Document:

exv10w30

 

Exhibit 10.30

                    , 200                    

[Name of Employee]

[Address]

[Address]

Dear                     :

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

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

 

 

	2.	 	Term of Agreement; Termination Date. This Agreement will commence on the date of
signing this Agreement by both parties (the “Effective Date”) and will be in effect until
December 31 of that year and thereafter for a series of one-year terms.
	 
	3.	 	Termination of Employment. Your employment with Lennox may be terminated for a
number of reasons prior to the expiration of any term of this Agreement as described below.
The rights of each party under each circumstance will vary and are described in the attached
Exhibits. More specifically, if Lennox terminates your employment for any reason other than
for “Cause”, as defined in Section B.3 of Exhibit A, you will be entitled to receive, in
addition to any other compensation or benefits described in Section B.2 of Exhibit A,
severance benefits consisting of either the Normal Severance Payment defined in Section 2 of
Exhibit C or the Enhanced Severance Payment defined in Section 3 of Exhibit C as determined by
those provisions. However, the provisions of Sections C.2(a)-(d) of Exhibit A will continue
to be effective after the termination of this Agreement regardless of the reason for your
termination.

	 	a.	 	Termination by Employee. You may terminate your employment at any time
upon 30 days notice to Lennox (or a lesser period if approved by Lennox) of your intent
to terminate or not to renew this Agreement and, in that event, Lennox shall be
obligated only to pay you your Base Salary and other applicable benefits provided to
employees in your position that are effective at the time of the voluntary resignation
up to the effective date of the termination only.
	 
	 	b.	 	Termination For Cause. Lennox may terminate your employment, at any
time, for Cause, as defined in Section B.3 of Exhibit A, to be effective immediately
upon delivery to you of notice of termination. If Lennox terminates you for Cause, you
are only entitled to receive your Base Salary and other applicable benefits provided to
employees in your position that are effective at the time of termination up through the
effective date of termination.
	 
	 	c.	 	Termination Other Than For Cause. Your employment may also be
terminated by Lennox other than for Cause at any time (including Lennox’ non-renewal of
the Agreement) but such a decision triggers certain defined benefits for you. In the
event Lennox elects to terminate you under this provision, Lennox agrees to pay either
the Normal Severance Payment as defined in Section 2 of Exhibit C or, solely at your
option, the Enhanced Severance Payment as defined in Section 3 of Exhibit C, provided
you comply with all requirements described in Section 3 of Exhibit C. These benefits
are contractually defined by this Agreement and are not dependent on the other benefits
policies of Lennox at the time of your termination.
	 
	 	d.	 	Termination As A Result Of Disability Or Death. Should you die or become
permanently disabled (completely unable to perform your duties as defined in the
benefit plans of Lennox) during the term of this Agreement, your employment will be
terminated effective as of the date of your death or permanent disability.

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

	4.	 	Nonpayment Upon Breach. Notwithstanding anything in this Agreement to the contrary,
at any time after the date of termination, if you, by any intentional or grossly negligent
action or omission to act, breach any covenant, agreement, condition or obligation contained
herein, Lennox is entitled to cease making any payments and to cease providing any of the
benefits to you under this Agreement. Additionally, Lennox reserves the right to seek
repayment of any amounts previously paid hereunder along with recovery of any other damages
caused by you.
	 
	5.	 	Resolution of Disputes. In the event that any employment dispute as defined in
Section A of Exhibit B arises between Lennox and any Employee, the parties involved will make
all efforts to resolve any such dispute through informal means. If these informal attempts at
resolution fail, Lennox and the Employee agree to and shall submit the dispute to final and
binding arbitration pursuant to the policy and terms outlined in Exhibit B, to which the
parties expressly agree to be bound. The parties fully and completely understand and agree
that arbitration is the exclusive forum for all such arbitrable disputes and that the parties
are giving up all rights to a court trial or jury trial; however, the parties, by agreeing to
the policy for resolution of disputes outlined in Exhibit B are not waiving any substantive
rights or remedies to which they would otherwise be entitled.
	 
	6.	 	Waiver, Modification, and Integration. The waiver by any party hereto of a breach of
any provision of this Agreement shall not operate or be construed as a waiver of any
subsequent breach by any party. This Agreement, which includes all Exhibits referenced or
attached, expresses the entire agreement of the parties concerning matters contained herein
and supersedes all prior and contemporaneous representations, understandings and agreement,
either oral or in writing, between the parties hereto with respect to such matters and all
such prior or contemporaneous representations, understandings and agreements, both oral and
written, are hereby terminated. This Agreement may not be modified, altered or amended except
by written agreement of the Employee and the Chief Executive Officer, except when the Chief
Executive Officer is involved, and in that event, an official designated by the Board of
Directors for Lennox.
	 
	7.	 	Binding Effect. This Agreement shall be binding and effective upon Lennox and
its successors and permitted assigns, and upon the Employee, Employee’s heirs and
representatives. The Employee hereby represents and warrants to Lennox that Employee

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

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

	 	 	 	 	 
	 	Sincerely,

LENNOX INTERNATIONAL INC.

 	 
	 	By:  	 	 
	 	 	[Name] 	 
	 	 	 	 
	 

ACCEPTED AND AGREED this                      day of                     , 200                    .

	 	 	 	 	 
	EMPLOYEE
	 	 	 	 
	 
	 	 	 	 
	 	 	 
	[Name]
	 	 	 	 

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EXHIBIT A

TERMS OF EMPLOYMENT

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

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

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

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

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

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

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

	C.	 	Agreements by Employee.

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

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

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

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

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

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

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

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

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

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

	 	e.	 	Remedies. In the event of breach or threatened breach
by Employee of any provision of Paragraph C.2 hereof, Lennox shall be entitled
to (i) cease any payments under this Agreement as set forth in Section 4 of the
body of the Agreement, (ii) relief by temporary restraining order, temporary
injunction, and/or permanent injunction, (iii) recovery of all attorneys fees
and costs incurred by Lennox in obtaining such relief, and (iv) any other legal
and equitable relief to which it may be entitled, including any and all
monetary damages. Lennox has the right to pursue partial enforcement and/or to
seek declaratory relief regarding the enforceable scope of this Agreement
without penalty and without waiving Lennox’ right to pursue any other available
remedy.
	 
	 	f.	 	Survival of Covenants. Each covenant of Employee set
forth in Paragraph C.2 shall survive the termination of Employee’s employment.
The existence of any claim or cause of action by Employee against Lennox,
whether related to this Agreement or otherwise, shall not constitute a defense
to the enforcement of the covenants in Paragraph C.2. In the event an
enforcement remedy is necessary under Paragraph C.2, the restricted time
periods provided for in Paragraph C.2 shall commence on the date enforcement is
ordered and complied with by Employee and shall be extended by the period of
noncompliance.
	 
	 	g.	 	Acknowledgment of Ancillary Agreements and Consideration.
Employee acknowledges that his or her agreement to be bound by the protective
covenants set forth in Paragraph C.2 is the inducement for Lennox (i) to enter
into the other terms of this Agreement (ii) to modify existing

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

	D.	 	Severability. If any provision contained in this Agreement is determined to be void,
illegal or unenforceable, in whole or in part, then it will be treated as though it never was
contained herein and all other provisions shall remain in full force and effect.
	 
	E.	 	Notices. All communications required or allowed under this Agreement shall be in
writing and shall be deemed to have been delivered on the date personally delivered or on the
date deposited in the United States Postal Service, postage prepaid, by certified mail, return
receipt requested, addressed to you at the address provided above and to Lennox at:

       Lennox
International Inc.
2140 Lake Park
Blvd.
               Richardson, Texas 75080-2254
      Attn: Chief Legal Officer

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EXHIBIT B

POLICY FOR RESOLUTION OF DISPUTES

	A.	 	Agreement to Arbitrate.

	 	1.	 	Arbitrable Disputes. This Policy covers any legal dispute between the
parties, as set forth below, except for Lennox’s right to seek enforcement of
Employee’s protective covenants set forth in Paragraph C.2 of Exhibit A or Employee’s
claims related to workers compensation and/or unemployment insurance. The disputes
subject to this policy are all those disputes between the parties arising from any
breach or alleged breach of this Agreement or as to Employee’s termination or as to any
allegation by the Employee that Lennox has violated any of the Employee’s rights under
state or federal employment or civil rights laws, or any other laws, statutes or
constitutional provisions, including, but not limited to, the following: unlawful
discrimination or harassment; claims based on any purported breach of contractual
obligations; claims based on any purported breach of duty arising in tort, including
violations of public policy; as well as any actions recognized under common law or the
combination of any of these claims; and any claims against supervisors or agents of
Lennox for which the supervisors or agents were acting in the course and scope of their
employment or making any decisions or comments related to or connected with employment,
even if the supervisor or agent was not acting within the course and scope of
employment, shall be resolved in accordance with the provisions of this Policy for
Resolution of Disputes as set forth herein. All arbitrable disputes are subject to
applicable statutes of limitations and other affirmative defenses recognized by law.
Employee or Lennox may seek a court order to enforce or compel arbitration pursuant to
the terms of this Policy.
	 
	 	2.	 	Acceptance of Policy. By accepting or continuing employment with
Lennox, for the provision of a term of employment provided by Lennox, for Lennox’
agreement to pay a severance package, and for Lennox’ agreement to provide Employee
access to confidential information, Employee and Lennox agree that arbitration is the
exclusive remedy for all arbitrable disputes.
	 
	 	3.	 	Governing Law/Waiver of Rights. THIS POLICY AND AGREEMENT TO ARBITRATE
IS MADE PURSUANT TO THE FEDERAL ARBITRATION ACT AND APPLICABLE STATE LAWS REGARDING
ARBITRATION AND IS A FULL AND COMPLETE WAIVER OF THE PARTIES’ RIGHTS TO A CIVIL COURT
ACTION AND RIGHTS TO A TRIAL BY JURY.

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	B.	 	Request for Arbitration.

	 	1.	 	Attempt at Informal Resolution of Disputes.

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

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

	 	a.	 	A factual description of the dispute in sufficient detail to
advise Lennox of the nature of the dispute;
	 
	 	b.	 	The date when the dispute first arose;
	 
	 	c.	 	The names, work locations, telephone numbers of any co-workers
or supervisors with knowledge of the dispute; and

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	 	d.	 	The relief requested by the Employee.

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

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

	 	a.	 	Ruling on motions regarding discovery, and ruling on procedural
and evidentiary issues arising during the arbitration;
	 
	 	b.	 	Issuing protective orders on the motion of any party or third
party witness (such protective orders may include, but not be limited to,
sealing the record of the arbitration, in whole or in part (including discovery
proceedings and motions, transcripts, and the decision and award), to protect
the privacy or other constitutional or statutory rights of parties and/or
witnesses);
	 
	 	c.	 	Determining only the issue(s) submitted to him/her (the
issue(s) must be identified in the “Request for Arbitration” or counterclaims,
and any issue(s) not so identified in those documents shall be deemed to be and
is/are outside the scope of the arbitrator’s jurisdiction, and any award
involving those issue(s) shall be subject to a motion to vacate);
	 
	 	d.	 	Shall have no authority to violate state or federal law; and
	 
	 	e.	 	Issuing written opinions on the issues raised in the
Arbitration.

	 	5.	 	Pleadings.

	 	a.	 	A copy of the “Request for Arbitration” shall be forwarded to
the arbitrator within five calendar days of his/her selection.
	 
	 	b.	 	Within 10 calendar days following submission of the “Request for
Arbitration” to the arbitrator, Lennox shall respond in writing to the

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

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

	 	(1)	 	a response, by admission or denial, to each
claim set forth in the “Request for Arbitration”;
	 
	 	(2)	 	all affirmative defenses asserted by Lennox to
each claim; and
	 
	 	(3)	 	all counterclaims Lennox asserts against the
Employee and any related third party claims.

	 	d.	 	If Lennox contends that some or all of the Employee’s claims
set forth in the “Request for Arbitration” are barred as a matter of law, it
may respond by demurrer setting forth the legal authorities in support of its
position. If Lennox demurs to less than the entire “Request for Arbitration,”
Lennox must answer those claims to which it does not demur at the same time
that it submits its demurrer.
	 
	 	e.	 	The Employee shall have 20 calendar days to oppose Lennox’
demurrer. Any opposition must be in writing and served on the arbitrator and
Lennox.
	 
	 	f.	 	If the answer alleges a counterclaim, within 20 days of service
of the answer, the Employee shall answer and/or demur to the counterclaim in
writing and serve the answer and/or demurrer on the arbitrator and Lennox. If
the Employee demurs to any counterclaim, Lennox shall have 20 calendar days
from its receipt of the demurrer to submit a written opposition to the demurrer
to the Employee and the arbitrator.
	 
	 	g.	 	The arbitrator shall rule on demurrer(s) to any claims and/or
counterclaims within 15 calendar days of service of the moving and opposition
papers.
	 
	 	h.	 	If any demurrer is overruled, the moving party must answer
those claims to which it demurred within five calendar days of the receipt of
the arbitrator’s ruling. The answer must be served on the arbitrator and the
opposing party.
	 
	 	i.	 	When all claims and counterclaims have been answered, the arbitrator shall
set a time and place for hearing which shall be no earlier than three months
from the day on which the parties are notified of the date of

4

 

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

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

	 	a.	 	Parties may obtain discovery by any of the following methods:

	 	(1)	 	depositions upon oral examination, one per side
as of right, with more permitted if leave is obtained from the
arbitrator;
	 
	 	(2)	 	written interrogatories, up to a maximum
combined total of 20, with the responding party having 20 days to
respond;
	 
	 	(3)	 	request for production of documents or things
or permission to enter upon land or other property for inspection, with
the responding party having 20 days to produce the documents and allow
entry or to file objections to the request; and
	 
	 	(4)	 	physical and mental examination, in accordance
with the Federal Rules of Civil Procedure, Rule 35(a).

	 	b.	 	Any motion to compel production, answers to interrogatories or
entry onto land or property must be made to the arbitrator within 15 days of
receipt of objections.
	 
	 	c.	 	All discovery requests shall be submitted no less than 60 days
before the hearing date.
	 
	 	d.	 	The scope of discoverable evidence shall be in accordance with
Federal Rule of Civil Procedure 26(b)(1).
	 
	 	e.	 	The arbitrator shall have the power to enforce the
aforementioned discovery rights and obligations by the imposition of the same
terms, conditions, consequences, liabilities, sanctions, and penalties as can
or may be imposed in like circumstances in a civil action by a federal court
under the Federal Rules of Civil Procedure, except the power to order the
arrest or imprisonment of a person.

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

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

5

 

	 	b.	 	Each party has the burden of proving each element of its claim or
counterclaims, and each party has the burden of proving any of its
affirmative defenses.
	 
	 	c.	 	In addition to, or in lieu of, closing arguments, either party
shall have the right to present post-hearing briefs, and the due date for
exchanging post-hearing briefs shall be mutually agreed on by the parties and
the arbitrator.

	 	8.	 	Substantive Law. The applicable substantive law shall be the law of
the State of Texas or federal law. If both federal and state law speak to a cause of
action, the Employee shall have the right to elect his/her choice of law. However,
choice of law in no way affects the procedural aspects of the arbitration, which are
exclusively governed by the provisions of this Policy.
	 
	 	9.	 	Opinion and Award. The arbitrator shall issue a written opinion and
award, in conformance with the following requirements:

	 	a.	 	The opinion and award must be signed and dated by the arbitrator.
	 
	 	b.	 	The arbitrator’s opinion and award shall decide all issues submitted.
	 
	 	c.	 	The arbitrator’s opinion and award shall set forth the legal
principles supporting each part of the opinion.
	 
	 	d.	 	The arbitrator shall have the same authority to award remedies
and damages as provided to a judge and/or jury under parallel circumstances.

	 	10.	 	Enforcement of Arbitrator’s Award. Following the issuance of the
arbitrator’s decision, any party may petition a court to confirm, enforce, correct or
vacate the arbitrator’s opinion and award under the Federal Arbitration Act, and/or
applicable state law.
	 
	 	11.	 	Fees and Costs. Fees and costs shall be allocated in the following manner:

	 	a.	 	Each party shall be responsible for its own attorneys’ fees,
except as provided by law.
	 
	 	b.	 	The Employee will pay a $150 filing fee to be paid to the
arbitration agency. Lennox will bear the remainder of the arbitrator’s fees
and any costs associated with the facilities for the arbitration.
	 
	 	c.	 	Lennox and the Employee shall each bear an equal one-half of any court
reporters’ fees, assuming both parties want a transcript of the proceeding. If
one party elects not to receive a transcript of the proceedings, the other
party will bear all of the court reporters’ fee. However, such an election

6

 

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

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

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

7

 

EXHIBIT C

SEVERANCE TERMS

	1.	 	Effect of Protective Covenants. The provisions of Paragraphs C2(a)-(d) of Exhibit A
of this Agreement will continue in full force and effect regardless of whether Employee
continues to be employed by Lennox and regardless of the reason Employee’s employment is
terminated and regardless of the severance compensation to which Employee is entitled as set
forth below, if any.
	 
	2.	 	Normal Severance Compensation. Should Employee be terminated by Lennox prior to the
expiration of the term specified in Section 2 of the body of the Agreement or the Agreement is
not renewed by Lennox for any reason other than for Cause as defined in Section B.3 of Exhibit
A, and provided the Employee does not elect and qualify for the Enhanced Severance Payment
described in Section 3 of Exhibit C set forth below, Employee will be entitled to receive
monthly payments of the greater of the Employee’s Monthly Base Salary for the remainder of the
Agreement’s term or three months of Employee’s Monthly Base Salary in addition to any other
compensation or benefits applicable to an employee at Employee’s level to the extent the
Employee would be eligible for such compensation or benefits under the terms of those formal
programs which are applicable to all employees at Employee’s level in effect at the time of
termination and, for any benefits which continue after termination, subject to any
modification which is made to such programs applicable to the all of the participants at such
time.
	 
	3.	 	Enhanced Severance Benefits. If Lennox terminates an Employee other than for Cause
(including Lennox’ non-renewal of the Agreement) and that Employee elects and meets the
conditions of this Paragraph 3 of Exhibit C, Lennox agrees to pay an Enhanced Severance
Payment and provide the other benefits described below (“Enhanced Severance Benefits”). The
Employee must agree to execute a written General Release of any and all possible claims
against Lennox existing at the time of termination in exchange for which Lennox agrees to the
following severance provisions:

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

1

 

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

	 	(ii)	 	Perquisites. Within 45 days following the date of termination, the
Employee will receive in addition to (i) above, in a lump sum, a payment of a sum equal
to 10% of the Employee’s Annual Base Salary in effect at the time of termination in
lieu of the continuation of or payment for any perquisites, including, without
limitation, automobile, club membership, tax preparation, physical examination or
others being received by the Employee at the time of termination.
	 
	 	(iii)	 	COBRA Continuation. Lennox agrees to pay COBRA premiums to allow
Employee to continue to participate in Lennox group health plan on the same terms as
other Lennox employees for up to 18 months while Employee is unemployed and not
eligible for other group health insurance coverage. Should Employee remain unemployed
at the end of 18 months, the equivalent of the COBRA premium will be paid to the
employee on a month-to-month basis for up to six additional months for his or her use
in obtaining health insurance coverage outside the group health plan.
	 
	 	(iv)	 	Outplacement. Lennox agrees to provide Employee with outplacement
services in accordance with Lennox’ then applicable policy. In lieu of such
outplacement services, Lennox agrees to pay Employee a lump sum payment of 10% of
Employee’s Annual Base Salary within 45 days following the date of termination should
Employee elect not to receive outplacement services.
	 
	 	(v)	 	Death Benefit. Employee’s beneficiary, as set forth in Exhibit D, will
receive, in a lump sum, a death benefit equivalent to six months of Employee’s
Monthly Base Salary in the event that the Employee should die during the period in
which the Employee is entitled to any severance payment described above.

2

 

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

3

 

EXHIBIT D

DESIGNATION OF BENEFICIARY

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

EMPLOYEE:                          

	 	 	 	 	 	 
	Primary Beneficiary(s):
	 	 	 	 	 
	 
	 	 	 	 	%*
	 

Name

	 	 

Relationship
	 	 
Percent	 
	 
	 	 	 	 	%*
	 

Name 
	 	Relationship

	 	 
Percent	 

 

			
	*The total should add to 100%	 	 

	 	 	 	 	 	 
	Contingent Beneficiary(s):
	 	 	 	 	 
	 
	 	 	 	 	%*
	 

Name

	 	 

Relationship
	 	 
Percent	 
	 
	 	 	 	 	%*
	 

Name

	 	 

Relationship
	 	 
Percent	 

 

			
	*The total should add to 100%

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

	 	 	 	 	 
	 

	 	EMPLOYEE	 	 
	 
	 	 	 	 
	 

	 	 

Signature
	 	 
	 
	 	 	 	 
	 

	 	 	 	 
	 

	 	Printed Name	 	 
	 
	 	 	 	 
	 

	 	 	 	 
	 

	 	Dateexv10w31

 

Exhibit 10.31

CHANGE OF CONTROL EMPLOYMENT AGREEMENT

 

 

Table of Contents

	 	 	 	 	 
	 	 	Page
	1. Employment Period
	 	 	1	 
	2. Terms of Employment
	 	 	2	 
	(a) Position and Duties
	 	 	2	 
	(b) Compensation
	 	 	2	 
	(i)  Base Salary
	 	 	2	 
	(ii)  Annual Bonus
	 	 	3	 
	(iii)  Qualified Plans
	 	 	3	 
	(iv)  Welfare Benefit Plans
	 	 	3	 
	(v)   Expenses
	 	 	4	 
	(vi)  Fringe Benefits and Perquisites
	 	 	4	 
	(vii)  Office and Support Staff
	 	 	4	 
	(viii)  Vacation
	 	 	4	 
	(ix)  Equity and Performance Based Awards
	 	 	4	 
	3. Termination of Employment
	 	 	5	 
	(a) Death or Disability
	 	 	5	 
	(b) Cause
	 	 	5	 
	(c) Good Reason; Window Period
	 	 	5	 
	(d) Notice of Termination
	 	 	6	 
	(e) Date of Termination
	 	 	6	 
	4. Obligations of the Company Upon Termination
	 	 	6	 
	(a) Good Reason or During a Window Period; Other than for Cause, Death or Disability
	 	 	6	 
	(b) Death
	 	 	10	 
	(c) Disability
	 	 	10	 
	(d) Cause; Other than for Good Reason or During a Window Period
	 	 	11	 
	5. Non-exclusivity of Rights
	 	 	11	 
	6. Full Settlement; Resolution of Disputes
	 	 	11	 
	7. Certain Additional Payments by the Company
	 	 	12	 
	8. Confidential Information; Certain Prohibited Activities
	 	 	15	 
	9. Change of Control; Potential Change of Control
	 	 	16	 
	10. Successors
	 	 	20	 
	11. Miscellaneous
	 	 	21	 

i

 

CHANGE OF CONTROL EMPLOYMENT AGREEMENT

     This CHANGE OF CONTROL EMPLOYMENT AGREEMENT (the “Agreement”) by and between Lennox
International Inc., a Delaware corporation (the “Company”), and                      (the “Executive”),
dated as of the                      day of                     , 200                    , to be effective as of the Agreement Effective
Date (as defined in Section 11(h) hereof).

     The Board of Directors of the Company (the “Board”) has determined that it is in the best
interests of the Company and its shareholders to assure that, in the event of a Change of Control
or Potential Change of Control (in each case as defined in Section 9 hereof), the Company will have
the continued services of the Executive and the Executive will be provided with compensation and
benefits arrangements that meet his expectations. Therefore, in order to accomplish these
objectives, the Board has caused the Company to enter into this Agreement. It is understood that
the Executive has an existing employment agreement (the “Existing Agreement”) with the Company.
This Agreement is intended to provide certain protections to Executive that are not afforded by the
Existing Agreement. This Agreement is not, however, intended to provide benefits that are
duplicative of the Executive’s current benefits. To the extent that this Agreement provides
benefits of the same types as those provided under the Existing Agreement, the Company shall
provide the better of the benefits in each case during the Employment Period. If Executive remains
employed by the Company at the conclusion of an Employment Period, the Existing Agreement shall
continue in effect in accordance with its terms thereafter, except that Executive’s Base Salary for
purposes of the Existing Agreement shall be equal to the Executive’s Annual Base Salary under this
Agreement at the conclusion of the Employment Period.

     NOW, THEREFORE, IT IS HEREBY AGREED AS FOLLOWS:

     1. Employment Period. Upon a Change of Control or Potential Change of Control, the
Company hereby agrees to continue the Executive in its employ, and the Executive hereby agrees to
remain in the employ of the Company, in accordance with, and subject to, the terms and provisions
of this Agreement, for the period (the “Employment Period”) commencing on the date upon which there
occurs a Change of Control or a Potential Change of Control and ending on (i) if a Change of
Control has occurred, the second anniversary of the Employment Effective Date or (ii) if a
Potential Change of Control has occurred but a Change of Control has not occurred, the earliest of
(x) the date upon which the Board determines in good faith that a Change of Control is unlikely to
occur, (y) any anniversary of the Potential Change of Control, if at least 30 days prior to such
anniversary the Executive notifies the Company in writing that he elects to terminate his
employment with the Company as of such anniversary and (z) the second anniversary of the Employment
Effective Date. If the Employment Period commences by reason of a Potential Change of Control and
the Employment Period is thereafter terminated pursuant to clause (ii) (x) of the preceding
sentence, this Agreement shall nevertheless remain in effect and a new Employment Period shall
commence upon a subsequent Change of Control or Potential Change of Control. The Company shall
promptly notify the Executive in writing of the occurrence of a Change of Control or Potential
Change of Control and of any determination

1

 

made by the Board pursuant to clause (ii)(x) above
that a Change of Control is unlikely to occur. As used herein, the term “Employment Effective
Date” shall mean, with respect to any Employment Period, the date upon which such Employment Period
commences in accordance with this Section 1.

	 	2.	 	Terms of Employment.

(a) Position and Duties.

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

     (ii) During the Employment Period, and excluding any periods of vacation and
sick leave to which the Executive is entitled, the Executive agrees to devote
reasonable attention and time during normal business hours to the business and
affairs of the Company and, to the extent necessary to discharge the
responsibilities assigned to the Executive hereunder, to use the Executive’s
reasonable best efforts to perform faithfully and efficiently such responsibilities.
During the Employment Period it shall not be a violation of this Agreement for the
Executive to (A) serve on corporate, civic or charitable boards or committees, (B)
deliver lectures, fulfill speaking engagements or teach at educational institutions
and (C) manage personal investments, so long as such activities do not significantly
interfere with the performance of the Executive’s responsibilities as an employee of
the Company in accordance with this Agreement. It is expressly understood and
agreed that to the extent that any such activities have been conducted by the
Executive prior to the Employment Effective Date, the continued conduct of such
activities (or the conduct of activities similar in nature and scope thereto)
subsequent to the Employment Effective Date shall not thereafter be deemed to
interfere with the performance of the Executive’s responsibilities to the Company.

(b) Compensation.

     (i) Base Salary. During the Employment Period, the Executive shall
receive an annual base salary equal to the base salary in effect immediately prior
to the Employment Effective Date or, if more favorable to the Executive, the base
salary in effect at any time after the Employment Effective Date (“Annual Base
Salary”), which shall be paid in accordance with the normal business practice of the
Company. During the Employment Period, the Annual Base Salary shall be reviewed at
least annually and shall be increased at any time and from time to

2

 

time as shall be substantially consistent with increases in base salary generally awarded in the
ordinary course of business to executives of the Company and its affiliated
companies. Any increase in Annual Base Salary shall not serve to limit or reduce
any other obligation to the Executive under this Agreement. Annual Base Salary
shall not be reduced after any such increase and the term “Annual Base Salary” as
utilized in this Agreement shall refer to Annual Base Salary as so increased. As
used in this Agreement, the term “affiliated companies” shall include, when used
with reference to the Company, any company controlled by, controlling or under
common control with the Company.

     (ii) Annual Bonus. In addition to Annual Base Salary, the Executive
shall be awarded, for each fiscal year or portion thereof during the Employment
Period, an annual bonus (the “Annual Bonus”) in cash equal to the greater of (A) the
greatest dollar amount of annual bonus paid or awarded to or for the benefit of the
Executive in respect of any of the preceding three fiscal years or (B) an amount
comparable to the annual bonus awarded to other Company executives taking into
account Executive’s position and responsibilities with the Company, prorated in the
case of either (A) or (B) for any period consisting of less than twelve full months.
The Annual Bonus awarded for a particular fiscal year shall (unless the Executive
elects to defer receipt thereof) be paid no later than the last day of the third
month after the end of such year.

     (iii) Qualified Plans. During the Employment Period, the Executive
shall be entitled to participate in all profit-sharing, savings and retirement plans
that are tax-qualified under Section 401(a) of the Internal Revenue Code of 1986, as
amended (“Code”), and all plans that are supplemental to any such tax-qualified
plans, in each case to the extent that such plans are applicable generally to other
executives of the Company and its affiliated companies, but in no event shall such
plans provide the Executive with incentive opportunities (measured with respect to
both regular and special incentive opportunities, to the extent, if any, that such
distinction is applicable), savings opportunities and retirement benefit
opportunities that are, in each case, less favorable, in the aggregate, than the
most favorable plans of the Company and its affiliated companies. As used in this
Agreement, the term “most favorable” shall, when used with reference to any plans,
practices, policies or programs of the Company and its affiliated companies, be
deemed to refer to the most favorable plans, practices, policies or programs of the
Company and its affiliated companies as in effect at any time during the three
months preceding the Employment Effective Date or, if more favorable to the
Executive, provided generally at any time after the Employment Effective Date to
other executives of the Company and its affiliated companies.

     (iv) Welfare Benefit Plans. During the Employment Period, the
Executive and/or the Executive’s
family, as the case may be, shall be eligible for participation in and shall
receive all benefits under welfare benefit plans, practices, policies and programs
provided by the Company and its affiliated companies (including, without
limitation, medical, prescription, dental, vision,

3

 

disability, salary continuance,
group life and supplemental group life, accidental death and travel accident
insurance plans and programs) to the extent applicable generally to other executives
of the Company and its affiliated companies, but in no event shall such plans,
practices, policies and programs provide the Executive with benefits that are less
favorable, in the aggregate, than the most favorable such plans, practices, policies
and programs of the Company and its affiliated companies.

     (v) Expenses. During the Employment Period, the Executive shall be
entitled to receive prompt reimbursement for all reasonable expenses incurred by the
Executive in accordance with the most favorable policies, practices and procedures
of the Company and its affiliated companies.

     (vi) Fringe Benefits and Perquisites. During the Employment Period,
the Executive shall be entitled to fringe benefits and perquisites in accordance
with the most favorable plans, practices, programs and policies of the Company and
its affiliated companies applicable to similarly situated executives, which, in the
aggregate, shall not be less than Executive’s benefits and perquisites in effect
prior to the commencement of the Employment Period or, if more favorable to the
Executive, the benefits and perquisites in effect at any time after the Employment
Effective Date .

     (vii) Office and Support Staff. During the Employment Period, the
Executive shall be entitled to an office or offices of a size and with furnishings
and other appointments, and to exclusive personal secretarial and other assistance,
at least equal to the most favorable of the foregoing provided to the Executive by
the Company and its affiliated companies at any time during the three months
preceding the Employment Effective Date.

     (viii) Vacation. During the Employment Period, the Executive shall be
entitled to paid vacation in accordance with the most favorable plans, policies,
programs and practices of the Company and its affiliated companies, but not less
than the amount of vacation time to which Executive was entitled prior to the
commencement of the Employment Period.

     (ix) Equity and Performance Based Awards. During the Employment
Period, the Executive shall be granted on an annual basis a long-term incentive
package consisting of stock options, restricted stock or restricted stock units and
other equity-based awards and performance grants, as selected by the Company, with an
aggregate value (as determined by an independent consulting firm selected by
Executive and reasonably acceptable to the Company) that shall be not less than the
aggregate value of the long-term incentive package awarded the Executive in any of
the three years immediately preceding such Employment Period.

4

 

	 	3.	 	Termination of Employment.

     (a) Death or Disability. The Executive’s employment shall terminate
automatically upon the Executive’s death during the Employment Period. If the Company
determines in good faith that the Disability of the Executive has occurred during the
Employment Period (pursuant to the definition of Disability set forth below), it may give to
the Executive written notice in accordance with Section 11(d) of this Agreement of its
intention to terminate the Executive’s employment. In such event, the Executive’s
employment with the Company shall terminate effective on the 30th day after receipt of such
notice by the Executive (the “Disability Effective Date”), provided that, within the 30 days
after such receipt, the Executive shall not have returned to full-time performance of the
Executive’s duties. For purposes of this Agreement, “Disability” shall mean the absence of
the Executive from the Executive’s duties with the Company on a full-time basis for 180
consecutive business days as a result of incapacity due to mental or physical illness which
is determined to be total and permanent by a physician selected by the Company or its
insurers and acceptable to the Executive or the Executive’s legal representative (such
agreement as to acceptability not to be withheld unreasonably).

     (b) Cause. The Company may terminate the Executive’s employment during the
Employment Period for Cause. For purposes of this Agreement, “Cause” shall mean (i)
dishonesty by Executive which results in substantial personal enrichment at the expense of
the Company or (ii) demonstratively willful repeated violations of Executive’s obligations
under this Agreement which are intended to result and do result in material injury to the
Company.

     (c) Good Reason; Window Period. The Executive’s employment may be terminated
during the Employment Period by the Executive for Good Reason or during a Window Period by
the Executive without any reason. For purposes of this Agreement, “Window Period” shall
mean the 90-day period commencing 366 days after any Change of Control as defined in Section
9 of this Agreement. For purposes of this Agreement, “Good Reason” shall mean:

     (i) any change in the Executive’s position (including status, offices, titles
and reporting requirements), authority, duties or responsibilities as contemplated
by Section 2 of this Agreement, excluding for this purpose any de minimus changes
and excluding an isolated, insubstantial and inadvertent action not taken in bad
faith and which is remedied by the Company promptly after receipt of notice thereof
given by the Executive, or any other assignment to the
Executive of any duties inconsistent in any respect with such position,
authority, duties or responsibilities, other than de minimus inconsistencies or
other than, in each case, any such change in duties or such assignment that would
clearly constitute a promotion or other improvement in Executive’s position;

     (ii) any failure by the Company to comply with any of the provisions of this
Agreement, other than an isolated, insubstantial and inadvertent failure not

5

 

occurring in bad faith and which is remedied by the Company promptly after receipt
of notice thereof given by the Executive;

     (iii) the Company’s requiring the Executive to be based at any office or
location other than that described in Section 2(a)(i)(B) hereof;

     (iv) any purported termination by the Company of the Executive’s employment
otherwise than as expressly permitted by this Agreement;

     (v) any failure by the Company to comply with and satisfy the requirements of
Section 10 of this Agreement, provided that (A) the successor described in Section
10(c) has received, at least ten days prior to the Date of Termination (as defined
in subparagraph (e) below), written notice from the Company or the Executive of the
requirements of such provision and (B) such failure to be in compliance and satisfy
the requirements of Section 10 shall continue as of the Date of Termination; or

     (vi) in the event that the Executive is serving as a member of the Board
immediately prior to the Employment Effective Date, any failure to reelect Executive
as a member of the Board, unless such reelection would be prohibited by the
Company’s By-laws as in effect at the beginning of the Employment Period.

     (d) Notice of Termination. Any termination by the Company for Cause, or by the
Executive for Good Reason or without any reason during a Window Period, shall be
communicated by Notice of Termination to the other party hereto given in accordance with
Section 11(d) of this Agreement. The failure by the Executive or the Company to set forth
in the Notice of Termination any fact or circumstance which contributes to a showing of Good
Reason or Cause shall not waive any right of the Executive or the Company hereunder or
preclude the Executive or the Company from asserting such fact or circumstance in enforcing
the Executive’s or the Company’s rights hereunder.

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

	 	4.	 	Obligations of the Company Upon Termination.

     (a) Good Reason or During a Window Period; Other than for Cause, Death or
Disability. If, during the Employment Period, the Company shall terminate the

6

 

Executive’s employment other than for Cause or Disability or the Executive shall terminate
employment for Good Reason or his employment shall be terminated for any reason during a
Window Period:

     (i) the Company shall pay or provide to or in respect of the Executive the
following amounts and benefits:

     A. in a lump sum in cash, undiscounted, within 10 days after the Date
of Termination, an amount equal to the sum of (1) the Executive’s Annual
Base Salary through the Date of Termination, (2) the product of (x) the
highest Annual Bonus paid or awarded to or for the benefit of Executive
during the three fiscal years preceding the Date of Termination and (y) a
fraction, the numerator of which is the number of days in the current fiscal
year through the Date of Termination and the denominator of which is 365,
(3) any deferred compensation previously awarded to or earned by the
Executive (together with any accrued interest or earnings thereon) and (4)
any compensation for unused vacation time for which the Executive is
eligible in accordance with the most favorable plans, policies, programs and
practices of the Company and its affiliated companies, in each case to the
extent not theretofore paid (the sum of the amounts described in clauses
(1), (2), (3) and (4) shall be hereinafter referred to as the “Accrued
Obligation”);

     B. in a lump sum in cash, undiscounted, within 10 days after the Date
of Termination, an amount equal to the sum of (1) one and one-half times the
Annual Base Salary, if the Date of Termination occurs before the third
anniversary of Executive’s employment with the Company or, if thereafter,
three times the Annual Base Salary and (2) one and one-half times the
highest Annual Bonus paid or awarded to or for the benefit of the Executive,
if the Date of Termination occurs before the third anniversary of
Executive’s employment with the Company or, if thereafter, three times the
highest Annual Bonus paid or awarded to or for the benefit of the Executive
during the three fiscal years preceding the Date of Termination;

     C. an additional one and one-half Years of Vesting Service and Years of
Credited Service, if the Date of Termination occurs before the third
anniversary of Executive’s employment with the Company or, if thereafter, an
additional three Years of Vesting Service and Years of Credited Service, as
well as an incremental one and one-half years added to the Executive’s age,
if the Date of Termination occurs before the third anniversary of
Executive’s employment with the Company or, if thereafter, three years added
to Executive’s age, for purposes of the Company’s Supplemental Retirement
Plan and Profit Sharing Restoration Plan;

7

 

     D. in a lump sum in cash, undiscounted, within 10 days after the Date
of Termination, an amount equal to the sum of (1) one and one-half times the
Annual Base Salary, if the Date of Termination occurs before the third
anniversary of Executive’s employment with the Company or, if thereafter,
three times the Annual Base Salary and (2) one and one-half times the
highest Annual Bonus paid or awarded to or for the benefit of the Executive,
if the Date of Termination occurs before the third anniversary of
Executive’s employment with the Company or, if thereafter, three times the
highest Annual Bonus paid or awarded to or for the benefit of the Executive
during the three fiscal years preceding the Date of Termination (the amounts
in this clause D. to reflect the equity component of Executive’s overall
compensation);

     E. in a lump sum in cash, undiscounted, within 10 days after the Date
of Termination, an amount equal to the sum of (1) 15% of the Annual Base
Salary (this amount being paid in lieu of the provision of out placement
services) and (2) three times 15% of the Annual Base Salary that would have
been paid or awarded to or for the benefit of the Executive during the
fiscal year that includes the Date of Termination (this amount to reflect
the perquisites component of Executive’s overall compensation);

     F. effective as of the Date of Termination, (x) immediate vesting and
exercisability of, termination of any restrictions on sale or transfer
(other than any such restriction arising by operation of law) with respect
to and treatment of any performance goals as having been satisfied at the
highest possible level with respect to each and every stock option,
restricted stock award, restricted stock unit award and other equity-based
award and performance award (each, a “Compensatory Award”) that is
outstanding as of a time immediately prior to the Date of Termination, (y)
the extension of the term during which each and every Compensatory Award may
be exercised by the Executive until the earlier of (1) the third anniversary
of the Date of Termination or (2) the date upon which the right to exercise
any Compensatory Award would have expired if the Executive had continued to
be employed by the Company under the terms of this Agreement until the
second anniversary of the Employment Effective Date and (z) at the sole election of Executive, in exchange
for any or all Compensatory Awards that are either denominated in or payable
in Common Stock, an amount in cash equal to the number of shares of Common
Stock that are subject to the Compensatory Award multiplied by the excess of
(i) the Highest Price Per Share (as defined below) over (ii) the exercise or
purchase price, if any, of such Compensatory Awards. As used herein, the
term “Highest Price Per Share” shall mean the highest price per share that
can be determined to have been paid or agreed to be paid for any share of
Common Stock by a Covered Person (as defined below) at any time during the
Employment Period or the six-month period

8

 

immediately preceding the
Employment Effective Date. As used herein, the term “Covered Person” shall
mean any Person other than an Exempt Person (in each case as defined in
Section 9 hereof) who (i) is the Beneficial Owner (as defined in Section 9
hereof) of 35% or more of the outstanding shares of Common Stock or 35% or
more of the combined voting power of the outstanding Voting Stock (as
defined in Section 9 hereof) of the Company at any time during the
Employment Period or the two-year period immediately prior to the Employment
Effective Date, or (ii) is a Person who has any material involvement in
proposing or effecting the Change of Control or Potential Change of Control
(but excluding any Person whose involvement in proposing or effecting the
Change of Control or Potential Change of Control resulted solely from such
Person’s voting or selling of Common Stock in connection with the Change of
Control or Potential Change of Control, from such Person’s status as a
director or officer of the Company in evaluating and/or approving a Change
of Control or Potential Change of Control or both). In determining the
Highest Price Per Share, the price paid or agreed to be paid by a Covered
Person will be appropriately adjusted to take into account (W) distributions
paid or payable in stock, (X) subdivisions of outstanding stock, (Y)
combinations of shares of stock into a smaller number of shares and (Z)
similar events.

     (ii) for the eighteen month period, if the Date of Termination occurs before
the third anniversary of Executive’s employment with the Company or, if thereafter,
three-year period commencing with the Date of Termination, and in the case of
medical and health benefits for the COBRA continuation period commencing thereafter,
the Company shall continue medical and health benefits and group life and
supplemental group life benefits to the Executive and/or the Executive’s family at
least equal to those that would have been provided to them in accordance with the
plans, programs, practices and policies described in Section 2(b)(iv) of this
Agreement if the Executive’s employment had not been terminated (such continuation
of such benefits for the applicable period herein set forth shall be hereinafter
referred to as “Welfare Benefit Continuation”). For purposes of determining
eligibility of the Executive for retiree benefits pursuant to such plans, practices,
programs and policies, the Executive shall be considered to have remained employed
until the second anniversary, if the Date of
Termination occurs before the third anniversary of Executive’s employment with
the Company or, if thereafter, third anniversary of Executive’s Date of Termination
and to have retired on such date; and

     (iii) the Company shall timely pay or provide to the Executive and/or the
Executive’s family any other amounts or benefits required to be paid or provided or
which the Executive and/or the Executive’s family is eligible to receive pursuant to
this Agreement and under any plan, program, policy or practice or contract or
agreement of the Company and its affiliated companies as in effect and applicable
generally to other executives and their families on the

9

 

Employment Effective Date (such other amounts and benefits shall be hereinafter referred to as the “Other
Benefits”).

     (b) Death. If the Executive’s employment is terminated by reason of the
Executive’s death during the Employment Period, and other than during a Window Period in
which event the provisions of Section 4(a) shall govern and the Executive shall be entitled
to the amounts and benefits set forth therein, this Agreement shall terminate and the
Company shall be obligated to pay to the Executive’s legal representatives under this
Agreement the greater of (i) such benefits as would be provided to Executive under the
Existing Agreement or (ii)(A) the payment of the Accrued Obligations (which shall be paid to
the Executive’s estate or beneficiary, as applicable, in a lump sum in cash within 30 days
of the Date of Termination), (B) the payment of an amount equal to the Annual Salary that
would have been paid to the Executive pursuant to this Agreement for the period beginning on
the Date of Termination and ending on the first anniversary thereof if the Executive’s
employment had not terminated by reason of death (which shall be paid to the Executive’s
estate or beneficiary, as applicable, in a lump sum in cash within 30 days of the Date of
Termination), (C) the timely payment or provision of the Welfare Benefit Continuation and
Other Benefits and (D) effective as of the Date of Termination, (x) immediate vesting and
exercisability of, and termination of any restrictions on sale or transfer (other than any
such restriction arising by operation of law) with respect to, each and every Compensatory
Award outstanding as of a time immediately prior to the Date of Termination, (y) the
extension of the term during which each and every Compensatory Award may be exercised or
purchased by the Executive until the earlier of (I) the second anniversary, if the Date of
Termination occurs before the third anniversary of Executive’s employment with the Company
or, if thereafter, third anniversary of the Date of Termination or (II) the date upon which
the right to exercise or purchase any Compensatory Award would have expired if the Executive
had continued to be employed by the Company under the terms of this Agreement until the
second anniversary of the Employment Effective Date and (z) at the sole election of
Executive’s legal representative, in exchange for any Compensatory Award that is either
denominated in or payable in Common Stock, an amount in cash equal to the excess of (I) the
Highest Price Per Share over (II) the exercise or purchase price, if any, of such
Compensatory Award.

     (c) Disability. If the Executive’s employment is terminated by reason of the
Executive’s Disability during the Employment
Period, and other than during a Window Period in which event the provisions of Section
4(a) shall govern and the Executive shall be entitled to the amounts and benefits set forth
therein, this Agreement shall terminate and the Company shall be obligated to pay to the
Executive, the greater of (i) such benefits as would be provided to Executive under the
Existing Agreement or (ii)(A) the payment of the Accrued Obligations (which shall be paid to
the Executive in a lump sum in cash within 30 days of the Date of Termination), (B) the
payment of an amount equal to the Annual Salary that would have been paid to the Executive
pursuant to this Agreement for the period beginning on the Date of Termination and ending on
the first anniversary thereof if the Executive’s employment had not terminated by reason of
Disability (which shall be paid to the Executive in a lump sum in cash within 30 days of the
Date of Termination), (C) the timely payment or provision of the Welfare Benefit

10

 

Continuation and Other Benefits and (D) effective as of the Date of Termination, (x)
immediate vesting and exercisability of, and termination of any restrictions on sale or
transfer (other than any such restriction arising by operation of law) with respect to, each
and every Compensatory Award outstanding as of a time immediately prior to the Date of
Termination, (y) the extension of the term during which each and every Compensatory Award
may be exercised or purchased by the Executive until the earlier of (I) the third
anniversary of the Date of Termination or (II) the date upon which the right to exercise or
purchase any Compensatory Award would have expired if the Executive had continued to be
employed by the Company under the terms of this Agreement until the second anniversary of
the Employment Effective Date and (z) at the sole election of Executive, in exchange for any
Compensatory Award that is either denominated in or payable in Common Stock, an amount in
cash equal to the excess of (I) the Highest Price Per Share over (II) the exercise or
purchase price, if any, of such Compensatory Award.

     (d) Cause; Other than for Good Reason or During a Window Period . If the
Executive’s employment shall be terminated for Cause during the Employment Period, and other
than during a Window Period in which event the provisions of Section 4(a) shall govern and
the Executive shall be entitled to the amounts and benefits set forth therein, this
Agreement shall terminate without further obligations under this Agreement to the Executive
other than for Accrued Obligations. If the Executive terminates employment during the
Employment Period other than for Good Reason and other than during a Window Period, this
Agreement shall terminate without further obligations to the Executive, other than for the
payment of Accrued Obligations. In such case, all Accrued Obligations shall be paid to the
Executive in a lump sum in cash within 30 days of the Date of Termination.

     5. Non-exclusivity of Rights. Except as provided in Section 4 of this Agreement, nothing
in this Agreement shall prevent or limit the Executive’s continuing or future participation in any
plan, program, policy or practice provided by the Company or any of its affiliated companies and
for which the Executive may qualify, nor shall anything herein limit or otherwise affect such
rights as the Executive may have under any contract or agreement with the Company or any of its
affiliated companies. Amounts which are vested benefits or which the Executive is otherwise
entitled to receive under any plan, policy, practice or program of or any contract or agreement with the Company or any of its affiliated
companies at or subsequent to the Date of Termination shall be payable in accordance with such
plan, policy, practice or program or contract or agreement except as such plan, policy, practice or
program is expressly superseded by this Agreement.

	 	6.	 	Full Settlement; Resolution of Disputes.

     (a) The Company’s obligation to make payments provided for in this Agreement and
otherwise to perform its obligations hereunder shall not be affected by any set-off,
counterclaim, recoupment, defense, mitigation or other claim, right or action which the
Company may have against the Executive or others. The Company agrees to pay promptly as
incurred, to the full extent permitted by law, all legal fees and expenses which the
Executive may reasonably incur as a result of any contest (unless the

11

 

Executive’s claim is
found by a court of competent jurisdiction to have been frivolous) by the Company, the
Executive or others of the validity or enforceability of, or liability under, any provision
of this Agreement (other than Section 8 hereof) or any guarantee of performance thereof
(including as a result of any contest by the Executive about the amount of any such payment
pursuant to this Agreement), plus in each case interest on any delayed payment at the
Applicable Federal Rate provided for in Section 7872(f)(2)(A) of the Code.

     (b) If there shall be any dispute between the Company and the Executive concerning (i)
in the event of any termination of the Executive’s employment by the Company, whether such
termination was for Cause, or (ii) in the event of any termination of employment by the
Executive, whether Good Reason existed or whether such termination occurred during a Window
Period, then, unless and until there is a final, nonappealable judgment by a court of
competent jurisdiction declaring that such termination was for Cause or that the
determination by the Executive of the existence of Good Reason was not made in good faith or
that the termination by the Executive did not occur during a Window Period, the Company
shall pay all amounts, and provide all benefits, to the Executive and/or the Executive’s
family or other beneficiaries, as the case may be, that the Company would be required to pay
or provide pursuant to Section 4(a) hereof as though such termination were by the Company
without Cause or by the Executive with Good Reason or during a Window Period; provided,
however, that the Company shall not be required to pay any disputed amounts pursuant to this
paragraph except upon receipt of an undertaking by or on behalf of the Executive to repay
all such amounts to which the Executive is ultimately adjudged by such court not to be
entitled; provided further that such undertaking need not be secured, whether by bond or
otherwise.

	 	7.	 	Certain Additional Payments by the Company.

     (a) Anything in this Agreement to the contrary notwithstanding, in the event it shall
be determined that any payment or distribution to or for the benefit of the Executive
(whether paid or payable or distributed or distributable pursuant to the terms of this
Agreement or otherwise, but determined without regard to any additional payments required
under this Section 7) (a “Payment”) would be subject to the excise tax imposed by Section
4999 of the Code or any interest or penalties are incurred by the Executive with respect to
such excise tax (such excise tax, together with any such interest and penalties, hereinafter
collectively referred to as the “Excise Tax”), then the Executive shall be entitled to
receive an additional payment (a “Gross-Up Payment”) in an amount such that after payment by
the Executive of all taxes (including any interest or penalties imposed with respect to such
taxes), including, without limitation, any income taxes (and any interest and penalties
imposed with respect thereto) and Excise Tax imposed upon the Gross-Up Payment, the
Executive retains an amount of the Gross-Up Payment equal to the Excise Tax imposed upon the
Payments.

     (b) Subject to the provisions of Section 7(c), all determinations required to be made
under this Section 7, including whether and when a Gross-Up Payment is required

12

 

and the amount of such Gross-Up Payment and the assumptions to be utilized in arriving at such
determination, shall be made by the Company’s independent accounting firm (the “Accounting
Firm”); provided, however, that the Accounting Firm shall not determine that no Excise Tax
is payable by the Executive unless it delivers to the Executive a written opinion (the
“Accounting Opinion”) that failure to report the Excise Tax on the Executive’s applicable
Federal income tax return would not result in the imposition of a negligence or similar
penalty. In the event that the Accounting Firm has served, at any time during the two years
immediately preceding a Change of Control Date, as accountant or auditor for the individual,
entity or group that is involved in effecting or has any material interest in the Change of
Control, the Executive, at his option, shall appoint another nationally recognized
accounting firm to make the determinations and perform the other functions specified in this
Section 7 (which accounting firm shall then be referred to as the Accounting Firm
hereunder). All fees and expenses of the Accounting Firm shall be borne solely by the
Company. Within 15 business days of the receipt of notice from the Executive that there has
been a Payment, or such earlier time as is requested by the Company, the Accounting Firm
shall make all determinations required under this Section 7, shall provide to the Company
and the Executive a written report setting forth such determinations, together with detailed
supporting calculations, and, if the Accounting Firm determines that no Excise Tax is
payable, shall deliver the Accounting Opinion to the Executive. Any Gross-Up Payment, as
determined pursuant to this Section 7, shall be paid by the Company to the Executive within
five days of the receipt of the Accounting Firm’s determination. Subject to the remainder
of this Section 7, any determination by the Accounting Firm shall be binding upon the
Company and the Executive. As a result of the uncertainty in the application of Section
4999 of the Code at the time of the initial determination by the Accounting Firm hereunder,
it is possible that a Gross-Up Payment that will not have been made by the Company should
have been made (“Underpayment”), consistent with the calculations required to be made
hereunder. In the event that it is ultimately determined in accordance with the procedures
set forth in Section 7(c) that the Executive is required to make a payment of any Excise
Tax, the Accounting Firm shall determine the amount of the Underpayment that has occurred
and any such Underpayment shall be promptly paid by the Company to or for the benefit of
the Executive.

     (c) The Executive shall notify the Company in writing of any claims by the Internal
Revenue Service that, if successful, would require the payment by the Company of the
Gross-Up Payment. Such notification shall be given as soon as practicable but not later
than 30 days after the Executive actually receives notice in writing of such claim and shall
apprise the Company of the nature of such claim and the date on which such claim is
requested to be paid; provided, however, that the failure of the Executive to notify the
Company of such claim (or to provide any required information with respect thereto) shall
not affect any rights granted to the Executive under this Section 7 except to the extent
that the Company is materially prejudiced in the defense of such claim as a direct result of
such failure. The Executive shall not pay such claim prior to the expiration of the 30-day
period following the date on which he gives such notice to the Company (or such shorter
period ending on the date that any payment of taxes with

13

 

respect to such claim is due). If
the Company notifies the Executive in writing prior to the expiration of such period that it
desires to contest such claim, the Executive shall:

     (i) give the Company any information reasonably requested by the Company
relating to such claim;

     (ii) take such action in connection with contesting such claim as the Company
shall reasonably request in writing from time to time, including, without
limitation, accepting legal representation with respect to such claim by an attorney
selected by the Company and reasonably acceptable to the Executive;

     (iii) cooperate with the Company in good faith in order effectively to contest
such claim; and

     (iv) if the Company elects not to assume and control the defense of such claim,
permit the Company to participate in any proceedings relating to such claim;

provided, however, that the Company shall bear and pay directly all costs and expenses
(including additional interest and penalties) incurred in connection with such contest and
shall indemnify and hold the Executive harmless, on an after-tax basis, for any Excise Tax
or income tax (including interest and penalties with respect thereto) imposed as a result of
such representation and payment of costs and expenses. Without limitation on the foregoing
provisions of this Section 7(c), the Company shall have the right, at its sole option, to
assume the defense of and control all proceedings in connection with such contest, in which
case it may pursue or forego any and all administrative appeals, proceedings, hearings and
conferences with the taxing authority in respect of such claim and may either direct the
Executive to pay the tax claimed and sue for a refund or contest the claim in any
permissible manner, and the Executive agrees to prosecute such contest to a determination
before any administrative tribunal, in a court of initial jurisdiction and in one or more
appellate courts, as the Company shall determine; provided, however, that
if the Company directs the Executive to pay such claim and sue for a refund, the Company
shall advance the amount of such payment to the Executive, on an interest-free basis, and
shall indemnify and hold the Executive harmless, on an after-tax basis, from any Excise Tax
or income tax (including interest or penalties with respect thereto) imposed with respect to
such advance or with respect to any imputed income with respect to such advance; and further
provided that any extension of the statute of limitations relating to payment of taxes for
the taxable year of the Executive with respect to which such contested amount is claimed to
be due is limited solely to such contested amount. Furthermore, the Company’s right to
assume the defense of and control the contest shall be limited to issues with respect to
which a Gross-Up Payment would be payable hereunder and the Executive shall be entitled to
settle or contest, as the case may be, any other issue raised by the Internal Revenue
Service or any other taxing authority.

     (d) If, after the receipt by the Executive of an amount advanced by the Company
pursuant to Section 7(c), the Executive becomes entitled to receive any refund

14

 

with respect to such claim, the Executive shall (subject to the Company’s complying with the requirements
of Section 7(c)) promptly pay to the Company the amount of such refund (together with any
interest paid or credited thereon after taxes applicable thereto). If, after the receipt by
the Executive of an amount advanced by the Company pursuant to Section 7(c), a determination
is made that the Executive shall not be entitled to any refund with respect to such claim
and the Company does not notify the Executive in writing of its intent to contest such
denial of refund prior to the expiration of 30 days after such determination, then such
advance shall be forgiven and shall not be required to be repaid and the amount of such
advance shall offset, to the extent thereof, the amount of Gross-Up Payment required to be
paid.

8. Confidential Information; Certain Prohibited Activities.

     (a) The Executive shall hold in a fiduciary capacity for the benefit of the Company all
secret or confidential information, knowledge or data relating to the Company or any of its
affiliated companies, and their respective businesses, which shall have been obtained by the
Executive during the Executive’s employment by the Company or any of its affiliated
companies and which shall not be or become public knowledge (other than by acts by the
Executive or representatives of the Executive in violation of this Agreement). After the
Executive’s Date of Termination, the Executive shall not, without the prior written consent
of the Company or as may otherwise be required by law or legal process, communicate or
divulge any such information, knowledge or data to anyone other than the Company and those
designated by it. Except as provided in subsection (c) below, in no event shall an asserted
violation of the provisions of this Section 8 constitute a basis for deferring or
withholding any amounts otherwise payable to Executive under this Agreement. Also, within
14 days of the termination of Executive’s employment for any reason, Executive shall return
to the Company all documents and other tangible items of or containing Company information
which are in Executive’s possession, custody or control.

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

     (c) In the event of a breach by Executive of any provision of this Section 8, the
Company shall be entitled to (i) cease any Welfare Benefit Contribution entitlement provided
pursuant to Section 4(a)(ii) hereof, (ii) relief by temporary restraining order, temporary
injunction and/or permanent injunction, (iii) recovery of all attorneys’ fees and costs
incurred in obtaining such relief and (iv) any other legal and equitable relief to which it
may be entitled, including monetary damages.

15

 

9. Change of Control; Potential Change of Control.

     (a) As used in this Agreement, the terms set forth below shall have the following
respective meanings:

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

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

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

provided, however, that a Person shall not be deemed the “Beneficial Owner” of, or to “beneficially
own” any security held by a Norris Family Trust with respect to which such Person acts in the
capacity of trustee, personal representative, custodian, administrator, executor, officer, partner,
member, or other fiduciary; provided, further, that nothing in this definition shall cause a
Person engaged in business as an underwriter of securities to be the Beneficial Owner of, or to
“beneficially own,” any securities acquired through such Person’s participation in good faith in a
firm commitment underwriting until the expiration of forty days after the date of such
acquisition. For purposes hereof, “voting” a security shall include voting, granting a proxy,
consenting or making a request or demand relating to corporate action (including, without
limitation, a demand for a stockholder list, to call a stockholder meeting or to inspect corporate
books and records) or otherwise giving an authorization (within the meaning of Section 14(a) of the
Exchange Act) in respect of such security.

          The terms “beneficially own” and “beneficially owning” shall have meanings that are
correlative to this definition of the term “Beneficial Owner.”

          “Change of Control” shall mean any of the following occurring on or after the Agreement
Effective Date:

     (i) Any Person (other than an Exempt Person) shall become the Beneficial Owner of
35% or more of the shares of Common Stock then outstanding or 35% or more of the
combined voting power of the Voting Stock of the Company then

16

 

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

     (ii) Individuals who, as of the Agreement Effective Date, constitute the Board (the
“Incumbent Board”) cease for any reason to constitute at least a majority of the Board;
provided, however, that any individual becoming a director subsequent to the Agreement
Effective Date whose election, or nomination for election by the Company’s shareholders,
was approved by a vote of at least a majority of the directors then comprising the
Incumbent Board shall be considered as though such individual were a member of the
Incumbent Board; provided, further, that there shall be excluded, for this purpose, any
such individual whose initial assumption of office occurs as a result of any actual or
threatened election contest that is subject to the provisions of Rule 14a-11 under the
Exchange Act;

     (iii) Approval by the shareholders of the Company of a reorganization, merger or
consolidation, in each case, unless, following such reorganization, merger or
consolidation, (x) more than 65% of the then outstanding shares of common stock of the
corporation resulting from such reorganization, merger or consolidation and the combined
voting power of the then outstanding Voting Stock of such corporation is beneficially
owned, directly or indirectly, by all or substantially all of the Persons who were the
Beneficial Owners of the outstanding Common Stock immediately prior to such
reorganization, merger or consolidation (ignoring, for purposes of this clause (x), the
first proviso in the definition of “Beneficial Owner” set forth in Section 9(a)) in
substantially the same proportions as their ownership immediately prior to such
reorganization, merger or consolidation of the outstanding Common Stock, (y)
no Person (excluding any Exempt Person or any Person beneficially owning,
immediately prior to such reorganization, merger or consolidation, directly or
indirectly, 35% or more of the Common Stock then outstanding or 35% or more of the
combined voting power of the Voting Stock of the Company then outstanding) beneficially
owns, directly or indirectly, 35% or more of the then outstanding shares of common stock
of the corporation resulting from such reorganization, merger or consolidation or the
combined voting power of the then outstanding Voting Stock of such corporation and (z)
at least a majority of the members of the board of directors of the corporation
resulting from such reorganization, merger or consolidation were members of the
Incumbent Board at the time of the execution of the initial agreement or initial action
by the Board providing for such reorganization, merger or consolidation; or

     (iv) Approval by the shareholders of the Company of (x) a complete liquidation or
dissolution of the Company, unless such liquidation or dissolution is

17

 

approved as part of a plan of liquidation and dissolution involving a sale or disposition of all or
substantially all of the assets of the Company to a corporation with respect to which,
following such sale or other disposition, all of the requirements of clauses (y)(A), (B)
and (C) of this subsection (iv) are satisfied, or (y) the sale or other disposition of
all or substantially all of the assets of the Company, other than to a corporation, with
respect to which, following such sale or other disposition, (A) more than 65% of the
then outstanding shares of common stock of such corporation and the combined voting
power of the Voting Stock of such corporation is then beneficially owned, directly or
indirectly, by all or substantially all of the Persons who were the Beneficial Owners of
the outstanding Common Stock immediately prior to such sale or other disposition
(ignoring, for purposes of this clause (y)(A), the first proviso in the definition of
“Beneficial Owner” set forth in Section 9(a)) in substantially the same proportions as
their ownership, immediately prior to such sale or other disposition, of the outstanding
Common Stock, (B) no Person (excluding any Exempt Person and any Person beneficially
owning, immediately prior to such sale or other disposition, directly or indirectly, 35%
or more of the Common Stock then outstanding or 35% or more of the combined voting power
of the Voting Stock of the Company then outstanding) beneficially owns, directly or
indirectly, 35% or more of the then outstanding shares of common stock of such
corporation and the combined voting power of the then outstanding Voting Stock of such
corporation and (C) at least a majority of the members of the board of directors of such
corporation were members of the Incumbent Board at the time of the execution of the
initial agreement or initial action of the Board providing for such sale or other
disposition of assets of the Company.

          “Common Stock” shall mean the common stock, par value $.01 per share, of the Company, and
shall include, for purposes of Section 4 hereof, stock of any successor, within the meaning of
Section 10(c).

          “Exchange Act” shall mean the Securities Exchange Act of 1934, as amended.

          “Exempt Person” shall mean (i) the Company, any subsidiary of the Company, any employee
benefit plan of the Company or any subsidiary of the Company, and any Person organized, appointed
or established by the Company for or pursuant to the terms of any such plan, (ii) any Person who is
shown under the caption “Principal and Selling Stockholders” in the Company’s final prospectus
dated July 28, 1999 relating to its initial public offering of the Common Stock as beneficially
owning (as determined pursuant to Rule 13d-3 of the General Rules and Regulations under the
Exchange Act, as in effect on the date of this Agreement) one percent or more of the Common Stock
and (iii) any lineal descendant and any spouse of any such lineal descendant of D.W. Norris, but
only if such lineal descendant and any spouse of any such lineal descendant shall not at any time
hold shares of Common Stock or Voting Stock of the Company with the primary purpose of effecting
with respect to the Company (A) an extraordinary corporate transaction, such as a merger,
reorganization or liquidation, (B) a sale or transfer of a material amount of assets, (C) any
material change in the capitalization, (D) any other material change in the business or corporate
structure or operations, (E) changes in the

18

 

corporate charter or bylaws or (F) a change in the
composition of the Board or of the members of senior management.

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

          “Norris Family Trust” shall mean any trust, estate, custodianship, other fiduciary
arrangement, corporation, limited partnership, limited liability company or other business entity
(collectively, a “Family Entity”) formed, owned, held, or existing primarily for the benefit of the
lineal descendants of D.W. Norris and any spouses of such lineal descendants, but only if such
Family Entity shall not at any time hold Common Stock or Voting Stock of the Company with the
primary purpose of effecting with respect to the Company (i) an extraordinary corporate
transaction, such as a merger, reorganization or liquidation (ii) a sale or transfer of a material
amount of assets, (iii) any material change in capitalization, (iv) any other material change in
business or corporate structure or operations, (v) changes in corporate charter or bylaws, or (vi)
a change in the composition of the Board or of the members of senior management.

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

          “Potential Change of Control” shall mean any of the following:

     (i) a tender offer or exchange offer is commenced by any Person which, if
consummated, would constitute a Change of Control;

     (ii) an agreement is entered into by the Company providing for a transaction which,
if consummated, would constitute a Change of Control;

     (iii) any election contest is commenced that is subject to the provisions of Rule
14a-11 under the Exchange Act; or

     (iv) any proposal is made, or any other event or transaction occurs or is
continuing, which the Board determines, if consummated, would result in a Change of
Control.

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

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     (a) In the event that the Company is a party to a transaction that is otherwise
intended to qualify for “pooling of interests” accounting treatment, such transaction
constitutes a Change of Control within the meaning of this Agreement and individuals who
satisfy the requirements in clauses (i) and (ii) below constitute at least 51% of the number
of directors of the entity surviving such transaction or any parent thereof: individuals
who (i) immediately prior to such transaction constituted the Board and (ii) on the date
hereof constitute the Board and any new director (other than a director whose initial
assumption of office is in connection with an actual or threatened election contest relating
to the election of directors of the Company) whose appointment or election by the Board or
nomination for election by the Company’s stockholders was approved or recommended by a vote
of at least 51% of the directors then still in office who either were directors on the date
hereof or whose appointment, election or nomination for election was previously so approved
or recommended, then this Section 9 and other Agreement provisions concerning a Change of
Control shall, to the extent practicable, be interpreted so as to permit such accounting
treatment, and to the extent that the application of this sentence does not preserve the
availability of such accounting treatment, then, to the extent that any provision or
combination of provisions of this Section 9 and other Agreement provisions concerning a
Change of Control disqualifies the transaction as a “pooling” transaction (including, if
applicable, all provisions of the Agreement relating to a Change of Control), the Board
shall amend such provision or provisions if and to the extent necessary (including declaring
such provision or provisions to be null and void as of the date hereof, which declaration
shall be binding on Executive) so that such transaction may be accounted for as a “pooling
of interests.” All determinations with respect to this paragraph shall be made by the
Company, based upon the advice of the accounting firm whose opinion with respect to “pooling
of interests” is required as a condition to the consummation of such transaction.

10. Successors.

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

     (b) This Agreement shall inure to the benefit of and be binding upon the Company and
may only be assigned to a successor described in Section 10(c).

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

20

 

11. Miscellaneous.

     (a) This Agreement shall be governed by and construed in accordance with the laws of
the State of Delaware, without reference to principles of conflict of laws that would
require the application of the laws of any other state or jurisdiction.

     (b) The captions of this Agreement are not part of the provisions hereof and shall have
no force or effect.

     (c) This Agreement may not be amended or modified otherwise than by a written agreement
executed by the parties hereto or their respective successors and heirs, executors and other
legal representatives.

     (d) All notices and other communications hereunder shall be in writing and shall be
given, if by the Executive to the Company, by telecopy or facsimile transmission at the
telecommunications number set forth below and, if by either the Company or the Executive,
either by hand delivery to the other party or by registered or certified mail, return
receipt requested, postage prepaid, addressed as follows:

     If to the Executive:

     [Name]

     [Address]
     [Address]

     If to the Company:

     Lennox International Inc.

     2140 Lake Park Blvd.

     Richardson, Texas 75080-2254

     Telecommunications Number: (972) 497-6660

     Attention: Chief Legal Officer

or to such other address as either party shall have furnished to the other in writing in accordance
herewith. Notice and communications shall be effective when actually received by the addressee.

     (e) The invalidity or unenforceability of any provision of this Agreement shall not
affect the validity or enforceability of any other provision of this Agreement.

     (f) The Company may withhold from any amounts payable under this Agreement such
Federal, state or local taxes as shall be required to be withheld pursuant to any applicable
law or regulation.

21

 

     (g) The Executive’s or the Company’s failure to insist upon strict compliance with any
provision hereof or any other provision of this Agreement or the failure to assert any right
the Executive or the Company may have hereunder, including, without limitation, the right of
the Executive to terminate employment for Good Reason or during a Window Period pursuant to
Section 3(c) of this Agreement, shall not be deemed to be a waiver of such provision or
right or any other provision or right of this Agreement.

     (h) This Agreement shall become effective as of                     , 200                     (the “Agreement
Effective Date “).

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

	 	 	 	 	 	 	 
	 	 	LENNOX INTERNATIONAL INC.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	Name:
	 	 

	 	 
	 

	 	 	 	 	 	 
	 

	 	Title:	 	 	 	 
	 

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 	 	EXECUTIVE	 	 
	 
	 	 	 	 	 	 
	 	 	 	 	 
	 

	 	[Name]	 	 	 	 

22

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