duly authorized
    and are validly issued, fully paid and non assessable and are
    not subject to preemptive rights.



 



    5.3  Power and Authority.  The
    Board of Directors of LII has adopted a resolution declaring the
    advisability of, and recommending that the LII stockholders
    approve the issuance of the New LII Shares pursuant to this
    Agreement. LII has full corporate power and authority to
    execute, deliver and perform this Agreement and the transactions
    contemplated hereby to be performed by it. The execution,
    delivery and performance by LII of this Agreement, and the
    consummation by LII of the transactions contemplated hereby to
    be performed by it, have been duly authorized by all necessary
    corporate action (other




    

    10








 






    than the approval by the holders of LII Common Stock of the
    issuance of the New LII Shares pursuant to this Agreement, in
    accordance with the LII bylaws and the NYSE Rules). This
    Agreement has been duly executed and delivered by LII and
    constitutes, and each other agreement, instrument or document
    executed or to be executed by LII in connection with the
    Reorganization, including without limitation the Registration
    Rights Agreement, has been, or when executed will be, duly
    executed and delivered by LII and constitutes, or when executed
    and delivered will constitute, a valid and legally binding
    obligation of LII enforceable against it in accordance with its
    terms, except that such enforceability may be limited by
    (a) applicable bankruptcy, insolvency, fraudulent transfer,
    reorganization, moratorium and similar laws affecting
    creditors’ rights generally and (b) general principles
    of equity (regardless of whether such enforceability is
    considered in a proceeding in equity or at law).



 



    5.4  No Violations; Consents and
    Approvals.  Neither the execution, delivery
    and performance of this Agreement nor the consummation by LII of
    the transactions contemplated herein will (i) violate any
    provision of the articles of incorporation or bylaws of LII,
    (ii) violate any statute, law, judgment, writ, decree,
    order, regulation or rule of any court or Governmental Authority
    applicable to LII or (iii) result in a violation or breach
    of, or constitute a default under, or result in the creation or
    imposition of any lien, charge or encumbrance upon any property
    or assets of LII pursuant to, any material contract, indenture,
    mortgage, loan agreement, note, lease or other instrument or
    obligation to which LII is subject, which, in the case of
    clauses (ii) and (iii), would reasonably be likely to have
    a Material Adverse Effect.



 



    5.5  No Litigation.  There are
    no Proceedings pending or, to the knowledge of LII, threatened
    which would reasonably be expected to prevent or hinder
    consummation of the transactions contemplated hereby.



 



    5.6  Listing.  The outstanding
    LII Common Stock is listed for trading on the NYSE.



 



    5.7  No Brokers.  AOC has not
    retained any financial advisor, broker, agent, or finder or paid
    or agreed to pay any financial advisor, broker, agent, or finder
    on account of the Reorganization.



 



    5.8  No Reliance.  Except for
    the representations and warranties made by LII in this
    Agreement, including in any Exhibit hereto or in any other
    document, certificate or instrument delivered to AOC at Closing
    by or on behalf of LII in connection with this Agreement, LII
    will not make any representation or warranty with respect to its
    business, operations, assets, liabilities, condition (financial
    or otherwise) or prospects. Without limiting the generality of
    the foregoing, AOC acknowledges that no representations or
    warranties are made with respect to any projections, forecasts,
    estimates, budgets or prospect information that may have been
    made available to AOC or any of their respective representatives.



 




    ARTICLE VI

    



 




    ADDITIONAL
    AGREEMENTS; COVENANTS OF PARTIES
    



 



    6.1  Operation in the Ordinary Course of
    Business.  AOC shall ensure that all
    Liabilities arising before or after the Closing are timely
    discharged. Except as expressly contemplated hereby or necessary
    to consummate the Reorganization, AOC shall operate only in the
    ordinary course of business consistent with past practice.



 



    6.2  Press Releases.  Except
    as may be required by Applicable Law or by the rules of the
    NYSE, neither AOC nor LII shall issue any press release with
    respect to this Agreement or the Reorganization without the
    prior consent of the other party (which consent shall not be
    unreasonably withheld under the circumstances). Any such press
    release required by Applicable Law or by the rules of any
    national securities exchange shall only be made after reasonable
    notice to the other party.



 



    6.3  Listing.  LII agrees to
    prepare and submit an application to the NYSE for the listing of
    the New LII Shares on the NYSE.



 



    6.4  Fees and Expenses.  AOC
    shall be responsible for the payment of all expenses incurred by
    AOC in connection with the Reorganization, including, without
    limitation, all fees and expenses of AOC’s legal




    

    11








 






    counsel and accountants engaged by AOC to assist in the
    Reorganization. Subject to receipt of appropriate documentation,
    AOC shall also reimburse LII for all
    out-of-pocket
    expenses reasonably incurred by LII in connection with the
    transactions contemplated by this Agreement, including, without
    limitation, the fees and expenses of LII’s legal counsel
    and accountants engaged by LII to assist in the Reorganization
    whether or not the Closing occurs; provided that the maximum
    amount of reimbursement to which LII is entitled is $250,000.
    Notwithstanding the foregoing, AOC shall have no obligation to
    reimburse LII’s
    out-of-pocket
    expenses pursuant to this Section 6.4 if the Board of
    Directors of LII withdraws or modifies its recommendation as
    provided in Section 6.5 and this Agreement is terminated
    pursuant to Section 9.1(vi).



 



    6.5  LII Annual Meeting; Proxy Statement.



 



    (i) LII shall submit a proposal to the holders of LII
    Common Stock to consider and vote upon the issuance of the New
    LII Shares pursuant to this Agreement at LII’s Annual
    Meeting of Stockholders currently scheduled to be held on
    May 17, 2007 (the “LII Annual Meeting”).
    The vote required for the approval of the issuance of the New
    LII Shares pursuant to this Agreement is described in
    Section 7.5(ii) of this Agreement, as required by
    Rule 312.03(b) of the NYSE Rules. The Board of Directors of
    LII shall, subject to its fiduciary obligations to LII under
    Applicable Law, taking into account the advice of counsel,
    recommend to the LII stockholders that they approve the issuance
    of the New LII Shares pursuant to this Agreement. For the
    avoidance of doubt, the Board of Directors may withdraw or
    modify its recommendation if it determines, after taking into
    account the advice of counsel, that the withdrawal or
    modification of the recommendation is necessary or desirable to
    comply with its fiduciary obligations to LII and its
    stockholders under Applicable Law.



 



    (ii) LII shall prepare, shall file with the SEC under the
    Exchange Act and, promptly thereafter, shall mail to LII
    stockholders, a proxy statement with respect to the LII Annual
    Meeting. The term “Proxy Statement,” as used
    herein, means such proxy statement and all related proxy
    materials and all amendments and supplements thereto, if any.
    Subject to Section 6.5(i), the Proxy Statement shall
    contain the recommendation of the Board that holders of LII
    Common Stock vote in favor of the issuance of the New LII Shares
    pursuant to this Agreement. LII shall notify AOC reasonably
    promptly of the receipt of any comments on, or any requests for
    amendments or supplements to, the Proxy Statement by the SEC,
    and LII shall supply AOC with copies of all correspondence
    between it and its representatives, on the one hand, and the SEC
    or members of its staff, on the other, with respect to the Proxy
    Statement. AOC shall cooperate with LII’s reasonable
    requests in preparing the Proxy Statement, and LII and AOC shall
    each use its reasonable best efforts to obtain and furnish the
    information required to be included in the Proxy Statement. LII
    and AOC each agree promptly to correct any information provided
    by it for use in the Proxy Statement if and to the extent that
    such information shall have become false or misleading in any
    material respect, and LII further agrees to take all steps
    necessary to cause the Proxy Statement as so corrected to be
    filed with the SEC and to be disseminated promptly to the LII
    stockholders, in each case as and to the extent required by
    Applicable Law.



 



    6.6  AOC Special Meeting.  AOC
    shall, in accordance with the TBCA and AOC’s bylaws, duly
    call, give notice of, convene and hold a special meeting of the
    holders of AOC Common Stock (the “AOC Special
    Meeting”) as promptly as practicable after the date
    hereof (but no later than the date of the LII Annual Meeting) to
    consider and vote upon the adoption and approval of the
    Reorganization. The AOC shareholder vote required for the
    adoption and approval of the Reorganization shall be an
    affirmative vote of the holders of at least two-thirds of the
    outstanding shares of AOC Common Stock entitled to vote thereon,
    as required by Articles 5.10 and 6.03 of the TBCA and the
    AOC bylaws. The Board of Directors of AOC shall, subject to its
    fiduciary obligations to AOC under Applicable Law, taking into
    account the advice of counsel, recommend to such shareholders
    that they vote in favor of the adoption and approval of all
    matters necessary to effectuate the Reorganization.



 



    6.7  Private
    Placement.  Promptly after the date hereof,
    LII shall prepare a private placement memorandum containing
    information in compliance with Rule 502 of
    Regulation D for the purposes of satisfying the exemption
    from registration of the New LII Shares under the Securities Act
    and Rule 506 of Regulation D promulgated thereunder
    (the “PPM”). As used herein, PPM includes such
    private placement memorandum and all amendments and supplements
    thereto, if any. LII shall use its reasonable best efforts to




    

    12








 






    have the PPM completed so that it can be delivered with or as a
    part of the notice and proxy materials as part of the AOC
    Special Meeting. AOC shall cooperate with LII’s reasonable
    requests in preparing the PPM, and LII and AOC shall each use
    its reasonable best efforts to obtain and furnish the
    information necessary to complete the PPM within a reasonable
    period of time after the execution of this Agreement. The
    information provided by AOC and LII shall not contain any untrue
    statement of a material fact or any omission to state therein a
    material fact required to be stated therein or necessary to make
    the statements therein not misleading. LII and AOC each agree
    promptly to correct any information provided by it for use in
    the PPM if and to the extent that such information shall have
    become false or misleading in any material respect, and LII and
    AOC further agree to use their reasonable best efforts to cause
    the PPM as so corrected to be disseminated to the extent
    required by Applicable Law. LII shall also take any action
    (other than qualifying to do business in any jurisdiction in
    which it is not now so qualified) reasonably required to be
    taken under any applicable state securities laws in connection
    with the issuance of securities pursuant to the PPM.



 



    6.8  Cooperation and
    Information.  The parties shall cooperate
    fully with each other in connection with the preparation of the
    Proxy Statement, the PPM, and the Private Letter Ruling and the
    filing of the Proxy Statement and Private Letter Ruling with the
    applicable Governmental Authority, and shall obtain and furnish
    to each other the information required to be included (based
    upon the advice of its counsel) in such documents and filings.



 



    6.9  Tax-Free
    Reorganization.  Promptly after the date of
    this Agreement, AOC and LII shall prepare and submit the Private
    Letter Ruling with the IRS. AOC shall notify LII reasonably
    promptly of the receipt of any comments on, or any requests for
    amendments or supplements to, the Private Letter Ruling from the
    IRS, and AOC shall supply LII with copies of all correspondence
    between it and its representatives, on the one hand, and the IRS
    or members of its staff, on the other, with respect to the
    Private Letter Ruling. AOC, after consultation with LII, shall
    use its reasonable best efforts to respond promptly to any
    comments made by the IRS with respect to the Private Letter
    Ruling. AOC and LII agree to treat the Reorganization as a
    reorganization within the meaning of Section 368(a) of the
    Code and to file all Tax Returns consistently with such
    treatment and to not take a position with any Taxing Authority
    inconsistent with such treatment. In connection with the Private
    Letter Ruling regarding such tax treatment, AOC and LII shall
    make to the IRS the representations contained (and ascribed to
    each of them) in Exhibit B hereto.



 




    ARTICLE VII

    



 




    CONDITIONS
    TO OBLIGATIONS OF AOC
    



 



    The obligations of AOC to consummate the transactions
    contemplated by this Agreement shall be subject to the
    fulfillment on or before the Closing Date of each of the
    following conditions:



 



    7.1  Representations and Warranties
    True.  All the representations and warranties
    of LII contained in this Agreement shall be true and correct in
    all material respects on and as of the Closing Date; provided
    that to the extent that any such representation or warranty is
    made as of a specified date, such representation or warranty
    shall have been true and correct as of such specified date.



 



    7.2  Covenants and Agreements Performed by
    LII.  LII shall have performed and complied in
    all material respects with all covenants and agreements required
    by this Agreement to be performed or complied with by it on or
    prior to the Closing Date.



 



    7.3  Compliance
    Certificate.  AOC shall have received
    certificates to the effect set forth in Sections 7.1 and
    7.2, dated the Closing Date, signed on behalf of LII by a duly
    authorized officer.



 



    7.4  Tax Ruling.  AOC shall
    have obtained a ruling from the IRS with respect to the
    Reorganization in form and substance reasonably satisfactory to
    AOC to the effect that, based on the facts and assumptions
    stated therein, for Federal income tax purposes the
    Reorganization will qualify as a reorganization within the
    meaning of Section 368(a) of the Code (the “Private
    Letter Ruling”).




    

    13








 





 



    7.5  Shareholder Approval.



 



    (i) The holders of at least two-thirds of the outstanding
    shares of AOC Common Stock entitled to vote thereon shall have
    duly and validly approved the Reorganization and all other
    actions necessary to effectuate the Reorganization.



 



    (ii) The holders of at least 50% of the outstanding shares
    of LII Common Stock entitled to vote thereon shall have cast a
    vote in respect of the proposal contained in the Proxy Statement
    to issue New LII Shares pursuant to this Agreement and such
    proposal shall have been duly and validly approved by at least a
    majority of the votes cast.



 



    7.6  Regulatory
    Approvals.  All necessary approvals,
    registrations, and exemptions under federal and state securities
    laws shall have been obtained.



 



    7.7  Stock Exchange
    Listing.  The New LII Shares shall have been
    approved for listing on the NYSE, subject to official notice of
    issuance.



 



    7.8  Legal Proceedings.  On
    the Closing Date, other than suits to enforce this Agreement,
    there shall not be (i) any effective injunction, writ, or
    temporary restraining order or any other order of any nature
    issued by a court or Governmental Authority of competent
    jurisdiction directing that any aspect of the Reorganization not
    be consummated, or (ii) any Proceeding pending in which it
    is or may be sought to prohibit, substantially delay, or rescind
    this Agreement or any aspect of the Reorganization or to obtain
    an award of damages in connection with the Reorganization and
    which, in the good faith judgment of either of the parties, is
    material.



 



    7.9  Stock Certificates; Cash in Lieu of
    Fractional Shares.  AOC shall have received
    stock certificates representing the whole New LII Shares in the
    name and denomination as set forth in the Consideration
    Certificate and, if applicable, a check by LII made payable to
    AOC in the aggregate amount of cash payments to AOC Shareholders
    in lieu of fractional shares pursuant to Section 2.6.



 



    7.10  Registration Rights
    Agreement.  LII shall have delivered to AOC an
    executed copy of the Registration Rights Agreement.



 



    7.11  Dissenters.  The number
    of shares of AOC Common Stock outstanding immediately prior to
    the Closing Date and held by an AOC Shareholder who has not
    voted in favor of the Reorganization or consented thereto in
    writing and who has delivered to AOC a written objection to the
    Reorganization in accordance with Article 5.12 of the TBCA
    shall be less than 5% of the total number of shares of AOC
    Common Stock outstanding immediately prior to the Closing Date.



 




    ARTICLE VIII

    



 




    CONDITIONS
    TO OBLIGATIONS OF LII
    



 



    The obligations of LII to consummate the transactions
    contemplated by this Agreement shall be subject to the
    fulfillment on or before the Closing Date of each of the
    following conditions:



 



    8.1  Representations and Warranties
    True.  All the representations and warranties
    of AOC contained in this Agreement shall be true and correct in
    all material respects on and as of the Closing Date; provided
    that to the extent that any such representation or warranty is
    made as of a specified date, such representation or warranty
    shall have been true and correct as of such specified date.



 



    8.2  Covenants and Agreements Performed by
    AOC.  AOC shall have performed and complied in
    all material respects with all covenants and agreements required
    by this Agreement to be performed or complied with by it on or
    prior to the Closing Date.



 



    8.3  Compliance
    Certificate.  LII shall have received
    certificates to the effect set forth in Sections 8.1 and
    8.2, dated the Closing Date, signed on behalf of AOC by a duly
    authorized officer.




    

    14








 





 



    8.4  Tax Ruling.  AOC shall
    have obtained the Private Letter Ruling in form and substance
    reasonably satisfactory to LII.



 



    8.5  Shareholder Approval.



 



    (i) The holders of at least two-thirds of the outstanding
    shares of AOC Common Stock entitled to vote thereon shall have
    duly and validly approved the Reorganization and all other
    actions necessary to effectuate the Reorganization.



 



    (ii) The holders of at least 50% of the outstanding shares
    of LII Common Stock entitled to vote thereon shall have cast a
    vote in respect of the proposal contained in the Proxy Statement
    to issue New LII Shares pursuant to this Agreement and such
    proposal shall have been duly and validly approved by at least a
    majority of the votes cast.



 



    8.6  Regulatory
    Approvals.  All necessary approvals,
    registrations, and exemptions under federal and state securities
    laws shall have been obtained.



 



    8.7  Legal Proceedings.  On
    the Closing Date, other than suits to enforce this Agreement,
    there shall not be (i) any effective injunction, writ, or
    temporary restraining order or any other order of any nature
    issued by a court or Governmental Authority of competent
    jurisdiction directing that any aspect of the Reorganization not
    be consummated, or (ii) any Proceeding pending in which it
    is or may be sought to prohibit, substantially delay, or rescind
    this Agreement or any aspect of the Reorganization or to obtain
    an award of damages in connection with the Reorganization and
    which, in the good faith judgment of either of the parties, is
    material.



 



    8.8  LII Certificate.  LII
    shall have received the LII Certificate, together with such
    stock powers or other instruments duly authorized on behalf of
    AOC dated the Closing Date as are reasonably satisfactory to
    LII, evidencing the sale, assignment, transfer, and conveyance
    by AOC to LII of the Assets in accordance with the terms hereof.



 



    8.9  Consideration
    Certificate.  LII shall have received the
    Consideration Certificate at least two business days prior to
    the Closing Date.



 



    8.10  Dissenters.  The number
    of shares of AOC Common Stock outstanding immediately prior to
    the Closing Date and held by an AOC Shareholder who has not
    voted in favor of the Reorganization or consented thereto in
    writing and who has delivered to AOC a written objection to the
    Reorganization in accordance with Article 5.12 of the TBCA
    shall be less than 5% of the total number of shares of AOC
    Common Stock outstanding immediately prior to the Closing Date.



 



    8.11  Registration Rights
    Agreement.  AOC shall have delivered to LII a
    copy of the Registration Rights Agreement duly executed by each
    AOC Shareholder.



 



    8.12  Non-Accredited
    Investors.  There shall be no more than
    thirty-five (35) AOC Shareholders who are not Accredited
    Investors.



 



    8.13  Investment
    Certificate.  LII shall have received a
    certificate in the form of Exhibit C hereto duly executed
    by each AOC Shareholder that is an Accredited Investor and a
    certificate in the form of Exhibit D hereto duly executed
    by each AOC Shareholder that is not an Accredited Investor.




    

    15








 







    ARTICLE IX

    



 




    TERMINATION
    



 



    9.1  Termination Prior to
    Closing.  This Agreement may be terminated and
    the Reorganization abandoned at any time prior to the Closing in
    the following manner:



 



    (i) by mutual written consent of AOC and LII;



 



    (ii) by AOC or LII after September 30, 2007, if the
    Closing shall not have occurred by the close of business on such
    date, so long as the failure to consummate the Reorganization on
    or before such date does not result from a breach of this
    Agreement by the party seeking termination of this Agreement;



 



    (iii) by AOC, if (A) any of the representations and
    warranties of LII contained in this Agreement shall not be true
    and correct when made or at any time prior to the Closing as if
    made at and as of such time or (B) LII shall have failed to
    fulfill any of their obligations in this Agreement in all
    material respects; and, in the case of each of clauses
    (A) and (B), such misrepresentation, breach of warranty, or
    failure (provided it can be cured) has not been cured within
    five days of actual knowledge thereof by LII;



 



    (iv) by LII, if (A) any of the representations and
    warranties of AOC contained in this Agreement shall not be true
    and correct when made or at any time prior to the Closing as if
    made at and as of such time or (B) AOC shall have failed to
    fulfill any of their obligations in this Agreement in all
    material respects; and, in the case of each of clauses
    (A) and (B), such misrepresentation, breach of warranty, or
    failure (provided it can be cured) has not been cured within
    five days of actual knowledge thereof by AOC;



 



    (v) by AOC or LII, if the AOC shareholders do not approve
    the Reorganization at the AOC Special Meeting as described in
    Section 7.5(i) of this Agreement; or



 



    (vi) by AOC or LII, if the LII stockholders do not approve
    the Reorganization at the LII Annual Meeting as described in
    Section 7.5(ii) of this Agreement.



 



    9.2  Effect of
    Termination.  In the event of the termination
    of this Agreement pursuant to Section 9.1 by LII, on the
    one hand, or AOC, on the other, written notice thereof shall
    forthwith be given to the other party specifying the provision
    hereof pursuant to which such termination is made, and this
    Agreement shall become void and have no effect, except that the
    provisions contained in this Article IX and Article X
    and in Section 6.4 shall survive the termination hereof.
    Nothing contained in this Section shall relieve any party from
    liability for any willful breach of this Agreement.



 




    ARTICLE X

    



 




    MISCELLANEOUS
    



 



    10.1  Survival of Representations and
    Warranties.  The representations and
    warranties contained herein and in any certificate or other
    writing delivered pursuant hereto shall not survive the Closing
    Date. This Section 10.1 shall not limit any covenant or
    agreement of the parties to this Agreement which, by its terms,
    contemplates performance after the Closing Date.



 



    10.2  Notices.  Any notice
    required or permitted to be given under this Agreement must be
    in writing and shall be deemed delivered three days after it is
    deposited in the United States mail, addressed to the party to
    be notified, postage prepaid and registered or certified, with a
    return receipt requested. Notice delivered by facsimile
    transmission (with the original being mailed the next day) shall
    be deemed to have been delivered on the day it is faxed to the
    recipient. Notice served in any other manner shall be deemed to
    have been given only if and when received by the addressee. For
    purposes of notices, the addresses of the parties shall be
    initially as set forth below. A party may change its address for
    purposes of this Section 10.2 by giving notice of such
    change of address to the other party in the manner herein
    provided for giving notice.




    

    16








 





 



    (i) if to AOC:



 



    A.O.C. Corporation




    c/o Service Experts Inc. [4T]




    2140 Lake Park Boulevard




    Richardson, Texas




    Dallas, Texas 75080




    Attention: Thomas W. Booth




    Facsimile:
    (972) 497-6948



 



    with copies to:



 



    Thompson & Knight LLP




    1700 Pacific Avenue, Suite 3300




    Dallas, Texas 75201




    Attention: Ann Marie Cowdrey




    Facsimile:
    (214) 969-1751



 



    (ii) if to LII:



 



    Lennox International Inc.




    2140 Lake Park Blvd.




    Richardson, Texas 75080




    Attention: William F. Stoll, Jr.




    Facsimile:
    (972) 497-6660



 



    with copies to:



 



    Baker Botts LLP




    2001 Ross Avenue




    Dallas, Texas
    75201-2980




    Attention: Douglass M. Rayburn




    Facsimile:
    (214) 661-4634



 



    10.3  Entire Agreement; Incorporation By
    Reference.  This Agreement, together with the
    Exhibits, which are incorporated by reference herein, and the
    Registration Rights Agreement constitute the entire agreement
    among the parties with respect to the subject matter hereof and
    supersede all prior agreements and understandings, both written
    and oral, between the parties with respect to the subject matter
    of this Agreement. No representations or warranties, other than
    those specifically set forth herein or in documents delivered
    pursuant to the terms hereof, are being made by the parties,
    notwithstanding any oral or written management presentations or
    other information provided by one party to the other.



 



    10.4  Amendment.  This
    Agreement may not be amended except by an instrument in writing
    executed by both parties hereto.



 



    10.5  Binding Effect; Assignment; No Third Party
    Benefit.  This Agreement shall be binding upon
    and inure to the benefit of the parties and their respective
    successors and permitted assigns; provided that neither this
    Agreement nor any of the rights, interests or obligations
    hereunder shall be assigned by either of the parties (by
    operation of law or otherwise) without the prior written consent
    of the other party, which consent may be withheld or denied in
    their sole and absolute discretion. Nothing expressed or
    referred to in this Agreement shall be construed to give any
    Person, other than the parties to this Agreement, any legal or
    equitable right, remedy or claim under or with respect to this
    Agreement or any provision of this Agreement, except such rights
    as shall enure to a successor or permitted assignee under this
    Agreement.



 



    10.6  Severability.  If any
    provision of this Agreement is held to be unenforceable, then
    this Agreement shall be considered divisible and such provision
    shall be deemed inoperative to the extent it is deemed
    unenforceable, and in all other respects this Agreement shall
    remain in full force and effect to the maximum extent permitted
    by Applicable Law.




    

    17








 





 



    10.7  Governing Law.  This
    Agreement shall be governed by and construed and enforced in
    accordance with the internal, substantive laws of the State of
    Texas, without giving effect to the conflict of laws rules
    thereof.



 



    10.8  Headings.  The
    descriptive headings in this Agreement are inserted for
    convenience of reference only, do not constitute a part of this
    Agreement and shall not affect in any manner the meaning or
    interpretation of this Agreement.



 



    10.9  Counterparts.  This
    Agreement may be executed and delivered (including by facsimile
    transmission) in one or more counterparts, all of which shall be
    considered one and the same agreement and shall become effective
    when one or more counterparts have been signed by each of the
    parties and delivered to the other parties, it being understood
    that all parties need not sign the same counterpart.



 



    [Remainder of this page intentionally left blank]



 



    [Signature page follows]




    

    18








 






    IN WITNESS WHEREOF, the parties have caused this Agreement to be
    duly executed on the dates set forth by their signatures below,
    to be effective as of the date set forth above.



 



    A.O.C. CORPORATION



 


			
	 	    By: 
	
    /s/  Tom
    Booth          









    Name: Tom Booth



			
	 	    Title: 
	
    President, AOC




 



    LENNOX INTERNATIONAL INC.



 


			
	 	    By: 
	
    /s/  William
    F. Stoll, Jr.









    Name: William F. Stoll



			
	 	    Title: 
	
    Chief Legal Officer





    

    19