Document:

exv10w4

 

Exhibit 10.4

1998 INCENTIVE PLAN

OF

LENNOX INTERNATIONAL INC.

EMPLOYEE

RESTRICTED STOCK GRANT AGREEMENT

     THIS AGREEMENT (“Agreement”) is made as of ___(the “Grant Date”), by and
between Lennox International Inc., a Delaware corporation (the “Company”), and «First» «Last»
(“Participant”) and shall be effective upon the signature of the Participant (“Effective Date”) on
the date provided below.

     The Company has adopted the 1998 Incentive Plan of Lennox International Inc. (the “Plan”), a
copy of which is appended to this Agreement as Exhibit A and by this reference made a part hereof,
for the benefit of eligible employees, directors, consultants and other independent contractors of
the Company and its Subsidiaries. Capitalized terms used and not otherwise defined herein shall
have the meanings ascribed thereto in the Plan.

     Pursuant to the Plan, the Committee, which has generally been assigned responsibility for
administering the Plan, has determined that it is in the interest of the Company and its
stockholders to make the Grant provided herein in order to encourage Participant to remain in the
employ of the Company or its Subsidiaries, to increase Participant’s personal interest in the
continued success and progress of the Company and to foster and enhance the long-term profitability
of the Company for the benefit of its shareholders by offering the incentive of long-term rewards
to be realized only upon attainment of established goals.

     The Company and Participant therefore agree as follows:

     1. Grant of Restricted Stock. Subject to the terms and conditions herein, the Company grants
to the Participant an Award of «Shares» shares of Restricted Common Stock (the “Grant”) which shall
vest and be distributed to the Participant upon the satisfaction of the conditions set forth in
paragraph 2 below.

     2. Conditions for Vesting. At the end of the Retention Period, the Award shall vest and be
distributed to the Participant provided that the Participant has been an employee of the Company or
one of its wholly owned Subsidiaries continuously throughout the Retention Period (“Vested Grant”).
The Retention Period begins on the Effective Date of this Agreement, and ends on ___
(“Retention Period”). If Participant’s employment with the Company and its Subsidiaries is
terminated for any reason other than Participant’s death, Disability (as defined in Section 5
below) or Retirement (as defined in Section 5 below) prior to the expiration of the Retention
Period, the Grant shall be canceled and be null and void. Notwithstanding the

1

 

above, the Grant shall become fully vested and be distributed to the Participant, irrespective
of the limitations set forth above, upon the occurrence of a Change of Control (as defined in
Section 13 below).

     3. Method and Time of Payment. The shares of the Grant that vest and become distributable
shall be provided to Participant as soon as practicable following the end of the Retention Period
or other date of vesting as provided below. Vested Grants shall be paid in whole shares of Common
Stock. Subject to the withholding referred to in paragraph 4, the Company shall deliver to
Participant certificates issued in Participant’s name for the number of shares to be issued to
Participant. If delivery is by mail, delivery of shares of Common Stock shall be deemed effected
for all purposes when a stock transfer agent of the Company shall have deposited the certificates
in the United States mail, addressed to Participant.

     4. Withholding for Taxes. Participant acknowledges and agrees that the Company may deduct
from the shares of Common Stock otherwise deliverable in connection with a Vested Grant a number of
whole shares of Common Stock (valued at their Fair Market Value on the date of exercise) that is at
least equal to the minimum statutory amount of all federal, state and local taxes required to be
withheld by the Company in connection with such delivery, as determined by the Company.

     5. Termination of Employment. Unless otherwise determined by the Committee in its sole
discretion, any Grant not yet vested shall terminate at the times specified below:

     (a) If Participant terminates employment with the Company and its Subsidiaries
voluntarily, or if Participant’s employment with the Company and its Subsidiaries is
terminated by the Company or a Subsidiary for any reason other than those described
in paragraph 5(b) or 5(c) below, all of the shares subject to the Grant shall be
canceled upon such termination of Participant’s employment.

     (b) If Participant’s employment with the Company and its Subsidiaries is
terminated by reason of Participant’s death or Disability (as defined below),
Participant, or in the event of Participant’s death, Participant’s beneficiary,
shall receive a prorata payment of Participant’s Grant based upon the portion of the
Retention Period the Participant actually served as an employee of Company,
determined as of the date of death, Disability or Retirement. Such payment shall be
made as soon as practicable. Any remaining shares of the Grant shall be forfeited
in such event.

     (c) If Participant’s employment with the Company and its Subsidiaries is
terminated by reason of Participant’s retirement under an employee pension benefit
plan maintained by the Company or a Subsidiary during the Retention Period,
Participant shall receive the Grant at the termination of the Retention Period.

     “Disability” for purposes of this Agreement, shall mean disability as defined in any written
employment agreement between Participant and the Company or a Subsidiary in

2

 

effect at the time of Participant’s termination of employment or, in the absence of any such
employment agreement, as determined by the Committee in good faith and/or pursuant to any long-term
disability plan sponsored by the Company or applicable Subsidiary.

     6. Nontransferability of Grant. During Participant’s lifetime, the Grant is not transferable
(voluntarily or involuntarily) other than pursuant to a domestic relations order and, except as
otherwise required pursuant to a domestic relations order, is payable only to Participant or
Participant’s court appointed legal representative. Participant may designate a beneficiary or
beneficiaries to whom the benefits of the Grant shall pass upon Participant’s death and may change
such designation from time to time by filing a written designation of beneficiary or beneficiaries
with the Committee on the form annexed hereto as Exhibit B or such other form as may be prescribed
by the Committee, provided that no such designation shall be effective unless so filed prior to the
death of Participant. If no such designation is made or if the designated beneficiary does not
survive Participant’s death, the benefits of the Grant shall pass by will or the laws of descent
and distribution.

     7. No Stockholder Rights. Participant shall not be deemed for any purpose, including voting
rights and dividends, to be, or to have any of the rights of, a stockholder of the Company with
respect to any shares of Common Stock as to which this Agreement relates until the Company shall
have issued such shares to Participant. Furthermore, the existence of this Agreement shall not
affect in any way the right or power of the Company or its stockholders to accomplish any corporate
act, including, without limitation, the acts referred to in Section 15 of the Plan.

     8. Adjustments. As provided in Section 15 of the Plan, certain adjustments may be made to
shares of Common Stock upon the occurrence of events or circumstances described in Section 15 of
the Plan.

     9. Restrictions Imposed by Law. Without limiting the generality of Section 16 of the Plan,
Participant agrees that the Company will not be obligated to deliver any shares of Common Stock, if
counsel to the Company determines that such delivery would violate any applicable law or any rule
or regulation of any governmental authority or any rule or regulation of, or agreement of the
Company with, any securities exchange or association upon which the Common Stock may be listed or
quoted. The Company shall in no event be obligated to take any affirmative action in order to
cause the delivery of shares of Common Stock to comply with any such law, rule, regulation or
agreement.

     10. Notice. Unless the Company notifies Participant in writing of a different procedure, any
notice or other communication to the Company with respect to this Agreement shall be in writing and
shall be (a) delivered personally to the following address:

Lennox International Inc.

c/o Corporate Secretary

2140 Lake Park Boulevard

Richardson, Texas 75080

3

 

or (b) sent by first class mail, postage prepaid and addressed as follows:

Lennox International Inc.

c/o Corporate Secretary

2140 Lake Park Boulevard

Richardson, Texas 75080

Any notice or other communication to Participant with respect to this Agreement shall be in writing
and shall be delivered personally, or shall be sent by first class mail, postage prepaid, to
Participant’s address as listed in the records of the Company on the Grant Date, unless the Company
has received written notification from Participant of a change of address.

     11. Amendment. Notwithstanding any other provisions hereof, this Agreement may be
supplemented or amended from time to time as approved by the Committee as contemplated by Section 6
of the Plan. Without limiting the generality of the foregoing, without the consent of Participant:

     (a) this Agreement may be amended or supplemented (i) to cure any ambiguity or
to correct or supplement any provision herein which may be defective or inconsistent
with any other provision herein; or (ii) to add to the covenants and agreements of
the Company for the benefit of Participant or surrender any right or power reserved
to or conferred upon the Company in this Agreement; subject, however, to any
required approval of the Company’s stockholders and, provided, in each case, that
such changes or corrections shall not adversely affect the rights of Participant
with respect to the Grant evidenced hereby without the Participant’s consent; (iii)
to make changes to the number of shares of Common Stock subject to Participant’s
Grant as equitably determined by the Committee to reflect adjustment required by the
effect of a major corporate event such as the acquisition or disposition of a
Subsidiary or major business activity or substantial operating assets, or a “going
public” event; or (iv) to make such other changes as the Company, upon advice of
counsel, determines are necessary or advisable because of the adoption or
promulgation of, or change in or to the interpretation of, any law or governmental
rule or regulation, including any applicable federal or state securities laws; and

     (b) subject to Section 6 of the Plan and any required approval of the Company’s
stockholders, the Grant evidenced by this Agreement may be canceled by the Committee
and a new Grant made in substitution therefore, provided that the Grant so
substituted shall satisfy all requirements of the Plan as of the date such new Grant
is made and no such action shall adversely affect a Grant without Participant’s
consent.

     12. Participant Employment. Nothing contained in this Agreement, and no action of the Company
or the Committee with respect hereto, shall confer or be construed to confer on Participant any
right to continue in the employ of the Company or any of its Subsidiaries or

4

 

interfere in any way with the right of the Company or any employing Subsidiary to terminate
Participant’s employment at any time, with or without cause; subject, however, to the provisions of
any employment agreement between Participant and the Company or any Subsidiary.

     13. Change of Control. 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 date of this
Agreement:

5

 

     (i) Any Person (other than an Exempt Person) shall become the Beneficial Owner
of 35% or more of the shares of Common Stock then outstanding or 35% or more of the
combined voting power of the Voting Stock of the Company then outstanding; provided,
however, that no Change 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 date of this Agreement, 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 date of this Agreement 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
above) in substantially the same proportions as their ownership immediately prior to
such reorganization, merger or consolidation of the outstanding Common Stock, (y) no
Person (excluding any Exempt Person or any Person beneficially owning, immediately
prior to such reorganization, merger or consolidation, directly or indirectly, 35%
or more of the Common Stock then outstanding or 35% or more of the combined voting
power of the Voting Stock of the Company then outstanding) beneficially owns,
directly or indirectly, 35% or more of the then outstanding shares of common stock
of the corporation resulting from such reorganization, merger or consolidation or
the combined voting power of the then outstanding Voting Stock of such corporation
and (z) at least a majority of the members of the board of directors of the
corporation resulting from such reorganization, merger or consolidation were

6

 

members of the Incumbent Board at the time of the execution of the initial
agreement or initial action by the Board providing for such reorganization, merger
or consolidation; or

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

     (v) If the Participant is an employee of a Subsidiary of the Company, a Change
of Control is deemed to have occurred at such time as any of the following occur
while such Participant is an employee of such Subsidiary: (A) such Subsidiary shall
no longer be deemed to be a Subsidiary of the Company or (B) the sale or transfer of
all or substantially all of the assets of such Subsidiary to any Person other than
the Company or a Subsidiary of the Company.

     “Common Stock” shall mean the common stock, par value $.01 per share, of the Company.

     “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

7

 

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 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.

     “Subsidiary” mean, with respect to any Person, (i) a corporation a majority of whose Voting
Stock is at the time, directly or indirectly, owned by such Person, by one or more Subsidiaries of
such Person or by such Person and one or more Subsidiaries thereof or (ii) any other Person (other
than a corporation), including, without limitation, a joint venture, in which such Person, one or
more Subsidiaries thereof or such Person and one or more Subsidiaries thereof, directly or
indirectly, at the date of determination thereof, have at least majority ownership interest
entitled to vote in the election of directors, managers or trustees thereof (or other Persons
performing similar functions).

8

 

     “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).

     14. Governing Law. This Agreement shall be governed by, and construed in accordance with, the
internal laws of the State of Delaware.

     15. Construction. References in this Agreement to “this Agreement” and the words “herein,”
“hereof,” “hereunder” and similar terms include all Exhibits and Schedules appended hereto,
including the Plan. This Agreement is entered into, and the Award evidenced hereby is granted,
pursuant to the Plan and shall be governed by and construed in accordance with the Plan and the
administrative interpretations adopted by the Committee thereunder. All decisions of the Committee
upon questions regarding the Plan or this Agreement shall be conclusive. Unless otherwise
expressly stated herein, in the event of any inconsistency between the terms of the Plan and this
Agreement, the terms of the Plan shall control. The headings of the paragraphs of this Agreement
have been included for convenience of reference only, are not to be considered a part hereof and
shall in no way modify or restrict any of the terms or provisions hereof.

     16. Duplicate Originals. The Company and Participant may sign any number of copies of this
Agreement. Each signed copy shall be an original, but all of them together represent the same
agreement.

     17. Rules by Committee. The rights of Participant and obligations of the Company hereunder
shall be subject to such reasonable rules and regulations as the Committee may adopt from time to
time hereafter.

     18. Definition. As used herein: “Fair Market Value” means the fair market value of a share of
Common Stock as most recently fixed and determined (prior to the date of the event giving rise to
the use and application of such term) as follows: (i) if shares of Common Stock are listed on a
national securities exchange, the mean between the highest and lowest sales price per share of
Common Stock on the consolidated transaction reporting system for the principal national securities
exchange on which shares of Common Stock are listed on that date, or, if there shall have been no
such sale so reported on that date, on the last preceding date on which such a sale was so
reported, (ii) if shares of Common Stock are not so listed but are quoted on the Nasdaq National
Market, the mean between the highest and lowest sales price per share of Common Stock reported by
the Nasdaq National Market on that date, or, if there shall have been no such sale so reported on
that date, on the last preceding date on which such a sale was so reported, (iii) if the Common
Stock is not so listed or quoted, the mean between the closing bid and asked price on that date,
or, if there are no quotations available for such date, on the last preceding date on which such
quotations shall be available, as reported by the Nasdaq Stock market, or, if not reported by the
Nasdaq Stock Market, by the National Quotation Bureau Incorporated.

9

 

     19. Entire Agreement. Subject to the provisions of any applicable written employment
agreement between Participant and the Company or any Subsidiary, Participant and the Company hereby
declare and represent that no promise or agreement not herein expressed has been made and that this
Agreement contains the entire agreement between the parties hereto with respect to the Grant and
replaces and makes null and void any prior agreements, oral or written, between Participant and the
Company regarding the Grant.

     20. Participant Acceptance. Participant shall signify acceptance of the terms and conditions
of this Agreement by signing in the space provided at the end hereof and returning a signed copy to
the Company.

	 	 	 	 	 
	 	LENNOX INTERNATIONAL INC.

 	 
	 	By:  	 	 
	 	 	Name:  	William F. Stoll, Jr. 	 
	 	 	Title:  	Executive Vice President, Chief Legal Officer, and Secretary
	 
	 	ACCEPTED:	 
	 
	 
	 	Signed:	 	 
	 	 	«First» «Last»	 
	 
	 	Date: 	 	 

10exv10w5

 

Exhibit 10.5

1998 INCENTIVE PLAN

OF

LENNOX INTERNATIONAL INC.

EMPLOYEE

STOCK APPRECIATION RIGHTS AGREEMENT

     THIS
STOCK APPRECIATION RIGHTS AGREEMENT (“Agreement”) is made as of ___ (the “Grant
Date”), by and between LENNOX INTERNATIONAL INC., a Delaware corporation (the “Company”), and
___ (“Grantee”).

     The Company has adopted the 1998 Incentive Plan of Lennox International Inc. (the “Plan”), a
copy of which is appended to this Agreement as Exhibit A and by this reference made a part hereof,
for the benefit of eligible employees, directors, consultants and other independent contractors of
the Company and its Subsidiaries. Capitalized terms used and not otherwise defined herein shall
have the meanings ascribed thereto in the Plan.

     Pursuant to the Plan, the Committee, which has generally been assigned responsibility for
administering the Plan, has determined that it is in the interest of the Company and its
stockholders to grant the stock appreciation rights (“SAR”) provided herein in order to provide
Grantee with additional remuneration for services rendered, to encourage Grantee to remain in the
employ of the Company or its Subsidiaries and to increase Grantee’s personal interest in the
continued success and progress of the Company.

     The Company and Grantee therefore agree as follows:

     1. Grant of SAR. Subject to the terms and conditions herein, the Company grants to Grantee
for the period commencing on ___, and expiring at 5 p.m. Central or Central Daylight
(as applicable) time (“Close of Business”) on
___ (the “Award Term”), subject to
earlier termination pursuant to paragraph 6 below, the right to the increase (if any) between the
Fair Market Value of ___ shares (“Shares”) of Common Stock on the date of exercise over the
Fair Market Value of such shares of Common Stock on the Date of Grant (the “Award”). The Fair
Market Value of the shares of Common Stock on the Date of Grant is
$_____ per share. To the extent
the Award is vested pursuant to the terms of this Agreement, the increase (if any) between the Fair
Market Value of the Shares on the date of exercise over the Fair Market Value of the Shares on the
Date of Grant shall be paid in Company Common Stock as set forth in Section 5 below.

     2. Conditions of Exercise. The Award is exercisable only in accordance with the conditions
stated in this paragraph.

 

 

     (a) Except as otherwise provided in this Agreement, or otherwise pursuant to
action of the Committee, the Award may be exercised only to the extent the Award
has become vested in accordance with the following schedule:

	 	 	 
	Date	 	Shares Available for Purchase
	 
	 	33 1/3%
	 
	 	66 2/3%
	 
	 	100%

     (b) The Award shall become fully vested by the Grantee, irrespective of the
limitations set forth in subparagraph (a) above, upon the occurrence of a Change
of Control (as defined in Section 14 below).

     (c) To the extent the Award becomes exercisable, such Award may be exercised
in whole or in part (at any time or from time to time, except as otherwise
provided herein) until expiration of the Award Term or earlier termination
thereof.

     (d) The foregoing provisions of this paragraph 2 are subject to (i) the
provisions of paragraph 6 below, which addresses events that may result in early
termination of the Award, and (ii) the provisions of any written employment
agreement between the Company and Grantee that applies, by its terms, to this
Agreement and that is in effect at the time its provisions would become operative
with respect to this Agreement.

     3. Manner of Exercise. The Award shall be considered exercised (as to the number of Shares
specified in the notice referred to in subparagraph (a) below) on the latest of (i) the date of
exercise designated in the written notice referred to in subparagraph (a) below, (ii) if the date
so designated is not a business day, the first business day following such date or (iii) the
earliest business day by which the Company has received all of the following:

     (a) Written notice, in such form as the Committee may require, designating,
among other things, the date of exercise and the number of Shares to be exercised,
and for such purpose Shares must be exercised in multiples of 100 Shares (or the
remaining balance if less than 100); and

     (b) Any other documentation that the Committee may reasonably require.

     4. Mandatory Withholding for Taxes. Grantee acknowledges and agrees that the Company shall
deduct from the shares of Common Stock otherwise payable or deliverable upon exercise of the Award
an amount of number of shares of Common Stock (valued at their Fair Market Value on the date of
exercise) that is equal to the minimum

 

 

statutory amount of all Federal, state and local taxes required to be withheld by the Company
upon such exercise, as determined by the Company.

     5. Delivery by the Company. As soon as practicable after receipt of all items referred to in
paragraph 3, and subject to the withholding referred to in paragraph 4, the Company shall deliver
to Grantee certificates issued in Grantee’s name for the number of shares of Common Stock, in the
form of the nearest number of whole shares of Common Stock, which represent the increase (if any)
between the Fair Market Value of the Common Stock on the date of exercise over the Fair Market
Value of the Common Stock on the Date of Grant. If delivery is by mail, delivery of shares of
Common Stock shall be deemed effected for all purposes when a stock transfer agent of the Company
shall have deposited the certificates in the United States mail, addressed to Grantee.

     6. Termination of Employment. Unless otherwise determined by the Committee in its sole
discretion, the Award shall terminate, prior to the expiration of the Award Term, at the time
specified below:

     (a) If Grantee terminates employment with the Company and its Subsidiaries
voluntarily, then the Award shall terminate immediately upon such termination of
Grantee’s employment; or

     (b) If Grantee’s employment with the Company and its Subsidiaries is
terminated by the Company or a Subsidiary for Cause (as defined in any applicable
employment agreement between the Company and Grantee or as determined by the
Committee in its sole discretion in the absence of any such employment agreement),
except for a termination within one year following a Change of Control, then the
Award shall terminate immediately upon such termination of Grantee’s employment;
or

     (c) If Grantee’s employment with the Company is terminated by the Company not
for Cause (as defined above in subparagraph (b), or if terminated for Cause or not
for Cause within one year following a Change of Control, then the Award, to the
extent then exercisable, shall continue to be exercisable for a period not to
exceed 90 days following Grantee’s termination of employment, but to the extent
not exercisable on the date of Grantee’s termination from employment, the
remaining unexercisable portion of the Award shall terminate as of such date; or

     (d) If Grantee’s employment with the Company and its Subsidiaries is
terminated by reason of (i) Grantee’s death, (ii) Grantee’s retirement under an
employee pension benefit plan maintained by the Company or a Subsidiary
(“Retirement”), or (iii), Grantee’s Disability (as defined below), notwithstanding
paragraph 2, the Award shall be fully exercisable and shall continue to be
exercisable for the remainder of the Award Term.

 

 

     Notwithstanding any period of time referenced in this paragraph 6 or any other provision of
this paragraph that may be construed to the contrary, the Award shall in any event terminate upon
the expiration of the Award Term.

     “Disability” for purposes of this Agreement shall mean disability as defined in any written
employment agreement between Grantee and the Company or a Subsidiary in effect at the time of the
Grantee’s termination of employment or, in the absence of any such employment agreement, as
determined by the Committee in good faith and/or pursuant to any long-term disability plan
sponsored by the Company or applicable Subsidiary.

     7. Transferability of Award. During Grantee’s lifetime, Grantee may transfer the Award for no
consideration to or for the benefit of Grantee’s Immediate Family (including, without limitation,
to a trust only for the benefit of Grantee’s Immediate Family or to a partnership or limited
liability company only for one or more members of Grantee’s Immediate Family), subject to such
limits as the Committee may establish, and the transferee shall remain subject to all the terms and
conditions applicable to the Award prior to such transfer. The foregoing right to transfer the
Award shall apply to the right to consent to amendments to this Agreement and, in the discretion of
the Committee, shall also apply to the right to transfer ancillary rights associated with the
Award. The term “Immediate Family” shall mean Grantee’s spouse, parents, children, stepchildren,
adoptive relationships, sisters, brothers and grandchildren (and, for this purpose, shall also
include Grantee). Except as further provided in this paragraph 7, during Grantee’s lifetime, the
Award is not transferable (voluntarily or involuntarily) other than pursuant to a domestic
relations order and, except as otherwise required pursuant to a domestic relations order, is
exercisable only by Grantee or Grantee’s court appointed legal representative. The Grantee may
designate a beneficiary or beneficiaries to whom the Award shall pass upon Grantee’s death and may
change such designation from time to time by filing a written designation of beneficiary or
beneficiaries with the Committee on the form annexed hereto as Exhibit B or such other form as may
be prescribed by the Committee, provided that no such designation shall be effective unless so
filed prior to the death Grantee. If no such designation is made or if the designated beneficiary
does not survive Grantee’s death, the Award shall pass by will or the laws of descent and
distribution. Following Grantee’s death, the Award, if otherwise exercisable, may be exercised by
the person to whom such Award passes according to the foregoing and such person shall be deemed the
Grantee for purposes of any applicable provisions of this Agreement.

     8. No Stockholder Rights. Grantee shall not be deemed for any purpose to be, or to have any of
the rights of, a stockholder of the Company with respect to any shares of Common Stock as to which
this Agreement relates until such shares shall have been issued to Grantee by the Company.
Furthermore, the existence of this Agreement shall not affect in any way the right or power of the
Company or its stockholders to accomplish any corporate act, including, without limitation, the
acts referred to in Section 15 of the Plan.

 

 

     9. Adjustments. As provided in Section 15 of the Plan, certain adjustments may be made to the
Awards upon the occurrence of events or circumstances described in Section 15 of the Plan.

     10. Restrictions Imposed by Law. Without limiting the generality of Section 16 of the Plan,
Grantee agrees that Grantee will not exercise the Award and that the Company will not be obligated
to deliver any shares of Common Stock, if counsel to the Company determines that such exercise, or
delivery would violate any applicable law or any rule or regulation of any governmental authority
or any rule or regulation of, or agreement of the Company with, any securities exchange or
association upon which the Common Stock is listed or quoted. The Company shall in no event be
obligated to take any affirmative action in order to cause the exercise of the Award or the
resulting delivery of shares of Common Stock to comply with any such law, rule, regulation or
agreement.

     11. Notice. Unless the Company notifies Grantee in writing of a different procedure, any
notice or other communication to the Company with respect to this Agreement shall be in writing and
shall be (a) delivered personally to the following address:

Lennox International Inc.

c/o Corporate Secretary

2140 Lake Park Boulevard

Richardson, Texas 75080

or (b) sent by first class mail, postage prepaid and addressed as follows:

Lennox International Inc.

c/o Corporate Secretary

2140 Lake Park Boulevard

Richardson, Texas 75080

Any notice or other communication to the Grantee with respect to this Agreement shall be in writing
and shall be delivered personally, or shall be sent by first class mail, postage prepaid, to
Grantee’s address as listed in the records of the Company on the Grant Date, unless the Company has
received written notification from Grantee of a change of address.

     12. Amendment. Notwithstanding any other provisions hereof, this Agreement may be
supplemented or amended from time to time as approved by the Committee as contemplated by Section 6
of the Plan. Without limiting the generality of the foregoing, without the consent of Grantee:

     (a) this Agreement may be amended or supplemented (i) to cure any ambiguity
or to correct or supplement any provision herein which may be defective or
inconsistent with any other provision herein, or (ii) to

 

 

add to the covenants and agreements of the Company for the benefit of Grantee
or surrender any right or power reserved to or conferred upon the Company in this
Agreement; subject, however, to any required approval of the Company’s
stockholders as determined by the Committee and, provided, in each case, that such
changes or corrections shall not adversely affect the rights of Grantee with
respect to the Award evidenced hereby without Grantee’s consent, or (iii) to make
such other changes as the Company, upon advice of counsel, determines are
necessary or advisable because of the adoption or promulgation of, or change in or
to the interpretation of, any law or governmental rule or regulation, including
any applicable Federal or state securities laws; and

     (b) subject to Section 6 of the Plan and any required approval of the
Company’s stockholders, the Award evidenced by this Agreement may be canceled by
the Committee and a new Award made in substitution therefore, provided that the
Award so substituted shall satisfy all requirements of the Plan as of the date
such new Award is made and no such action shall adversely affect the Award to the
extent then exercisable without Grantee’s consent.

     13. Grantee Employment. Nothing contained in this Agreement, and no action of the Company or
the Committee with respect hereto, shall confer or be construed to confer on Grantee any right to
continue in the employ of the Company or any of its Subsidiaries or interfere in any way with the
right of the Company or any employing Subsidiary to terminate the Grantee’s employment at any time,
with or without cause; subject, however, to the provisions of any employment agreement between
Grantee and the Company or any Subsidiary.

     14. Change of Control. 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 date of this
Agreement:

     (i) Any Person (other than an Exempt Person) shall become the Beneficial
Owner of 35% or more of the shares of Common Stock then outstanding or 35% or more
of the combined voting power of the Voting Stock of the Company then outstanding;
provided, however, that no Change 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 date of this Agreement, 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 date of this Agreement 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 above) in substantially the same proportions as their ownership immediately
prior to such reorganization, merger or consolidation of the outstanding Common
Stock, (y) no Person (excluding any Exempt Person or any Person beneficially
owning, immediately prior to such reorganization, merger or consolidation,
directly or indirectly, 35% or more of the Common Stock then outstanding or 35% or
more of the combined voting power of the Voting Stock of the Company then
outstanding) beneficially owns, directly or indirectly, 35% or more of the then
outstanding shares of common stock of the corporation resulting from such
reorganization, merger or consolidation or the combined voting power of the then
outstanding Voting Stock of such corporation and (z) at least a majority of the
members of the board of directors of the corporation resulting from such
reorganization, merger or consolidation were members of the Incumbent Board at the
time of the execution of the initial agreement or initial action by the Board
providing for such reorganization, merger or consolidation; or

     (iv) Approval by the shareholders of the Company of (x) a complete
liquidation or dissolution of the Company, unless such liquidation or dissolution
is approved as part of a plan of liquidation and dissolution involving a sale or
disposition of all or substantially all of the assets of the Company to a
corporation with respect to which, following such sale or other disposition, all
of the requirements of clauses (y)(A), (B) and (C) of this subsection (iv) are
satisfied, or (y) the sale or other disposition of all or substantially all of the
assets of the Company, other than to a corporation, with respect to which,
following such sale or other disposition, (A) more than 65% of the then
outstanding shares of common stock of such corporation and the combined voting
power of the Voting

 

 

Stock of such corporation is then beneficially owned, directly or indirectly,
by all or substantially all of the Persons who were the Beneficial Owners of the
outstanding Common Stock immediately prior to such sale or other disposition
(ignoring, for purposes of this clause (y)(A), the first proviso in the definition
of “Beneficial Owner” set forth above) in substantially the same proportions as
their ownership, immediately prior to such sale or other disposition, of the
outstanding Common Stock, (B) no Person (excluding any Exempt Person and any
Person beneficially owning, immediately prior to such sale or other disposition,
directly or indirectly, 35% or more of the Common Stock then outstanding or 35% or
more of the combined voting power of the Voting Stock of the Company then
outstanding) beneficially owns, directly or indirectly, 35% or more of the then
outstanding shares of common stock of such corporation and the combined voting
power of the then outstanding Voting Stock of such corporation and (C) at least a
majority of the members of the board of directors of such corporation were members
of the Incumbent Board at the time of the execution of the initial agreement or
initial action of the Board providing for such sale or other disposition of assets
of the Company; or 

     (v) If the Grantee is an employee of a Subsidiary of the Company, a Change of
Control is deemed to have occurred at such time as any of the following occur
while such Grantee is an employee of such Subsidiary: (A) such Subsidiary shall no
longer be deemed to be a Subsidiary of the Company or (B) the sale or transfer of
all or substantially all of the assets of such Subsidiary to any Person other than
the Company or a Subsidiary of the Company.

     “Common Stock” shall mean the common stock, par value $.01 per share, of the Company.

     “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 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.

     “Subsidiary” mean, with respect to any Person, (i) a corporation a majority of whose Voting
Stock is at the time, directly or indirectly, owned by such Person, by one or more Subsidiaries of
such Person or by such Person and one or more Subsidiaries thereof or (ii) any other Person (other
than a corporation), including, without limitation, a joint venture, in which such Person, one or
more Subsidiaries thereof or such Person and one or more Subsidiaries thereof, directly or
indirectly, at the date of determination thereof, have at least majority ownership interest
entitled to vote in the election of directors, managers or trustees thereof (or other Persons
performing similar functions).

     “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).

     15. Governing Law. This Agreement shall be governed by, and construed in accordance with, the
internal laws of the State of Delaware.

 

 

     16. Construction. References in this Agreement to “this Agreement” and the words “herein,”
“hereof,” “hereunder” and similar terms include all Exhibits and Schedules appended hereto,
including the Plan. This Agreement is entered into, and the Award evidenced hereby is granted,
pursuant to the Plan and shall be governed by and construed in accordance with the Plan and the
administrative interpretations adopted by the Committee thereunder. All decisions of the Committee
upon questions regarding the Plan or this Agreement shall be conclusive. Unless otherwise
expressly stated herein, in the event of any inconsistency between the terms of the Plan and this
Agreement, the terms of the Plan shall control. The headings of the paragraphs of this Agreement
have been included for convenience of reference only, are not to be considered a part hereof and
shall in no way modify or restrict any of the terms or provisions hereof.

     17. Duplicate Originals. The Company and Grantee may sign any number of copies of this
Agreement. Each signed copy shall be an original, but all of them together represent the same
agreement.

     18. Rules by Committee. The rights of Grantee and obligations of the Company hereunder shall
be subject to such reasonable rules and regulations as the Committee may adopt from time to time
hereafter.

     19. Entire Agreement. Subject to the provisions of any applicable written employment
agreement between Grantee and the Company or any Subsidiary, Grantee and the Company hereby declare
and represent that no promise or agreement not herein expressed has been made and that this
Agreement contains the entire agreement between the parties hereto with respect to the Award and
replaces and makes null and void any prior agreements, oral or written, between Grantee and the
Company regarding the Award.

 

 

     20. Grantee Acceptance. Grantee shall signify acceptance of the terms and conditions of this
Agreement by signing in the space provided at the end hereof and returning a signed copy to the
Company.

	 	 	 	 	 
	 	LENNOX INTERNATIONAL INC.

 	 
	 	By:  	 	 
	 	 	Name:  	William F. Stoll, Jr. 	 
	 	 	Title:  	Executive Vice President, Chief Legal Officer, and Secretary 	 
	 

	 	 	 	 	 
	 	ACCEPTED:

 	 
	 	Employee 
	 	 	 
	 	 	 

 

 

	 	 	 	 	 

Exhibit A

to

Employee’s Stock Appreciation Rights Agreement dated as of __________, 2005

1998 Incentive Plan of Lennox International Inc.

 

 

Exhibit B

to

Employee’s Stock Appreciation Rights Agreement dated as of __________, 2005

1998 Incentive Plan of Lennox International Inc.

Designation of Beneficiary

I, (the “Grantee”), hereby declare that upon my death:

 

(Name) (the “Beneficiary”)

 

(Address),

who is my

 

(Relationship to Grantee),

shall be entitled to the Award and all other rights accorded the Grantee by the above-referenced
agreement (the “Agreement”).

     It is understood that this Designation of Beneficiary is made pursuant to the Agreement and is
subject to the conditions stated herein, including the Beneficiary’s survival of the Grantee’s
death. If any such condition is not satisfied, such rights shall devolve according to the
Grantee’s will or the laws of descent and distribution.

     It is further understood that all prior designations of beneficiary under the Agreement are
hereby revoked and that this Designation of Beneficiary may be revoked only in writing, signed by
the Grantee, and filed with the Company prior to the Grantee’s death.

	 	 	 
	 

	 	 
	Date

	 	Employee

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00094-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00094-of-00352.parquet"}]]