Document:

Filed by Bowne Pure Compliance

Exhibit 10.1

Execution version

SEVENTH AMENDMENT TO

SECOND AMENDED AND RESTATED RECEIVABLES PURCHASE AGREEMENT

THIS SEVENTH AMENDMENT TO SECOND AMENDED AND RESTATED RECEIVABLES PURCHASE AGREEMENT(this
“Amendment”), dated as of November 26, 2008, is entered into, by and among LENNOX
INDUSTRIES INC., an Iowa corporation, (“Lennox” or the “Master Servicer”), LPAC
CORP., a Delaware corporation (“LPAC” or the “Company”), MARKET STREET FUNDING LLC
(“Market Street”), the investors named in the Purchase Agreement (defined below), PNC BANK,
NATIONAL ASSOCIATION (“PNC”) YC SUSI TRUST (“Yorktown”), BANK OF AMERICA, NATIONAL
ASSOCIATION (the “Yorktown Agent”) and THE YORKTOWN INVESTORS and consented to by LENNOX
INTERNATIONAL INC. (the “Assurance Provider”). Capitalized terms used and not otherwise
defined herein are used as defined in the Purchase Agreement (as defined below).

WHEREAS, LPAC, Lennox, Market Street, the investors named therein, PNC, Yorktown, the Yorktown
Agent, and the Yorktown Investors are party to that certain Second Amended and Restated Receivables
Purchase Agreement, dated as of June 16, 2003 (as amended, supplemented or otherwise modified
through the date hereof, the “Original Purchase Agreement”); and

WHEREAS, the parties hereto desire to amend the Original Purchase Agreement as set forth
herein.

NOW THEREFORE, in consideration of the premises and the other mutual covenants contained
herein, the parties hereto agree as follows:

SECTION 1. Market Street Termination.

Upon the payment on the Effective Date by the Seller to the Market Street Purchaser Agent for
the benefit of the Market Street Investors of all CP Costs, Earned Discount, Principal, Program
Fees and Unused Fees accrued through November 25, 2008, Market Street, the Market Street Purchaser
Agent, the Market Street Investors and the Market Street Purchaser Group shall cease to be parties
to the Transaction Documents for all purposes and, Market Street, the Market Street Purchaser
Agent, the Market Street Investors and the Market Street Purchaser Group hereby assign all of their
respective right, title and interest in, to and under each Asset Tranche funded by the Market
Street Purchaser Group to the Seller and none of Market Street, the Market Street Purchaser Agent,
the Market Street Investors and the Market Street Purchaser Group shall have any rights,
obligations or duties under any of the Transaction Documents from and after the Effective Date.

 

 

 

SECTION 2. Amendments to the Original Purchase Agreement.

Effective as of the Effective Date, the Original Purchase Agreement is hereby amended to
reflect the changes marked in the conformed copy of the Receivables Purchase Agreement attached as
Exhibit A hereto.

SECTION 3. Representations and Warranties.

Each Seller Party hereby certifies that, subject to the effectiveness of this Amendment, each
of the representations and warranties set forth in Article VI of the Receivables Purchase
Agreement is true and correct on the date hereof, as if each such representation and warranty were
made on the date hereof.

SECTION 4. Purchase Agreement in Full Force and Effect as Amended.

Except as specifically amended hereby, the Purchase Agreement shall remain in full force and
effect. All references to the Purchase Agreement shall be deemed to mean the Purchase Agreement as
modified hereby. This Amendment shall not constitute a novation of the Purchase Agreement, but
shall constitute an amendment thereof. The parties hereto agree to be bound by the terms and
conditions of the Purchase Agreement, as amended by this Amendment, as though such terms and
conditions were set forth herein.

SECTION 5. Consent of Assurance Provider.

The Assurance Provider hereby consents to the amendments to the Purchase Agreement set forth
in this Amendment.

SECTION 6. Effective Date.

This Amendment shall become effective as of the date (the “Effective Date”) on which
each of the parties hereto has executed this Amendment and the renewal fee payable pursuant to the
Fee Letter has been received by the Yorktown Purchaser Agent.

SECTION 7. Miscellaneous.

(a) This Amendment may be executed in any number of counterparts, and by the different
parties hereto on the same or separate counterparts, each of which shall be deemed to be an
original instrument but all of which together shall constitute one and the same agreement.
Delivery of an executed counterpart of a signature page by facsimile or other electronic
transmission shall be effective as delivery of a manually executed counterpart of this Amendment.

(b) The descriptive headings of the various sections of this Amendment are inserted for
convenience of reference only and shall not be deemed to affect the meaning or construction of any
of the provisions hereof.

 

2

 

(c) This Amendment may not be amended or otherwise modified except as provided in the
Agreement.

(d) THIS AMENDMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES UNDER THIS AMENDMENT SHALL BE
GOVERNED BY AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.

[remainder of page intentionally left blank]

 

3

 

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

	 	 	 	 	 
	 	LPAC CORP.,

as Seller

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 

	 	 	 	 	 
	 	LENNOX INDUSTRIES INC.,

as Master Servicer

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 

[additional signatures to follow]

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

 

 

	 	 	 	 	 
	 	MARKET STREET FUNDING LLC,

as a Purchaser

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 

	 	 	 	 	 
	 	PNC BANK, NATIONAL ASSOCIATION,

as Market Street Purchaser Agent and

Market Street Investor

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 

[additional signatures to follow]

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

 

 

	 	 	 	 	 
	 	YC SUSI TRUST,

as the Yorktown Purchaser

 	 
	 	By:  	Bank of America, National Association,
 	 
	 	 	as Administrative Trustee 	 
	 	 	 
	 	By:  	
 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 

	 	 	 	 	 
	 	BANK OF AMERICA, NATIONAL ASSOCIATION,

as the Yorktown Investor

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 

	 	 	 	 	 
	 	BANK OF AMERICA, NATIONAL ASSOCIATION,

as the Yorktown Purchaser Agent

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 

[additional signatures to follow]

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

 

 

	 	 	 	 	 
	 	Acknowledged and consented to by:

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

[end of signatures]

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

 

 

Exhibit A

COMPARISON OF CONFORMED RECEIVABLES PURCHASE AGREEMENT

REFLECTING AMENDMENTS

[see attached]

 

 

Exhibit A

 

SECOND AMENDED AND RESTATED RECEIVABLES PURCHASE AGREEMENT

Dated as of June 16, 2003

Among

LPAC CORP.

as the Seller

and

LENNOX INDUSTRIES INC.,

as the Master Servicer

and

YC SUSI Trust

as a Purchaser

and

BANK OF AMERICA, NATIONAL ASSOCIATION

as Administrative Agent and Yorktown Purchaser Agent

 

 

 

 

TABLE OF CONTENTS

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

 

i

 

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

APPENDIX

	 	 	 
	Appendix A
	 	Definitions

SCHEDULES

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

 

ii

 

EXHIBITS

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

 

iii

 

SECOND AMENDED AND RESTATED RECEIVABLES PURCHASE AGREEMENT

Dated as of June 16, 2003

THIS IS A SECOND AMENDED AND RESTATED RECEIVABLES PURCHASE AGREEMENT (the “Agreement”)
among:

(1) LPAC CORP., a Delaware corporation (together with its successors and permitted assigns,
the “Seller”),

(2) LENNOX INDUSTRIES INC., an Iowa corporation (together with its successors,
“Lennox”), as master servicer hereunder (in such capacity, together with any successor
master servicer appointed pursuant to Section 8.1, the “Master Servicer”, Lennox in
its capacity as the Master Servicer, together with the Seller, each a “Seller Party” and
collectively the “Seller Parties”),

(3) YC SUSI Trust, a Delaware Statutory Trust (the “Yorktown Purchaser”), and

(4) BANK OF AMERICA, NATIONAL ASSOCIATION, a national banking association (“Bank of
America”), as administrative agent for the Purchasers (in such capacity, together with any
successors thereto in such capacity, the “Administrative Agent”) and as purchaser agent for
the Yorktown Purchaser and the Yorktown Investors (in such capacity, together with any successors
thereto in such capacity, the “Yorktown Purchaser Agent”).

and amends and restates in its entirety that certain Amended and Restated Receivables Purchase
Agreement dated as of March 23, 2001 by and among the parties, as the same may have been and may be
amended from time to time (the “Existing Agreement”).

Unless otherwise indicated, capitalized terms used in this Agreement are defined in
Appendix A.

Background

1. The Originators own 100% of the issued and outstanding capital stock of the Seller.

2. The Originators are engaged in the heating, ventilating, air conditioning and refrigeration
businesses.

3. Each of the Originators and the Seller has entered into the Sale Agreement pursuant to
which the Originators have transferred, and hereafter will transfer, to the Seller all of their
respective right, title and interest in and to the Pool Receivables and certain related property.

 

 

 

4. The Seller has requested the Purchasers, and the Purchasers have agreed, subject to the
terms and conditions contained in this Agreement, to purchase from the Seller from time to
time undivided percentage interests, referred to herein as the Asset Interest, in Pool
Receivables and related property.

5. The Seller and the Purchasers also desire that, subject to the terms and conditions of this
Agreement, certain of the daily Collections in respect of the Asset Interest be reinvested in Pool
Receivables, which reinvestment shall constitute part of the Asset Interest.

6. Bank of America has been requested, and is willing, to act as the Administrative Agent and
the Yorktown Purchaser Agent under this Agreement.

7. The parties wish to amend and restate the Existing Agreement as hereinafter set forth.

NOW, THEREFORE, in consideration of the premises and the mutual agreements herein contained,
the parties hereto hereby agree as follows:

Article I

Purchases and Reinvestments

Section 1.1 Commitments to Purchase; Limits on Purchasers’ Obligations.

Upon the terms and subject to the conditions of this Agreement (including, without limitation,
Article V), from time to time during the Revolving Period, prior to the Termination Date,
the Seller may request that the Purchasers purchase from the Seller ownership interests in Pool
Receivables and Related Assets, and the Yorktown Purchaser may, in its sole discretion, make such
purchase or, if Yorktown Purchaser shall decline to make such purchase, the Yorktown Investors
shall make such purchase (in any such case, each being a “Purchase”); provided that
no Purchase shall be made by any Purchaser if, after giving effect thereto, i) the Invested Amount
would exceed $125,000,000 (as adjusted pursuant to Section 3.2(b)) (the “Purchase
Limit”), ii) such Purchaser Group’s Purchaser Group Invested Amount would exceed the related
Purchaser Group Limit or iii) the Asset Interest, expressed as a percentage of Net Pool Balance,
would exceed 100% (the “Allocation Limit”); and provided, further that each
Purchase made pursuant to this Section 1.1 shall have a purchase price equal to at least
$1,000,000 and shall be an integral multiple of $100,000. Notwithstanding anything to the contrary
herein, the amount available for any Purchase hereunder shall be calculated based on the most
recently delivered Information Package and not based on the most recently delivered Interim
Information Package; provided, however that no Purchases shall be permitted hereunder if the
calculations in any Interim Information Package delivered after the most recently delivered
Information Package show that (i) the Invested Amount would exceed the Purchase Limit, (ii) any
Purchase Group Invested Amount shall exceed the related Purchaser Group Limit, or (iii) the Asset
Interest, expressed as a percentage of Net Pool Balance would exceed the Allocation Limit.

 

2

 

Section 1.2 Purchase Procedures; Assignment of the Purchasers’ Interests.

(a) Purchase Request. Each Purchase from the Seller by the Purchasers shall be made
on notice from the Seller to each Purchaser Agent (on behalf of the related Purchaser) received
by such Purchaser Agent not later than 12:00 noon (New York City time) on the second Business
Day preceding the date of such proposed Purchase. Each such notice of a proposed Purchase shall be
substantially in the form of Exhibit 1.2(a) and shall specify, among other items, the
desired amount and date of such Purchase. Each Purchaser Agent shall promptly upon receipt notify
the related Purchaser of any such notice. The Seller shall not request more than one Purchase in
any calendar week.

(b) Funding of Purchase. On the date of each Purchase, each Purchaser shall, upon
satisfaction of the applicable conditions set forth in Article V, make available to the
Seller its Pro Rata Share of the amount of the Purchase in same day funds by wire transfer to an
account designated in writing by the Seller.

(c) Assignment of Asset Interests. The Seller hereby sells, assigns and transfers to
the Purchasers on a pro rata basis, effective on and as of the date of each Purchase and each
Reinvestment by the Purchasers hereunder, the Asset Interest.

Section 1.3 Reinvestments of Certain Collections; Payment of Remaining Collections.

(a) On the close of business on each day during the period from the date of the first Purchase
to the Termination Date, the Master Servicer will, out of all Collections received on such day from
Pool Receivables and Related Assets:

(i) determine the portion of the Collections attributable to the Asset Interest by
multiplying (A) the amount of such Collections times (B) the lesser of (1) the Asset
Interest and (2) 100%;

(ii) out of the portion of such Collections allocated to the Asset Interest pursuant to
clause (i) above, identify and hold in trust for the Purchasers (provided that
unless otherwise requested by any Purchaser Agent, on behalf of the related Purchaser, such
Collections shall not be required to be held in a separate account) an amount equal to the
sum of the estimated amount of Earned Discount and CP Costs accrued in respect of each Asset
Tranche (based on the rate information provided by the Administrative Agent pursuant to
Section 2.5), all other amounts due to the Purchasers or the Agents hereunder and
the Purchasers’ Share of the Servicing Fee (in each case, accrued through such day) and not
so previously identified; and

(iii) apply the Collections allocated to the Asset Interest pursuant to clause
(i) above and not required to be identified and held in trust pursuant to clause
(ii) above to the purchase from the Seller of ownership interests in Pool Receivables
and Related Assets (each such purchase being a “Reinvestment”); provided that:

(A) if, after giving effect to such Reinvestment, (1) the Asset Interest would
exceed the Allocation Limit, (2) any Purchaser Group Invested Amount shall exceed
the related Purchaser Group Limit or (3) the Invested Amount would exceed the
Purchase Limit, then the Master Servicer shall not make such Reinvestment, but shall
identify and hold in trust for the benefit of the Purchasers, a portion of such
Collections which, together with other Collections previously
identified and then so held, shall equal the amount necessary to reduce (x) the
Invested Amount to the Purchase Limit, (y) any Purchaser Group’s Purchaser Group
Invested Amount to such Purchaser Group’s Purchase Group Limit and (z) the Asset
Interest to the Allocation Limit; and

 

3

 

(B) if any of the conditions precedent to Reinvestment in clause (a),
(b) and (d) of Section 5.2, subject to the proviso set forth
in Section 5.2, are not satisfied, then the Master Servicer shall not
reinvest any of such remaining Collections, but shall identify them and hold them in
trust for the benefit of the Purchasers;

(iv) out of the portion of Collections not allocated to the Asset Interest pursuant to
clause (i) above, pay to the Master Servicer or set aside (at the option of the
Master Servicer) the Seller’s Share of the Servicing Fee accrued through such day and not
previously paid; and

(v) pay to the Seller (A) the remaining portion of Collections not allocated to the
Asset Interest pursuant to clause (i) above and (B) the Collections applied to
Reinvestment pursuant to clause (iii) above.

(b) Unreinvested Collections. The Master Servicer shall identify and hold in trust
for the benefit of the Purchasers all Collections which, pursuant to clause (iii) of
Section 1.3(a), may not be reinvested in the Pool Receivables and Related Assets, provided
that unless otherwise requested by any Purchaser Agent, such Collections need not be held in a
segregated account. If, prior to the date when such Collections are required to be paid to any
Purchaser Agent for the benefit of the related Purchaser pursuant to Section 1.3(c)(iv),
the amount of Collections so identified exceeds the amount, if any, necessary to reduce (i) the
Invested Amount to the Purchase Limit, (ii) each Purchaser Group’s Invested Amount to the related
Purchaser Group Limit and (iii) the Asset Interest to the Allocation Limit, and the conditions
precedent to Reinvestment set forth in clauses (a), (b) and (d) of
Section 5.2, subject to the proviso set forth in Section 5.2, are satisfied, then
the Master Servicer shall apply such Collections (or, if less, a portion of such Collections equal
to the amount of such excess) to the making of a Reinvestment.

(c) Payment of Amounts.

(i) The Master Servicer shall pay all amounts identified pursuant to Section
1.3(a)(ii) in respect of Earned Discount on an Asset Tranche funded by a Liquidity
Funding or an Alternate Funding, as the case may be, to each Purchaser Agent, on the related
Purchaser’s behalf, on the last day of the then current Yield Period for an Asset Tranche,
as provided in Section 3.1.

(ii) The Master Servicer shall pay all amounts of Collections identified pursuant to
Section 1.3(a)(ii) in respect of Earned Discount on any Asset Tranche funded by
Commercial Paper Notes to each Purchaser Agent, on the related Purchaser’s behalf, on the
Settlement Date following the last day of each CP Accrual Period for such Asset Tranche, as
provided in Section 3.1.

 

4

 

(iii) The Master Servicer shall pay all amounts of Collections identified pursuant to
Section 1.3(a)(ii) and not applied pursuant to clauses (i) or (ii)
above to each Purchaser Agent, on the related Purchaser’s behalf, on each Settlement Date
for each Collection Period, as provided in Section 3.1.

(iv) The Master Servicer shall pay all amounts identified pursuant to Section
1.3(b) to each Purchaser Agent (A) on the last day of the then current Yield Period for
any Asset Tranche funded by an Alternate Funding or a Liquidity Funding of such Purchaser
Group, as provided in Section 3.1(b), in an amount not exceeding the related
Purchaser’s Tranche Investment of such Asset Tranche, and (B) on the last day of the then
current CP Accrual Period for any Asset Tranche funded by Commercial Paper Notes, as
provided in Section 3.1, in an amount not exceeding the related Purchaser’s Tranche
Investment of such Asset Tranche.

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

 

5

 

Section 1.4 Asset Interest.

(a) Components of Asset Interest. On any date the Asset Interest will represent the
Investors’ undivided percentage ownership interest in all then outstanding Pool Receivables and all
Related Assets with respect to such Pool Receivables as at such date.

(b) Computation of Asset Interest. On any date, the Asset Interest will be equal to
the percentage equivalent of the following fraction:

IA
+ RR

NPB

where:

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

provided, however, that the Asset Interest during the Liquidation Period shall
equal 100% and shall at no time exceed 100%.

(c) Frequency of Computation. The Asset Interest shall be computed (i) as provided in
Section 3.1, as of the Cut-Off Date for each Collection Period, and (ii) on the Settlement
Date following each Reporting Date, after giving effect to the payments made pursuant to
Section 3.1. In addition, at any time, any Purchaser Agent, on behalf of the related
Purchaser, may require the Master Servicer to provide an interim report (an “Interim
Information Package”), based on the information then available to the Master Servicer, for
purposes of computing the Asset Interest, any Purchaser Group Limit or the Purchase Limit as of any
other date, and the Master Servicer agrees to do so within five (5) (or three (3), if a Liquidation
Event or a Credit Event has occurred and is continuing) Business Days of its receipt of such
Purchaser Agent’s request (such date, the “Interim Reporting Date”).

Article II

Computational Rules

Section 2.1 Selection of Asset Tranches.

Each Purchaser Agent shall, from time to time for purposes of computing Earned Discount on
that portion of the Asset Interest funded with Alternate Fundings or Liquidity Fundings made by the
related Purchaser Group, as the case may be, divide such portion of the Asset Interest into Asset
Tranches. The applicable Earned Discount Rate may be different for each Asset Tranche funded by a
Liquidity Funding or an Alternate Funding, as the case may be. The related Purchaser Group
Invested Amount shall be allocated to each Asset Tranche by the related Purchaser Agent, on the
related Purchaser’s behalf, to reflect the funding sources for the Asset Interest, so that:

(a) there will be a single Asset Tranche equal to the excess of the related Purchaser Group
Invested Amount over the aggregate amount allocated at such time pursuant to clause (b)
below, which Asset Tranche shall reflect the portion of the Asset Interest funded by Commercial
Paper Notes of the related Purchaser; and

(b) there may be one or more Asset Tranches, selected by a Purchaser Agent, on the related
Purchaser’s behalf, reflecting the portion or portions of the Asset Interest funded by outstanding
Alternate Fundings or Liquidity Fundings of such Purchaser Group, as the case may be.

 

6

 

Section 2.2 Computation of Invested Amount and Purchaser’s Tranche Investment.

In making any determination of the Invested Amount, any Purchaser Group Invested Amount and
any Purchaser’s Tranche Investment, the following rules shall apply:

(a) the Invested Amount and each Purchaser Group Invested Amount, as the case may be, shall
not be considered reduced by any allocation, setting aside or distribution of any portion of
Collections unless such Collections shall have been actually delivered hereunder to the related
Purchaser Agent, on the related Purchaser’s behalf;

(b) the Invested Amount and each Purchaser Group Invested Amount, as the case may be, shall
not be considered reduced by any distribution of any portion of Collections if at any time such
distribution is rescinded or must otherwise be returned for any reason; and

(c) if there is any reduction in the Invested Amount or any Purchaser Group Invested Amount,
as the case may be, there shall be a corresponding reduction in the related Purchaser’s Tranche
Investment with respect to one or more Asset Tranches selected by a Purchaser Agent, on the related
Purchaser’s behalf, in its discretion.

Section 2.3 Computation of Concentration Limits and Unpaid Balance.

The Obligor Concentration Limits and the aggregate Unpaid Balance of Pool Receivables of any
Obligor and its Affiliated Obligors (if any) shall be calculated as if such Obligor and its
Affiliated Obligors were one Obligor.

Section 2.4 Computation of Earned Discount.

In making any determination of Earned Discount, the following rules shall apply:

(a) each Purchaser Agent, on the related Purchaser’s behalf, shall determine the Earned
Discount accruing with respect to each Asset Tranche funded by an Alternate Funding or a Liquidity
Funding of such Purchaser Group, as the case may be, for each Yield Period, in accordance with the
definition of Earned Discount;

(b) no provision of this Agreement shall require the payment or permit the collection of
Earned Discount in excess of the maximum permitted by applicable law; and

(c) the Earned Discount for any Asset Tranche shall not be considered paid by any distribution
if at any time such distribution is rescinded or must otherwise be returned for any reason.

It is the intent of the Yorktown Purchaser to fund its portion of the Asset Interest by the
issuance of Commercial Paper Notes. If, for any reason, the Yorktown Purchaser is unable, or
determines that it is undesirable, to issue Commercial Paper Notes to fund its portion of the Asset
Interest, or is unable to repay such Commercial Paper Notes upon the maturity thereof, such
Purchaser will draw on Liquidity Fundings or an Alternate Funding, to the extent available. If any
Purchaser
funds itself through Liquidity Fundings or an Alternate Funding, the Earned Discount payable by the
Seller will be based on the Bank Rate.

 

7

 

Section 2.5
Estimates of Earned Discount Rate, Fees, Etc.

For purposes of determining the amounts required to be identified by Master Servicer pursuant
to Section 1.3, each Purchaser Agent, on the related Purchaser’s behalf, shall notify the
Master Servicer (and, if Lennox is not the Master Servicer, the Seller) from time to time of the
related Purchaser’s Tranche Investment of each Asset Tranche, the Earned Discount Rate applicable
to each Asset Tranche funded by an Alternate Funding or Liquidity Funding of such Purchaser Group,
as the case may be, and the rates at which fees and other amounts are accruing hereunder. It is
understood and agreed that (a) the CP Costs for any Asset Tranche funded by the issuance of
Commercial Paper Notes for any Purchaser Group are determined in arrears and may change from one
applicable CP Accrual Period to the next, (b) the Earned Discount Rate for any Asset Tranche funded
by an Alternate Funding or a Liquidity Funding of any Purchaser Group may change from one
applicable Yield Period to the next, and the Bank Rate used to calculate the Earned Discount Rate
may change from time to time during an applicable Yield Period, (c) certain rate information
provided by any Purchaser Agent to the Master Servicer shall be based upon such Purchaser Agent’s
good faith estimate, (d) the amount of Earned Discount actually accrued with respect to an Asset
Tranche funded by an Alternate Funding or a Liquidity Funding of any Purchaser Group during any
Yield Period may exceed, or be less than, the amount identified with respect thereto by Master
Servicer, and (e) the amount of fees or other amounts payable by the Seller hereunder which have
accrued hereunder with respect to any Collection Period may exceed, or be less than, the amount
identified with respect thereto by the Master Servicer. Failure to identify any amount so accrued
shall not relieve the Master Servicer of its obligation to remit Collections to each Purchaser
Agent, for the benefit of the related Purchaser, with respect to such accrued amount, as and to the
extent provided in Section 3.1.

Article III

Settlements

Section 3.1 Settlement Procedures.

The parties hereto will take the following actions with respect to each Collection Period:

(a) Information Package. On each Reporting Date the Master Servicer shall deliver to
each Purchaser Agent, on the related Purchaser’s behalf, the relevant Information Package.

(b) Earned Discount and CP Costs; Other Amounts Due. Not later than 12:00 noon
(Atlanta, Georgia, time) on:

(i) the Business Day before the last day of each Yield Period, each Purchaser Agent
shall notify the Master Servicer of the amount of Earned Discount accrued with respect to
any Asset Tranche funded by an Alternate Funding or a Liquidity Funding of the related
Purchaser Group, as the case may be, corresponding to such Yield Period;

 

8

 

(ii) the fifth (5th) Business Day before each Reporting Date, each Purchaser
Agent shall notify the Master Servicer of the CP Costs accrued during the most recently
ended CP Accrual Period with respect to any Asset Tranche funded with Commercial Paper Notes
of such Purchaser Group during all or any portion of such CP Accrual Period;

(iii) the last day of each Yield Period, the Master Servicer shall pay to each Agent
for the benefit of the related Purchaser the amount of the related Earned Discount;

(iv) each Settlement Date, the Master Servicer shall pay to each Agent for the benefit
of the related Purchaser the amount of the CP Costs for the related CP Accrual Period;

(v) the Business Day before each Reporting Date, each Purchaser Agent, on behalf of the
related Purchaser, shall notify the Master Servicer of all Broken Funding Costs, fees and
other amounts accrued and payable by the Seller under this Agreement to the related
Purchaser during the prior calendar month (other than amounts described in clause
(c) below); and

(vi) each Settlement Date, the Master Servicer shall pay to each Purchaser Agent, for
the benefit of the related Purchaser, the amount of any Broken Funding Costs, fees and other
amounts (to the extent of Collections attributable to the Asset Interest funded by such
Purchaser Group during such Collection Period) for such Collection Period.

Such payments shall be made out of amounts identified pursuant to Section 1.3 for such
payment; provided, however, that to the extent Collections attributable to the
Asset Interest funded by such Purchaser Group during such Collection Period are not sufficient to
make such payment, such payment shall be made out of funds paid by the Master Servicer to the
Seller (which amounts the Seller hereby agrees to pay to the Master Servicer), up to the aggregate
amount of Collections applied to Reinvestments under Section 1.3(a) or (b) during
the related Reporting Period.

(c) Asset Interest Computations.

(i) On each Reporting Date, the Master Servicer shall compute, as of the related
Cut-Off Date and based upon the assumptions in the next sentence, (A) the Asset Interest,
(B) the amount of the reduction or increase (if any) in the Asset Interest since the next
preceding Cut-Off Date, (C) the excess (if any) of the Asset Interest over the Allocation
Limit, (D) the excess (if any) of any Purchaser Group Invested Amount over such Purchaser
Group Limit and (E) the excess (if any) of the Invested Amount over the Purchase Limit.
Such calculations shall be based upon the assumptions that the (1) information in the
Information Package is correct, and (2) Collections identified pursuant to Section
1.3(b) will be paid to each Purchaser Agent, for the benefit of the related Purchaser,
on the Settlement Date for such Collection Period.

 

9

 

(ii) If, according to the computations made pursuant to clause (i) above, (A)
the Asset Interest exceeds the Allocation Limit, (B) any Purchaser Group Invested
Amount exceeds such Purchaser Group Limit or (C) the Invested Amount exceeds the
Purchase Limit, then on the related Settlement Date, the Master Servicer shall pay to the
applicable Purchaser Agent, for the benefit of the related Purchaser, (to the extent of
Collections during the related Collection Period attributable to all Asset Tranches funded
by such Purchaser Group and not previously paid to such Purchaser Agent) the amount
necessary to reduce (1) the Invested Amount to the Purchase Limit, (2) any Purchaser Group
Invested Amount to such Purchaser Group Limit and (3) the Asset Interest to the Allocation
Limit. Such payment shall be made out of amounts identified pursuant to Section 1.3
for such purpose and, to the extent such amounts were not so identified, the Seller hereby
agrees to pay such amounts to the Master Servicer to the extent of Collections applied to
Reinvestment under Section 1.3 during the relevant Collection Period.

(iii) In addition to the payments described in clause (ii) above and clause
(iv) below, during the Liquidation Period, the Master Servicer shall pay to each Agent,
for the benefit of the related Purchaser, all amounts identified pursuant to Section
1.3 on (A) the last day of the current Yield Period for any Asset Tranche funded by an
Alternate Funding or a Liquidity Funding funded by such Purchaser Group, as the case may be,
in an amount not exceeding such Purchaser’s Tranche Investment of such Asset Tranche, and
(B) the last day of the each CP Accrual Period, in an amount not exceeding such Purchaser’s
Tranche Investment of the Asset Tranche funded by Commercial Paper Notes issued by such
Purchaser Group.

(iv) On the Interim Reporting Date for each Interim Reporting Period, the Master
Servicer shall compute, as of the related Interim Cut-Off Date and based upon the
assumptions in the next sentence, (A) the Asset Interest, (B) the amount of the reduction or
increase (if any) in the Asset Interest since the next preceding Cut-Off Date or Interim
Cut-Off Date, (C) the excess (if any) of the Asset Interest over the Allocation Limit, (D)
the excess (if any) of any Purchaser Group Invested Amount over the related Purchaser Group
Limit and (E) the excess (if any) of the Invested Amount over the Purchase Limit. Such
calculations shall be based upon the assumptions that (1) the information in the Interim
Information Package is correct, and (2) Collections identified pursuant to Section
1.3(b) will be paid to each Purchaser Agent, for the benefit of the related Purchaser,
on the Settlement Date for such Collection Period.

(v) If, according to the computations made pursuant to clause (iv) above, (A)
the Asset Interest exceeds the Allocation Limit, (B) any Purchaser Group Invested Amount
exceeds the related Purchaser Group Limit or (C) the Invested Amount exceeds the Purchase
Limit, then on the Interim Settlement Date for such Interim Reporting Period, the Master
Servicer shall pay to the applicable Purchaser Agent, for the benefit of the related
Purchaser, (to the extent of Collections during the related Interim Reporting Period
attributable to all Asset Tranches funded by the related Purchaser Group and not previously
paid to such Purchaser Agent) the amount necessary to reduce (1) the Invested Amount to the
Purchase Limit, (2) any Purchaser Group Invested Amount to the related Purchaser Group Limit
and (3) the Asset Interest to the Allocation Limit. Such payment shall be made out of
amounts identified pursuant to Section 1.3 for such purpose and, to the extent such
amounts were not so identified, the Seller hereby agrees to pay such
amounts to the Master Servicer to the extent of Collections applied to Reinvestment
under Section 1.3 during the relevant Interim Reporting Period.

 

10

 

(d) Order of Application. Upon receipt by each Purchaser Agent, on the related
Purchaser’s behalf, of funds distributed pursuant to this Section 3.1, such Purchaser Agent
shall apply them to the items specified in the subclauses below, in the order of priority of such
subclauses:

(i) to accrued Earned Discount, CP Costs and Broken Funding Costs, plus any previously
accrued Earned Discount, CP Costs and Broken Funding Costs not paid, to the extent owing to
such Purchaser Group;

(ii) to the related Purchaser’s Share of the accrued and unpaid Servicing Fee (if the
Master Servicer is not Lennox or its Affiliate);

(iii) to such Purchaser Group’s Pro Rata Share of the Program Fee and the Unused Fee
accrued during such Collection Period, plus any previously accrued Program Fee and the
Unused Fee not paid on a prior Settlement Date;

(iv) to the reduction of the Invested Amount on a pro-rata basis and the reduction of
any Purchaser Group Invested Amount, to the extent such reduction is required under
Section 3.1(c);

(v) to other accrued and unpaid amounts owing to any Purchaser or any Agent hereunder
(except Earned Discount on any Asset Tranche funded by an Alternate Funding or a Liquidity
Funding of any Purchaser Group, as the case may be, which has accrued but is not yet overdue
under Section 1.3(c));

(vi) to the related Purchaser’s Share of the accrued and unpaid Servicing Fee (if the
Master Servicer is Lennox or its Affiliate); and

(vii) to purchase newly originated Receivables during the Revolving Period;

provided,
however, that all amounts received on any Interim Settlement Date or Weekly
Settlement Date shall be applied (x) with respect to amounts received on any Weekly Settlement
Date, as provided in Section 3.1(c)(ii) and (y) with respect to amounts received on any
Interim Settlement Date, as provided in Section 3.1(c)(v).

(e) Non-Distribution of Servicing Fee. Each Purchaser Agent hereby consents (which
consent may be revoked at any time), to the retention by the Master Servicer of the amounts (if
any) identified pursuant to Section 1.3 in respect of the Servicing Fee, in which case no
distribution shall be made in respect of the Servicing Fee pursuant to clause (d) above.

(f) Delayed Payment. If on any day described in this Section 3.1 (or in
Section 1.3(c) in respect of accrued Earned Discount on Asset Tranches funded by Alternate
Fundings or Liquidity Fundings of any Purchaser Group, as the case may be, or accrued CP Costs on
Asset Tranches funded by the issuance of Commercial Paper Notes issued by any Purchaser Group),
because Collections during the relevant CP Accrual Period or Yield Period were less than the
aggregate amounts payable, the Master Servicer shall not make any payment otherwise required,
the next available Collections in respect of the Asset Interest shall be applied to such payment,
and no Reinvestment shall be permitted hereunder until such amount payable has been paid in full.

 

11

 

Section 3.2 Deemed Collections; Reduction of Invested Amount, Etc.

(a) Deemed Collections. If on any day:

(i) the Unpaid Balance of any Pool Receivable is:

(A) reduced as a result of any defective, rejected or returned merchandise or
services, any cash discount, or any other adjustment by any Seller Party or any
Affiliate thereof, or as a result of any tariff or other governmental or regulatory
action, or

(B) reduced or canceled as a result of a setoff in respect of any claim by the
Obligor thereof (whether such claim arises out of the same or a related or an
unrelated transaction, including without limitation, any setoff or claim arising as
a result of any amount at any time owed by any Originator in connection with any
account receivable owed by any such Originator to such Obligor), or

(C) reduced on account of the obligation of any Seller Party or any Affiliate
thereof to pay to the related Obligor any rebate or refund, or

(D) less than the amount included in calculating the Net Pool Balance for
purposes of any Information Package or Interim Information Package, as the case may
be (for any reason other than such Receivable becoming a Defaulted Receivable), or

(ii) any of the representations or warranties of the Seller set forth in Section
6.1(j), (l) or (p) were not true when made with respect to any Pool
Receivable, or any of the representations or warranties of the Seller set forth in
Section 6.1(l) are no longer true with respect to any Pool Receivable, or any Pool
Receivable is repurchased by an Originator pursuant to the Sale Agreement,

then, on such day, the Seller shall be deemed to have received a Collection of such Pool Receivable

(A) in the case of clause (i) above, in the amount of such reduction or
cancellation or the difference between the actual Unpaid Balance and the amount
included in calculating such Net Pool Balance, as applicable; and

(B) in the case of clause (ii) above, in the amount of the Unpaid
Balance of such Pool Receivable.

Collections deemed received by the Seller under this Section 3.2(a) are herein referred to
as “Deemed Collections.”

 

12

 

(b) Seller’s Optional Reduction of the Invested Amount. The Seller may at any time
elect to reduce the Invested Amount and each Purchaser Group Invested Amount as follows:

(i) the Seller shall give each Purchaser Agent, on the related Purchaser’s behalf, at
least five (5) Business Days’ prior written notice of such reduction (including the amount
of such proposed reduction and the proposed date on which such reduction will commence),

(ii) on the proposed date of commencement of such reduction and on each day thereafter,
the Master Servicer shall refrain from reinvesting Collections pursuant to Section
1.3 until the amount thereof not so reinvested shall equal the desired amount of
reduction, and

(iii) the Master Servicer shall hold such Collections in trust for the Purchasers,
pending payment to the related Purchaser Agent, as provided in Section 1.3;

provided that:

(A) the amount of any such reduction shall be in (1) an amount of $1,000,000,
(2) an integral multiple thereof or (3) an amount equal to the remaining Invested
Amount,

(B) the Seller shall use reasonable efforts to attempt to choose a reduction
amount, and the date of commencement thereof, so that such reduction shall commence
and conclude in the same Collection Period,

(C) unless the Invested Amount shall be reduced to zero, after giving effect to
such reduction, the Invested Amount will be at least $1,000,000, and

(D) each reduction of the Invested Amount shall be done on a pro rata basis and
shall result in a corresponding reduction in each Purchaser Group Invested Amount.

Section 3.3 Payments and Computations, Etc.

(a) Payments. All amounts to be paid to any Purchaser Agent or any other Person or
deposited by the Seller or the Master Servicer hereunder (other than amounts payable under
Section 4.2) shall be paid or deposited in accordance with the terms hereof no later than
12:00 noon (New York City time) on the day when due in lawful money of the United States of America
in same day funds to the related Purchaser Agent Account, or to such other account at the bank
named therein or at such other bank as any Purchaser Agent on behalf of the related Purchaser may
designate by written notice to the Person making such payment.

(b) Late Payments. The Seller or the Master Servicer, as applicable, shall, to the
extent permitted by law, pay to the Person to whom payment is due interest on all amounts not paid
or deposited when due hereunder at 2% per annum above the Base Rate,
payable on demand, provided,
however, that such interest rate shall not at any time exceed the maximum rate permitted by
applicable law.

(c) Method of Computation. All computations of interest, CP Costs, Broken Funding
Costs, Earned Discount, any fees payable under Section 4.1 and any other fees payable by
the Seller to any Purchaser or any Purchaser Agent hereunder shall be made on the basis of a year
of 360 days for the actual number of days (including the first day but excluding the last day)
elapsed.

 

13

 

Section 3.4 Treatment of Collections and Deemed Collections.

The Seller shall forthwith deliver to the Master Servicer all Deemed Collections, and the
Master Servicer shall hold or distribute such Deemed Collections as Earned Discount, CP Costs,
Broken Funding Costs, accrued Servicing Fee, repayment of the Invested Amount or any Purchaser
Group Invested Amount and to other accrued amounts owing hereunder to the same extent as if such
Deemed Collections had actually been received on the date of such delivery to the Master Servicer.
If Collections are then being paid to any Agent, on behalf of the Purchasers, or its designee, or
to lock boxes or accounts directly or indirectly owned or controlled by the Administrative Agent on
behalf of the Purchasers, the Master Servicer shall forthwith cause such Deemed Collections to be
paid to each Purchaser Agent, on the related Purchaser’s behalf, or its designee or to such lock
boxes or accounts, as applicable, or as the Agents shall request. So long as the Seller shall hold
any Collections (including Deemed Collections) required to be paid to the Master Servicer or any
Agent, it shall hold such Collections in trust for the benefit of the Agents, on behalf of the
Purchasers, and shall clearly mark its records to reflect such trust; provided that unless the
Administrative Agent shall have requested it in writing to do so, the Seller shall not be required
to hold such Collections in a separate deposit account containing only such Collections.

Article IIIA

Additional Alternate Investor Provisions

Section 3A.1 Assignment to Alternate Investors.

(a) Assignment Amounts. At any time on or prior to the Funding Termination Date, if
the Purchaser Agent on behalf of the related Conduit Investor so elects, by written notice to the
Administrative Agent, the Seller hereby irrevocably requests and directs that such designated
Conduit Investor assign, and such Conduit Investor does hereby assign effective on the Assignment
Date referred to below all or such portions as may be elected by such Conduit Investor of, its
interest in the related Purchaser Group Invested Amount and the Asset Interest at such time to the
Alternate Investors that are members of such Purchaser Group pursuant to this Section 3A.1
(each such portion, an “Assignment Amount”) and the Seller hereby agrees to pay the amounts
described in Section 3A.1(b); provided, however, that unless such assignment is an
assignment of all of the Conduit Investor’s interest in the related Purchaser Group Invested Amount
and the Asset Interest in whole on or after the Funding Termination Date, no such assignment shall
take place pursuant to this Section 3A.1 if a Liquidation Event described in Section
10.1(j) shall then exist; and provided, further, that no such assignment shall take place
pursuant to this Section 3A.1 at a time when an Event of Bankruptcy with respect to such
Conduit Investor exists. No further documentation or action on the part of a Conduit Investor or
the Seller shall be required to exercise the rights set forth in the immediately preceding
sentence, other than the giving of the

 

14

 

notice by the Purchaser Agent on behalf of such Conduit
Investor referred to in such sentence and the delivery by the related Purchaser Agent of a copy of such
notice to each Alternate Investor that is a member of such Purchaser Group (the date of any such
notice being the “Assignment Date”). Each Alternate Investor in a Purchaser Group hereby
agrees, unconditionally and irrevocably and under all circumstances, without setoff, counterclaim
or defense of any kind, to pay the full amount of its Assignment Amount on such Assignment Date to
the related Conduit Investor in immediately available funds to an account designated by the related
Purchaser Agent. Upon payment of its Assignment Amount, each such Alternate Investor shall acquire
an interest in the Asset Interest and the related Purchaser Group Invested Amount equal to its pro
rata share (based on the outstanding portions of the related Purchaser Group Invested Amount funded
by it) of such Purchaser Group Invested Amount. Upon any assignment in whole by a Conduit Investor
to the Alternate Investors in the related Purchaser Group on or after the Funding Termination Date
as contemplated hereunder, such Conduit Investor shall cease to make any additional Purchases or
Reinvestments hereunder. At all times prior to the Funding Termination Date, nothing herein shall
prevent any Conduit Investor from making a subsequent Purchase or Reinvestment hereunder, in its
sole discretion, following any assignment pursuant to this Section 3A.1 or from making more
than one assignment pursuant to this Section 3A.1.

(b) Seller’s Obligation to Pay Certain Amounts; Additional Assignment Amount. The
Seller shall pay to each Purchaser Agent, for the account of the related Conduit Investor, in
connection with any assignment by such a Conduit Investor to the related Alternate Investors
pursuant to this Section 3A.1, an aggregate amount equal to all Earned Discount to accrue
through the end of the current Earned Discount Period to the extent attributable to the portion of
the related Purchaser Group Invested Amount so assigned to such Alternate Investors (which Earned
Discount shall be determined for such purpose using the Yorktown CP Rate most recently determined
by the related Purchaser Agent), plus all other amounts due and payable to such Conduit Investor
hereunder (other than the related Purchaser Group Invested Amount and other than any Earned
Discount not described above). If the Seller fails to make payment of such amounts at or prior to
the time of assignment by such Conduit Investor to the related Alternate Investors, such amount
shall be paid by the related Alternate Investors (in accordance with their respective pro rata
shares) to such Conduit Investor as additional consideration for the interests assigned to such
Alternate Investors and the amount of the related Purchaser Group Invested Amount hereunder held by
the related Alternate Investors shall be increased by an amount equal to the additional amount so
paid by such Alternate Investors.

(c) Payments to Agent’s Account. After any assignment in whole by a Conduit Investor
to the related Alternate Investors pursuant to this Section 3A.1 at any time on or after
the Funding Termination Date, all payments to be made hereunder by the Seller or the Servicer to
any assigning Conduit Investor shall be made to the related Purchaser Agent’s account as such
account shall have been notified to the Seller and the Servicer.

(d) Recovery of related Purchaser Group Invested Amount. In the event that the
aggregate of the Assignment Amounts paid by the Alternate Investors of any Purchaser Group pursuant
to this Section 3A.1 on any Assignment Date occurring on or after the Funding Termination
Date is less than the related Purchaser Group Invested Amount of the related Conduit Investor on
such Assignment Date, then to the extent Collections thereafter received by the Agent hereunder in
respect of the related Purchaser Group Invested Amount exceed the
aggregate of the unrecovered Assignment Amounts and related Purchaser Group Invested Amount
funded by the Alternate Investors, such excess shall be remitted by the Agent to the Conduit
Investor (or to the Administrator on its behalf) for the account of the Conduit Investor.

 

15

 

Section 3A.2 Downgrade of Alternate Investor.

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

 

16

 

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

(c) Notwithstanding the other provisions of this Section 3A.2, an Alternate Investor
shall not be required to make a Downgrade Draw (or provide for the issuance of a letter of credit
in lieu thereof) pursuant to Section 3A.2(a) at a time when such Alternate Investor has a
downgrade collateral account (or letter of credit in lieu thereof) established pursuant to any
document or agreement providing liquidity or credit support to the related Conduit Investor
relating to the transactions contemplated by this Agreement to which it is a party in an amount at
least equal to the unused commitment of such Alternate Investor, and the related Purchaser
Agent may apply monies in such downgrade collateral account in the manner described in
Section 3A.2(b) as if such downgrade collateral account were a Downgrade Collateral
Account.

 

17

 

Article IV

Fees and Yield Protection

Section 4.1 Fees.

The Seller shall pay to each Purchaser Agent for the benefit of the related Purchaser Group
the fees and other amounts set forth in the Fee Letters, all such fees and other amounts to be paid
from time to time in the amounts set forth in each such Fee Letter.

Section 4.2 Yield Protection.

(a) If (i) Regulation D or (ii) any Regulatory Change occurring after June 19, 2000:

(A) shall subject an Affected Party to any tax, duty or other charge with
respect to the portion of the Asset Interest owned by or funded by it, or any
obligations or right to make Purchases or Reinvestments or to provide funding
therefor, or shall change the basis of taxation of payments to the Affected Party of
any portion of the Invested Amount or Earned Discount owned by, owed to or funded in
whole or in part by it or any other amounts due under this Agreement in respect of
the portion of the Asset Interest owned by or funded by it or its obligations or
rights, if any, to make Purchases or Reinvestments or to provide funding therefor
(except for (1) taxes based on, or measured by, net income, or changes in the rate
of tax on or determined by reference to the overall net income, of such Affected
Party imposed by the United States of America, by the jurisdiction in which such
Affected Party’s principal executive office is located and, if such Affected Party’s
principal executive office is not in the United States of America, by the
jurisdiction where such Affected Party’s principal office in the United States is
located or, (2) franchise taxes, taxes on, or in the nature of, doing business taxes
or capital taxes); or

(B) shall impose, modify or deem applicable any reserve (including, without
limitation, any reserve imposed by the Federal Reserve Board, but excluding any
reserve included in the determination of Earned Discount), special deposit or
similar requirement against assets of any Affected Party, deposits or obligations
with or for the account of any Affected Party or with or for the account of any
affiliate (or entity deemed by the Federal Reserve Board to be an affiliate) of any
Affected Party, or credit extended by any Affected Party; or

(C) shall change the amount of capital maintained or required or requested or
directed to be maintained by any Affected Party; or

 

18

 

(D) shall impose any other condition affecting any Asset Interest owned or
funded in whole or in part by any Affected Party, or its obligations or
rights, if any, to make Purchases or Reinvestments or to provide funding
therefor; or

(E) shall change the rate for, or the manner in which the Federal Deposit
Insurance Corporation (or a successor thereto) assesses, deposit insurance premiums
or similar charges;

and the result of any of the foregoing is or would be

(A) to increase the cost to or to impose a cost on (1) an Affected Party
funding or making or maintaining any Purchases or Reinvestments, any purchases,
reinvestments, or loans or other extensions of credit under any Liquidity Agreement,
or any commitment of such Affected Party with respect to any of the foregoing, or
(2) any Agent for continuing its or the Seller’s relationship with any Purchaser, in
each case, in an amount deemed to be material by such Affected Party,

(B) to reduce the amount of any sum received or receivable by an Affected Party
under this Agreement or under any Liquidity Agreement, or

(C) in the reasonable determination of such Affected Party, to reduce the rate
of return on the capital of an Affected Party as a consequence of its obligations
hereunder or arising in connection herewith to a level below that which such
Affected Party could otherwise have achieved,

then, within thirty days after demand by such Affected Party (which demand shall be accompanied by
a certificate setting forth, in reasonable detail, the basis of such demand and the methodology for
calculating, and the calculation of, the amounts claimed by the Affected Party), the Seller shall
pay directly to such Affected Party such additional amount or amounts as will compensate such
Affected Party for such additional or increased cost or such reduction; provided,
however, the Seller shall only be required to compensate any such Affected Party for such
amounts to the extent that such Affected Party is requiring all of its other similarly situated
customers to compensate it for such amounts.

(b) Each Affected Party will promptly notify the Seller and each Agent of any event of which
it has knowledge (including any future event that, in the judgment of such Affected Party, is
reasonably certain to occur) which will entitle such Affected Party to compensation pursuant to
this Section 4.2; provided, however, no failure to give or delay in giving such
notification shall adversely affect the rights of any Affected Party to such compensation.

(c) In determining any amount provided for or referred to in this Section 4.2, an
Affected Party may use any reasonable averaging and attribution methods (consistent with its
ordinary business practices) that it (in its reasonable discretion) shall deem applicable. Any
Affected Party when making a claim under this Section 4.2 shall submit to the Seller the
certificate (referred to in subsection (a) above) as to such increased cost or reduced
return (including calculation thereof in reasonable detail), which statement shall, in the absence
of demonstrable error, be conclusive and binding upon the Seller.

(d) For the avoidance of doubt, any interpretation of Fin. 46R or FAS 140 by the Financial
Accounting Standards Board shall constitute an adoption, change, request or directive subject to
this Section 4.2.

 

19

 

Section 4.3 Funding Losses.

In the event that any Purchaser or any Liquidity Bank shall actually incur any loss or expense
(including any loss or expense incurred by reason of the liquidation or reemployment of deposits or
other funds acquired by such Purchaser through the issuance of Commercial Paper Notes to fund any
Purchase, such Liquidity Bank to make any Liquidity Funding or maintain any Liquidity Funding or to
make any Alternate Funding or maintain any Alternate Funding) as a result of (a) any settlement
with respect to the related Purchaser’s Tranche Investment of the portion of any Asset Tranche
being made by such Purchaser Group on any day other than the scheduled last day of an applicable CP
Accrual Period or Yield Period with respect thereto (it being understood that the foregoing shall
not apply to any portion of the Invested Amount that is accruing Earned Discount calculated by
reference to the Base Rate), or (b) any Purchase not being made in accordance with a request
therefor under Section 1.2, then, upon written notice from any Purchaser Agent to the
Seller and the Master Servicer, the Seller shall pay to the Master Servicer, and the Master
Servicer shall pay to such Purchaser Agent for the account of the related Purchaser or such
Liquidity Bank, as the case may be, the amount of such loss or expense. Such written notice (which
shall include the methodology for calculating, and the calculation of, the amount of such loss or
expense, in reasonable detail) shall, in the absence of demonstrable error, be conclusive and
binding upon the Seller and the Master Servicer.

Article V

Conditions of Purchases

Section 5.1
Reserved.

Section 5.2
Conditions Precedent to All Purchases and Reinvestments.

Each Purchase and each Reinvestment shall be subject to the conditions precedent that on the
date of such Purchase or Reinvestment the following statements shall be true (and the Seller, by
accepting the amount of such Purchase or by receiving the proceeds of such Reinvestment, and each
other Seller Party, upon such acceptance or receipt by the Seller, shall be deemed to have
certified that):

(a) the representations and warranties contained in Section 6.1 are correct in all
material respects on and as of such day as though made on and as of such day and shall be deemed to
have been made on such day,

(b) no event has occurred and is continuing, or would result from such Purchase or
Reinvestment, that constitutes a Liquidation Event or Unmatured Liquidation Event,

(c) after giving effect to each proposed Purchase or Reinvestment, the Invested Amount will
not exceed the Purchase Limit, no Purchaser Group Invested Amount will exceed the related Purchaser
Group Limit and the Asset Interest will not exceed the Allocation Limit,

 

20

 

(d) the Termination Date shall not have occurred,

(e) in the case of a Purchase, each Purchaser Agent shall have timely received an appropriate
notice of the proposed Purchase in accordance with Section 1.2(a),

(f) a completed Information Package or Interim Information Package (if applicable) shall have
been delivered by the Master Servicer to each Purchaser Agent, on the related Purchaser’s behalf,
as of the applicable Reporting Date or Interim Reporting Date, as the case may be,

(g) both prior to and after giving effect to each proposed Purchase or Reinvestment, the
requirements of the Credit Agreement and any other agreement evidencing any Material Indebtedness
of Lennox International with respect to transfers of assets and creation of liens shall not have
been violated,

(h) after giving effect to each proposed Purchase or Reinvestment, the Weighted Average Term
(with respect to Receivables included in the Net Pool Balance) shall not exceed 45 days, and

(i) such other agreements, instruments, certificates, opinions and other documents as the
Administrative Agent may reasonably request have been delivered;

provided,
however, the absence of the occurrence and continuance of an Unmatured Liquidation Event
shall not be a condition precedent to any Reinvestment or any Purchase on any day which does not
cause the Invested Amount, after giving effect to such Reinvestment or Purchase, to exceed the
Invested Amount as of the opening of business on such day.

Article VI

Representations and Warranties

Section 6.1 Representations and Warranties of the Seller Parties.

Each Seller Party represents and warrants as to itself, except when specifically provided, in
which case, the specified Seller Party represents and warrants as follows:

(a) Organization and Good Standing; Ownership. Its jurisdiction of organization is
correctly set forth in the preamble to this Agreement. It is duly organized and is a “registered
organization” as defined in the UCC under the laws of that jurisdiction and no other state or
jurisdiction, and such jurisdiction must maintain a public record showing the organization to have
been organized. It is validly existing as a corporation in good standing under the laws of its
state of organization, with power and authority to own its properties and to conduct its business
as such properties are presently owned and such business is presently conducted. The Seller had at
all relevant times, and now has, all necessary power, authority, and legal right to acquire and own
the Pool Receivables and Related Assets. The Originators own directly all the issued and
outstanding capital stock of the Seller.

 

21

 

(b) Due Qualification. It is duly qualified to do business as a foreign corporation
in good standing, and has obtained all necessary licenses and approvals, in all jurisdictions in
which the ownership or lease of property or the conduct of its business requires such
qualification, licenses or approvals, except where the failure to be so qualified or have such
licenses or approvals would not have a Material Adverse Effect.

(c) Power and Authority; Due Authorization. It (i) has all necessary power, authority
and legal right (A) to execute and deliver this Agreement and the other Transaction Documents to
which it is a party, (B) to carry out the terms of the Transaction Documents to which it is a
party, (C) in the case of the Master Servicer, to service the Receivables and the Related Assets in
accordance with this Agreement and the Sale Agreement, and (D) in the case of the Seller, sell and
assign the Asset Interest on the terms and conditions herein provided, and (ii) has duly authorized
by all necessary corporate action the execution, delivery and performance of this Agreement and the
other Transaction Documents and, in the case of the Seller, the sales and assignments described in
clause (i)(D) above.

(d) Valid Sale; Binding Obligations. (i) This Agreement constitutes a valid sale,
transfer, and assignment of the Asset Interest to the Purchasers, enforceable against creditors of,
and purchasers from, the Seller, and (ii) this Agreement and each other Transaction Document signed
by such Seller Party constitutes, a legal, valid and binding obligation of such Seller Party,
enforceable in accordance with its terms, except as enforceability may be limited by bankruptcy,
insolvency, reorganization, or other similar laws from time to time in effect affecting the
enforcement of creditors’ rights generally and by general principles of equity, regardless of
whether such enforceability is considered in a proceeding in equity or at law.

(e) No Violation. The execution, delivery and performance by it of this Agreement and
the other Transaction Documents to which it is a party and the consummation by it of the
transactions contemplated hereby and thereby will not (i) conflict with, result in any breach of
any of the terms and provisions of, or constitute (with or without notice or lapse of time or both)
a default under, its articles or certificate of incorporation or by-laws, or any material
indenture, loan agreement, receivables purchase agreement, mortgage, deed of trust, or other
agreement or instrument to which it is a party or by which it or any of its properties is bound
(including, but not limited to, those agreements or instruments evidencing Material Indebtedness of
Lennox International), (ii) result in the creation or imposition of any Lien upon any its
properties pursuant to the terms of any such material indenture, loan agreement, receivables
purchase agreement, mortgage, deed of trust, or other agreement or instrument, other than this
Agreement and the other Transaction Documents, or (iii) violate any law or any order, rule, or
regulation applicable to it of any court or of any federal or state regulatory body, administrative
agency, or other governmental instrumentality having jurisdiction over it or any of its properties.

(f) No Proceedings. There are no proceedings or investigations pending, or, to its
knowledge, threatened, before any Governmental Authority (i) asserting the invalidity of this
Agreement or any other Transaction Document, (ii) seeking to prevent the sale and assignment of the
Receivables under the Sale Agreement or of the Asset Interest under this Agreement or the
consummation of any of the other transactions contemplated by this Agreement or any other
Transaction Document, or (iii) that would have a Material Adverse Effect.

 

22

 

(g) Bulk Sales Act. No transaction contemplated hereby requires compliance with any
bulk sales act or similar law.

(h) Government Approvals. No authorization or approval or other action by, and no
notice to or filing with, any Governmental Authority or regulatory body is required for the due
execution, delivery and performance by it of this Agreement and each other Transaction Document to
which it is a party, except, in the case of the Seller, for (i) the filing of the UCC financing
statements referred to in Article V, and (ii) the filing of any UCC continuation statements
and amendments from time to time required in relation to any UCC financing statements filed in
connection with this Agreement, as provided in Section 8.7, all of which, at the time
required in Article V or Section 8.7, as applicable, shall have been duly made and
shall be in full force and effect.

(i) Financial Condition. (i) The consolidated and consolidating balance sheets of the
Lennox International and its consolidated subsidiaries as at December 31, 2002, and the related
statements of income and shareholders’ equity of Lennox International and its consolidated
subsidiaries for the fiscal year then ended, certified by KPMG LLP, independent certified public
accountants, copies of which have been furnished to the Agents, fairly present in all material
respects the consolidated financial condition of Lennox International and its consolidated
subsidiaries as at such date and the consolidated results of the operations of Lennox International
and its consolidated subsidiaries for the period ended on such date, all in accordance with GAAP
consistently applied, (ii) since December 31, 2002 there has been no material adverse change in any
such financial condition, business or operations except as described in Schedule 6.1(i),
(iii) the balance sheet of the Seller as at March 31, 2003, certified by the chief financial
officer or treasurer of the Seller by means of a Certificate of Financial Officer in the form
attached hereto as Exhibit B, copies of which have been furnished to the Agents, fairly
present in all material respects the financial condition, assets and liabilities of the Seller as
at such date, all in accordance with GAAP consistently applied, and (iv) since June 9, 2000 there
has been no material adverse change in the Seller’s financial condition, business or operations.

(j) Nature of Receivables. Each Receivable constitutes an “account” as such term is
defined in the UCC.

(k) Margin Regulations. The use of all funds obtained by such Seller Party under this
Agreement or any other Transaction Document will not conflict with or contravene any of Regulation
T, U and X promulgated by the Federal Reserve Board from time to time.

(l) Quality of Title. (i) This Agreement creates a valid and continuing security
interest (as defined in the applicable UCC) in the Collateral in favor of the Administrative Agent
for the benefit of the Secured Parties, which security interest is prior to all other Liens and is
enforceable as such against creditors of and purchasers from the Seller, (ii) the Seller owns and
has good and marketable title to the Collateral free and clear of any Lien (other than any Lien
arising solely as the result of any action taken by any Secured Parties (or any assignee thereof)
or by the Administrative Agent); (iii) when any Purchaser makes a Purchase or Reinvestment, it
shall have acquired and shall at all times thereafter continuously maintain a valid and perfected
first priority undivided percentage ownership interest to the extent of the portion of the Asset
Interest funded by the related Purchaser

 

23

 

Group in the Collateral, free and clear of any Lien (other
 than any Lien arising as the result of any action taken by any Secured Party (or any assignee
thereof or by the Administrative Agent); (iv) other than the security interest granted to the
Administrative Agent for the benefit of the Secured Parties pursuant to this Agreement, the Seller
has not pledged, assigned, sold or granted a security interest in, or otherwise conveyed any of the
Collateral; (v) the Seller has not authorized the filing of, and is not aware of any financing
statements against the Seller that include a description of Collateral and (vi) the Seller has not
authorized the filing of, and is not aware of any financing statements against the Seller that
include a description of collateral covering the Collateral other than except such as may be filed
(A) in favor of the Originators in accordance with the Contracts, (B) in favor of the Seller in
connection with the Sale Agreement or (C) in favor of the Secured Parties or the Administrative
Agent in accordance with this Agreement or in connection with any Lien arising solely as the result
of any action taken by the Secured Parties (or any assignee thereof) or by the Administrative
Agent.

(m) Accurate Reports. No Information Package or Interim Information Package (if
prepared by such Seller Party, or to the extent information therein was supplied by such Seller
Party) or other information, exhibit, financial statement, document, book, record or report
furnished or to be furnished by or on behalf of such Seller Party to any Agent or any Purchaser
pursuant to this Agreement was or will be inaccurate in any material respect as of the date it was
or will be dated or (except as otherwise disclosed to such Agent or Purchaser at such time) as of
the date so furnished, or contained or (in the case of information or other materials to be
furnished in the future) will contain any material misstatement of fact or omitted or (in the case
of information or other materials to be furnished in the future) will omit to state a material fact
or any fact necessary to make the statements contained therein not materially misleading in light
of the circumstances made or presented.

(n) Offices. The principal places of business and chief executive offices of the
Master Servicer and the Seller are located at the respective addresses set forth on Schedule
14.2, and the offices where the Master Servicer and the Seller keep all their books, records
and documents evidencing Pool Receivables, the related Contracts and all purchase orders and other
agreements related to such Pool Receivables are located at the addresses specified in Schedule
6.1(n) (or at such other locations, notified to each Purchaser Agent, on the related
Purchaser’s behalf, in accordance with Section 7.1(f), in jurisdictions where all action
required by Section 8.5 has been taken and completed).

(o) Lockbox Accounts. The names, addresses and jurisdictions of organization of all
the Lockbox Banks, together with the account numbers of the Lockbox Accounts of the Seller at each
Lockbox Bank and the post office box numbers of the lockboxes, are listed on Schedule
6.1(o) (or have been notified to and approved by the Agents in accordance with Section 7.3(d)).
The Seller has not granted any Person, other than the Administrative Agent for the benefit of the
Secured Parties as contemplated by this Agreement, dominion and control of any lockbox or Lockbox
Account, or the right to take dominion and control of any such lockbox or Lockbox Account at a
future time.

(p) Eligible Receivables. Each Receivable included in the Net Pool Balance as an
Eligible Receivable on the date of any Purchase, Reinvestment or computation of Net Pool Balance
shall be an Eligible Receivable on such date.

 

24

 

(q) Servicing Programs. No license or approval is required for any Agent’s use of any
program used by the Master Servicer in the servicing of the Receivables, other than those which
have been obtained and are in full force and effect.

(r) Compliance with Credit and Collection Policy. With respect to each Eligible
Receivable, it has complied in all material respects with the Credit and Collection Policy.

(s) [Reserved].

(t) Names. Since the date of its incorporation, the Seller has not used any corporate
names, trade names or assumed names other than the name in which it has executed this Agreement.

(u) Ownership of the Seller. Collectively, the Originators own 100% of the issued and
outstanding capital stock of the Seller, free and clear of any Lien. Such capital stock is validly
issued, fully paid and nonassessable, and there are no options, warrants or other rights to acquire
securities of the Seller.

(v) Investment Company. The Seller is not an “investment company” within the meaning
of the Investment Company Act of 1940, as amended from time to time, or any successor statute.

(w) Taxes. Each Seller Party has filed all material tax returns and reports required
by law to have been filed by it and has paid all taxes and governmental charges thereby shown to be
owing, except for immaterial amounts, unless such immaterial amounts give rise to a Lien, and
except for any such taxes which are not yet delinquent or are being diligently contested in good
faith by appropriate proceedings and for which adequate reserves in accordance with generally
accepted accounting principles shall have been set aside on its books. The Seller is not aware of
any judgment or tax lien filings against it.

(x) Compliance with Laws. Each Seller Party is in compliance with all applicable
laws, rules, regulations and orders, including those with respect to the Pool Receivables and
related Contracts, except where the failure to so comply would not individually or in the aggregate
have a Material Adverse Effect.

Article VII

General Covenants of the Seller Parties

Section 7.1 Affirmative Covenants of the Seller Parties.

Until the Final Payout Date, unless each Agent shall otherwise consent in writing:

(a) Compliance With Laws, Etc. Each Seller Party will comply in all material respects
with all applicable laws, rules, regulations and orders, including those with respect to the Pool
Receivables and related Contracts, except where the failure to so comply would not individually or
in the aggregate have a Material Adverse Effect.

 

25

 

(b) Preservation of Corporate Existence. Each Seller Party will preserve and maintain
its corporate existence, status as a “registered organization”, rights, franchises and privileges
in the jurisdiction of its incorporation, and qualify and remain qualified in good standing as a
foreign corporation in each jurisdiction where the failure to preserve and maintain such existence,
rights, franchises, privileges and qualification would have a Material Adverse Effect.

(c) Audits. Each Seller Party will (i) at any time and from time to time upon not
less than five (5) Business Days’ notice (unless a Liquidation Event has occurred and is continuing
(or any Purchaser Agent, on the related Purchaser’s behalf, believes in good faith that a
Liquidation Event has occurred and is continuing), in which case no such notice shall be required)
during such Seller Party’s regular business hours, permit each Purchaser Agent, on the related
Purchaser’s behalf, or any of its agents or representatives, (A) to examine and make copies of and
abstracts from all books, records and documents (including, without limitation, computer tapes and
disks) in the possession or under the control of such Seller Party relating to Pool Receivables,
including, without limitation, the related Contracts and purchase orders and other agreements, and
(B) to visit the offices and properties of such Seller Party for the purpose of examining such
materials described in clause (i)(A) next above, and to discuss matters relating to Pool
Receivables or such Seller Party’s performance hereunder with any of the officers or employees
(with notification to and coordination with the treasurer of such Seller or his designee) of such
Seller Party having knowledge of such matters; (ii) permit each Purchaser Agent or any of its
respective agents or representatives, upon not less than five (5) Business Days’ notice from such
Purchaser Agent and the consent (which consent shall not unreasonably be withheld or delayed) of
such Seller Party (unless a Liquidation Event has occurred and is continuing (or such Purchaser
Agent believes in good faith that a Liquidation Event has occurred and is continuing) in which case
no such notice or consent shall be required), to meet with the independent auditors of such Seller
Party, to review such auditors’ work papers and otherwise to review with such auditors the books
and records of such Seller Party with respect to the Pool Receivables and Related Assets; and (iii)
without limiting the provisions of clause (i) or (ii) next above, from time to
time, at the expense of such Seller Party, permit certified public accountants or other auditors
acceptable to each Purchaser Agent to conduct a review of such Seller Party’s books and records
with respect to the Pool Receivables and Related Assets; provided, that, so long as no Liquidation
Event has occurred and is continuing, such reviews shall not be done more than two (2) times in any
one calendar year, provided, further that the Seller Parties shall be responsible for the costs and
expenses of one such review in any one calendar year.

(d) Keeping of Records and Books of Account. The Master Servicer will maintain and
implement administrative and operating procedures (including, without limitation, an ability to
recreate records evidencing Pool Receivables in the event of the destruction of the originals
thereof), and keep and maintain, all documents, books, records and other information reasonably
necessary or advisable for the collection of all Pool Receivables (including, without limitation,
records adequate to permit the daily identification of outstanding Unpaid Balances by Obligor and
related debit and credit details of the Pool Receivables).

(e) Performance and Compliance with Receivables and Contracts. Each Seller Party
will, at its expense, timely and fully perform and comply with all material provisions, covenants
and other promises, if any, required to be observed by it under the Contracts related to the
Pool Receivables and all agreements related to such Pool Receivables.

 

26

 

(f) Location of Records. Each Seller Party will keep its chief place of business and
chief executive office, and the offices where it keeps its records concerning the Pool Receivables,
all related Contracts and all agreements related to such Pool Receivables (and all original
documents relating thereto), at the address(es) of the Master Servicer and the Seller referred to
in Section 6.1(n) or, upon 30 days’ prior written notice to the Administrative Agent, at
such other locations in jurisdictions where all action required by Section 8.5 shall have
been taken and completed.

(g) Credit and Collection Policies. Each Seller Party will comply in all material
respects with the Credit and Collection Policy in regard to each Pool Receivable and the related
Contract.

(h) Sale Agreement. The Seller will perform and comply in all material respects with
all of its covenants and agreements set forth in the Sale Agreement, and will enforce the
performance by the Originators of their respective obligations under the Sale Agreement.

(i) Lockbox Agreements. The Seller and the Master Servicer shall enter into a Lockbox
Agreement with Bank of America with respect to each Lockbox Bank with respect to each Lockbox
Account, and shall instruct all Obligors to deposit all Collections to the Lockbox Accounts. Upon
the establishment of the Collection Account, if any, the Master Servicer shall instruct each
Lockbox Bank to deposit all Collections to the Collection Account. The Seller will not give any
contrary or conflicting instructions, and will, upon the request of the Master Servicer or the
Administrative Agent, confirm such instructions by the Master Servicer or take such other action as
may be reasonably required to give effect to such instructions.

Section 7.2 Reporting Requirements of the Seller Parties.

From the date hereof until the Final Payout Date, unless each Agent, on the Purchasers’
behalf, shall otherwise consent in writing:

(a) Quarterly Financial Statements — Lennox International. The Master Servicer will
furnish to each Purchaser Agent, on the related Purchaser’s behalf, as soon as available and in any
event within 45 days after the end of each of the first three quarters of each fiscal year of
Lennox International, copies of its consolidated, and, to the extent otherwise available,
consolidating balance sheets and related statements of income and statements of cash flow, showing
the financial condition of Lennox International and its consolidated Subsidiaries as of the close
of such fiscal quarter and the results of its operations and the operations of such Subsidiaries
during such fiscal quarter and the then elapsed portion of the fiscal year, together with a
Certificate of Financial Officer in the form attached hereto as Exhibit B executed by the
chief financial officer or treasurer of the Lennox International.

 

27

 

(b) Annual Financial Statements — Lennox International. The Master Servicer will
furnish to each Purchaser Agent, as soon as available and in any event within 90 days after the end
of each fiscal year of Lennox International, copies of its consolidated and consolidating balance
sheets and related statements of income and statements of cash flow, showing the
financial condition of Lennox International and its consolidated Subsidiaries as of the close
of such fiscal year and the results of its operations and the operations of such Subsidiaries
during such year, all audited by KPMG LLP or other independent public accountants of recognized
national standing acceptable to each Agent and accompanied by an opinion of such accountants (which
shall not be qualified in any material respect) to the effect that such consolidated financial
statements fairly present the financial condition and results of operations of Lennox International
on a consolidated basis (except as noted therein) in accordance with GAAP consistently applied;

(c) Reserved.;

(d) Annual Financial Statements — Seller. The Seller will furnish to the each
Purchaser Agent, as soon as available and in any event within 90 days after the end of each fiscal
year of the Seller, copies of the financial statements of the Seller, consisting of at least a
balance sheet of the Seller for such year and statements of earnings, cash flows and shareholders’
equity, setting forth in each case in comparative form corresponding figures from the preceding
fiscal year, together with a Certificate of Financial Officer in the form attached hereto as
Exhibit B executed by the chief financial officer or treasurer of the Seller;

(e) Reports to Holders and Exchanges. In addition to the reports required by
subsections (a), (b), (c) and (d) above, promptly upon any Agent’s
request, the Master Servicer will furnish or cause to be furnished to such Agent, on the related
Purchaser’s behalf, copies of any reports specified in such request which the Master Servicer sends
to any of its securityholders, and any reports, final registration statements (excluding exhibits),
and each final prospectus and all amendments thereto that the Master Servicer files with the
Securities and Exchange Commission or any national securities exchange other than registration
statements relating to employee benefit plans and registrations of securities for selling
securities;

(f) ERISA. Promptly after the filing or receiving thereof, each Seller Party will
furnish to each Purchaser Agent, on the related Purchaser’s behalf, copies of all reports and
notices with respect to any Reportable Event defined in Article IV of ERISA which any Seller Party
or ERISA Affiliate thereof files under ERISA with the Internal Revenue Service, the Pension Benefit
Guaranty Corporation or the U.S. Department of Labor or which such Seller Party or ERISA Affiliate
thereof receives from the Pension Benefit Guaranty Corporation, which Reportable Event(s)
individually or in the aggregate could have a Material Adverse Effect;

(g) Liquidation Events, Etc. As soon as possible and in any event within three (3)
Business Days after obtaining knowledge of the occurrence of any Liquidation Event, any Unmatured
Liquidation Event, or any Credit Event, each Seller Party will furnish to each Purchaser Agent, on
the related Purchaser’s behalf, a written statement of the chief financial officer, treasurer or
chief accounting officer of such Seller Party setting forth details of such event and the action
that such Seller Party will take with respect thereto;

(h) Litigation. As soon as possible and in any event within ten (10) Business Days of
any Seller Party’s knowledge thereof, such Seller Party will furnish to each Purchaser Agent, on
the related Purchaser’s behalf, notice of (i) any litigation, investigation or proceeding which may
exist at any time which could reasonably be expected to have a Material Adverse Effect and (ii)
any development in previously disclosed litigation which development could reasonably be
expected to have a Material Adverse Effect;

 

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(i) [Reserved];

(j) Change in Credit and Collection Policy. Prior to its effective date, each Seller
Party will furnish to each Purchaser Agent, on the related Purchaser’s behalf, notice of (i) any
material change in the character of such Seller Party’s business, and (ii) any material change in
the Credit and Collection Policy;

(k) Credit Event. Within five (5) Business Days of the occurrence thereof, each
Seller Party will furnish to each Purchaser Agent, on the related Purchaser’s behalf, notice of any
Credit Event; and

(l) Other. Promptly, from time to time, each Seller Party will furnish to each
Purchaser Agent, on the related Purchaser’s behalf, such other information, documents, records or
reports respecting the Receivables or the condition or operations, financial or otherwise, of such
Seller Party as such Purchaser Agent may from time to time reasonably request in order to protect
the interests of such Purchaser Agent or the related Purchaser under or as contemplated by this
Agreement.

Section 7.3 Negative Covenants of the Seller Parties.

From June 19, 2000 until the Final Payout Date, without the prior written consent of the
Administrative Agent:

(a) Sales, Liens, Etc. (i) The Seller will not, except as otherwise provided herein
and in the other Transaction Documents, sell, assign (by operation of law or otherwise) or
otherwise dispose of, or create or suffer to exist any Lien upon or with respect to, any Pool
Receivable or any Related Asset, or any interest therein, or any account to which any Collections
of any Pool Receivable are sent, or any right to receive income or proceeds from or in respect of
any of the foregoing (except, prior to the execution of Lockbox Agreements, set-off rights of any
bank at which any such account is maintained), and (ii) the Master Servicer will not assert any
interest in the Receivables, except as Master Servicer.

(b) Extension or Amendment of Receivables. No Seller Party will, except as otherwise
permitted in Section 8.2(c), extend, amend or otherwise modify the terms of any Pool
Receivable, or amend, modify or waive any material term or condition of any Contract related
thereto in any way that adversely affects the collectibility of any Pool Receivable or the
Purchaser’s rights therein.

(c) Change in Credit and Collection Policy. No Seller Party will make or permit to be
made any material change in the Credit and Collection Policy, which change would impair the
collectibility of any significant portion of the Pool Receivables or otherwise adversely affect the
interests or remedies of the Purchaser under this Agreement or any other Transaction Document.

 

29

 

(d) Change in Payment Instructions to Obligors. No Seller Party will add or terminate
any bank as a Lockbox Bank from those listed in Schedule 6.1(o) or, after Lockbox
Accounts have been delivered pursuant to Section 7.1(i), make any change in its
instructions to Obligors regarding payments to be made to the Seller or Master Servicer or payments
to be made to any Lockbox Bank (except for a change in instructions solely for the purpose of
directing Obligors to make such payments to another existing Lockbox Bank.

(e) Deposits to Collection Account. No Seller Party will deposit or otherwise credit,
or cause or permit to be so deposited or credited, to the Collection Account, any cash or cash
proceeds other than Collections of Pool Receivables.

(f) Changes to Other Documents. The Seller will not enter into any amendment or
modification of, or supplement to, the Sale Agreement or the Seller’s certificate of incorporation.

(g) [Reserved].

(h) Seller Indebtedness. The Seller will not incur or permit to exist any
Indebtedness or liability on account of deposits or advances or for borrowed money or for the
deferred purchase price of any property or services, except (i) indebtedness of the Seller to the
Originators incurred in accordance with the Sale Agreement, (ii) current accounts payable arising
under the Transaction Documents and not overdue and (iii) other current accounts payable arising in
the ordinary course of business and not overdue, in an aggregate amount at any time outstanding not
to exceed $10,000.

(i) Negative Pledges. No Seller Party will enter into or assume any agreement (other
than this Agreement and the other Transaction Documents) prohibiting the creation or assumption of
any Lien upon any Pool Receivables or Related Assets, whether now owned or hereafter acquired,
except as contemplated by the Transaction Documents, or otherwise prohibiting or restricting any
transaction contemplated hereby or by the other Transaction Documents.

(j) Change of Name; Jurisdiction of Organization; Offices and Records. No Seller
Party shall change (i) its name as it appears in official filings in the jurisdiction of its
organization, (ii) its status as a “registered organization” (within the meaning of Article 9 of
any applicable enactment of the UCC), (iii) its organizational identification number, if any,
issued by its jurisdiction of organization, or (iv) its jurisdiction of organization unless it
shall have: (A) given the Agents at least forty-five (45) days’ prior written notice thereof; (B)
at least ten (10) days prior to such change, delivered to the Agents all financing statements,
instruments and other documents requested by the Agents in connection with such change or
relocation and (C) caused an opinion of counsel acceptable to Agents and their respective assigns
to be delivered to the Agents and such assigns that Administrative Agent’s security interest (for
the benefit of the Secured Parties) is perfected and of first priority, such opinion to be in form
and substance acceptable to the Agents and such assigns in their sole discretion.

(k) [Reserved].

 

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(l) Mergers, Consolidations and Acquisitions.

(i) The Master Servicer will not, nor will it permit any subservicer to merge into or
consolidate with any other Person, or permit any other Person to merge into or
consolidate with it, or purchase, lease or otherwise acquire (in one transaction or a
series of transactions) all or substantially all of the assets of any other Person (whether
directly by purchase, lease or other acquisition of all or substantially all of the assets
of such Person or indirectly by purchase or other acquisition of all or substantially all of
the capital stock of such other Person) other than acquisitions in the ordinary course of
their business, except that if at the time thereof and immediately after giving effect
thereto no Liquidation Event or Unmatured Liquidation Event shall have occurred and be
continuing (A) the Master Servicer or such subservicer may merge or consolidate with any
Subsidiary (other than Seller) in a transaction in which such Master Servicer or such
subservicer is the surviving corporation, and (B) the Master Servicer or such subservicer
may purchase, lease or otherwise acquire from any Subsidiary (other than Seller) all or
substantially all of its assets and may purchase or otherwise acquire all or substantially
all of the capital stock of any Person who immediately thereafter is a Subsidiary.

(ii) Seller will not merge into or consolidate with any other Person, or permit any
other Person to merge into or consolidate with it, or purchase, lease or otherwise acquire
(in one transaction or a series of transactions) all or substantially all of the assets of
any other Person (whether directly by purchase, lease or other acquisition of all or
substantially all of the assets of such Person or indirectly by Purchase or other
acquisition of all or substantially all of the capital stock of such other Person) other
than the acquisition of the Receivables and Related Assets pursuant to the Sale Agreement
and the sale of an interest in the Pool Receivables and Related Assets hereunder.

(m) [Reserved].

(n) Change in Business. No Seller Party will make or permit to be made any material
change in the character of its business, which change would impair the collectibility of any
significant portion of the Pool Receivables or otherwise adversely affect the interests or remedies
of the Purchasers under this Agreement or any other Transaction Document.

Section 7.4 Separate Corporate Existence of the Seller.

Each Seller Party hereby acknowledges that the Purchaser and each Agent are entering into the
transactions contemplated hereby in reliance upon the Seller’s identity as a legal entity separate
from the Master Servicer and its other Affiliates. Therefore, each Seller Party shall take all
steps specifically required by this Agreement or reasonably required by the Agents to continue the
Seller’s identity as a separate legal entity and to make it apparent to third Persons that the
Seller is an entity with assets and liabilities distinct from those of its Affiliates, and is not a
division of the Master Servicer or any other Person. Without limiting the foregoing, each Seller
Party will take such actions as shall be required in order that:

(a) The Seller will be a limited purpose corporation whose primary activities are restricted
in its Certificate of Incorporation to purchasing or otherwise acquiring from the Originators,
owning, holding, granting security interests, or selling interests, in Receivables in the
Receivables Pool and Related Assets, entering into agreements for the selling and servicing of the
Receivables Pool, and conducting such other activities as it deems necessary or appropriate to
carry out its primary activities;

 

31

 

(b) At least one member of the Seller’s Board of Directors shall be an Independent Director.
The certificate of incorporation of the Seller shall provide that (i) at least one member of the
Seller’s Board of Directors shall be an Independent Director, (ii) the Seller’s Board of Directors
shall not approve, or take any other action to cause the filing of, a voluntary bankruptcy petition
with respect to the Seller unless the Independent Director shall approve the taking of such action
in writing prior to the taking of such action and (iii) the provisions requiring an Independent
Director and the provisions described in clauses (i) and (ii) of this paragraph
(b) cannot be amended without the prior written consent of the Independent Director;

(c) The Independent Director shall not at any time serve as a trustee in bankruptcy for the
Seller or any Affiliate thereof;

(d) Any employee, consultant or agent of the Seller will be compensated from the Seller’s
funds for services provided to the Seller. The Seller will not engage any agents other than its
attorneys, auditors and other professionals, and a servicer and any other agent contemplated by the
Transaction Documents for the Receivables Pool (the parties acknowledge that the Master Servicer
will be fully compensated for its services by payment of the Servicing Fee), and certain
organizational expenses in connection with the formation of the Seller;

(e) The Seller will contract with the Master Servicer to perform for the Seller all operations
required on a daily basis to service the Receivables Pool. The Seller will pay the Master Servicer
the Servicing Fee pursuant hereto. The Seller will not incur any material indirect or overhead
expenses for items shared with the Master Servicer (or any other Affiliate thereof) which are not
reflected in the Servicing Fee. To the extent, if any, that the Seller (or any other Affiliate
thereof) shares items of expenses not reflected in the Servicing Fee, for legal, auditing and other
professional services and directors’ fees, such expenses will be allocated to the extent practical
on the basis of actual use or the value of services rendered, and otherwise on a basis reasonably
related to the actual use or the value of services rendered, it being understood that Lennox shall
pay or cause to be paid all expenses relating to the preparation, negotiation, execution and
delivery of the Transaction Documents, including, without limitation, legal, rating agency and
other fees;

(f) The Seller’s operating expenses will not be paid by any other Seller Party or other
Affiliate of the Seller;

(g) The Seller will have its own stationery;

(h) The books of account, financial reports and corporate records of the Seller will be
maintained separately from those of the Master Servicer and each other Affiliate of the Seller;

(i) Any financial statements of any Seller Party or Affiliate thereof which are consolidated
to include the Seller will contain detailed notes clearly stating that (i) all of the Seller’s
assets are owned by the Seller, and (ii) the Seller is a separate corporate entity with its own
separate creditors that will be entitled to be satisfied out of the Seller’s assets prior to any
value in the Seller becoming available to the Seller’s equity holders; and the accounting records
and the published financial statements of the Originators will clearly show that, for accounting
purposes, the Pool Receivables and Related Assets have been sold by the Originators to the
Seller;

 

32

 

(j) The Seller’s assets will be maintained in a manner that facilitates their identification
and segregation from those of the Master Servicer and the other Affiliates;

(k) Each Affiliate of the Seller will strictly observe corporate formalities in its dealings
with the Seller, and, except as permitted pursuant to this Agreement with respect to Collections,
funds or other assets of the Seller will not be commingled with those of any of its Affiliates;

(l) No Affiliate of the Seller will maintain joint bank accounts with the Seller or other
depository accounts with the Seller to which any such Affiliate (other than in its capacity as the
Master Servicer hereunder or under the Sale Agreement) has independent access, provided that prior
to the occurrence of a Credit Event, Collections may be deposited into general accounts of the
Master Servicer, subject to the obligations of the Master Servicer hereunder;

(m) No Affiliate of the Seller shall, directly or indirectly, name the Seller or enter into
any agreement to name the Seller as a direct or contingent beneficiary or loss payee on any
insurance policy covering the property of any Affiliate of the Seller;

(n) Each Affiliate of the Seller will maintain arm’s length relationships with the Seller, and
each Affiliate of the Seller that renders or otherwise furnishes services or merchandise to the
Seller will be compensated by the Seller at market rates for such services or merchandise;

(o) No Affiliate of the Seller will be, nor will it hold itself out to be, responsible for the
debts of the Seller or the decisions or actions in respect of the daily business and affairs of the
Seller. The Seller shall not (i) guarantee or become obligated for the debts of any other entity
or hold out its credit as being available to satisfy the obligations of others, (ii) acquire
obligations of its shareholders or (iii) pledge its assets for the benefit of any other entity or
make any loans to any other entity. The Master Servicer and the Seller will immediately correct
any known misrepresentation with respect to the foregoing and they will not operate or purport to
operate as an integrated single economic unit with respect to each other or in their dealing with
any other entity;

(p) The Seller will keep correct and complete books and records of account and minutes of the
meetings and other proceedings of its stockholder and board of directors, as applicable, and the
resolutions, agreements and other instruments of the Seller will be continuously maintained as
official records by the Seller; and

(q) The Seller, on the one hand, and each Originator, on the other hand, will conduct its
business solely in its own corporate name and in such a separate manner so as not to mislead others
with whom they are dealing.

 

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Article VIII

Administration and Collection

Section 8.1 Designation of Master Servicer.

(a) Lennox as Initial Master Servicer. The servicing, administering and collection of
the Pool Receivables shall be conducted by the Person designated as Master Servicer hereunder from
time to time in accordance with this Section 8.1. Until the Administrative Agent at the
request of the Agents, on the Purchasers’ behalf, gives to Lennox a Successor Notice (as defined in
Section 8.1(b)), Lennox is hereby designated as, and hereby agrees to perform the duties
and obligations of, the Master Servicer pursuant to the terms hereof. Each of the Originators
named in the Sale Agreement, has agreed to act as subservicer for the purpose of performing certain
duties and obligations with respect to all Receivables purchased by the Seller from such Originator
pursuant to the terms of the Sale Agreement. In so acting as subservicer, each of the Originators
has agreed to comply with, and be bound by, all of the terms and provisions of this Agreement
applicable to such Originator in the performance of its duties as subservicer; provided,
however, that each such Originator (i) shall cease to act as subservicer upon the
Administrative Agent’s delivery of a Successor Notice to Lennox, and (ii) shall not be entitled to
receive any Servicing Fee provided for herein (except that the Master Servicer may agree to pay to
the subservicers a proportional share of the Servicing Fee which obligation shall be that of the
Master Servicer).

(b) Successor Notice; Master Servicer Transfer Events. Upon Lennox’s receipt of a
notice from the Administrative Agent of the Administrative Agent’s designation at the direction of
the Purchaser Agents, on the Purchasers’ behalf, of a new Master Servicer (a “Successor
Notice”), Lennox agrees that it will terminate its activities as Master Servicer hereunder in a
manner that the Agents believe will facilitate the transition of the performance of such activities
to the new Master Servicer, and the Administrative Agent (or its designee) shall assume each and
all of Lennox’s obligations to service and administer such Receivables, on the terms and subject to
the conditions herein set forth, and Lennox shall use its best efforts to assist the Administrative
Agent (or its designee) in assuming such obligations. Without limiting the foregoing, Lennox
agrees, at its expense, to take all actions necessary to provide the new Master Servicer with
access to all computer software necessary or useful in collecting, billing or maintaining records
with respect to the Receivables.

(c) Subcontracts. The Master Servicer may, with the prior consent of the Agents,
subcontract with any other Person for servicing, administering or collecting the Pool Receivables,
provided that the Master Servicer shall remain liable for the performance of the duties and
obligations of the Master Servicer pursuant to the terms hereof and such subservicing arrangement
may be terminated at any Agent’s request, on the related Purchaser’s behalf, at anytime after a
Successor Notice has been given.

 

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Section 8.2 Duties of Master Servicer.

(a) Appointment; Duties in General. Each of the Seller, the Purchasers and the Agents
hereby appoints as its agent the Master Servicer, as from time to time designated
pursuant to Section 8.1, to enforce its rights and interests in and under the Pool
Receivables, the Related Security and the related Contracts. The Master Servicer shall take or
cause to be taken all such actions as may be necessary or advisable to collect each Pool Receivable
from time to time, all in accordance with applicable laws, rules and regulations, with reasonable
care and diligence, and in accordance with the Credit and Collection Policy.

(b) Allocation of Collections; Segregation. The Master Servicer shall identify for
the account of the Seller and Purchasers their respective allocable shares of the Collections of
Pool Receivables in accordance with Section 1.3 but shall not be required (unless otherwise
requested by the Administrative Agent, on the Purchasers’ behalf) to segregate the funds
constituting such portions of such Collections prior to the remittance thereof in accordance with
said Section. If instructed by any Agent, on the Purchasers’ behalf, the Master Servicer shall
segregate and deposit into the Collection Account, the Purchasers’ Share of Collections of Pool
Receivables, on the second Business Day following receipt by the Master Servicer of such
Collections in immediately available funds.

(c) Modification of Receivables. So long as no Liquidation Event and no Unmatured
Liquidation Event shall have occurred and be continuing, Lennox, while it is Master Servicer, may,
in accordance with the applicable Credit and Collection Policy, (i) extend the maturity or adjust
the Unpaid Balance of any Defaulted Receivable as the Master Servicer may reasonably determine to
be appropriate to maximize Collections thereof, and (ii) adjust the Unpaid Balance of any
Receivable to reflect the reductions or cancellations described in the first sentence of
Section 3.2(a); provided that such extension or adjustment shall not alter the status of
such Receivables as Delinquent Receivables or Defaulted Receivables or limit the rights of any
Agent or any Purchaser with respect thereto.

(d) Documents and Records. Each Seller Party shall deliver to the Master Servicer,
and the Master Servicer shall hold in trust for the Seller and the Purchaser in accordance with
their respective interests, all documents, instruments and records (including, without limitation,
computer tapes or disks) that evidence or relate to Pool Receivables.

(e) Certain Duties to the Seller. The Master Servicer shall, as soon as practicable
following receipt, turn over to the Seller (i) that portion of Collections of Pool Receivables
representing its undivided percentage interest therein, less the Seller’s Share of the Servicing
Fee, and, in the event that neither Lennox nor any other Seller Party or Affiliate thereof is the
Master Servicer, all reasonable and appropriate out-of-pocket costs and expenses of the Master
Servicer of servicing, collecting and administering the Pool Receivables to the extent not covered
by the Servicing Fee received by it, and (ii) the Collections of any Receivable which is not a Pool
Receivable. The Master Servicer, if other than Lennox or any other Seller Party or Affiliate
thereof, shall, as soon as practicable upon demand, deliver to the Seller all documents,
instruments and records in its possession that evidence or relate to Receivables of the Seller
other than Pool Receivables, and copies of documents, instruments and records in its possession
that evidence or relate to Pool Receivables.

(f) Termination. The Master Servicer’s authorization under this Agreement shall
terminate upon the Final Payout Date.

 

35

 

(g) Power of Attorney. The Seller hereby grants to the Master Servicer an irrevocable
power of attorney, with full power of substitution, coupled with an interest, to take in the name
of the Seller all steps which are necessary or advisable to endorse, negotiate or otherwise realize
on any writing or other right of any kind held or transmitted by the Seller or transmitted or
received by the Purchaser (whether or not from the Seller) in connection with any Receivable.

Section 8.3
[Reserved].

Section 8.4
Servicer Defaults.

If any one of the following events (a “Servicer Default”) shall occur and be
continuing:

(a) any failure by the Master Servicer to make any payment, transfer or deposit or to give
instructions or notice to any Agent as required by this Agreement including, without limitation,
delivery of any Information Package or Interim Information Package or any failure to make any
payment or deposit required to be made in order to reduce the Asset Interest to the Allocation
Limit and, (i) in the case of failure to deliver an Information Package or Interim Information
Package, s the case may be, such failure shall remain unremedied for two (2) Business Days after
the earliest to occur of (A) written notice thereof shall have been given by any Agent to the
Master Servicer or (B) the Master Servicer shall have otherwise become aware of such failure and
(ii) except with respect to any payment or deposit required to be made in order to reduce the Asset
Interest to the Allocation Limit which shall be made when due, in the case of failure to make any
payment or deposit to be made by the Master Servicer such failure shall remain unremedied for three
(3) Business Days after the due date thereof;

(b) any failure on the part of the Master Servicer duly to observe or perform in any material
respect any other covenants or agreements of the Master Servicer set forth in this Agreement or any
other Transaction Document to which the Master Servicer is a party, which failure continues
unremedied for a period of 30 days after the first to occur of (i) the date on which written notice
of such failure requiring the same to be remedied shall have been given to the Master Servicer by
any Agent and (ii) the date on which the Master Servicer becomes aware thereof;

(c) any representation, warranty or certification made by the Master Servicer in this
Agreement or in any certificate delivered pursuant to this Agreement shall prove to have been
incorrect when made, which continues to be unremedied for a period of 30 days after the first to
occur of (i) the date on which written notice of such incorrectness requiring the same to be
remedied shall have been given to the Master Servicer by any Agent and (ii) the date on which the
Master Servicer becomes aware thereof; provided, however, that in the case of any
representation, warranty or certification that was not made in writing, a Servicer Default shall
occur hereunder only if such representation, warranty or certification was reasonably relied upon
by any Agent and/or the Purchasers;

(d) a Credit Event shall occur or any bankruptcy, insolvency or similar event occurs with
respect to the Master Servicer; or

 

36

 

(e) any change in the control of the Master Servicer which takes the form of either a merger
or consolidation in which the Master Servicer is not the surviving entity.

Notwithstanding anything herein to the contrary, so long as any such Servicer Default shall not
have been remedied, the Agents, by written notice to the Master Servicer (a “Termination
Notice”), may terminate all of the rights and obligations of the Master Servicer as Master
Servicer under this Agreement and appoint a successor Master Servicer satisfactory to the Agents
(in the Agents’ sole discretion).

Section 8.5 Rights of the Administrative Agent.

(a) Notice to Obligors. At any time when a Liquidation Event has occurred and is
continuing, the Agents may notify the Obligors of Pool Receivables, or any of them, of the
ownership of the Asset Interest by the Purchasers.

(b) Notice to Lockbox Banks. At any time, the Administrative Agent is hereby
authorized to give notice to the Lockbox Banks, as provided in the Lockbox Agreements, of the
transfer to the Administrative Agent for the benefit of the Secured Parties of dominion and control
over the lockboxes and related accounts to which the Obligors of Pool Receivables make payments.
The Seller and the Master Servicer hereby transfer to the Administrative Agent, effective when the
Administrative Agent shall give notice to the Lockbox Banks as provided in the Lockbox Agreements,
the exclusive dominion and control over such lockboxes and accounts, and shall take any further
action that the Administrative Agent may reasonably request to effect such transfer.

(c) Rights on Servicer Transfer Event. At any time following the designation of a
Master Servicer other than Lennox pursuant to Section 8.1:

(i) The Administrative Agent may direct the Obligors of Pool Receivables, or any of
them, to pay all amounts payable under any Pool Receivable directly to the Administrative
Agent or its designee.

(ii) Any Seller Party shall, at the Administrative Agent’s request and at such Seller
Party’s expense, give notice of the Purchasers’ ownership and security interests in the Pool
Receivables to each Obligor of Pool Receivables and direct that payments be made directly to
the Administrative Agent or its designee.

(iii) Each Seller Party shall, at any Agent’s request, (A) assemble all of the
documents, instruments and other records (including, without limitation, computer programs,
tapes and disks) which evidence the Pool Receivables, and the related Contracts and Related
Security, or which are otherwise necessary or desirable to collect such Pool Receivables,
and make the same available to the successor Master Servicer at a place selected by such
Agent, and (B) segregate all cash, checks and other instruments received by it from time to
time constituting Collections of Pool Receivables in a manner acceptable to the Agents and
promptly upon receipt, remit all such cash, checks and instruments, duly endorsed or with
duly executed instruments of transfer, to the successor Master Servicer.

 

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(iv) Each Seller Party and each Purchaser hereby authorizes the Administrative Agent,
on such Purchaser’s behalf, and grants to the Administrative Agent an irrevocable power of
attorney (which shall terminate on the Final Payout Date), to take any and all steps in such
Seller Party’s name and on behalf of the Seller Parties and Purchaser which are necessary or
desirable, in the determination of the Administrative Agent, to collect all amounts due
under any and all Pool Receivables, including, without limitation, endorsing any Seller
Party’s name on checks and other instruments representing Collections and enforcing such
Pool Receivables and the related Contracts.

Section 8.6 Responsibilities of the Seller Parties.

Anything herein to the contrary notwithstanding:

(a) Contracts. Each Seller Party shall remain responsible for performing all of its
obligations (if any) under the Contracts related to the Pool Receivables and under the related
agreements to the same extent as if the Asset Interest had not been sold hereunder, and the
exercise by the Administrative Agent or its designee of its rights hereunder shall not relieve any
Seller Party from such obligations.

(b) Limitation of Liability. No Agent or Purchaser shall have any obligation or
liability with respect to any Pool Receivables, Contracts related thereto or any other related
agreements, nor shall any of them be obligated to perform any of the obligations of any Seller
Party or any Originator thereunder.

Section 8.7 Further Action Evidencing Purchases and Reinvestments.

(a) Further Assurances. Each Seller Party agrees that from time to time, at its
expense, it will promptly execute and deliver all further instruments and documents, and take all
further action that any Agent or its designee may reasonably request in order to perfect, protect
or more fully evidence the Purchases hereunder and the resulting Asset Interest, or to enable the
Secured Parties or the Agents or any of their respective designees to exercise or enforce any of
their respective rights hereunder or under any Transaction Document in respect thereof. Without
limiting the generality of the foregoing, each Seller Party will:

(i) upon the request of the Administrative Agent at the direction of the Purchaser
Agents on behalf of the Purchasers, execute and file such financing or continuation
statements, or amendments thereto or assignments thereof, and such other instruments or
notices, as may be necessary or appropriate, in accordance with the terms of this Agreement;

(ii) upon the request of any Agent after the occurrence and during the continuance of a
Liquidation Event, mark conspicuously each Contract evidencing each Pool Receivable with a
legend, acceptable to the Agents, evidencing that the Asset Interest has been sold in
accordance with this Agreement; and

(iii) mark its master data processing records evidencing such Pool Receivables and
related Contracts with a legend, acceptable to the Agents, evidencing that the Asset
Interest has been sold in accordance with this Agreement.

 

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(b) Additional Financing Statements; Performance by Administrative Agent. Each Seller
Party hereby authorizes the Administrative Agent, on the Purchaser’s behalf, or its designee to
file one or more financing or continuation statements, and amendments thereto and assignments
thereof, relative to all or any of the Pool Receivables and the Related Assets now existing or
hereafter arising in the name of any Seller Party. If any Seller Party fails to perform any of its
agreements or obligations under this Agreement, the Administrative Agent or its designee may (but
shall not be required to) itself perform, or cause performance of, such agreement or obligation,
and the reasonable expenses of the Administrative Agent or its designee incurred in connection
therewith shall be payable by the Seller Parties as provided in Section 14.5.

(c) Continuation Statements; Opinion. Without limiting the generality of
subsection (a), the Seller will, not earlier than six (6) months and not later than three
(3) months prior to the fifth anniversary of the date of filing of the financing statements
referred to in Section 5.1(a) or any other financing statement filed pursuant to this
Agreement or in connection with any Purchase hereunder, if the Final Payout Date shall not have
occurred:

(i) if necessary, execute and deliver and file or cause to be filed an appropriate
continuation statement with respect to such financing statement; and

(ii) deliver or cause to be delivered to each Agent an opinion of the counsel for the
Seller Parties (which may be an opinion of in-house counsel for the Seller Parties), in form
and substance reasonably satisfactory to each Agent, confirming and updating the opinion
delivered pursuant to Section 5.1(a) to the effect that the Asset Interest hereunder
continues to be a valid and perfected ownership or security interest, subject to no other
Liens of record except as provided herein or otherwise permitted hereunder.

Section 8.8 Application of Collections.

Any payment by an Obligor in respect of any indebtedness owed by it to any Originator or
Seller shall, except as otherwise specified by such Obligor or required by the underlying Contract
or law, be applied, first, as a Collection of any Pool Receivable or Receivables then outstanding
of such Obligor in the order of the age of such Pool Receivables, starting with the oldest of such
Pool Receivables and, second, to any other indebtedness of such Obligor.

Article IX

Security Interest

Section 9.1 Grant of Security Interest.

To secure all obligations of the Seller arising in connection with this Agreement and each
other Transaction Document, whether now or hereafter existing, due or to become due, direct or
indirect, or absolute or contingent, including, without limitation, all Indemnified Amounts,
payments on account of Collections received or deemed to be received and fees, in each case pro
rata according to the respective amounts thereof, the Seller hereby assigns and pledges to the
Administrative Agent, as agent for the Purchasers and their respective successors and assigns, for
the benefit of the Secured Parties, and hereby grants to the Administrative Agent, as agent for the
Purchasers, for the benefit of the Secured Parties, a security interest in, all of the
Seller’s right, title and interest now or hereafter existing in, to and under all assets of the
Seller, including, without limitation, (a) all the Pool Receivables and Related Assets (and
including specifically any undivided interest therein retained by the Seller hereunder), (b) the
Sale Agreement and the other Transaction Documents and (c) all proceeds of any of the foregoing
(collectively, the “Collateral”).

 

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Section 9.2 Further Assurances.

The provisions of Section 8.7 shall apply to the security interest granted under
Section 9.1 as well as to the Purchases, Reinvestments and all the Asset Interests
hereunder.

Section 9.3 Remedies.

Upon the occurrence of a Liquidation Event, each Purchaser shall have, with respect to the
Collateral granted pursuant to Section 9.1, and in addition to all other rights and
remedies available to such Purchaser or the Administrative Agent under this Agreement and the other
Transaction Documents or other applicable law, all the rights and remedies of a secured party upon
default under the UCC.

Article X

Liquidation Events

Section 10.1 Liquidation Events.

The following events shall be “Liquidation Events” hereunder:

(a) The Master Servicer (if any Seller Party or Affiliate thereof is the Master Servicer) or
the Seller (in the case of clause (ii) below) (i) shall fail to perform or observe any term,
covenant or agreement that is an obligation of the Master Servicer hereunder (other than as
referred to in clause (ii) below or in other paragraphs of this Section 10.1), and such failure
shall remain unremedied for fifteen (15) days after written notice thereof shall have been given by
the Administrative Agent to the Master Servicer or the Master Servicer shall have otherwise become
aware, or (ii) shall fail to make any payment or deposit to be made by it hereunder when due which
failure shall continue for one (1) Business Day, if such payment or deposit is in connection with
the reduction of the Invested Amount or for two (2) Business Days for any other payment; or

(b) Any representation or warranty made or deemed to be made by any Seller Party or Lennox
International (or any of its officers) under this Agreement or any other Transaction Document or
any Information Package, Interim Information Package or other information or report delivered
pursuant hereto shall prove to have been false or incorrect in any material respect when made
provided, however, that in the case of any representation, warranty or information
that was not made or provided in writing, a Liquidation Event shall occur hereunder only if such
representation, warranty or information was reasonably relied upon by any Agent and/or any
Purchaser; or

 

40

 

(c) Any Seller Party shall fail to perform or observe any other term, covenant or agreement
contained in this Agreement or any of the other Transaction Documents on its part to be performed
or observed and any such failure shall remain unremedied for fifteen (15) days after written notice
thereof shall have been given by any Agent to any Seller Party or such Seller Party shall have
otherwise become aware; or

(d) (i) Any Seller Party or Lennox International shall (A) fail to pay any principal or
interest, regardless of amount, due in respect of any Indebtedness when the aggregate unpaid
principal amount is in excess of in the case of the Seller, $10,000, or in the case of Lennox
International or the Master Servicer $7,500,000 when and as the same shall become due and payable
(after expiration of any applicable grace period) or (B) fail to observe or perform any other term,
covenant, condition or agreement (after expiration of any applicable grace period) contained in any
agreement or instrument evidencing or governing any such Indebtedness if the effect of any failure
referred to in this clause (B) is to cause such Indebtedness to become due prior to its
stated maturity; (ii) any default under any other agreement or instrument of the Seller, Master
Servicer or Lennox International relating to the purchase of receivables in an aggregate amount in
excess of in the case of the Seller, $10,000, or in the case of the Master Servicer or Lennox
International $50,000,000, or any other event, shall occur and shall continue after the applicable
grace period, if any, specified in such agreement or instrument, if the effect of such default is
to terminate the commitment of any party to such agreement or instrument to purchase receivables
or the right of such Seller Party to reinvest in receivables the principal amount paid by any party
to such agreement or instrument for its interest in receivables; or (iii) a default or trigger
event shall occur under any asset securitization agreement or arrangement entered into by any
Seller Party for the sale of receivables or an interest therein in excess of $10,000,000, if the
effect of such default or trigger event is to cause the amounts owing in connection therewith to
become payable prior to the stated maturity; or

(e) An Event of Bankruptcy shall have occurred and remain continuing with respect to Lennox
International or any Seller Party; or

(f) The Seller shall become an “investment company” within the meaning of the Investment
Company Act of 1940; or

(g) The rolling 3 month average Dilution Ratio at any Cut-Off Date exceeds 12.00%; or

(h) The rolling 3 month average Default Ratio at any Cut-Off Date exceeds 3.00%; or

(i) The rolling 3 month average Delinquency Ratio at any Cut-Off Date exceeds 3.50%; or

(j) On any Settlement Date, after giving effect to the payments made under Section
3.1(c), (i) the Asset Interest exceeds 100%, (ii) the Invested Amount exceeds the Purchase
Limit; or (iii) any Purchaser Group Invested Amount exceed the related Purchaser Group Limit, and,
in the case of any failure to make a timely payment or deposit with respect thereto solely by
reason of any mechanical delay in or malfunction of the Fedwire system or due to an error on the
part of the initiating or receiving bank such failure shall continue for more than one (1) Business
Day; or

 

41

 

(k) There shall have occurred any event which materially adversely impairs the ability of the
Originators to originate Receivables of a credit quality which are at least of the credit quality
of the Receivables included in the first Purchase, or any other event occurs that is reasonably
likely to have a Material Adverse Effect; or

(l) Any Seller Party, Originator or Lennox International is subject to a Change in Control; or

(m) The Internal Revenue Service shall file notice of a lien pursuant to Section 6323 of the
Internal Revenue Code with regard to any of the Receivables or Related Assets and such lien shall
not have been released within seven (7) days, or the Pension Benefit Guaranty Corporation shall, or
shall indicate its intention to, file notice of a lien pursuant to Section 4068 of the Employee
Retirement Income Security Act of 1974 with regard to any of the Receivables or Related Assets; or

(n) Any Seller Party or any Originator shall make any material change in the policies as to
origination of Receivables or in its Credit and Collection Policy without prior written notice to
and consent of the Agents; or

(o) The Administrative Agent for the benefit of the Secured Parties, for any reason, does not
have a valid, perfected first priority interest in the Pool Receivables and the Related Assets; or

(p) A final judgment or judgments shall be rendered against Lennox International, the Master
Servicer, the Seller or any combination thereof for the payment of money with respect to which an
aggregate amount in excess of $10,000 with respect to the Seller and $7,500,000 with respect to
Lennox International or the Master Servicer is not covered by insurance and the same shall remain
undischarged for a period of 30 consecutive days during which execution shall not be effectively
stayed, or any action shall be legally taken by a judgment creditor to levy upon assets or
properties of Lennox International, the Master Servicer or the Seller to enforce any such judgment;
or

(q) A Reportable Event or Reportable Events, or a failure to make a required installment or
other payment (within the meaning of Section 412(n)(1) of the Code), shall have occurred with
respect to any Plan or Plans that reasonably could be expected to result in liability of any Master
Servicer or any ERISA Affiliate to the Pension Benefit Guaranty Corporation (“PBGC”) or to
a Plan in an aggregate amount exceeding $5,000,000 and, within 30 days after the reporting of any
such Reportable Event to the Agents, on the Purchasers’ behalf, any Agent shall have notified the
Master Servicer in writing that (i) such Agent, on the related Purchaser’s behalf, has made a
determination that, on the basis of such Reportable Event or Reportable Events or the failure to
make a required payment, there are reasonable grounds (A) for the termination of such Plan or Plans
by the PBGC, (B) for the appointment by the appropriate United States District Court of a trustee
to administer such Plan or Plans or (C) for the imposition of a lien in favor of a Plan and (ii) as
a result thereof a Liquidation Event exists hereunder; or a trustee shall be appointed by a United
States District Court to administer any such Plan or Plans; or the PBGC shall institute proceedings
to terminate any Plan or Plans;

 

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(r) The occurrence of a Servicer Default;

(s) The Seller’s Net Worth shall be less than the Threshold Amount; or

(t) An Event of Default (as defined in the Credit Agreement) shall have occurred, regardless
of whether such Event of Default has been waived by the parties to the Credit Agreement.

Section 10.2 Remedies.

(a) Optional Liquidation. Upon the occurrence of a Liquidation Event (other than a
Liquidation Event described in subsection (e) of Section 10.1), any Agent shall, at
the request, or may with the consent, of the related Purchaser, by notice to the Seller declare the
Funding Termination Date to have occurred and the Liquidation Period to have commenced.

(b) Automatic Liquidation. Upon the occurrence of a Liquidation Event described in
subsection (e) of Section 10.1, the Funding Termination Date shall occur and the
Liquidation Period shall commence automatically.

(c) Additional Remedies. Upon the occurrence of the Termination Date, no Purchases or
Reinvestments thereafter will be made, and each of the Agents and the Purchasers shall have, in
addition to all other rights and remedies under this Agreement or otherwise, all other rights and
remedies provided under the UCC of each applicable jurisdiction and other applicable laws, which
rights shall be cumulative.

(d) The Yorktown Purchaser Agent may, upon the occurrence of any Liquidation Event, direct the
Administrative Agent to take such action under any or all of the Lockbox Agreements such that the
Administrative Agent has control over each related Lockbox Account and the Administrative Agent
hereby agrees to take such action, to the extent permitted by law, upon receipt of such notice.

Article XI

The Administrative Agent

Section 11.1 Administrative Authorization and Action.

Pursuant to agreements entered into with the Administrative Agent, each Purchaser has
appointed and authorized the Administrative Agent (or its designees) to take such action as agent
on its behalf and to exercise such powers under this Agreement as are delegated to the
Administrative Agent by the terms hereof, together with such powers as are reasonably incidental
thereto.

 

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Section 11.2 Administrative Agent’s Reliance, Etc.

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

Section 11.3 Yorktown Purchaser Agent Authorization and Action.

Pursuant to agreements entered into with the Yorktown Purchaser Agent, the Yorktown Purchaser
has appointed and authorized the Yorktown Purchaser Agent (or its designees) to take such action as
agent on its behalf and to exercise such powers under this Agreement as are delegated to the
Yorktown Purchaser Agent by the terms hereof, together with such powers as are reasonably
incidental thereto.

Section 11.4 Yorktown Purchaser Agent’s Reliance, Etc.

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

 

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Article XII

Assignment of The Purchaser’s Interest

Section 12.1 Restrictions on Assignments.

(a) No Seller Party may assign its rights, or delegate its duties hereunder or any interest
herein without the prior written consent of the Agents (except a Seller Party may delegate certain
administrative duties to an Affiliate, such as payroll, financial reporting, tax and the like, so
long as such Seller Party remains liable for performance of such duties). No Purchaser may assign
its rights hereunder (although it may delegate its duties hereunder as expressly indicated herein)
or the portion of the Asset Interest funded by the related Purchaser Group (or any portion thereof)
to any Person without the prior written consent of the Seller, which consent shall not be
unreasonably withheld; provided, however, that

(i) Any Purchaser may assign all of its rights and interests in the Transaction
Documents, together with all its interest in the Asset Interest, to any Liquidity Bank, Bank
of America or any Affiliate thereof, or to any “bankruptcy remote” special purpose entity,
the business of which is administered by Bank of America or any Affiliate thereof (which
assignee shall then be subject to this Article XII); and

(ii) Each Purchaser may assign and grant a security interest in all of its rights in
the Transaction Documents, together with all of its rights and interest in the Asset
Interest, to secure such Purchaser’s obligations under or in connection with the Commercial
Paper Notes, the related Liquidity Agreement, and certain other obligations of such
Purchaser incurred in connection with the funding of the Purchases and Reinvestments
hereunder, which assignment and grant of a security interest shall not be considered an
“assignment” for purposes of Section 12.1(b) or, prior to the enforcement of such
security interest, for purposes of any other provision of this Agreement (other than
Section 12.3).

(b) The Seller agrees to advise the Agents within five (5) Business Days after notice to the
Seller of any proposed assignment by any Purchaser of the Asset Interest (or any portion thereof),
not otherwise permitted under subsection (a), of the Seller’s consent or non-consent to
such assignment, and if it does not consent, the reasons therefor. If Seller does not consent to
such assignment, each Purchaser may immediately or at any time thereafter assign such Asset
Interest (or portion thereof) to any Person or Persons permitted under clause (i) of
Section 12.1(a).

 

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Section 12.2 Rights of Assignee.

Upon the assignment by the Purchaser in accordance with this Article XII, the assignee
receiving such assignment shall have all of the rights of the related Purchaser with respect to the
Transaction Documents and the Asset Interest (or such portion thereof as has been assigned).

Section 12.3 Terms and Evidence of Assignment.

Any assignment of the Asset Interest (or any portion thereof) to any Person which is otherwise
permitted under this Article XII shall be upon such terms and conditions as the related
Purchaser and the assignee may mutually agree, and may be evidenced by such instrument(s) or
document(s) as may be satisfactory to the Purchaser, the related Purchaser Agent and the assignee.

Section 12.4 Rights of Liquidity Banks.

The Seller hereby agrees that, upon notice to the Seller, the Liquidity Banks may exercise all
the rights of the related Purchaser Agent and Purchaser hereunder, with respect to the portion of
the Asset Interest funded by the related Purchaser Group (or any portions thereof), and Collections
with respect thereto, which are owned by the related Purchaser, and all other rights and interests
of the related Purchaser in, to or under this Agreement or any other Transaction Document. Without
limiting the foregoing, upon such notice or at any time thereafter (but subject to any conditions
applicable to the exercise of such rights by the Agents), the Liquidity Banks may request the
Master Servicer to segregate Purchasers’ allocable shares of Collections from the Seller’s
allocable share, may give a Successor Notice pursuant to and in accordance with Section
8.1(b), may give or require the Administrative Agent to give notice to the Lockbox Banks as
referred to in Section 8.5(b) and may direct the Obligors of Pool Receivables to make
payments in respect thereof directly to an account designated by them, in each case, to the same
extent as the Administrative Agent might have done.

Article XIII

Indemnification

Section 13.1 Indemnities by the Seller.

(a) General Indemnity. Without limiting any other rights which any such Person may
have hereunder or under applicable law, the Seller hereby agrees to indemnify Bank of America, both
individually and as the Administrative Agent and the Yorktown Purchaser Agent, the Purchasers, the
Liquidity Banks, the Liquidity Agent, each of their respective Affiliates, and all successors,
transferees, participants and assigns and all officers, directors, shareholders, controlling
persons, and employees of any of the foregoing, and any successor servicer and subservicer not
affiliated with Lennox (each an “Indemnified Party”), forthwith on demand, from and against
any and all damages, losses, claims, liabilities and related costs and expenses, including
attorneys’ fees and disbursements (all of the foregoing being collectively referred to as
“Indemnified Amounts”) awarded against or incurred by any of them arising out of or
relating to the Transaction Documents or the ownership or funding of the Asset Interest or in
respect of any Receivable or any Contract, excluding, however, (x) Indemnified Amounts to the
extent

 

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determined by a court of competent jurisdiction to have resulted from gross negligence or
willful misconduct on the part of such Indemnified Party or (y) recourse (except as otherwise
specifically provided in this Agreement) for Defaulted Receivables; the Seller further agrees to
indemnify any agent (which is not otherwise an Indemnified Party) of any of Bank of America, the
Agents, the Purchasers, the Liquidity Banks, and the Liquidity Agent forthwith on demand, from and
against any and all Indemnified Amounts awarded against or incurred by any of them arising out of
or caused by the gross negligence or willful misconduct of the Seller (unless otherwise expressly
agreed to in writing by the Seller). Without limiting the foregoing, the Seller shall indemnify
each Indemnified Party for Indemnified Amounts arising out of or relating to:

(i) the transfer by any Seller Party of any interest in any Receivable other than the
transfer of Receivables and related property by the Originators to the Seller pursuant to
the Sale Agreement, the transfer of an Asset Interest to the Purchaser pursuant to this
Agreement and the grant of a security interest to the Purchaser pursuant to Section
9.1;

(ii) any representation or warranty made in writing by any Seller Party (or any of its
officers) under or in connection with any Transaction Document, any Information Package,
Interim Information Package or any other information or report delivered by or on behalf of
any Seller Party pursuant hereto, which shall have been false, incorrect or misleading in
any material respect when made or deemed made or delivered, as the case may be;
provided, however, that in the case of any representation, warranty or
information that was not made or delivered in writing, indemnification shall be available to
an Indemnified Party hereunder only if such representation, warranty or information was
reasonably relied upon by such Indemnified Party;

(iii) the failure by any Seller Party to comply with any applicable law, rule or
regulation with respect to any Pool Receivable or the related Contract, or the nonconformity
of any Pool Receivable or the related Contract with any such applicable law, rule or
regulation;

(iv) the failure to vest and maintain vested in Purchaser an undivided percentage
ownership interest, to the extent of the Asset Interest, in the Receivables in, or
purporting to be in, the Receivables Pool, free and clear of any Lien, other than a Lien
arising solely as a result of an act of any Purchaser or the Administrative Agent, whether
existing at the time of any Purchase or Reinvestment of such Asset Interest or at any time
thereafter;

(v) the failure to file, or any delay in filing, financing statements or other similar
instruments or documents under the UCC of any applicable jurisdiction or other applicable
laws with respect to any Receivables in, or purporting to be in, the Receivables Pool,
whether at the time of any Purchase or Reinvestment or at any time thereafter;

 

47

 

(vi) any dispute, claim, offset or defense (other than discharge in bankruptcy) of the
Obligor to the payment of any Receivable in, or purporting to be in, the Receivables Pool
(including, without limitation, a defense based on such Receivables or
the related Contract not being a legal, valid and binding obligation of such Obligor
enforceable against it in accordance with its terms), or any other claim resulting from the
sale of the merchandise or services related to such Receivable or the furnishing or failure
to furnish such merchandise or services;

(vii) any matter described in clause (i) or (ii) of Section
3.2(a);

(viii) any failure of any Seller Party, as the Master Servicer or otherwise, to perform
its duties or obligations in accordance with the provisions of Article III or
Article VIII;

(ix) any product liability claim arising out of or in connection with merchandise or
services that are the subject of any Pool Receivable;

(x) any claim of breach by any Seller Party of any related Contract with respect to any
Pool Receivable; or

(xi) any tax or governmental fee or charge (but not including franchise taxes or taxes
upon or measured by net income), all interest and penalties thereon or with respect thereto,
and all out-of-pocket costs and expenses, including the reasonable fees and expenses of
counsel in defending against the same, which may arise by reason of the purchase or
ownership of any Asset Interest, or any other interest in the Pool Receivables or in any
goods which secure any such Pool Receivables.

(b) Contest of Tax Claim; After-Tax Basis. If any Indemnified Party shall have notice
of any attempt to impose or collect any tax or governmental fee or charge for which indemnification
will be sought from any Seller Party under Section 13.1(a)(xi), such Indemnified Party
shall give prompt and timely notice of such attempt to the Seller and the Seller shall have the
right, at its expense, to participate in any proceedings resisting or objecting to the imposition
or collection of any such tax, governmental fee or charge. Indemnification hereunder shall be in
an amount necessary to make the Indemnified Party whole after taking into account any tax
consequences to the Indemnified Party of the payment of any of the aforesaid taxes (including any
deduction) and the receipt of the indemnity provided hereunder or of any refund of any such tax
previously indemnified hereunder, including the effect of such tax, deduction or refund on the
amount of tax measured by net income or profits which is or was payable by the Indemnified Party.

(c) Contribution. If for any reason the indemnification provided above in this
Section 13.1 (and subject to the exceptions set forth therein) is unavailable to an
Indemnified Party or is insufficient to hold an Indemnified Party harmless, then the Seller shall
contribute to the amount paid or payable by such Indemnified Party as a result of such loss, claim,
damage or liability in such proportion as is appropriate to reflect not only the relative benefits
received by such Indemnified Party on the one hand and the Seller on the other hand but also the
relative fault of such Indemnified Party as well as any other relevant equitable considerations.

 

48

 

Section 13.2 Indemnities by Master Servicer.

Without limiting any other rights which any Indemnified Party may have hereunder or under
applicable law, the Master Servicer hereby agrees to indemnify each of the Indemnified Parties
forthwith on demand, from and against any and all Indemnified Amounts awarded against or incurred
by any of them arising out of or relating to the Master Servicer’s performance of, or failure to
perform, any of its obligations under or in connection with any Transaction Document, or any
representation or warranty made by the Master Servicer (or any of its officers) under or in
connection with any Transaction Document, any Information Package, Interim Information Package or
any other information or report delivered by or on behalf of the Master Servicer, which shall have
been false, incorrect or misleading in any material respect when made or deemed made or delivered,
as the case may be, or the failure of the Master Servicer to comply with any applicable law, rule
or regulation with respect to any Pool Receivable or the related Contract; provided,
however, that in the case of any representation, warranty or information that was not made
or delivered in writing, indemnification shall be available to an Indemnified Party hereunder only
if such representation, warranty or information was reasonably relied upon by such Indemnified
Party. Notwithstanding the foregoing, in no event shall any Indemnified Party be awarded any
Indemnified Amounts (a) to the extent determined by a court of competent jurisdiction to have
resulted from gross negligence or willful misconduct on the part of such Indemnified Party or (b)
recourse for Defaulted Receivables. The Master Servicer further agrees to indemnify any agent
(which is not otherwise an Indemnified Party) of any of Bank of America, the Agents, the
Purchasers, the Liquidity Banks, and the Liquidity Agents forthwith on demand, from and against any
and all Indemnified Amounts awarded against or incurred by any of them arising out of or caused by
the gross negligence or willful misconduct of the Master Servicer (unless otherwise expressly
agreed to in writing by the Master Servicer).

If for any reason the indemnification provided above in this Section 13.2 (and subject
to the exceptions set forth therein) is unavailable to an Indemnified Party or is insufficient to
hold an Indemnified Party harmless, then the Master Servicer shall contribute to the amount paid or
payable by such Indemnified Party as a result of such loss, claim, damage or liability in such
proportion as is appropriate to reflect not only the relative benefits received by such Indemnified
Party on the one hand and the Master Servicer on the other hand but also the relative fault of such
Indemnified Party as well as any other relevant equitable considerations.

Article XIV

Miscellaneous

Section 14.1 Amendments, Etc.

No amendment or waiver of any provision of this Agreement nor consent to any departure by any
Seller Party therefrom shall in any event be effective unless the same shall be in writing and
signed by (a) each Seller Party, the Agents and the Purchasers (with respect to an amendment), or
(b) the Agents and the Purchasers (with respect to a waiver or consent by them) or any Seller Party
(with respect to a waiver or consent by it), as the case may be, and then such waiver or consent
shall be effective only in the specific instance and for the specific purpose for which given to
the extent that any Purchaser is required to obtain any confirmation from any
rating agency, such confirmation shall be in writing with respect to any material amendment,
modification, waiver or consent. The parties acknowledge that, before entering into such an
amendment or granting such a waiver or consent, any Purchaser may also be required to obtain the
approval of some or all of the related Liquidity Banks or to obtain confirmation from certain
rating agencies that such amendment, waiver or consent will not result in a withdrawal or reduction
of the ratings of the Commercial Paper Notes to the extent that any Purchaser is required to obtain
any confirmation from any rating agency, such confirmation shall be in writing with respect to any
material amendment, modification, waiver or consent.

 

49

 

Section 14.2 Notices, Etc.

All notices and other communications provided for hereunder shall, unless otherwise stated
herein, be in writing (including facsimile communication) and shall be personally delivered or sent
by express mail or courier or by certified mail, postage prepaid, or by facsimile, to the intended
party at the address or facsimile number of such party set forth on Schedule 14.2 or at
such other address or facsimile number as shall be designated by such party in a written notice to
the other parties hereto. All such notices and communications shall be effective, (a) if
personally delivered or sent by express mail or courier or if sent by certified mail, when
received, and (b) if transmitted by facsimile, when sent, receipt confirmed by telephone or
electronic means; provided, however, that the financial statements required to be
delivered by Sections 7.2(a), 7.2(b), 7.2(c) and 7.2(d) shall be
deemed delivered on the date such financial statements are deposited in the United States mail with
first class postage prepaid, addressed to the intended party at the address as set forth on
Schedule 14.2 or at such other address as shall be designated by such party in a written
notice to the other parties hereto.

Section 14.3 No Waiver; Remedies.

No failure on the part of the Administrative Agent, any Affected Party, any Indemnified Party,
any Purchaser or any other holder of the Asset Interest (or any portion thereof) to exercise, and
no delay in exercising, any right hereunder shall operate as a waiver thereof; nor shall any single
or partial exercise of any right hereunder preclude any other or further exercise thereof or the
exercise of any other right. The remedies herein provided are cumulative and not exclusive of any
remedies provided by law. Without limiting the foregoing, Bank of America, individually, and as the
Administrative Agent and the Yorktown Purchaser Agent and each Liquidity Bank is hereby authorized
by the Seller at any time and from time to time, to the fullest extent permitted by law, to set off
and apply any and all deposits (general or special, time or demand provisional or final) at any
time held and other indebtedness at any time owing by Bank of America and such Liquidity Bank to or
for the credit or the account of the Seller, against any and all of the obligations of the Seller
now or hereafter existing under this Agreement, to any Agent, any Affected Party, any Indemnified
Party or any Purchaser, or their respective successors and assigns.

Section 14.4 Binding Effect; Survival.

This Agreement shall be binding upon and inure to the benefit of each Seller Party, the
Agents, the Purchasers and their respective successors and assigns, and the provisions of
Section 4.2 and Article XIII shall inure to the benefit of the Affected Parties and
the Indemnified Parties,
respectively, and their respective successors and assigns; provided, however, nothing in the
foregoing shall be deemed to authorize any assignment not permitted by Section 12.1. This
Agreement shall create and constitute the continuing obligations of the parties hereto in
accordance with its terms, and shall remain in full force and effect until the Final Payout Date.
The rights and remedies with respect to any breach of any representation and warranty made by the
Seller pursuant to Article VI and the indemnification and payment provisions of Article
XIII and Sections 4.2, 14.5, 14.6, 14.7 and 14.15 shall
be continuing and shall survive any termination of this Agreement.

 

50

 

Section 14.5 Costs, Expenses and Taxes.

In addition to its obligations under Article XIII, the Seller Parties jointly and
severally agree to pay on demand:

(a) all costs and expenses incurred by the Agents, any Liquidity Bank, any Purchaser and their
respective Affiliates in connection with:

(i) the negotiation, preparation, execution and delivery of this Agreement, the other
Transaction Documents or the Liquidity Agreement, any amendment of or consent or waiver
under any of the Transaction Documents which is requested or proposed by any Seller Party
(whether or not consummated), or the enforcement by any of the foregoing Persons of, or any
actual or claimed breach of, this Agreement or any of the other Transaction Documents,
including, without limitation, the reasonable fees and expenses of counsel to any of such
Persons incurred in connection with any of the foregoing or in advising such Persons as to
their respective rights and remedies under any of the Transaction Documents in connection
with any of the foregoing, and

(ii) the administration (including periodic auditing as provided for herein) of this
Agreement and the other Transaction Documents, including, without limitation, all reasonable
out-of-pocket expenses (including reasonable fees and expenses of independent accountants),
incurred in connection with any review of any Seller Party’s books and records either prior
to the execution and delivery hereof but subject to the provisions of the Fee Letter or
pursuant to Section 7.1(c), subject to the limitations set forth in such Section
7.1(c); and

(b) all stamp and other taxes and fees payable or determined to be payable in connection with
the execution, delivery, filing and recording of this Agreement or the other Transaction Documents
(and the Seller Parties, jointly and severally agree to indemnify each Indemnified Party against
any liabilities with respect to or resulting from any delay in paying or omission to pay such taxes
and fees).

(c) all losses, costs and expenses incurred by the Purchasers or the Agents in connection with
or as a result of any failure to make a timely payment or deposit, including, without limitation,
by reason of any mechanical delay in or malfunction of the Fedwire system or due to an error on the
part of the initiating or receiving bank.

 

51

 

Section 14.6 No Proceedings.

The Master Servicer hereby agrees that it will not institute against the Seller, or join any
Person in instituting against the Seller, and each Seller Party, the Master Servicer, Bank of
America (individually, as Administrative Agent and as Yorktown Purchaser Agent) and each Purchaser,
as to each other Purchaser, hereby agrees that it will not institute against any Purchaser, or join
any other Person in instituting against any Purchaser, any insolvency proceeding (namely, any
proceeding of the type referred to in the definition of Event of Bankruptcy) so long as any
Commercial Paper Notes issued by such Purchaser shall be outstanding or there shall not have
elapsed one year plus one day since the last day on which any such Commercial Paper Notes shall
have been outstanding.

Section 14.7 Confidentiality of Seller Information.

(a) Confidential Seller Information. Each party hereto (other than Seller Parties)
acknowledges that certain of the information provided to such party by or on behalf of the Seller
Parties in connection with this Agreement and the transactions contemplated hereby is or may be
confidential, and each such party severally agrees that, unless the Master Servicer shall otherwise
agree in writing, and except as provided in subsection (b), such party will not disclose to
any other person or entity:

(i) any information regarding, or copies of, any nonpublic financial statements,
reports, schedules and other information furnished by any Seller Party to any Purchaser or
any Agent (A) prior to the date hereof in connection with such party’s due diligence
relating to the Seller Parties and the transactions contemplated hereby, or (B) pursuant to
this Agreement, including without limitation, Section 3.1, 5.1,
6.1(i), 7.1(c) or 7.2, or

(ii) any other information regarding any Seller Party which is designated by any Seller
Party to such party in writing as confidential

(the information referred to in clauses (i) and (ii) above, whether furnished by
any Seller Party or any attorney for or other representative thereof (each a “Seller
Information Provider”), is collectively referred to as the “Seller Information”);
provided, however, Seller Information shall not include any information which is or becomes
generally available to the general public or to such party on a nonconfidential basis from a source
other than any Seller Information Provider, or which was known to such party on a nonconfidential
basis prior to its disclosure by any Seller Information Provider.

(b) Disclosure. Notwithstanding subsection (a), each party may disclose any
Seller Information:

(i) to any of such party’s independent attorneys, consultants and auditors, and to any
dealer or placement agent for such Purchaser’s Commercial Paper Notes, who (A) in the good
faith belief of such party, have a need to know such Seller Information, and (B) are
informed by such party of the confidential nature of the Seller Information and the terms of
this Section 14.7 and has agreed, verbally or otherwise, to be bound by the
provisions of this Section 14.7,

 

52

 

(ii) to any Liquidity Bank, any actual or potential assignees of, or participants in,
any rights or obligations of any Purchaser, any Liquidity Bank or the related Purchaser
Agent under or in connection with this Agreement who has agreed to be bound by the
provisions of this Section 14.7,

(iii) to any rating agency that maintains a rating for such Purchaser’s Commercial
Paper Notes or is considering the issuance of such a rating, for the purposes of reviewing
the credit of such Purchaser in connection with such rating,

(iv) to any other party to this Agreement (and any independent attorneys, consultants
and auditors of such party), for the purposes contemplated hereby,

(v) as may be required by any municipal, state, federal or other regulatory body having
or claiming to have jurisdiction over such party, in order to comply with any law, order,
regulation, regulatory request or ruling applicable to such party,

(vi) subject to subsection (c), in the event such party is legally compelled
(by interrogatories, requests for information or copies, subpoena, civil investigative
demand or similar process) to disclose such Seller Information, or

(vii) in connection with the enforcement of this Agreement or any other Transaction
Document.

In addition, each Purchaser and each Agent may disclose on a “no name” basis to any actual or
potential investor in such Purchaser’s Commercial Paper Notes information regarding the nature of
this Agreement, the basic terms hereof (including without limitation the amount and nature of such
Purchaser’s commitment and Invested Amount with respect to the Asset Interest funded by such
Purchaser Group and any other credit enhancement provided by any Seller Party hereunder), the
nature, amount and status of the Pool Receivables, and the current and/or historical ratios of
losses to liquidations and/or outstandings with respect to the Receivables Pool.

(c) Legal Compulsion. In the event that any party hereto (other than any Seller
Party) or any of its representatives is requested or becomes legally compelled (by interrogatories,
requests for information or documents, subpoena, civil investigative demand or similar process) to
disclose any of the Seller Information, such party will (or will cause its representative to):

(i) provide the Master Servicer with prompt written notice so that (A) the Master
Servicer may seek a protective order or other appropriate remedy, or (B) the Master Servicer
may, if it so chooses, agree that such party (or its representatives) may disclose such
Seller Information pursuant to such request or legal compulsion; and

(ii) unless the Master Servicer agrees that such Seller Information may be disclosed,
make a timely objection to the request or compulsion to provide such Seller Information on
the basis that such Seller Information is confidential and subject to the agreements
contained in this Section 14.7.

 

53

 

In the event such protective order or remedy is not obtained, or the Master Servicer agrees that
such Seller Information may be disclosed, such party will furnish only that portion of the Seller
Information which (in such party’s good faith judgment) is legally required to be furnished and
will exercise reasonable efforts to obtain reliable assurance that confidential treatment will be
afforded the Seller Information.

(d) Notwithstanding anything herein to the contrary, any party to this Agreement (and any
employee, representative, or other agent of any party to this Agreement) may disclose to any and
all persons, without limitation of any kind, the tax treatment and tax structure of the
transactions contemplated by this Agreement and all materials of any kind (including opinions and
other tax analyses) that are provided to it relating to such tax treatment and tax structure.
However, any such information relating to the tax treatment or tax structure is required to be kept
confidential to the extent necessary to comply with any applicable federal or state securities
laws.

(e) This Section 14.7 shall survive termination of this Agreement.

Section 14.8 Captions and Cross References.

The various captions (including, without limitation, the table of contents) in this Agreement
are provided solely for convenience of reference and shall not affect the meaning or interpretation
of any provision of this Agreement. Unless otherwise indicated, references in this Agreement to
any Section, Appendix, Schedule or Exhibit are to such Section of or Appendix, Schedule or Exhibit
to this Agreement, as the case may be, and references in any Section, subsection, or clause to any
subsection, clause or subclause are to such subsection, clause or subclause of such Section,
subsection or clause.

Section 14.9 Integration.

This Agreement and the other Transaction Documents contain a final and complete integration of
all prior expressions by the parties hereto with respect to the subject matter hereof and shall
constitute the entire understanding among the parties hereto with respect to the subject matter
hereof, superseding all prior oral or written understandings.

Section 14.10 Governing Law.

THIS AGREEMENT, INCLUDING THE RIGHTS AND DUTIES OF THE PARTIES HERETO, SHALL BE GOVERNED BY,
AND CONSTRUED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW YORK WITHOUT REFERENCE TO
PRINCIPLES OF CONFLICTS OF LAW (OTHER THAN SECTION 5-1401 OF THE NEW YORK GENERAL OBLIGATIONS LAW).

 

54

 

Section 14.11 Waiver Of Jury Trial.

EACH PARTY HERETO HEREBY EXPRESSLY WAIVES ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION OR
PROCEEDING TO ENFORCE OR DEFEND ANY RIGHTS UNDER THIS AGREEMENT, ANY OTHER TRANSACTION DOCUMENT OR
UNDER ANY AMENDMENT, INSTRUMENT OR DOCUMENT DELIVERED OR WHICH
MAY IN THE FUTURE BE DELIVERED IN CONNECTION HEREWITH OR ARISING FROM ANY BANKING OR OTHER
RELATIONSHIP EXISTING IN CONNECTION WITH THIS AGREEMENT OR ANY OTHER TRANSACTION DOCUMENT AND
AGREES THAT ANY SUCH ACTION OR PROCEEDING SHALL NOT BE TRIED BEFORE A JURY.

Section 14.12 Consent To Jurisdiction; Waiver Of Immunities.

EACH PARTY HERETO HEREBY ACKNOWLEDGES AND AGREES THAT:

(a) IT IRREVOCABLY (i) SUBMITS TO THE JURISDICTION, FIRST, OF ANY UNITED STATES FEDERAL COURT,
AND SECOND, IF FEDERAL JURISDICTION IS NOT AVAILABLE, OF ANY NEW YORK STATE COURT, AS APPROPRIATE,
IN EITHER CASE SITTING IN NEW YORK COUNTY, NEW YORK, IN ANY ACTION OR PROCEEDING ARISING OUT OF OR
RELATING TO THIS AGREEMENT, (ii) AGREES THAT ALL CLAIMS IN RESPECT OF SUCH ACTION OR PROCEEDING MAY
BE HEARD AND DETERMINED ONLY IN SUCH NEW YORK STATE OR FEDERAL COURT AND NOT IN ANY OTHER COURT,
AND (iii) WAIVES, TO THE FULLEST EXTENT IT MAY EFFECTIVELY DO SO, THE DEFENSE OF AN INCONVENIENT
FORUM TO THE MAINTENANCE OF SUCH ACTION OR PROCEEDING.

(b) TO THE EXTENT THAT IT HAS OR HEREAFTER MAY ACQUIRE ANY IMMUNITY FROM THE JURISDICTION OF
ANY COURT OR FROM ANY LEGAL PROCESS (WHETHER THROUGH SERVICE OR NOTICE, ATTACHMENT PRIOR TO
JUDGMENT, ATTACHMENT IN AID TO EXECUTION, EXECUTION OR OTHERWISE) WITH RESPECT TO ITSELF OR ITS
PROPERTY, IT HEREBY IRREVOCABLY WAIVES SUCH IMMUNITY IN RESPECT OF ITS OBLIGATIONS UNDER OR IN
CONNECTION WITH THIS AGREEMENT.

Section 14.13 Execution in Counterparts.

This Agreement may be executed in any number of counterparts and by the different parties
hereto in separate counterparts, each of which when so executed shall be deemed to be an original
and all of which when taken together shall constitute one and the same Agreement. Delivery of an
executed counterpart of a signature page to this Agreement by facsimile shall be as effective as
delivery of a manually executed counterpart of a signature page of this Agreement.

 

55

 

Section 14.14 No Recourse Against Other Parties.

The obligations of each Purchaser under this Agreement are solely the corporate obligations of
such Purchaser. No recourse shall be had for the payment of any amount owing by any Purchaser
under this Agreement or for the payment by such Purchaser of any fee in respect hereof or any other
obligation or claim of or against such Purchaser arising out of or based upon this Agreement,
against Bank of America or against any employee, officer, director, incorporator or stockholder of
such Purchaser. For purposes of this Section 14.15, the term “Bank of America” shall mean
and include Bank of America, National Association and all affiliates thereof and any employee,
officer, director, incorporator, stockholder or beneficial owner of any of them; provided, however,
for the purposes of this paragraph, the Yorktown
Purchaser shall not be considered to be an affiliate of Bank of America. Each of the Seller,
the Master Servicer and the Agents agree that each Purchaser shall be liable for any claims that
such party may have against such Purchaser only to the extent such Purchaser has excess funds and
to the extent such assets are insufficient to satisfy the obligations of such Purchaser hereunder,
such Purchaser shall have no liability with respect to any amount of such obligations remaining
unpaid and such unpaid amount shall not constitute a claim against such Purchaser. Any and all
claims against any Purchaser or the related Purchaser Agent shall be subordinate to the claims of
the holders of Commercial Paper Notes and the related Liquidity Banks.

Section 14.15 Severability of Provisions.

Any provision of this Agreement which is prohibited or unenforceable in any jurisdiction,
shall as to such jurisdiction, be ineffective to the extent of such prohibition or
unenforceability, without invalidating the remaining provisions hereof or affecting the validity or
enforceability of such provisions in any other jurisdiction.

[remainder of page intentionally left blank]

 

56

 

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

	 	 	 	 	 	 	 	 	 
	 	 	LPAC CORP.,	 	 
	 	 	as Seller	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	By:	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 

	 	 	 	Name:	 	 	 	 
	 

	 	 	 	Title:
	 	 

	 	 
	 

	 	 	 	 	 	 

	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	LENNOX INDUSTRIES INC.,	 	 
	 	 	as Master Servicer	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	By:	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 

	 	 	 	Name:	 	 	 	 
	 

	 	 	 	Title:
	 	 

	 	 
	 

	 	 	 	 	 	 

	 	 

[additional signatures to follow]

 

 

 

	 	 	 	 	 	 	 	 	 
	 	 	YC SUSI TRUST,	 	 
	 	 	as a Purchaser	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	By: Bank of America, National Association,	 	 
	 	 	as Administrative Trustee	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	By:	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 

	 	 	 	Name:	 	 	 	 
	 

	 	 	 	Title:
	 	 

	 	 
	 

	 	 	 	 	 	 

	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	BANK OF AMERICA, NATIONAL ASSOCIATION,	 	 
	 	 	as Administrative Agent and Yorktown Purchaser Agent	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	By:	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 

	 	 	 	Name:	 	 	 	 
	 

	 	 	 	Title:
	 	 

	 	 
	 

	 	 	 	 	 	 

	 	 

[end of signatures]

 

 

 

APPENDIX A

DEFINITIONS

This is Appendix A to the Second Amended and Restated Receivables Purchase Agreement
dated as of June 16, 2003 among LPAC Corp., as the Seller, Lennox Industries, Inc., as the Master
Servicer, YC SUSI Trust, as a Purchaser and Bank of America, as the Administrative Agent and the
Yorktown Purchaser Agent (as amended, supplemented or otherwise modified from time to time, this
“Agreement”). Each reference in this Appendix A to any Section, Appendix or Exhibit
refers to such Section of or Appendix or Exhibit to this Agreement.

A. Defined Terms. As used in this Agreement, unless the context requires a different
meaning, the following terms have the meanings indicated below:

Adjusted Dilution Ratio: The 12-month rolling average of the Dilution Ratio.

Administrative Agent: As defined in the preamble.

Affected Party: Each of Purchasers, each Liquidity Bank, any assignee or participant of
any Purchaser or any Liquidity Bank, Bank of America, any successor to Bank of America, as
Administrative Agent or Yorktown Purchaser Agent, or any sub-agent of any Agent.

Affiliate: With respect to any other Person controlling, controlled by, or under common
control with, such Person.

Affiliated Obligor: In relation to any Obligor, an Obligor that is an Affiliate of such
Obligor.

Agent: Any Purchaser Agent or the Administrative Agent, as the case may be.

Allocation Limit: As defined in Section 1.1.

Alternate Funding: A Yorktown Alternate Funding.

Alternate Investor: With respect to the Yorktown Purchaser Group, the Yorktown Investors.

Asset Interest: An undivided percentage ownership interest in favor of the Administrative
Agent, as agent for the Secured Parties, determined from time to time as provided in Section
1.4(b), in (i) all then outstanding Pool Receivables and (ii) all Related Assets.

Asset Tranche: At any time, a portion of the Asset Interest funded by any Purchaser Group
selected by the related Purchaser Agent pursuant to Section 2.1.

Assurance Agreement: The Second Amended and Restated Assurance Agreement dated as of
November 26, 2008 made by Lennox International, as the same may be amended, restated, supplemented
or modified from time to time.

 

 

 

Bank of America: As defined in the preamble.

Bank Rate: For any Yield Period with respect to any Asset Tranche:

(i) in the case of any Yield Period other than a Yield Period described in clause
(ii) below, an interest rate per annum equal to the sum of (A) the Bank Rate
Spread per annum, plus (B) Eurodollar Rate (Reserve Adjusted) for such Yield Period;

(ii) in the case of

(A) any Yield Period commencing on or prior to the first day of which the
related Purchaser or any related Liquidity Bank shall have notified the related
Purchaser Agent that (1) the introduction of or any change in or in the
interpretation of any law or regulation makes it unlawful, or any central bank or
other Governmental Authority asserts that it is unlawful, for such Person to fund
such Asset Tranche at the rate described in clause (i) above, or (2) due to
market conditions affecting the interbank eurodollar market, funds are not
reasonably available to such Person in such market in order to enable it to fund
such Asset Tranche at the rate described in clause (i) above (and in the
case of subclause (1) or (2) above, such Person shall not have
subsequently notified the related Purchaser Agent that such circumstances no longer
exist), or

(B) any Yield Period as to which the related Purchaser Agent does not receive
notice or determine, by no later than 12:00 noon (Atlanta, Georgia time) on the
third Business Day preceding the first day of such Yield Period, that the related
Asset Tranche will be funded by Alternate Fundings or Liquidity Fundings of the
related Purchaser Group, as the case may be, and not by the issuance of Commercial
Paper Notes,

an interest rate per annum equal to the Base Rate in effect from time to time during
such Yield Period; it being understood that, in the case of paragraph (ii)(A) above,
such rate shall only apply to the Person affected by the circumstances described in such
paragraph (ii)(A).

Bank Rate Spread: As defined in the Fee Letter.

Base Rate: For any day, the rate per annum equal to the higher as of such day of (i) the
Prime Rate, or (ii) one-half of one percent above the Federal Funds Rate. For purposes of
determining the Base Rate for any day, changes in the Prime Rate or the Federal Funds Rate shall be
effective on the date of each such change. The Base Rate is not necessarily intended to be the
lowest rate of interest determined by Bank of America o in connection with extensions of credit.

Broken Funding Costs: For any Asset Interest, the sum of Yorktown Broken Funding Costs.

 

 

 

Business Day: (i) with respect to any matters relating to the Eurodollar Rate, a day on
which banks are open for business in New York, New York, and in Atlanta, Georgia and on which
dealings in Dollars are carried on in the London interbank market and (ii) for all other purposes,
any day other than a Saturday, Sunday or other day on which banking institutions or trust
companies in New York, New York, or Atlanta, Georgia are authorized or obligated by law, executive
order or governmental decree to be closed.

Capital Lease: At any time, a lease with respect to which the lessee is required
concurrently to recognize the acquisition of an asset and the incurrence of a liability in
accordance with GAAP.

Change in Control:

(i) in relation to either of the Master Servicer or Lennox International, the
acquisition after the date hereof by any person or group of persons (within the meaning of
Section 13 or 14 of the Exchange Act), of beneficial ownership (within the meaning of Rule
13d-3 promulgated by the Securities and Exchange Commission under the Exchange Act) of
issued and outstanding shares of the capital stock of such Person entitled (without regard
to the occurrence of any contingency) to vote for the election of members of the board of
directors of such Person and having a then present right to exercise 50% or more of the
voting power for the election of members of the board of directors of such Person attached
to all such outstanding shares of capital stock of such Person, unless otherwise agreed in
writing by the Agents; and

(ii) in relation to the Seller, the failure of Lennox International to own (directly or
through wholly-owned Subsidiaries of Lennox International) 100% of the issued and
outstanding shares of the capital stock (including all warrants, options, conversion rights,
and other rights to purchase or convert into such stock) of the Seller on a fully diluted
basis.

Code: The Internal Revenue Code of 1986, as the same may be amended from time to time.

Collateral: As defined in Section 9.1.

Collection Account: The segregated account that may be established and maintained with
Bank of America in the name of the Seller.

Collection Period:

(i) the period from the date of the initial Purchase to the last day of the calendar
month in which such date occurs; and

(ii) thereafter, each period from the last day of the next preceding Collection Period
to the last day of the next following calendar month;

provided, however, that during any period during which Weekly Reports are required to be delivered,
the Collection Period related to each related Settlement Date shall be related Weekly Reporting
Period; provided, further, however, that the last Collection Period shall end on
the Final Payout Date.

 

 

 

Collections: With respect to any Receivable, all funds which either (i) are received by
the Seller, the Originators or the Master Servicer from or on behalf of the related Obligor in
payment of any amounts owed (including, without limitation, purchase prices, finance charges,
interest and all
other charges) in respect of such Receivable, or applied to such amounts owed by such Obligor
(including, without limitation, insurance payments that the Seller, the Originator or the Master
Servicer applies in the ordinary course of its business to amounts owed in respect of such
Receivable and net proceeds of sale or other disposition of repossessed goods or other collateral
or property of the Obligor or any other party directly or indirectly liable for payment of such
Receivable and available to be applied thereon), or (ii) are Deemed Collections; provided that,
prior to such time as Lennox shall cease to be the Master Servicer, late payment charges,
collection fees, extension fees and any other similar fees or expenses billed to and collected from
an Obligor shall not be deemed to be Collections.

Commercial Paper Notes: The commercial paper promissory notes issued by any Purchaser in
the commercial paper market.

Conduit Investor: Any commercial paper conduit that from time to time is a member of a
Purchaser Group.

Contract: A contract between the Seller or the Originator and any Person, or an invoice
sent or to be sent by the Seller or the Originator, pursuant to or under which a Receivable shall
arise or be created, or which evidences a Receivable. A ‘related Contract’ or similar reference
means rights to payment, collection and enforcement, and other rights under a Contract to the
extent directly related to a Receivable in the Receivables Pool, but not any other rights under
such Contract.

CP Accrual Period: Each Collection Period during which any Asset Tranche is funded with
Commercial Paper Notes.

CP Costs: The Yorktown CP Costs.

Credit Agreement: That certain Third Amended and Restated Revolving Credit Facility
Agreement dated as of October 12, 2007 by and among Lennox International Inc. as the borrower,
certain financial institutions, as the lenders, Bank of America, as administrative agent for the
lenders, swingline lender and as an issuing bank, JPMorgan Chase Bank, N.A. and Wachovia Bank,
National Association, as co-syndication agents, The Bank of Tokyo-Mitsubishi UFJ, Ltd. and Wells
Fargo Bank, N.A., as co-documentation agents, U.S. Bank National Association and the Bank of Nova
Scotia, as co-managing agents and Banc of America Securities LLC and J.P. Morgan Securities, Inc.,
as joint lead arrangers and joint book managers, as such agreement may be further amended,
restated, substituted or replaced from time to time.

Credit and Collection Policy: Collectively, those credit and collection policies and
practices of the Originators and the Master Servicer relating to Contracts and Receivables as in
effect on the date of this Agreement in the forms of Exhibit C-1, C-2 and
C-3 hereto, as may hereafter be modified without violating Section 7.3(c), but
subject to compliance with applicable tariffs or state regulations in effect from time to time.

Credit Event: The earliest of (i) an Event of Bankruptcy with respect to Lennox
International, (ii) an Event of Bankruptcy with respect to Lennox or (iii) any event described in
subsection (d) of Section 10.1 hereof.

 

 

 

Cut-Off Date: The last day of each fiscal month of the Servicer.

Days Sales Outstanding or DSO: As of any day, an amount equal to the product of
(i) 91 and (ii) a fraction the numerator of which is the aggregate Unpaid Balance of Pool
Receivables as of the most recent Cut-Off Date and the denominator of which is the aggregate
dollar amount of Receivables generated by the Originators during the three Collection Periods
including and immediately preceding such Cut-Off Date.

Deemed Collections: As defined in Section 3.2(a).

Default Horizon Ratio: As of any Cut-Off Date, the ratio (expressed as a percentage) of
(i) the aggregate sales of the Originators during the immediately preceding five (5) Collection
Periods ending on such Cut-Off Date divided by (ii) the Net Pool Balance on such Cut-Off Date.

Default Ratio: At any time, an amount (expressed as a percentage) equal to a fraction (i)
the numerator of which is equal to the sum of the Outstanding Balances of Eligible Receivables,
during the immediately preceding Collection Period, as to which (A) any payment, or part thereof,
remains unpaid for more than 150 days from the original due date for such payment or (B) any
portion of the Outstanding Balance (including amounts related to an Event of Bankruptcy) or other
payment due in respect thereof was (or should have been) written off and (ii) the denominator of
which is the amount of sales generated during the Collection Period six months prior to the
immediately preceding Collection Period.

Defaulted Receivable: A Receivable: (i) as to which any payment, or part thereof, remains
unpaid for more than 120 days from the original due date for such payment, (ii) as to which any
portion of the Outstanding Balance (including amounts related to an Event of Bankruptcy) or other
payment due in respect thereof was (or should have been) written off.

Delinquency Ratio: At any time, the ratio (expressed as a percentage) computed as of the
Cut-Off Date for the next preceding Collection Period by dividing (i) the aggregate Unpaid Balance
of all Pool Receivables that are Delinquent Receivables on such Cut-Off Date by (ii) the aggregate
Unpaid Balance of Pool Receivables on such Cut-Off Date.

Delinquent Receivable: A Pool Receivable (i) that is not a Defaulted Receivable and (ii)
as to which any payment, or part thereof, remains unpaid for 91 days or more from the original due
date for such payment.

Dilution: The amount of any reduction or cancellation of the Unpaid Balance of a Pool
Receivable as described in Section 3.2(a).

Dilution Horizon: For any day, the weighted average credit memo lag, in days, set forth in
the most recent review conducted pursuant to the provisions of Section 7.1(c).

Dilution Horizon Ratio: As of any date, the product (calculated as of the most recent
Reporting Date) of (a) the decimal equivalent of a fraction, the numerator of which is the
aggregate dollar amount of all Receivables generated by the Originators during the most recent
Collection Period and the denominator of which is the Net Pool Balance as of the most recent
Cut-Off Date and (b)
the decimal equivalent of a fraction the numerator of which is the then current Dilution Horizon
and the denominator of which is 31.

 

 

 

Dilution Ratio: As of any Cut-Off Date, the percentage equivalent of a fraction, the
numerator of which is the aggregate dollar amount of Dilutions that occurred during the Collection
Period ending on such date and the denominator of which is the aggregate dollar amount of all
Receivables originated by the Originators during such Collection Period.

Dilution Reserve: The product of (i) the sum of (A) the product of (1) 2 and (2) the
Adjusted Dilution Ratio and (B) the Dilution Volatility Component and (ii) the Dilution Horizon
Ratio.

Dilution Volatility Component: The product of (i) the positive excess, if any, of (A) the
highest Dilution Ratio over the past 12 months over (B) the Adjusted Dilution Ratio and (ii) a
fraction, the numerator of which is the highest three month rolling average Dilution Ratio over the
past 12 months and the denominator of which is the Adjusted Dilution Ratio.

Dollars: Means dollars in lawful money of the United States of America.

Downgraded Liquidity Bank: A Liquidity Bank with respect to which a Downgrading Event
shall have occurred.

Downgrading Event: With respect to any Person means the lowering of the rating with regard
to the short-term securities of such Person to below (i) A-1 by Standard & Poor’s Ratings Group, or
(ii) P-1 by Moody’s.

Earned Discount: For any Yield Period for any Asset Tranche funded with an Alternate
Funding or a Liquidity Funding by any Purchaser Group, as the case may be:

IA x ER x ED + LF

360     

where:

	 	 	 	 	 	 	 
	 

	 	IA
	 	=
	 	the daily average (calculated at the close of business each
day) of the related Purchaser Group Invested Amount in such Asset Tranche
during such Yield Period,
	 
	 	 	 	 	 	 
	 

	 	ER
	 	=
	 	the Earned Discount Rate for such Yield Period,
	 
	 	 	 	 	 	 
	 

	 	ED
	 	=
	 	the actual number of days elapsed during such Yield Period, and
	 
	 	 	 	 	 	 
	 

	 	LF
	 	=
	 	the Liquidation Fee, if any, during such Yield Period.

Earned Discount Rate: For any Yield Period for any Asset Tranche funded by an Alternate
Funding or a Liquidity Funding, as the case may be, the Bank Rate for such Asset Tranche and such
Yield Period.

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

 

 

 

Effective Date: December 13, 2007.

Eligible Receivable: At any time, a Receivable:

(i) which is a Pool Receivable arising out of the sale by an Originator in the ordinary
course of its business that has been sold or contributed to the Seller pursuant to the Sale
Agreement in a “true sale” transaction;

(ii) as to which the perfection of the Purchaser’s undivided ownership interest therein
is governed by the laws of a jurisdiction where the Uniform Commercial Code — Secured
Transactions is in force, and which constitutes an “account” as defined in the Uniform
Commercial Code as in effect in such jurisdiction;

(iii) the Obligor of which is a resident of the United States, or any of its possessions
or territories and is not an Affiliate or employee of any Seller Party;

(iv) which is neither a Defaulted Receivable nor a Delinquent Receivable;

(v) with regard to which the representations and warranties of the Seller set forth
in Section 6.1(l) are true and correct;

(vi) the sale of an undivided interest in which does not contravene or conflict with
any law;

(vii) which is denominated and payable only in Dollars in the United States;

(viii) which arises under a Contract that has been duly authorized and that, together with
such Receivable, is in full force and effect and constitutes the legal, valid and binding
obligation of the Obligor of such Receivable enforceable against such Obligor in accordance
with its terms and is not subject to any dispute, offset, counterclaim or defense
whatsoever, provided, however, that if such dispute, offset, counterclaim or
defense affects only a portion of the Unpaid Balance of such Receivable then such Receivable
may be deemed an Eligible Receivable to the extent of the portion of such Unpaid Balance
which is not so affected;

(ix) which, together with the Contract related thereto, does not contravene in any
material respect any laws, rules or regulations applicable thereto (including, without
limitation, laws, rules and regulations relating to usury, truth in lending, fair credit
billing, fair credit reporting, equal credit opportunity, fair debt collection practices and
privacy) and with respect to which no party to the Contract related thereto is in violation
of any such law, rule or regulation in any material respect if such violation would impair
the collectibility of such Receivable;

(x) which satisfies in all material respects all applicable requirements of the
applicable Originator’s Credit and Collection Policy;

 

 

 

(xi) which, according to the Contract related thereto, is due and payable within 120
days from the invoice date of such Receivable; provided, however, that on any day when the
Weighted Average Term shall exceed 45 days, the Contract related thereto, shall be due and
payable within 60 days from the invoice date of such Receivable; provided,
further that a Receivable that is otherwise an “Eligible Receivable” shall not be an
Eligible Receivable, if the Outstanding Balance of such Receivable when added to the
Outstanding Balance of all other Receivables that are due and payable within 91-120 days
from the invoice date of such Receivable, would exceed 5% of the aggregate Outstanding
Balance of all Receivables;

(xii) not more than 35% of the aggregate Unpaid Balance of all Receivables of the
Obligor of which are Defaulted Receivables;

(xiii) the original term of which has not been extended and the Unpaid Balance of which
has not been adjusted more than one time;

(xiv) the Obligor of which is not a Governmental Authority as to which the assignment
of receivables owing therefrom requires compliance with the Federal Assignment of Claims Act
or other similar Legislation (unless the Seller has complied therewith);

(xv) which is not classified by the “Terms Description” of the related Originator’s
Credit and Collection Policy or any other internal classification procedures utilized by
such Originator as (A) “Authorizer,” (B) “Cash Application,” (C) “Check in Progress,” (D)
“COD-Certified Check,” (E) “COD-Company Check,” (F) “Consignment Shipment,” (G) “Direct
Pay,” (H) “Due Immediately,” (I) “Gratis,” (J) “Invoice to be Considered,” (K) “Paid in
Advance,” (L) “Payroll Deduction,” (M) “Warrant Gratis,” (N) “Warranty Parts,” or (O) any
other classification now existing or hereinafter created that has the same or any similar
definition as any of the foregoing;

(xvi) as to which the applicable Originator has satisfied and fully performed all
obligations on its part with respect to such Receivable required to be fulfilled by it, and
no further action is required to be performed by any Person with respect thereto other than
payment thereon by the applicable Obligor;

(xvii) as to which any Purchaser Agent has not notified Seller that such Purchaser Agent
has determined that such Receivable or class of Receivables is not acceptable as an Eligible
Receivable, including, without limitation, because such Receivable arises under a Contract
that is not acceptable to such Purchaser Agent; and

(xviii) until such time as all of the Agents shall have provided to the Seller and to each
other their written consents otherwise, the Originator of which was not Advanced Distributor
Products LLC or Heatcraft Refrigeration Products LLC.

ERISA: The U.S. Employee Retirement Income Security Act of 1974, as amended from time to
time.

 

 

 

ERISA Affiliate: Any trade or business (whether or not incorporated) that is a member of a
group of which the Master Servicer is a member and which is treated as a single employer under
Section 414 of the Code.

Eurodollar Business Day: A day of the year as defined in clause (i) of the
definition of Business Day.

Eurodollar Rate: For any Yield Period, the rate per annum determined on the basis of the
offered rate for deposits in Dollars of amounts equal or comparable to the principal amount of the
related Liquidity Funding or Alternate Funding, as the case may be, offered for a term comparable
to such Yield Period, which rates appear on the Telerate Page 3750 effective as of 11:00 A.M.,
London time, two Eurodollar Business Days prior to the first day of such Yield Period, provided
that if no such offered rates appear on such page, the Eurodollar Rate for such Yield Period will
be the arithmetic average (rounded upwards, if necessary, to the next higher 1/100th of 1%) of
rates quoted by not less than two major banks in New York City, selected by the related Purchaser
Agent, at approximately 10:00 A.M., New York City time, two Eurodollar Business Days prior to the
first day of such Yield Period, for deposits in Dollars offered by leading European banks for a
period comparable to such Yield Period in an amount comparable to the principal amount of such
Liquidity Funding or Alternate Funding, as the case may be.

Eurodollar Rate (Reserve Adjusted): With respect to any Yield Period means a rate per
annum equal to the quotient obtained (rounded upwards, if necessary, to the next higher 1/100th of
1%) by dividing (i) the applicable Eurodollar Rate for such Yield Period by (ii) 1.0 minus the
Eurodollar Reserve Percentage.

Eurodollar Reserve Percentage: With respect to any Yield Period, the maximum reserve
percentage, if any, applicable to any Liquidity Bank under Regulation D during such Yield Period
(or if more than one percentage shall be applicable, the daily average of such percentages for
those days in such Yield Period during which any such percentage shall be applicable) for
determining the Liquidity Bank’s reserve requirement (including any marginal, supplemental or
emergency reserves) with respect to liabilities or assets having a term comparable to such Yield
Period consisting or included in the computation of “Eurocurrency Liabilities” pursuant to
Regulation D. Without limiting the effect of the foregoing, the Eurodollar Reserve Percentage
shall reflect any other reserves required to be maintained by the Liquidity Bank by reason of any
Regulatory Change against (i) any category of liabilities which includes deposits by reference to
which the “London Interbank Offered Rate” or “LIBOR” is to be determined or (ii) any category of
extensions of credit or other assets which include LIBOR-based credits or assets.

Event of Bankruptcy: With respect to a Person if either:

(i) a case or other proceeding shall be commenced, without the application or consent
of such Person, in any court, seeking the liquidation, reorganization, debt arrangement,
dissolution, winding up, or composition or readjustment of debts of such Person, the
appointment of a trustee, receiver, custodian, liquidator, assignee, sequestrator or the
like for such Person or all or substantially all of its assets, or any similar action with
respect to such Person under any law relating to bankruptcy, insolvency, reorganization,
winding up or composition or adjustment of debts, and such
case or proceeding shall continue undismissed, or unstayed and in effect, for a period
of 60 consecutive days; or an order for relief in respect of such Person shall be entered in
an involuntary case under the federal bankruptcy laws or other similar laws now or hereafter
in effect; or

 

 

 

(ii) such Person shall commence a voluntary case or other proceeding under any
applicable bankruptcy, insolvency, reorganization, debt arrangement, dissolution or other
similar law now or hereafter in effect, or shall consent to the appointment of or taking
possession by a receiver, liquidator, assignee, trustee, custodian, sequestrator (or other
similar official) for, such Person or for any substantial part of its property, or shall
make any general assignment for the benefit of creditors, or shall be adjudicated insolvent,
or admit in writing its inability to, pay its debts generally as they become due, or, if a
corporation or similar entity, its board of directors shall vote to implement any of the
foregoing.

Excess Concentration Amount: As of any date, the sum of the amounts by which the aggregate
Unpaid Balance of Receivables of each Obligor exceeds the Obligor Concentration Limit for such
Obligor.

Exchange Act: The Securities Exchange Act of 1934, as amended.

Existing Agreement: As defined in the Preamble.

Face Amount: With respect to any Commercial Paper Note, (i) the face amount stated thereon
in the case of any Commercial Paper Note issued on a discount basis and (ii) the principal amount
stated thereon plus the amount of all interest scheduled to accrue on such Commercial Paper Note
through its stated maturity date in the case of any Commercial Paper Note issued on an interest
bearing basis.

Federal Funds Rate: For any day, the rate per annum (rounded upwards, if necessary, to the
next higher 1/100th of 1%) equal to the weighted average of the rates on overnight Federal funds
transactions with members of the Federal Reserve System arranged by Federal funds brokers on such
day, as published by the Federal Reserve Bank of New York on the Business Day next succeeding such
day, provided that (i) if the day for which such rate is to be determined is not a Business Day,
the Federal Funds Rate for such day shall be such rate on such transactions on the next preceding
Business Day as so published on the next succeeding Business Day, and (ii) if such rate is not so
published for any day, the Federal Funds Rate for such day shall be the average rate charged to
Bank of America on such day on such transactions, as reasonably determined by the Bank of America.

Federal Reserve Board: The Board of Governors of the Federal Reserve System, or any
successor thereto or to the functions thereof.

Fee Letter: For each Purchaser Group, the fee letter (including all amendments,
modifications, restatements, replacements and addendums thereto) entered into from time to time by
the Seller and the members of such Purchaser Group.

 

 

 

Final Payout Date: The date following the Termination Date on which the Invested Amount
shall have been reduced to zero and all other amounts payable by the Seller under the Transaction
Documents shall have been paid in full.

Funding Termination Date: The earliest of the following:

(i) November 25, 2009, or such later date as may, from time to time, be agreed to in
writing by the Agents;

(ii) the date on which the Agents declare a Funding Termination Date in a notice to
the Seller in accordance with Section 10.2(a); or

(iii) in accordance with Section 10.2(b), the Funding Termination Date occurs
automatically.

GAAP: Generally accepted accounting principles set forth in the opinions and
pronouncements of the Accounting Principles Board of the American Institute of Certified Public
Accountants and statements and pronouncements of the Financial Accounting Standards Board or in
such other statements by such accounting profession, which are applicable to the circumstances as
of the date of determination.

Governmental Authority: Any nation or government, any state or other political subdivision
thereof, any central bank (or similar monetary or regulatory authority) thereof, any body or entity
exercising executive, legislative, judicial, regulatory or administrative functions of or
pertaining to government, any court or arbitrator and any accounting board or authority (whether or
not a part of government) which is responsible for the establishment or interpretation of national
or international accounting principles, in each case whether foreign or domestic.

Guaranty: With respect to any Person, any obligation (except the endorsement in the
ordinary course of business of negotiable instruments for deposit or collection) of such Person
guaranteeing or in effect guaranteeing any Indebtedness, dividend or other obligation of any other
Person in any manner, whether directly or indirectly, including (without limitation) obligations
incurred through an agreement, contingent or otherwise, by such Person:

(i) to purchase such Indebtedness or obligation or any property constituting security
therefor;

(ii) to advance or supply funds (A) for the purchase or payment of such Indebtedness
or obligation, or (B) to maintain any working capital or other balance sheet condition or
any income statement condition of any other Person or otherwise to advance or make available
funds for the purchase of payment of such Indebtedness or obligation;

(iii) to lease properties or to purchase properties or services primarily for the
purpose of assuring the owner of such Indebtedness or obligation of the ability of any other
Person to make payment of the Indebtedness or obligation; or

(iv) otherwise to assure the owner of such Indebtedness or obligation against loss in
respect of thereof. In any computation of the Indebtedness or other liabilities of
the obligor under any Guaranty, the Indebtedness or other obligations that are the
subject of such Guaranty shall be assumed to be direct obligations of such obligor.

 

 

 

Indebtedness: With respect to any Person shall mean, at any time, without duplication:

(i) its liabilities for borrowed money and its redemption obligations in respect of
mandatorily redeemable Preferred Stock;

(ii) its liabilities for the deferred purchase price of property acquired by such
Person (excluding accounts payable arising in the ordinary course of business but including
all liabilities created or arising under any conditional sale or other title retention
agreement with respect to any such property);

(iii) all liabilities appearing on its balance sheet in accordance with GAAP in
respect of Capital Leases;

(iv) all liabilities for borrowed money secured by any Lien with respect to any
property owned by such Person (whether or not it has assumed or otherwise become liable for
such liabilities);

(v) all its liabilities in respect of letters of credit or instruments serving a
similar function issued or accepted for its account by banks and other financial
institutions (whether or not representing obligations for borrowed money, but excluding in
any event obligations in respect of (A) trade or commercial letters of credit issued for the
account of such Person in the ordinary course of its business and (B) stand-by letters of
credit issued to support obligations of such Person that are not of a type described in any
of clauses (i), (ii), (iii), (iv), (vi) or
(vii) of this definition;

(vi) Swaps of such Person; and

(vii) any Guaranty of such Person with respect to liabilities of a type described in
any of clauses (i) through (vi) hereof.

Indebtedness of any Person shall include all obligations of such Person of the character
described in clauses (i) through (vii) above to the extent such Person remains
legally liable in respect hereof notwithstanding that any such obligation is deemed to be
extinguished under GAAP.

Indemnified Amounts: As defined in Section 13.1.

Indemnified Party: As defined in Section 13.1.

Independent Director: A Person who is a director of the Seller and who is not at such
time, and has not been at any time during the preceding five (5) years: (i) a creditor, supplier,
director, officer, employee, family member, manager, member, limited partner, partner or contractor
of Lennox International, the Servicer any Originator or any of their respective Subsidiaries or
Affiliates (other than Seller), (ii) a direct or indirect or beneficial owner, excluding de minimus
ownership interests, (at the time of such individual’s appointment as an Independent Director or
at any time thereafter while serving as an Independent Director) of any of the outstanding common
shares of the Seller, Lennox International, the Servicer, any Originator, or any of their
respective Subsidiaries or Affiliates, having general voting rights, or (iii) a person who controls
(whether directly, indirectly or otherwise) Lennox International, the Servicer, any Originator or
any of their respective Subsidiaries or Affiliates (other than Seller) or any creditor, supplier,
employee, officer, director, manager, member, limited partner, partner or contractor of Lennox
International, the Servicer, any Originator or any of their respective Subsidiaries or Affiliates
(other than Seller). Such Person is subject to the written approval of the Agents.

 

 

 

Information Package: A report in the form of Exhibit 3.1(a) and, during any period
during which a Weekly Report is required to be delivered, each such Weekly Report,
provided, however, that, if a Liquidation Event has occurred and is continuing, such
Information Package shall be accompanied by an electronic file in a form satisfactory to each
Purchaser Agent.

Initial Cut-Off Date: May 31, 2000.

Initial Due Diligence Auditor: Such person designated by the Administrative Agent as the
initial due diligence auditor.

Initial Seller Note: As defined in the Sale Agreement.

Interim Cut-Off Date: Such date as may be specified by any Agent in any request to provide
an Interim Information Package pursuant to Section 1.4(c).

Interim Information Package: As defined in Section 1.4(c).

Interim Reporting Date: As defined in Section 1.4(c).

Interim Reporting Period: Such period as may be specified by any Agent in any request to
provide an Interim Information Package pursuant to Section 1.4(c).

Interim Settlement Date: One Business Day following each Interim Reporting Date.

Invested Amount: At any time with respect to the Asset Interest an amount equal to (i) the
aggregate of the amounts theretofore paid to Seller for Purchases pursuant to Sections 1.1
and 1.2, less (ii) the aggregate amount of Collections theretofore received and
actually distributed to the Investors on account of such Invested Amount pursuant to Section
1.3.

Investors: The Purchasers and the Liquidity Banks.

Lennox: As defined in the Preamble.

Lennox International: Lennox International Inc., a Delaware corporation.

Lien: With respect to any Person, any mortgage, lien, pledge, charge, security interest,
or other encumbrance, or any interest or title of any vendor, lessor, lender or other secured party
to or of such Person under any conditional sale or other title retention agreement or Capital
Lease, upon
or with respect to any property or asset of such Person (including in the case of stock,
stockholder agreements, voting trust agreements and all similar arrangements).

 

 

 

Liquidation Event: As defined in Section 10.1.

Liquidation Fee: For each Asset Tranche (or portion thereof) funded through a Liquidity
Funding or an Alternate Funding, as the case may be, for each day in any Yield Period (computed
without regard to clause (iii) of the proviso of the definition of “Yield Period”), the
amount, if any, by which:

(i) the additional Earned Discount (calculated without taking into account any
Liquidation Fee) which would have accrued on the reductions of the related Purchaser’s
Tranche Investment with respect to such Asset Tranche during such Yield Period (as so
computed) if such reductions had not been made, exceeds

(ii) the income, if any, received by the related Purchaser from investing the
proceeds of such reductions of such Purchaser’s Tranche Investment.

Liquidation Period: The period commencing on the date on which a Liquidation Event has
occurred or is continuing and the Agents shall have notified Seller and the Master Servicer in
writing that the Liquidation Period has commenced, and ending on the Final Payout Date;
provided, hereunder, upon the occurrence of a Liquidation Event described in
Section 10.1(e), the Liquidation Period shall commence automatically.

Liquidity Agent: With respect to the Yorktown Purchaser Group, Bank of America, as agent
for the Liquidity Banks under the Yorktown Liquidity Agreement, or any successor to Bank of America
in such capacity

Liquidity Bank: Any Yorktown Liquidity Bank.

Liquidity Funding: A purchase made by any Liquidity Bank (or simultaneous purchases made
by the Liquidity Banks) pursuant to any Liquidity Agreement.

Lockbox Account: An account maintained for the purpose of receiving Collections at a bank
or other financial institution which has executed a Lockbox Account.

Lockbox Agreement: A letter agreement, in substantially the form of Exhibit A-1,
among the Master Servicer, the Administrative Agent, the Seller and any Lockbox Bank.

Lockbox Bank: Any of the banks holding one or more lockboxes or Lockbox Accounts receiving
Collections from Pool Receivables.

Loss Reserve: At any time, means the product of (1) 2.0 and (2) the highest rolling three
month average Default Ratio during the immediately preceding twelve (12) months and (3) the most
recently calculated Default Horizon Ratio.

Master Servicer: As defined in the preamble.

 

 

 

Material Adverse Effect: With respect to any event or circumstance, a material adverse
effect on:

(i) (A) the assets, operations, business or financial condition of the Seller or (B)
the business, assets, operations or financial condition of Lennox International and its
Subsidiaries, taken as a whole, which could reasonably be expected to have a material
adverse effect on the creditworthiness of any Originator;

(ii) the ability of the Seller, the Master Servicer, any Originator or any Affiliate
thereof to perform in all material respects its obligations under this Agreement or any
other Transaction Document; or

(iii) the validity or enforceability of this Agreement or any other Transaction
Document, or the validity, enforceability or collectibility of a material portion of the
Receivables Pool; or

(iv) the status, existence, perfection, priority or enforceability of the Secured
Parties’ and the Administrative Agent’s interest in the Receivables Pool.

Material Indebtedness: Indebtedness, the aggregate principal amount of which is greater
than $25,000,000.

Moody’s: Moody’s Investors Service, Inc.

Net Pool Balance: On any date, an amount equal to (i) the aggregate Unpaid Balance of all
Eligible Receivables in the Receivables Pool on such date, minus (ii) the Excess Concentration
Amount on such date.

Net Worth: With respect to the Seller on any date, an amount equal to the aggregate
Outstanding Balance of all Pool Receivables minus the sum of (i) the aggregate Outstanding
Balance of all Defaulted Receivables on such day, (ii) the aggregate principal amount outstanding
of the Initial Seller Notes on such day, together with all accrued and unpaid interest thereon on
such day, and (iii) an amount equal to the Net Pool Balance times the Asset Interest on
such day.

Obligor: A Person obligated to make payments with respect to a Receivable, including any
guarantor thereof.

Obligor Concentration Limit: At any time, in relation to the aggregate Unpaid Balance of
Receivables owed by any single Obligor and its Affiliated obligors (if any):

(i) for Obligors who have a short term unsecured debt rating currently assigned to them
by either S&P or Moody’s, the applicable concentration limit shall be determined according
to the following table (and, if such Obligor is rated by both S&P and Moody’s and has a
split rating, the applicable rating will be the lower of the two):

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

 

 

 

If such Obligor is rated by only S&P, the applicable rating will be deemed to be one ratings tier
below the actual rating by S&P, and, if such Obligor is rated by only Moody’s, the applicable
rating will be deemed to be one ratings tier below the actual rating by Moody’s, it being
understood that if, for example, Moody’s has assigned a P-1 rating to such Obligor and S&P has not
rated it, the applicable rating will be deemed to be P-2.

(ii) for Obligors who do not have a debt rating listed above or who are not rated,
2% of the aggregate Unpaid Balance of Eligible Receivables at such time.

provided, however that at the Originator’s request and in the Agents’ sole
discretion, the Agents may permit certain obligors to have an Obligor Concentration Limit in excess
of those described in clauses (i) and (ii) above (“Special Obligor”);
provided, however, that any such Special Obligor designation shall not take effect without
the confirmation of approval to the Agents by each of Fitch Investors Service, Moody’s and S&P of
such designation, if any Agent, in its sole discretion, determines that such confirmation of
approval shall be required.

Originator: Each of Lennox and any other Person who is a seller under the Sale Agreement.

Outstanding Balance: With respect to any Receivable, the outstanding balance of such
Receivable in Dollars.

Person: An individual, partnership, corporation (including a business trust), joint stock
company, trust, unincorporated association, joint venture, government or any agency or political
subdivision thereof or any other entity.

Plan: Any pension plan subject to the provisions of Title IV of ERISA or Section 412 of
the Code which is maintained for employees of Lennox or any ERISA Affiliate.

Pool Receivable: A Receivable in the Receivables Pool.

Pooled Commercial Paper: Commercial Paper Notes of Purchaser subject to any pooling
arrangement by Purchaser, but excluding Commercial Paper Notes issued by Purchaser for a tenor and
in an amount specifically requested by any Person in connection with any agreement effected by
Purchaser.

Preferred Stock: Any class of capital stock of a corporation that is preferred over any
other class of capital stock of such corporation as to the payment of dividends or the payment of
any amount upon liquidation or dissolution of such corporation.

Prime Rate: Refers to that interest rate so denominated and set by Bank of America from
time to time as an interest rate basis for borrowings. The Prime Rate is but one of several
interest rate bases used by Bank of America. Bank of America lends at interest rates above and
below the Prime Rate.

 

 

 

Program Fee: The aggregate “Program Fee” set forth in each Fee Letter.

Pro Rata Share: At any time with respect to a Purchaser Group, (a) with respect to any
payment to be made to such Purchaser Group, the percentage equivalent of a fraction the numerator
of which is equal to such Purchaser Group’s Purchaser Group Invested Amount at such time and the
denominator of which is equal to the Invested Amount at such time and (b) with respect to any
Purchase to be made by such Purchaser Group, the percentage equivalent of a fraction, the numerator
of which is equal to the related Purchaser Group Limit and the denominator of which is equal to the
Purchase Limit.

Purchase: As defined in Section 1.1.

Purchase Limit: As defined in Section 1.1.

Purchaser: The Yorktown Purchaser and each Yorktown Investor, as the case may be.

Purchaser Agent: The Yorktown Purchaser Agent.

Purchaser Agent Account: The Yorktown Purchaser Account.

Purchaser Group: The Yorktown Purchaser Group.

Purchaser Group Invested Amount: With respect to a Purchaser Group, the aggregate of the
portions of the Invested Amount outstanding at such time that were funded by such Purchaser Group.

Purchaser Group Limit: The Yorktown Purchaser Group Limit.

Purchasers’ Share: With respect to any amount, at any time, the lesser of (i) the most
recently calculated Asset Interest and (ii) 100%.

Purchaser’s Tranche Investment: In relation to any Asset Tranche, the amount of the
Invested Amount allocated by the Administrative Agent to that Asset Tranche pursuant to Section
2.1, provided, that at all times the aggregate amounts allocated to all Asset Tranches shall
equal the Invested Amount.

Qualifying Liquidity Bank: A Liquidity Bank with a rating of its short-term securities
equal to or higher than (i) A-1 by Standard & Poor’s and (ii) P-1 by Moody’s.

Receivable: Any right to payment from a Person (other than an Affiliate), whether
constituting an account, chattel paper, instrument or general intangible and includes the right to
payment of any interest or finance charges and other amounts with respect thereto.

Receivables Pool: At any time all then outstanding Receivables which have been sold or
contributed as capital, or purported to have been sold or contributed as capital, by an Originator
to the Seller, other than those reconveyed to an Originator pursuant to Section 3.5 of the Sale
Agreement.

 

 

 

Regulation D: Regulation D of the Federal Reserve Board, as the same may be amended or
supplemented from time to time.

Regulatory Change: Any change after the date of this Agreement in United States (federal,
state or municipal) or foreign laws or regulations (including Regulation D) or the adoption or
making after such date of any interpretations, directives or requests applying to a class of banks
(including the Liquidity Banks) of or under any United States (federal, state or municipal) or
foreign, laws, or regulations (whether or not having the force of law) by any Governmental
Authority or monetary authority charged with the interpretation or administration thereof.

Reinvestment: As defined in Section 1.3(a)(iii).

Related Assets: (i) all rights to, but not any obligations under, all related Contracts
and other Related Security related to any Pool Receivables, (ii) all rights and interests of the
Seller under the Sale Agreement in relation to any Pool Receivables, (iii) all books and records
evidencing or otherwise relating to any Pool Receivables, (iv) all Lockbox Accounts and all cash
and investments therein, to the extent constituting or representing the items in the following
clause (v) and (v) all Collections in respect of, and other proceeds of, any Pool
Receivables or any other Related Assets.

Related Security: With respect to any Pool Receivable, all of the Seller’s (in the case of
usage in the Receivables Purchase Agreement) or the Originator’s (in the case of usage in the Sale
Agreement) right, title and interest in and to: (i) all Contracts that relate to such Pool
Receivable; (ii) all merchandise (including returned merchandise), if any, relating to the sale
which gave rise to such Pool Receivable; (iii) all security deposits and other security interests
or liens and property subject thereto from time to time purporting to secure payment of such Pool
Receivable, whether pursuant to the Contract related to such Pool Receivable or otherwise; (iv) all
UCC financing statements covering any collateral securing payment of such Pool Receivable (but only
to the extent of the interest of the Purchaser in the respective Pool Receivable); (v) all
guarantees and other agreements or arrangements of whatever character from time to time supporting
or securing payment of such Pool Receivable whether pursuant to the Contract related to such Pool
Receivable or otherwise; and (vi) all insurance policies, and all claims thereunder, related to
such Pool Receivable, in each case to the extent directly related to rights to payment, collection
and enforcement, and other rights with respect to such Pool Receivable. The interest of the
Purchaser in any Related Security is only to the extent of the Purchaser’s undivided percentage
interest, as more fully described in the definition of Asset Interest.

Reportable Event: Any reportable event as defined in Section 4043(b) of ERISA or the
regulations issued thereunder with respect to a Plan (other than a Plan maintained by an ERISA
Affiliate which is considered an ERISA Affiliate only pursuant to subsection (m) or (o) of Section
414 of the Code).

Reporting Date: The eighth day of each month or if such day is not a Business Day, the
next succeeding Business Day; provided however, that if the senior unsecured debt ratings
of Lennox International Inc. by Moody’s or S&P are reduced below Ba2 or BB, respectively, or are
withdrawn by either of Moody’s or S&P or if either Moody’s or S&P no longer provides a senior
unsecured debt rating for Lennox International Inc. and, in any such case, the aggregate Invested
Amount is greater than $0.00, then, in any such case, the Reporting Date will be the first Business
Day of each week.

 

 

 

Required Reserve: On any day during a Collection Period, an amount equal to the product of
(i) the Net Pool Balance and (ii) the sum of (a) the Yield Reserve on such day, (b) the Servicing
Reserve on such day and (c) the greater of (I) Required Reserve Factor Floor on such day and (II)
the sum of the Loss Reserve on such day and the Dilution Reserve on such day.

Required Reserve Factor Floor: The sum of (i) 8.0% and (ii) the product of the Adjusted
Dilution Ratio times the Dilution Horizon Ratio.

Revolving Period: Means the period beginning on the date hereof and ending on the earlier
of (i) November 25, 2009 and (ii) the Termination Date.

S&P: Standard & Poor’s Ratings Service.

Sale Agreement: The Purchase and Sale Agreement dated as of June 19, 2000 among the
Originators and the Seller as it may be amended, supplemented or otherwise modified.

Sale Amendment: As defined in Section 5.1(a)(i).

SEC: The Securities and Exchange Commission.

Secured Parties: The Purchasers, the Agents, the Indemnified Parties and the Affected
Parties.

Seller: As defined in the preamble.

Seller Information: As defined in Section 14.7(a).

Seller Information Provider: As defined in Section 14.7(a).

Seller Party: As defined in the preamble.

Seller’s Share: With respect to any amount means 100% minus the lesser of (i) the most
recently calculated Asset Interest and (ii) 100%.

Servicer Default: As defined in Section 8.4.

Servicer Transfer Event: As defined in Section 8. 1(b).

Servicing Fee: Accrued for any day in a Collection Period means: (i) an amount equal to
the product of (A) the Servicing Fee rate, (B) the aggregate Unpaid Balance of the Pool Receivables
at the close of business on the first day of such Collection Period, and (C) 1/360; or (ii) on and
after the Master Servicer’s reasonable request made at any time when Lennox shall no longer be
Master Servicer, an alternative amount specified by Master Servicer not exceeding (A) 110% of
Master Servicer’s costs and expenses of performing its obligations under the Agreement during the
Collection Period when such day occurs divided by (B) the number of days in such Collection Period.

 

 

 

Servicing Fee Rate: 1.00% per annum.

Servicing Reserve: The product of (i) the Servicing Fee Rate and (ii) a fraction, the
numerator of which is the Twelve Month DSO and the denominator of which is 360.

Settlement Date: Two Business Days following each Reporting Date; provided,
however, during any period during which a Weekly Report is required to be delivered, the Settlement
Date shall also be two Business Days immediately following the related Weekly Reporting Date.

Special Obligor: As defined in the definition of Obligor Concentration Limit.

Structuring Fee: As defined in the Fee Letter.

Subsidiary: With respect to any Person means (i) a corporation more than 50% of whose
stock of any class or classes having by the terms thereof ordinary voting power to elect a majority
of the directors of such corporation (irrespective of whether or not at the time stock of any class
or classes of such corporation shall have or might have voting power by reason of the happening of
any contingency) is at the time owned or controlled by such Person, directly or indirectly through
Subsidiaries, and (ii) any partnership, association, joint venture or other entity in which such
Person, directly or indirectly through Subsidiaries, has more than a 50% equity interest at the
time.

Successor Notice: As defined in Section 8.1(b).

Swaps: With respect to any Person, payment obligations with respect to interest rate
swaps, currency swaps and similar obligations obligating such Person to make payments, whether
periodically or upon the happening of a contingency. For the purpose of this Agreement, the amount
of the obligation under any Swap shall be an amount determined in respect thereof as of the end of
the then most recently ended fiscal quarter of such Person, based on the assumption that such Swap
had terminated at the end of such fiscal quarter, and in making such determination, if any
agreement relating to such Swap provides for the netting of amounts payable by and to such Person
thereunder or if any such agreement provides for the simultaneous payment of amounts by and to such
Person, then in each such case, the amount of such obligation shall be the net amount so
determined.

Termination Date: The earliest of:

(i) the date of termination (whether by scheduled expiration, termination on default or
otherwise) of the Liquidity Banks’ commitments under the Liquidity Agreement (unless such
commitments are renewed, extended or replaced on or before such date);

(ii) the Funding Termination Date;

(iii) the date designated by the Seller as the “Termination Date” on not less than
thirty (30) days’ notice to the Administrative Agent, provided that on such date the
Invested Amount has been reduced to zero, all accrued Earned Discount, CP Costs,
Broken Funding Costs and fees have been paid in full and all other amounts due to the
Purchaser and the Administrative Agent have been paid in full; and

 

 

 

(iv) the date on which any of the following shall occur:

(A) A Downgrading Event with respect to a Liquidity Bank shall have occurred
and been continuing for not less than 45 days, (x) the Downgraded Liquidity Bank
shall not have been replaced by a Qualifying Liquidity Bank pursuant to a Liquidity
Agreement in form and substance acceptable to the Purchaser and the Administrative
Agent, and (y) the commitment of such Downgraded Liquidity Bank under the Liquidity
Agreement shall not have been funded or collateralized in such a manner that such
Downgrading Event will not result in a reduction or withdrawal of the credit rating
applied to the Commercial Paper Notes by any of the rating agencies then rating the
Commercial Paper Notes; or

(B) Purchaser shall become an “investment company” within the meaning of the
Investment Company Act of 1940, as amended.

Termination Notice: As defined in Section 8.4.

Threshold Amount: $3,900,000, or such other amount to which the Administrative Agent may
agree in writing from time to time.

Transaction Documents: This Agreement, the Lockbox Agreements, the Sale Agreement, the
Assurance Agreement, the Fee Letter, and the other documents to be executed and delivered in
connection herewith.

Transaction Fees: Subject to the limitations set forth in the Fee Letter, all reasonable
expenses of the Agents incurred in connection with the consummation of this Agreement and each
other Transaction Document, including but not limited to (i) the legal fees of Hunton & Williams
LLP, counsel to the Administrative Agent, (ii) expenses incurred in connection with any due
diligence audit and (iii) out-of-pocket expenses of the Agents.

Twelve Month DSO: For any day, the highest Days Sales Outstanding that occurred during the
twelve (12) month period ending on such date of calculation.

UCC: The Uniform Commercial Code, as from time to time in effect in the applicable
jurisdiction or jurisdictions.

Unmatured Liquidation Event: Any event which, with the giving of notice or lapse of time,
or both, would become a Liquidation Event.

Unpaid Balance: With respect to any Receivable means at any time the unpaid amount
thereof, but excluding all late payment charges, delinquency charges and extension or collection
fees.

Unused Fee: The aggregate “Unused Fee” set forth in the Fee Letter.

 

 

 

Weekly Report: A report (for the week most recently ended) in the form of Exhibit
3.1(a)-2.

Weekly Reporting Date: For any period during which Weekly Reports are required to be
delivered, the first Business Day of each calendar week.

Weekly Reporting Period: For any Weekly Reporting Date, the calendar week ended on the
Friday immediately preceding such Weekly Reporting Date.

Weekly Settlement Date: One Business Day following each Weekly Reporting Date.

Weighted Average Term: On any day, the weighted average of the stated terms of all
Receivables (excluding Receivables owed by an Affiliate or employee of any Seller Party) owned by
Seller on such date, weighted on the basis of the Unpaid Balance of each such Receivable, as of
such date of calculation.

Yield Period: With respect to any Asset Tranche funded by a Liquidity Funding or an
Alternate Funding, as the case may be,

(a) the period commencing on the date of the initial Purchase of the Asset Interest,
the making of such Liquidity Funding or Alternate Funding, as the case may be, or the
creation of such Asset Tranche pursuant to Section 2.1 (whichever is latest) and
ending such number of days thereafter as the Administrative Agent shall select; and

(b) each period commencing on the last day of the immediately preceding Yield Period
for the related Asset Tranche and ending such number of days thereafter as the
Administrative Agent shall select;

provided, however, that

(i) any such Yield Period (other than a Yield Period consisting of one day) which would
otherwise end on a day that is not a Business Day shall be extended to the next succeeding
Business Day (unless the related Asset Tranche shall be accruing Earned Discount at a rate
determined by reference to Eurodollar Rate (Reserve Adjusted), in which case if such
succeeding Business Day is in a different calendar month, such Yield Period shall instead be
shortened to the next preceding Business Day);

(ii) in the case of Yield Periods of one day for any Asset Tranche, (A) the initial
Yield Period shall be the date such Yield Period commences as described in clause
(a) above; and (B) any subsequently occurring Yield Period which is one day shall, if
the immediately preceding Yield Period is more than one day, be the last day of such
immediately preceding Yield Period, and if the immediately preceding Yield Period is one
day, shall be the next day following such immediately preceding Yield Period; and

 

 

 

(iii) in the case of any Yield Period for any Asset Tranche which commences before the
Termination Date and would otherwise end on a date occurring after such Termination Date,
such Yield Period shall end on such Termination Date and the duration of each such Yield
Period which commences on or after the Termination Date for such
Asset Tranche shall be of such duration as shall be selected by the related Purchaser
Agent.

Yield Reserve: On any date of determination, the product of (i) 1.5, (ii) the Base Rate
and (iii) a fraction the numerator of which is the Twelve Month DSO and the denominator of which is
360.

B. Other Terms. All accounting terms not specifically defined herein shall be
construed in accordance with GAAP. All terms used in Article 9 of the UCC in the State of New
York, and not specifically defined herein, are used herein as defined in such Article 9.

C. Computation of Time Periods. Unless otherwise stated in this Agreement, in the
computation of a period of time from a specified date to a later specified date, the word “from”
means “from and including” and the words “to” and “until” each mean “to but excluding”.

Yorktown Alternate Funding: The portion of the outstanding Invested Amount of any Asset
Tranche that is funded by the Yorktown Investors pursuant to either Section 1.1 or
Section 3A.1.

Yorktown Broken Funding Costs: For any Asset Tranche funded by any Yorktown Investor
which: (i) has its Purchaser Group Invested Amount reduced without compliance by the Seller with
the notice requirements hereunder, (ii) does not become subject to a reduction following the
delivery of any reduction notice pursuant to Section 3.2(b), or (iii) is assigned under an Yorktown
Liquidity Agreement or terminated prior to the date on which it was originally scheduled to end,
including by the written notice of Seller that it wishes to terminate the facility evidenced by
this Agreement; an amount equal to the excess, if any, of (A) the Yorktown CP Costs or Earned
Discount (as applicable) that would have accrued during the remainder of the Yield Periods or the
tranche periods for Commercial Paper determined by the Yorktown Purchaser Agent to relate to such
Asset Tranche (as applicable) subsequent to the date of such reduction, assignment or termination
(or in respect of clause (ii) above, the date such reduction was designated to occur pursuant to
the reduction notice) of the Yorktown Invested Amount of such Asset Tranche if such reduction,
assignment or termination had not occurred or such Reduction Notice had not been delivered, over
(B) the sum of (x) to the extent all or a portion of such Yorktown Invested Amount is allocated to
another Asset Tranche, the amount of Yorktown CP Costs or Earned Discount actually accrued during
the remainder of such period on such Yorktown Invested Amount for the new Asset Tranche, and (y) to
the extent such Yorktown Invested Amount is not allocated to another Asset Tranche, the income, if
any, actually received during the remainder of such period by the holder of such Asset Tranche from
investing the portion of such Yorktown Invested Amount not so allocated. All Yorktown Broken
Funding Costs shall be due and payable hereunder upon after written demand.

 

 

 

Yorktown CP Costs: For any CP Accrual Period for any Asset Tranche owned by the Yorktown
Purchaser if and to the extent the Yorktown Purchaser funds the Purchase or maintenance of its
Asset Tranche by the issuance of commercial paper notes during such period, the per annum rate
equivalent to the “weighted average cost” (as defined below) related to the issuances of commercial
paper notes that are allocated, in whole or in part, by the Yorktown Purchaser (or by its
administrator) to fund or maintain the Asset Tranche (and which may also be allocated in part to
the funding of other assets of the Yorktown Purchaser); provided, however, that if any component of
such rate is a discount rate, in calculating the “CP Rate” for such CP Accrual
Period, the Yorktown Purchaser shall for such component use the rate resulting from converting such
discount rate to an interest bearing equivalent rate per annum. As used in this definition, the
Yorktown Purchaser’s “weighted average cost” shall consist of (w) the actual interest rate (or
discount) paid to purchasers of the Yorktown Purchaser’s commercial paper notes, together with
dealer fees or commissions, to the extent allocated, in whole or in part, to the Yorktown
Purchaser’s commercial paper notes by the Yorktown Purchaser (or its administrator), (x) certain
documentation and transaction costs associated with the issuance of such commercial paper notes,
(y) any incremental carrying costs incurred with respect to commercial paper notes maturing on
dates other than those on which corresponding funds are received by the Yorktown Purchaser and (z)
other borrowing by the Yorktown Purchaser, including borrowings to fund small or odd dollar amounts
that are not easily accommodated in the commercial paper market.

Yorktown Investors: Bank of America, National Association and such other financial
institutions from time to time identified as “Yorktown Investors”.

Yorktown Liquidity Agreement: The Liquidity Asset Purchase Agreement, dated as of May 5,
2004, by and among the Yorktown Purchaser and the Yorktown Liquidity Banks.

Yorktown Liquidity Bank: The commercial lending institutions that are at any time parties
to the Yorktown Liquidity Agreement.

Yorktown Purchaser: YC SUSI Trust.

Yorktown Purchaser Agent: Bank of America, National Association and its successors.

Yorktown Purchaser Account: .

Yorktown Purchaser Group: The Yorktown Purchaser, each Yorktown Investor, each Yorktown
Liquidity Bank, the Yorktown Purchaser Agent, together with their respective successors, assigns
and participants.

Yorktown Purchaser Group Limit: $125,000,000.Filed by Bowne Pure Compliance

Exhibit 4.18

DATED
                 2008

THE BORROWERS

(as Borrowers)

- and -

THE SEVERAL LENDERS

(as Lenders)

- and -

DNB NOR BANK ASA

(as Agent)

- and -

DNB NOR BANK ASA

(as Security Trustee)

- and -

DNB NOR BANK ASA

NORDEA BANK FINLAND PLC, New York Branch

SUMITOMO MITSUI BANKING CORPORATION, Brussels Branch

LLOYDS TSB BANK PLC

(as Mandated Lead Arrangers)

- and -

DNB NOR BANK ASA

NORDEA BANK FINLAND PLC, New York Branch

(as Bookrunners)

 

SECURED FACILITY AGREEMENT

 

STEPHENSON HARWOOD

One St. Paul’s Churchyard

London EC4M 8SH

Tel: 020 7329 4422

Fax: 020 7329 7100

Ref: 819/1314

 

 

 

CONTENTS

	 	 	 	 	 
	 	 	Page	 
	 
	 	 	 	 
	1 Definitions and Interpretation
	 	 	2	 
	 
	 	 	 	 
	2 The Facility and its Purposes
	 	 	16	 
	 
	 	 	 	 
	3 Conditions of Utilisation
	 	 	18	 
	 
	 	 	 	 
	4 Advance
	 	 	22	 
	 
	 	 	 	 
	5 Repayment
	 	 	23	 
	 
	 	 	 	 
	6 Prepayment
	 	 	23	 
	 
	 	 	 	 
	7 Interest
	 	 	24	 
	 
	 	 	 	 
	8 Indemnities
	 	 	27	 
	 
	 	 	 	 
	9 Fees
	 	 	31	 
	 
	 	 	 	 
	10 Security and Application of Moneys
	 	 	31	 
	 
	 	 	 	 
	11 Representations and Warranties
	 	 	33	 
	 
	 	 	 	 
	12 Undertakings and Covenants
	 	 	38	 
	 
	 	 	 	 
	13 Events of Default
	 	 	43	 
	 
	 	 	 	 
	14 Assignment and Sub-Participation
	 	 	49	 
	 
	 	 	 	 
	15 The Agent, the Security Trustee and the Lenders
	 	 	51	 
	 
	 	 	 	 
	16 Set-Off
	 	 	60	 
	 
	 	 	 	 
	17 Payments
	 	 	60	 
	 
	 	 	 	 
	18 Notices
	 	 	62	 
	 
	 	 	 	 
	19 Partial Invalidity
	 	 	65	 
	 
	 	 	 	 
	20 Remedies and Waivers
	 	 	65	 

 

 

 

	 	 	 	 	 
	 	 	Page	 
	 
	 	 	 	 
	21 Joint and several liability
	 	 	65	 
	 
	 	 	 	 
	22 Miscellaneous
	 	 	67	 
	 
	 	 	 	 
	23 Law and Jurisdiction
	 	 	68	 
	 
	 	 	 	 
	SCHEDULE 1: The Lenders and the Commitments
	 	 	69	 
	 
	 	 	 	 
	SCHEDULE 2: The Borrowers and the Vessels
	 	 	72	 
	 
	 	 	 	 
	SCHEDULE 3: Conditions Precedent and Subsequent
	 	 	73	 
	Part I: Conditions precedent to the First Drawdown Date in respect of either Tranche A or Tranche B
	 	 	73	 
	Part II: Conditions subsequent to the First Drawdown Date in respect of either Tranche A or Tranche B
	 	 	76	 
	Part III: Conditions precedent to any subsequent drawing
	 	 	77	 
	Part IV: Conditions precedent to an Upsize Amount Drawdown Date
	 	 	78	 
	Part V: Conditions subsequent to an Upsize Amount Drawdown Date
	 	 	80	 
	 
	 	 	 	 
	SCHEDULE 4: Calculation of Mandatory Cost
	 	 	81	 
	 
	 	 	 	 
	SCHEDULE 5: Form of Drawdown Notice
	 	 	83	 
	 
	 	 	 	 
	SCHEDULE 6: Form of Transfer Certificate
	 	 	84	 
	 
	 	 	 	 
	SCHEDULE 7: Form of Upsize Notice
	 	 	87	 
	 
	 	 	 	 
	SCHEDULE 8: Reductions
	 	 	88	 

 

 

 

FACILITY AGREEMENT

Dated:
                 2008

BETWEEN:

	(1)	 	ARCTIC SPIRIT L.L.C., a limited liability company formed under the laws of the Marshall
Islands with its registered office at c/o Trust Company Complex, Ajeltake Road, Ajeltake
Islands, Majuro, Marshall Islands MH96960 and POLAR SPIRIT L.L.C., a limited liability company
formed under the laws of the Marshall Islands with its registered office at c/o Trust Company
Complex, Ajeltake Road, Ajeltake Islands, Majuro, Marshall Islands MH96960 (together the
“Borrowers” and each a “Borrower”), jointly and severally;

	(2)	 	the banks listed in Schedule 1, each acting through its office at the address indicated
against its name in Schedule 1 (together the “Lenders” and each a “Lender”);

	(3)	 	DNB NOR BANK ASA, acting as agent (in that capacity the “Agent”);

	(4)	 	DNB NOR BANK ASA, NORDEA BANK FINLAND PLC, SUMITOMO MITSUI BANKING CORPORATION, Brussels
Branch and LLOYDS TSB BANK PLC acting as mandated lead arrangers (in that capacity each an
“MLA” and together the “MLAs”);

	(5)	 	DNB NOR BANK ASA and NORDEA BANK FINLAND PLC acting as bookrunners (in that capacity each a
“Bookrunner” and together the “Bookrunners”); and

	(6)	 	DNB NOR BANK ASA, acting as security trustee (in that capacity the “Security Trustee”).

WHEREAS:

Each of the Lenders has agreed to advance to the Borrowers (on a joint and several basis) its
Commitment (aggregating, with all the other Commitments, a revolving credit facility of up to one
hundred and seventy two million five hundred thousand Dollars ($172,500,000) (as increased from
time to time pursuant to the provisions of Clause 2.1.2)) (i) to refinance the aggregate purchase
price of the Vessels and (ii) for the general corporate purposes of the Guarantor Group.

 

 

 

IT IS AGREED as follows:

	1	 	Definitions and Interpretation

	 	1.1	 	In this Agreement:

“Administration” has the meaning given to it in paragraph 1.1.3 of the ISM Code.

“Affiliate” means, in relation to any entity, a Subsidiary of that entity, a Holding
Company of that entity or any other Subsidiary of that Holding Company.

“Approved Brokers” means H. Clarkson & Co. Ltd, Compass Maritime Services L.L.C.,
Simpson Spence & Young Shipbrokers Ltd, Fearnley AS, R.S. Platou AS and P.F. Bassoe
AS.

“Assignments” means the deeds of assignment from the Borrowers in respect of each of
the Vessels referred to in Clause 10.1.2 (each an “Assignment”).

“Authorisation” means an authorisation, consent, approval, resolution, licence,
exemption, filing, notarisation or registration.

“Break Costs” means all sums payable by the Borrowers from time to time under Clause
8.3.

“Business Day” means a day on which banks are open for business of a nature
contemplated by this Agreement (and not authorised by law to close) in New York and
London.

“Charterer” means Polarc L.L.C. a limited liability company formed under the laws of
the Marshall Islands with its registered office at c/o Trust Company Complex,
Ajeltake Islands, Majuro, Marshall Islands MH96900.

“Charter Guarantees” means the guarantees made or to be made by the Charter
Guarantor in favour of the relevant Borrower guaranteeing the obligations of the
Charterer under each Charter.

“Charter Guarantor” means Teekay Corporation, a company incorporated under the laws
of the Marshall Islands and whose registered office is at c/o Trust Company Complex,
Ajeltake Islands, Majuro, Marshall Islands MH96960.

 

2

 

“Charters” means the time charterparties made or to be made between each Borrower
and the Charterer on the terms and subject to the conditions of which the Borrowers
respectively will charter their Vessels to the Charterer and which will be on arm’s
length terms and “Charter” means either of them.

“Commitment” means, in relation to a Lender, the aggregate amount of the Facility
which that Lender agrees to advance to the Borrowers as its several liability as
indicated against the name of that Lender in Schedule 1 (as amended from time to
time pursuant to Clause 2.1.2) and/or, where the context permits, the amount of the
Facility advanced by that Lender and remaining outstanding and “Commitments” means
more than one of them.

“Commitment Commission” means the commitment commission to be paid by the Borrowers
to the Agent on behalf of the Lenders pursuant to Clause 9.1.

“Commitment Termination Date” means the date being one (1) month before the Maturity
Date or such later date as the Lenders may in their discretion agree.

“Companies” means each ISM Company and each ISPS Company (each a “Company”).

“Conversion Agreements” means the conversion agreements in respect of each Vessel
dated 1 April 2008 between the Owner and the Charterer (as amended, supplemented,
novated or replaced from time to time).

“Conversion Project Price” means the total project price in respect of the
conversion costs, Owner supplied equipment, supervision fees, finance costs and
other expenses relating to the conversions of the Vessels (as approved by the
Lenders such approval not to be unreasonably withheld).

“Currency of Account” means, in relation to any payment to be made to a Finance
Party under a Finance Document, the currency in which that payment is required to be
made by the terms of that Finance Document.

“Deeds of Covenants” means the deeds of covenants referred to in Clause 10.1.1 (each
a “Deed of Covenant”).

“Default” means an Event of Default or any event or circumstance specified in Clause
13.1 which would (with the expiry of a grace period, the giving of notice,
the making of any determination under the Finance Documents or any combination of
any of the foregoing) be an Event of Default.

 

3

 

“DOC” means, in relation to the ISM Company, a valid Document of Compliance issued
for the ISM Company by the Administration under paragraph 13.2 of the ISM Code.

“Dollars”, “US$” and “$” each means available and freely transferable and
convertible funds in lawful currency of the United States of America.

“Drawdown Date” means the date on which a Drawing is advanced under Clause 4.

“Drawdown Notice” means a notice substantially in the form set out in Schedule 5.

“Drawing” means any one amount advanced or to be advanced pursuant to a Drawdown
Notice or, where the context permits, the amount advanced and for the time being
outstanding and “Drawings” means more than one of them.

“Earnings” in relation to each Vessel means all hires, freights, pool income and
other sums payable to or for the account of its Owner in respect of that Vessel
including (without limitation) all remuneration for salvage and towage services,
demurrage and detention moneys, contributions in general average, compensation in
respect of any requisition for hire, and damages and other payments (whether awarded
by any court or arbitral tribunal or by agreement or otherwise) for breach,
termination or variation of any contract for the operation, employment or use of
that Vessel.

“Encumbrance” means a mortgage, charge, assignment, pledge, lien, or other security
interest securing any obligation of any person or any other agreement or arrangement
having a similar effect.

“Environmental Affiliate” means an agent or employee of an Owner or a person in a
contractual relationship with that Owner in respect of the Vessel owned by it
(including without limitation, the operation of or the carriage of cargo of such
Vessel).

 

4

 

“Environmental Approvals” means any present or future permit, licence, approval,
ruling, variance, exemption or other authorisation required under the applicable
Environmental Laws.

“Environmental Claim” means any and all enforcement, clean-up, removal,
administrative, governmental, regulatory or judicial actions, orders, demands or
investigations instituted or completed pursuant to any Environmental Laws or
Environmental Approvals together with any claims made by any third person relating
to damage, contribution, loss or injury resulting from any Environmental Incident.

“Environmental Incident” means:

	 	(a)	 	any release of Environmentally Sensitive Material from a
Vessel; or

	 
	 	(b)	 	any incident in which Environmentally Sensitive Material is
released from a vessel other than a Vessel and which involves a collision
between a Vessel and such other vessel or some other incident of navigation or
operation, in either case, in connection with which the relevant Vessel is
actually or potentially liable to be arrested, attached, detained or injuncted
and/or where any guarantor, any manager (or any sub-manager of such Vessel) or
any of its officers, employees or other persons retained or instructed by it
(or such sub-manager) are at fault or allegedly at fault or otherwise liable to
any legal or administrative action; or

	 
	 	(c)	 	any other incident in which Environmentally Sensitive Material
is released otherwise than from such Vessel and in connection with which that
Vessel is actually or potentially liable to be arrested and/or where any
guarantor, any manager (or any sub-manager of the relevant Vessel) or any of
its officers, employees or other persons retained or instructed by it (or such
sub-manager) are at fault or allegedly at fault or otherwise liable to any
legal or administrative action.

“Environmental Laws” means all present and future laws, regulations, treaties and
conventions of any applicable jurisdiction which:

	 	(a)	 	have as a purpose or effect the protection of, and/or
prevention of harm or damage to, the environment;

	 
	 	(b)	 	relate to the carriage of Environmentally Sensitive Material or
to actual or threatened releases of Environmentally Sensitive Material;

 

5

 

	 	(c)	 	provide remedies or compensation for harm or damage to the
environment; or

	 
	 	(d)	 	relate to Environmentally Sensitive Materials or health or
safety matters.

“Environmentally Sensitive Material” means (i) oil and oil products and (ii) any
other waste, pollutant, contaminant or other substance (including any liquid, solid,
gas, ion, living organism or noise) that may be harmful to human health or other
life or the environment or a nuisance to any person or that may make the enjoyment,
ownership or other territorial control of any affected land, property or waters more
costly for such person to a material degree.

“Event of Default” means any of the events or circumstances set out in Clause 13.1.

“Execution Date” means the date on which this Agreement is executed by each of the
parties hereto.

“Facility” means the reducing revolving credit facility made available by the
Lenders to the Borrowers pursuant to this Agreement.

“Facility Outstandings” means, at any time, the total of all Drawings made at that
time, to the extent not reduced by repayments, prepayments and voluntary reductions.

“Facility Period” means the period beginning on the date of this Agreement and
ending on the date when the whole of the Indebtedness has been repaid in full and
the Security Parties have ceased to be under any further actual or contingent
liability to the Finance Parties under or in connection with the Finance Documents.

“Fee Letter” means any letter or letters dated on or about the date of this
Agreement between the Agent and the Borrowers setting out any of the fees referred
to in Clause 9.

 

6

 

“Finance Documents” means this Agreement, the Security Documents, any Fee Letter and
any other document designated as such by the Agent and the Borrowers and “Finance
Document” means any one of them.

“Finance Parties” means the Agent, the Security Trustee, the MLAs, the Bookrunners
and the Lenders and “Finance Party” means any one of them.

“First Drawdown Date” means the date on which the first Drawing is advanced under
Clause 4.

“GAAP” means generally accepted accounting principles in the United States of
America.

“General Partner” means Teekay GP L.L.C., a Marshall Islands limited liability
company acting in its capacity as the general partner in the Guarantor.

“Guarantee” means the guarantee and indemnity referred to in Clause 10.1.3.

“Guarantor” means Teekay LNG Partners L.P., a limited partnership formed and
existing under the laws of the Marshall Islands and with its registered office at
c/o Trust Company Complex, Ajeltake Road, Ajeltake Islands, Majuro, Marshall Islands
MH96960.

“Guarantor Group” means the Guarantor and each of its Subsidiaries (including but
not limited to the Pledgor and the Borrowers).

“Guarantor’s Accounts” means the consolidated financial accounts of the Guarantor to
be provided to the Agent pursuant to clause 9 of the Guarantee.

“Holding Company” means, in relation to any entity, any other entity in respect of
which it is a Subsidiary.

“Indebtedness” means the Facility Outstandings; all other sums of any nature
including costs (together with all interest on any of those sums) which from time to
time may be payable by the Borrowers to the Finance Parties pursuant to the Security
Documents.

“Initial Maximum Amount” means the aggregate of the Tranche A Maximum Amount and the
Tranche B Maximum Amount, in a maximum aggregate amount of
one hundred and seventy two million five hundred thousand Dollars ($172,500,000).

 

7

 

“Insurances” in relation to each Vessel means all policies and contracts of
insurance (including all entries in protection and indemnity or war risks
associations) which are from time to time taken out or entered into in respect of or
in connection with that Vessel or her increased value and (where the context
permits) all benefits under such contracts and policies, including all claims of any
nature and returns of premium.

“Interest Payment Date” means each date for the payment of interest in accordance
with Clause 7.7.

“Interest Period” means each period for the payment of interest selected by the
Borrowers or agreed by the Agent pursuant to Clause 7.

“ISM Code” means the International Management Code for the Safe Operation of Ships
and for Pollution Prevention.

“ISM Company” means, at any given time, the company responsible for a Vessel’s
compliance with the ISM Code under paragraph 1.1.2 of the ISM Code.

“ISPS Code” means the International Ship and Port Facility Security Code.

“ISPS Company” means, at any given time, the company responsible for a Vessel’s
compliance with the ISPS Code.

“ISSC” means a valid international ship security certificate for a Vessel issued
under the ISPS Code.

“law” or “Law” means any law, statute, treaty, convention, regulation, instrument or
other subordinate legislation or other legislative or quasi-legislative rule or
measure, or any order or decree of any government, judicial or public or other body
or authority, or any directive, code of practice, circular, guidance note or other
direction issued by any competent authority or agency (whether or not having the
force of law).

 

8

 

“LIBOR” means:

	 	(a)	 	the applicable Screen Rate; or

	 
	 	(b)	 	(if no Screen Rate is available for any Interest Period) the
arithmetic mean of the rates (rounded upwards to four decimal places) as
supplied to the Agent at its request quoted by the Reference Banks (or by one
of them if one is unable to quote) to leading banks in the London interbank
market,

at 11.00 a.m. London time two (2) Business Days before the first day of the relevant
Interest Period for the offering of deposits in Dollars in an amount comparable to
the Facility (or any relevant part of the Facility) and for a period comparable to
the relevant Interest Period.

“Majority Lenders” means a Lender or Lenders whose Commitments aggregate more than
sixty six and two thirds per cent (66 2/3%) of the aggregate of all the Commitments.

“Management Agreement” means any agreement(s) for the commercial and/or technical
management of the Vessels entered into between each Owner and a company which is not
controlled either by the Guarantor or Teekay Corporation.

“Managers” means any company controlled by the Guarantor or Teekay Corporation or
such other commercial and/or technical managers of the Vessels nominated by the
relevant Owner as the Agent acting on the instructions of the Majority Lenders may
approve such approval not to be unreasonably withheld or delayed.

“Mandatory Cost” means the percentage rate per annum calculated by the Agent in
accordance with Schedule 4.

“Margin” means nought point eight per cent (0.8%) per annum.

“Material Adverse Effect” means a material adverse change in, or a material adverse
effect on:

	 	(a)	 	the financial condition, assets, prospects or business of any
Security Party or the Charter Guarantor or on the consolidated financial
condition, assets, prospects or business of the Guarantor Group;

	 
	 	(b)	 	the ability of any Security Party to perform and comply with
its obligations under any Security Document or to avoid any Event of Default;

 

9

 

	 	(c)	 	the validity, legality or enforceability of any Security
Document; or

	 
	 	(d)	 	the validity, legality or enforceability of any security
expressed to be created pursuant to any Security Document or the priority and
ranking of any such security,

provided that, in determining whether any of the forgoing circumstances shall
constitute such a material adverse change or material adverse effect for the
purposes of this definition, the Finance Parties shall consider such circumstance in
the context of (x) the Guarantor Group taken as a whole and (y) the ability of the
Borrowers and the Guarantor to perform each of their obligations under the Security
Documents.

“Maturity Date” means the date falling ten (10) years after the Execution Date.

“Maximum Amount” means:

	 	(a)	 	the Initial Maximum Amount for the period from the Execution
Date until the first Upsize Trigger Date; and

	 
	 	(b)	 	the relevant Upsize Increased Maximum Amount from each Upsize
Trigger Date until the Maturity Date,

as reduced from time to time pursuant to the terms of this
Agreement.

“Mortgages” means the statutory mortgages referred to in Clause 10.1.1 together with
the Deeds of Covenants.

“Necessary Authorisations” means all Authorisations of any person including any
government or other regulatory authority required by applicable Law to enable it to:

	 	(a)	 	lawfully enter into and perform its obligations under the
Security Documents to which it is party;

	 
	 	(b)	 	ensure the legality, validity, enforceability or admissibility
in evidence in England and, if different, its jurisdiction of incorporation, of
such Security Documents to which it is party; and

	 
	 	(c)	 	carry on its business from time to time.

 

10

 

“Owner” means in respect of each Vessel the Borrower whose name appears beside that
Vessel in Schedule 2.

“Permitted Encumbrance” means (i) any Encumbrance which has the prior written
approval of the Agent acting on the instructions of all the Lenders or (ii) any
liens for current crews’ wages and salvage and liens incurred in the ordinary course
of trading a Vessel up to an aggregate amount for that Vessel at any time not
exceeding ten million Dollars ($10,000,000).

“Pledgor” means Teekay LNG Operating L.L.C..

“Pre-Approved Classification Society” means any of Det norske Veritas, Lloyds
Register, American Bureau of Shipping (ABS), Germanischer Lloyd or Bureau Veritas or
such other classification society acceptable to the Majority Lenders.

“Pre-Approved Flag” means Marshall Islands, Norwegian International Ship Registry,
Liberia, Panama, Isle of Man, Cayman Islands, Bermuda, Bahamas or Singapore.

“Proportionate Share” means, at any time, the proportion which a Lender’s Commitment
(whether or not advanced) then bears to the aggregate Commitments of all the Lenders
(whether or not advanced).

“Reduction Date” means the date falling six (6) months after the Execution Date and
each date falling at consecutive six monthly intervals thereafter.

“Reference Banks” means, in relation to LIBOR, the principal London offices (or
lending Affiliates) of each of the Bookrunners or such other banks as may be
appointed by the Agent in consultation with the Borrowers.

“Relevant Documents” means the Finance Documents, the Charters, the Charter
Guarantee, the Sub-Charters and the Management Agreements.

“Requisition Compensation” in relation to a Vessel means all compensation or other
money which may from time to time be payable to an Owner as a result of that Vessel
being requisitioned for title or in any other way compulsorily acquired (other than
by way of requisition for hire).

 

11

 

“Same Day Drawing”, means, in respect of the first drawing only, a Drawing
requested by the Borrowers prior to 10.00 am hours (New York time) on the day before
the First Drawdown Date and made by the Lenders on the First Drawdown Date.

“Screen Rate” means in relation to LIBOR, the British Bankers’ Association Interest
Settlement Rate for the relevant currency and period  displayed on the
appropriate page of the Reuters page LIBOR 01 (or such other page or pages which
replace(s) such page) for the purposes of displaying offered rates of leading banks,
for deposits in Dollars of amounts equal to the amount of the relevant Drawing for a
period equal in length to the relevant Interest Period.

“Security Documents” means the Mortgages, the Deeds of Covenants, the Assignments,
the Guarantee, the Share Pledges or (where the context permits) any one or more of
them and any other agreement or document which may at any time be executed by any
person as security for the payment of all or any part of the Indebtedness and
“Security Document” means any one of them.

“Security Parties” means the Borrowers, the Guarantor, the Pledgor and any other
party which may at any time during the Facility Period be liable for, or provide
security for, all or any part of the Indebtedness (but for the avoidance of doubt
not the Charterer or the Charter Guarantor) and “Security Party” means any one of
them.

“Share Pledges” means the pledges of the membership interests in each of the
Borrowers given by the Pledgor as referred to in Clause 10.1.4.

“SMC” means a valid safety management certificate issued for a Vessel by or on
behalf of the Administration under paragraph 13.7 of the ISM Code.

“SMS” means a safety management system for a Vessel developed and implemented in
accordance with the ISM Code.

“Sub-Charter” means the time charterparty in respect of each Vessel entered into
between the Charterer and the
Sub-Charterers.

“Sub-Charterers” means ConocoPhillips Alaska Natural Gas Corporation and Arctic Sun
Shipping Company, Ltd. or any of their Affiliates.

 

12

 

“Subsidiary” means a subsidiary undertaking, as defined in section 1162 of the
Companies Act 2006 or any analogous definition under any other relevant system of
law.

“Tax” means any tax, levy, impost, duty or other charge or withholding of a similar
nature (including any penalty or interest payable in connection with any failure to
pay or any delay in paying any of the same) and “Taxation” shall be interpreted
accordingly.

“Total Loss” in relation to a Vessel means:

	 	(a)	 	an actual, constructive, arranged, agreed or compromised total
loss of that Vessel; or

	 
	 	(b)	 	the requisition for title or compulsory acquisition,
nationalisation or expropriation of that Vessel by or on behalf of any
government or other authority (other than by way of requisition for hire); or

	 
	 	(c)	 	the capture, seizure, arrest, detention or confiscation of that
Vessel unless the Vessel is released and returned to the possession of its
Owner within ninety (90) days after the capture, seizure, arrest, detention or
confiscation in question.

“Tranche A” means an amount not exceeding the Tranche A Maximum Amount to be made
available by the Lenders to the Borrowers in relation to Vessel A.

“Tranche A Maximum Amount” means an amount not exceeding eighty six million two
hundred and fifty thousand Dollars ($86,250,000), as reduced from time to time in
accordance with Clause 3.4 and/or Clause 7.9.5 or increased pursuant to Clause
2.1.2.

“Tranche B” means an amount not exceeding the Tranche B Maximum Amount to be made
available by the Lenders to the Borrowers in relation to Vessel B.

“Tranche B Maximum Amount” means an amount not exceeding eighty six million two
hundred and fifty thousand Dollars ($86,250,000), as reduced from time to time in
accordance with Clause 3.4 and/or Clause 7.9.5 or increased pursuant to Clause
2.1.2.

 

13

 

“Tranches” means together Tranche A and Tranche B (each a “Tranche”).

“Tranche Maximum Amounts” means together the Tranche A Maximum Amount and the
Tranche B Maximum Amount (each a “Tranche Maximum Amount”).

“Transfer Certificate” means a certificate substantially in the form set out in
Schedule 6 or any other form agreed between the Agent and the Borrowers.

“Transfer Date” means, in relation to any Transfer Certificate, the date for the
making of the transfer specified in the schedule to such Transfer Certificate.

“Trust Property” means:

	 	(a)	 	all benefits derived by the Security Trustee from Clause 10;
and

	 
	 	(b)	 	all benefits arising under (including, without limitation, all
proceeds of the enforcement of) each of the Security Documents,

with the exception of any benefits arising solely for the benefit of the Security
Trustee.

“Upsize Amount” means the amount set out in an Upsize Notice, which when aggregated
with all Upsize Amounts shall not exceed the lesser of (i) seventy five per cent of
the Conversion Project Price and (ii) one hundred and fifty million Dollars
($150,000,000).

“Upsize Increased Maximum Amount” means the Initial Maximum Amount as increased by
the relevant Upsize Amount with effect from each Upsize Trigger Date, being a total
maximum amount of up to three hundred and twenty two million, five hundred thousand
Dollars ($322,500,000) to be allocated between Tranche A and Tranche B as specified
by the Borrowers in the relevant Upsize Notice.

“Upsize Notice” means a notice substantially in the form of Schedule 7.

“Upsize Trigger Date” means the date specified in an Upsize Notice (being not less
than thirty (30) days following the date of such Upsize Notice) on which the
Borrowers request an increase in the Maximum Amount pursuant to Clause 2.1.2.

 

14

 

“Valuation” means in relation to a Vessel, the written valuation of that Vessel
expressed in Dollars prepared by one of the Approved Brokers (or such other firm of
reputable independent shipbrokers as may be acceptable to the Agent) to be nominated
by the Borrowers. Such valuations shall be prepared at the Borrowers’ expense,
without a physical inspection, on the basis of a sale for prompt delivery for cash
at arm’s length between a willing buyer and a willing seller without the benefit of
any charterparty or other engagement.

“Vessel A” means m.v. “ARCTIC SPIRIT” and everything now or in the future belonging
to it on board and ashore, currently registered under the flag of the Bahamas in the
ownership of Arctic Spirit L.L.C..

“Vessel B” means m.v. “POLAR SPIRIT” and everything now or in the future belonging
to it on board and ashore, currently registered under the flag of the Bahamas in the
ownership of Polar Spirit L.L.C..

“Vessels” or “Vessel” means either or both of Vessel A and Vessel B as the case
requires.

“WSJ Prime Rate” means the “Prime Rate” as published in the printed copy of the Wall
Street Journal on any particular day as the same may be adjusted from time to time.

	 	1.2	 	In this Agreement:

	 	1.2.1	 	words denoting the plural number include the singular and vice versa;

	 	1.2.2	 	words denoting persons include corporations, partnerships,
associations of persons (whether incorporated or not) or governmental or
quasi-governmental bodies or authorities and vice versa;

	 	1.2.3	 	references to Recitals, Clauses and Schedules are references
to recitals, clauses and schedules to or of this Agreement;

	 	1.2.4	 	references to this Agreement include the Recitals and the
Schedules;

	 	1.2.5	 	the headings and contents page(s) are for the purpose of
reference only, have no legal or other significance, and shall be ignored in
the interpretation of this Agreement;

 

15

 

	 	1.2.6	 	references to any document (including, without limitation, to
all or any of the Relevant Documents) are, unless the context otherwise
requires, references to that document as amended, supplemented, novated or
replaced from time to time;

	 	1.2.7	 	references to statutes or provisions of statutes are
references to those statutes, or those provisions, as from time to time
amended, replaced or re-enacted;

	 	1.2.8	 	references to any Finance Party include its successors,
transferees and assignees; and

	 	1.2.9	 	a time of day (unless otherwise specified) is a reference to
New York time.

	 	1.3	 	Offer letter

This Agreement supersedes the terms and conditions contained in any correspondence
relating to the subject matter of this Agreement exchanged between any Finance Party
and the Borrowers or their representatives prior to the date of this Agreement.

	2	 	The Facility and its Purposes

	 	2.1	 	Amount

	 	2.1.1	 	Subject to the terms of this Agreement, each of the Lenders
agrees to make available to the Borrowers its Commitment of a revolving credit
in an aggregate amount not exceeding, until the first Upsize Trigger Date, the
Initial Maximum Amount at any one time to be used by the Borrowers for the
purposes referred to in the Recitals.

	 	2.1.2	 	The Borrowers shall have the right (provided that no Event of
Default has occurred and is continuing unremedied or unwaived) to issue one or
more Upsize Notices requesting an Upsize Amount and specifying the Upsize
Trigger Date and the proportions in which it is to be allocated to Tranche A
and/or Tranche B, following receipt of which Upsize Notice the Lenders shall
have the right (but not the obligation) to subscribe in the Upsize Amount pro
rata to their Commitments in the Initial Maximum Amount. The availability of
the Upsize Amount

 

16

 

shall be subject (inter alia) to the participating Lenders agreeing to the proposed fee payable, as specified in
the relevant Upsize Notice. If any Lender does not take up this option
within twenty (20) days of receipt of an Upsize Notice, its portion of the
Upsize Amount shall be made available to be taken up by the participating
Lenders for a further ten (10) days. If at the end of such ten (10) day
period not all of the Upsize Amount has been subscribed, then the Upsize
Amount shall be reduced to the amount subscribed, and the reduced Upsize
Amount shall take effect from the Upsize Trigger Date. Following each
Upsize Trigger Date, the participating Lenders agree to make their
Commitments in the Maximum Amount as increased by the relevant Upsize Amount
available to the Borrowers. The aggregate amount of the Facility following
each Upsize Trigger Date shall not exceed the Maximum Amount. The Upsize
Amount shall be used for the purposes of financing up to seventy five
percent (75%) of the Conversion Project Price. At or around each Upsize
Trigger Date, the Agent shall circulate to each of the parties an amended
Schedule 8 to reflect the increased Maximum Amount, which shall be
calculated on a similar basis to the initial Schedule 8 but with the
availability of the increased Upsize Amount reducing by equal consecutive
semi annual reductions commencing six (6) months after redelivery of the
second Vessel or, if only one Vessel is so converted, of that Vessel down to
a balloon payment of zero on the Maturity Date, and an amended Schedule 1 to
reflect the amended Commitments. Save in the case of manifest error, such
amended Schedules shall be binding on all the parties with effect from the
relevant Upsize Trigger Date, and each Lender, whether participating in the
Upsize Amount or not, agrees to sign all documents reasonably necessary in
connection therewith (but if not so participating shall not be entitled to
any additional fee).

	 	2.2	 	Finance Parties’ obligations The obligations of each Finance Party under the
Finance Documents are several. Failure by a Finance Party to perform its obligations
under the Finance Documents does not affect the obligations of any other party to the
Finance Documents. No Finance Party is responsible for the obligations of any other
Finance Party under the Finance Documents.

 

17

 

	 	2.3	 	Purposes The Borrowers shall apply the Facility insofar as it relates to the
Initial Maximum Amount for the purposes referred to in the Recital and insofar as it
relates to the Upsize Amount for the purposes referred to in Clause 2.1.2.

	 
	 	2.4	 	Monitoring No Finance Party is bound to monitor or verify the application of
any amount borrowed under this Agreement.

	3	 	Conditions of Utilisation

	 	3.1	 	Conditions precedent

	 	3.1.1	 	Before any Lender shall have any obligation to advance any
Drawing the Borrowers shall deliver or cause to be delivered to or to the order
of the Agent all of the documents and other evidence listed in Part I of
Schedule 3.

	 	3.1.2	 	Before any Lender shall have any obligation to advance any
subsequent Drawing the Borrowers shall deliver or cause to be delivered to or
to the order of the Agent all of the documents and other evidence listed in
Part III of Schedule 3.

	 	3.1.3	 	Before any Lender that has agreed to participate in any Upsize
Amount shall have any obligation to advance any drawing in respect of the
Upsize Amount the Borrowers shall deliver or cause to be delivered to or to the
order of the Agent all of the documents and other evidence listed in Part IV of
Schedule 3.

	 	3.2	 	Further conditions precedent The Lenders will only be obliged to advance a
Drawing if on the date of the Drawdown Notice and on the proposed Drawdown Date:

	 	3.2.1	 	no Default is continuing or would result from the advance of
that Drawing; and

	 	3.2.2	 	the representations made by the Borrowers under Clause 11 and
by the Guarantor under the Guarantee are true in all material respects.

 

18

 

	 	3.3	 	Drawing limit The Lenders will only be obliged to advance a Drawing if:

	 	3.3.1	 	no other Drawing under the same Tranche has been made on the
same Business Day;

	 	3.3.2	 	that Drawing will not result in there being more than seven
Drawings outstanding in respect of that Tranche at any one time;

	 	3.3.3	 	that Drawing is not less than five million Dollars
($5,000,000) and in an integral multiples of one million Dollars ($1,000,000)
or otherwise for the balance available under the relevant Tranche; and

	 	3.3.4	 	that Drawing will not increase the outstanding amount of the
relevant Tranche to a sum in excess of the relevant Tranche Maximum Amount or
the Facility to a sum in excess of the Maximum Amount.

The First Drawdown Date must occur on or before 30 June 2008 or 30 days following
the Execution Date, whichever is the later.

	 	3.4	 	Facility Reduction

	 	3.4.1	 	The amount of the Facility available to the Borrowers, for
drawing under this Agreement shall be the Maximum Amount. On the Reduction
Dates the amount of the Facility available for drawing shall be reduced by the
amounts set out in Schedule 8 (the “Initial Reduction Amounts”). On the
Maturity Date the Facility available shall be reduced to zero. Subject to the
proviso hereto, the mandatory reductions in the amount of the Facility
available for drawing required pursuant to this Clause will be made in the
amounts and at the times specified whether or not the Maximum Amount is reduced
pursuant to Clause 3.4.2, Clause 3.4.3, Clause 3.4.4, Clause 3.4.5, Clause 6.1
or Clause 7.9, PROVIDED ALWAYS THAT any reductions pursuant to Clause 3.4.2
(voluntary reductions) shall be applied to the remaining mandatory reductions
hereunder on a pro rata basis.

	 	3.4.2	 	The Borrowers may voluntarily cancel the Maximum Amount in
whole or in part (such cancellation to be against the Tranches in the
proportions specified by the Borrowers) in an amount of not less than five
million Dollars ($5,000,000) such amount to be in integral multiples of one
million Dollars ($1,000,000) (or as otherwise may be agreed by the Agent),
provided that they have first given to the Agent not fewer than five (5)
Business Days’ prior written notice expiring on a Business Day (the
“Cancellation Date”) of their desire to reduce the Maximum Amount and
notification of which Tranche the cancellation is to be applied against;
such notice once 

 

19

 

	 	 	 	received by the Agent shall be irrevocable and shall oblige the Borrowers to make payment of all interest and Commitment Commission
accrued on the amount so cancelled up to and including the Cancellation Date
together with any Break Costs in respect of such cancelled amount if the
Cancellation Date is not the final day of an Interest Period. Any such
reduction in the Maximum Amount shall not be reversed. If, as a result of
any such cancellation, the Facility Outstandings would exceed the Tranche
Maximum Amounts, the Borrowers shall, on the Cancellation Date, prepay such
amount of Tranche A and/or Tranche B as will ensure that the Facility
Outstandings is not greater than the Tranche Maximum Amounts.

	 	3.4.3	 	In the event of a sale or disposal of a Vessel, the relevant
Tranche Maximum Amount shall be reduced to zero on the date falling thirty (30)
days after such sale or disposal. The Borrowers shall, on or before such
reduction date, prepay such Tranche in full. Any such prepayment shall oblige
the Borrowers to make payment of all interest and Commitment Commission accrued
on the amount so reduced up to and including the date of reduction together
with any Break Costs in respect of such reduced amount if the date of such
reduction is not the final day of an Interest Period. Any such reduction in
the Maximum Amount and Tranche Maximum Amounts shall not be reversed.

	 	3.4.4	 	In the event that any Vessel becomes a Total Loss, on the
earlier to occur of (a) the date of receipt of the proceeds of the Total Loss
and (b) the date falling one hundred and eighty (180) days after the occurrence
of the Total Loss (the “Total Loss Reduction Date”), the relevant Tranche
Maximum Amount shall be reduced to zero. The Borrowers shall, on the earlier
to occur of (i) the date on which the relevant Owner receives the proceeds of
such Total Loss and (ii) the one hundred and eightieth day after the date of
such Total Loss occurring, prepay such Tranche in full PROVIDED that if the
date of such repayment is not the last day of the then current Interest Period,
the Borrowers shall prepay such Tranche in full on the last day of the then
current Interest Period. If the amount of the prepayment is not
immediately applied, the Borrowers shall promptly, if so requested by the
Majority Lenders, place the amount of the prepayment in an account held with
the Agent and pledge such account to the Agent as security for the
Indebtedness for the period up until such funds are applied in or towards
payment hereunder. Any prepayment under this Clause 3.4.4 shall not be
reborrowed and Clause 8.3 shall apply to any such prepayment.

 

20

 

	 	3.4.5	 	In the event that (a) one of Charters is terminated early or
(b) one of the Charters expires prior to the Maturity Date, the relevant
Tranche Maximum Amount shall be reduced to zero. The Borrowers shall, on the
earlier to occur of (i) the date on which the relevant Owner receives the
notice of such Charter termination or (ii) on the expiry of the Charter prior
to the Maturity Date, prepay such Tranche in full. Any prepayment under this
Clause 3.4.5 shall not be reborrowed and Clause 8.3 shall apply to any such
prepayment.

	 	3.4.6	 	To the extent that repayments or prepayments made by the
Borrowers to the Agent in accordance with this Agreement reduce the Facility
and Tranches outstanding to less than the Maximum Amount and the Tranche
Maximum Amounts respectively, the Borrowers shall again be entitled to make
Drawings up to the Commitment Termination Date in accordance with and subject
to the terms of this Agreement. Any part of the Facility which is undrawn on
the Commitment Termination Date shall be automatically cancelled.

	 	3.4.7	 	Simultaneously with each reduction of the Maximum Amount in
accordance with Clause 3.4.1, Clause 3.4.2, Clause 3.4.3, Clause 3.4.4 or
Clause 3.4.5 (as the case may be), the Commitment of each Lender will reduce so
that the Commitments of the Lenders in respect of the amended Maximum Amount
and Tranche Maximum Amounts remain in accordance with their respective
Proportionate Shares. In the case of any increase in the Maximum Amount in
accordance with Clause 2.1.2, the Commitment of each Lender will be in
accordance with the revised Schedule 1 circulated by the Agent pursuant to
Clause 2.1.2 at or about the relevant Upsize Trigger Date.

 

21

 

	 	3.5	 	Termination Date No Lender shall be under any obligation to advance all or any
part of its Commitment after the Commitment Termination Date.

	 
	 	3.6	 	Conditions subsequent The Borrowers undertake to deliver or to cause to be
delivered to the Agent on, or as soon as practicable after, the First Drawdown Date the
additional documents and other evidence listed in Part II of Schedule 3.

	 
	 	3.7	 	No Waiver If the Lenders in their sole discretion agree to advance a Drawing
to the Borrowers before all of the documents and evidence required by Clause 3.1 have
been delivered to or to the order of the Agent, the Borrowers undertake to deliver all
outstanding documents and evidence to or to the order of the Agent no later than the
date specified by the Agent, except to the extent expressly waived by the Agent in
writing.

	 
	 	 	 	The advance of all or any part of the Facility under this Clause 3.7 shall not be
taken as a waiver of the Lenders’ right to require production of all the documents
and evidence required by Clause 3.1.

	 
	 	3.8	 	Form and content All documents and evidence delivered to the Agent under this
Clause 3 shall:

	 	3.8.1	 	be in form and substance reasonably acceptable to the Agent; and

	 
	 	3.8.2	 	if reasonably required by the Agent, be certified, notarised,
legalised or attested in a manner acceptable to the Agent.

	4	 	Advance

	 	4.1	 	Drawdown Request The Borrowers may request a Drawing in respect of Tranche A
and/or Tranche B, in each case to be advanced on any Business Day prior to the
Commitment Termination Date, by delivering to the Agent a duly completed Drawdown
Notice not more than ten (10) and not fewer than three (3) Business Days before the
proposed Drawdown Date save in respect of a Same Day Drawing.

	 
	 	4.2	 	Lenders’ participation Subject to Clauses 2 and 3, the Agent shall promptly
notify each Lender of the receipt of a Drawdown Notice, following which each Lender
shall advance its Proportionate Share of the relevant Drawing to the Borrowers through
the Agent on the relevant Drawdown Date.

 

22

 

	5	 	Repayment

	 	5.1	 	Repayment of each Drawing The Borrowers agree to repay each Drawing to the
Agent for the account of the Lenders on the last day of the Interest Period in respect
of that Drawing unless the Borrowers select a further Interest Period for that Drawing
in accordance with Clause 7, provided that the Borrowers shall not be permitted to
select such a further Interest Period if a Default has occurred and shall then be
obliged to repay such Drawing on the last day of its then current Interest Period. The
Borrowers shall on the Maturity Date repay to the Agent as agent for the Lenders all
Facility Outstandings.

	 
	 	5.2	 	Reborrowing Amounts of the Facility which are repaid or prepaid shall be
available for reborrowing in accordance with Clause 3 prior to the Commitment
Termination Date.

	6	 	Prepayment

	 	6.1	 	Illegality If it becomes unlawful in any jurisdiction for a Lender to fund or
maintain its Commitment as contemplated by this Agreement or to fund or maintain the
Facility:

	 	6.1.1	 	that Lender shall promptly notify the Agent of that event;

	 	6.1.2	 	upon the Agent notifying the Borrowers, the Commitment of that
Lender (to the extent not already advanced) will be immediately cancelled; and

	 	6.1.3	 	the Borrowers shall repay that Lender’s Proportionate Share of
any Drawing on the last day of its current Interest Period or, if earlier, the
date specified by that Lender in the notice delivered to the Agent and notified
by the Agent to the Borrowers (being no earlier than the last day of any
applicable grace period permitted by law) and the Maximum Amount shall be
reduced by the amount of that Lender’s Commitment in the Facility. Prior to
the date on which repayment is required to be made under this Clause 6.1.3 the
affected Lender shall negotiate in good faith with the Borrowers to find an
alternative method or lending base in order to reinstate and maintain its
Commitment in the Facility.

 

23

 

	 	6.2	 	Voluntary prepayment of Facility The Borrowers may prepay the whole or any
part of a Drawing (but, if in part, being an amount that reduces that Drawing by a
minimum amount of five million Dollars ($5,000,000)) provided that they give the Agent
not less than three (3) Business Days’ prior notice.

	 
	 	6.3	 	Restrictions Any notice of prepayment given under this Clause 6 shall be
irrevocable and, unless a contrary indication appears in this Agreement, shall specify
the date or dates upon which the relevant prepayment is to be made and the amount of
that prepayment.

Any prepayment under this Agreement shall be made together with accrued interest on
the amount prepaid and, subject to any Break Costs, without premium or penalty.

If the Agent receives a notice under this Clause 6 it shall promptly forward a copy
of that notice to the Borrowers or the Lenders, as appropriate.

	 	6.4	 	Mandatory Prepayment If at any time the Facility Outstandings shall exceed the
Maximum Amount or the amount outstanding under a Tranche shall exceed the relevant
Tranche Maximum Amount, the Borrowers shall immediately prepay to the Agent on behalf
of the Lenders such amounts as will ensure that the Facility Outstandings do not exceed
the Maximum Amount or the amount outstanding under a Tranche shall not exceed the
relevant Tranche Maximum Amount, and shall pay to the Lenders all interest accrued on
the amount prepaid up to and including the date on which such prepayment occurred.

	7	 	Interest

	 	7.1	 	Interest Periods The period during which each Drawing shall be outstanding
under this Agreement shall be an Interest Period of one, three or six months’ duration,
as selected by the Borrowers in the Drawdown Notice in respect of the Drawing in
question, or such other duration as may be agreed by the Agent (acting on the
instructions of all the Lenders). Not more than seven (7) one (1) month Interest
Periods in respect of a Tranche may be selected by the Borrowers in each twelve (12)
month period.

 

24

 

	 	7.2	 	Beginning and end of Interest Periods The first Interest Period in respect of
each Drawing shall begin on the Drawdown Date of that Drawing and shall end on
the last day of the Interest Period selected in accordance with Clause 7.1. Any
subsequent Interest Period selected in respect of each Drawing shall commence on the
day following the last day of its previous Interest Period and shall end on the last
day of its current Interest Period selected in accordance with Clause 7.1.

	 
	 	7.3	 	Interest Periods to meet Maturity Date If an Interest Period for a Drawing
would otherwise expire after the Maturity Date, the Interest Period for that Drawing
shall expire on the Maturity Date.

	 
	 	7.4	 	Non-Business Days If an Interest Period would otherwise end on a day which is
not a Business Day, that Interest Period will instead end on the next Business Day in
that calendar month (if there is one) or the preceding Business Day (if there is not).

	 
	 	7.5	 	Interest rate During each Interest Period interest shall accrue on the
relevant Drawing at the rate determined by the Agent to be

	 	(i)	 	the WSJ Prime Rate in the case of the first Interest Period for
a Same Day Drawing; or

	 	(ii)	 	in all other cases the aggregate of (a) the applicable Margin
for that Tranche, (b) LIBOR and (c) the Mandatory Cost, if applicable.

	 	7.6	 	Failure to select Interest Period If the Borrowers at any time fail to select
or agree an Interest Period in accordance with Clause 7.1, the Interest Period
applicable shall be of three (3) months duration.

	 
	 	7.7	 	Accrual and payment of interest Interest shall accrue from day to day, shall
be calculated on the basis of a 360 day year and the actual number of days elapsed (or,
in any circumstance where market practice differs, in accordance with the prevailing
market practice) and shall be paid by the Borrowers to the Agent for the account of the
Lenders on the last day of each Interest Period and, if the Interest Period is longer
than three months, on the dates falling at three monthly intervals after the first day
of that Interest Period.

 

25

 

	 	7.8	 	Default interest If the Borrowers fail to pay any amount payable by them
under a Finance Document on its due date, interest shall accrue on the overdue amount
from the due date, subject to any applicable grace period, up to the date of actual
payment (both before and after judgment) at a rate which is one point five per cent
(1.5%) higher than the rate which would have been payable if the overdue amount
had, during the period of non-payment, constituted a Drawing for successive
Interest Periods, each selected by the Agent (acting reasonably). Any interest
accruing under this Clause 7.8 shall be immediately payable by the Borrowers on
demand by the Agent. If unpaid, any such interest will be compounded with the
overdue amount at the end of each Interest Period applicable to that overdue amount
but will remain immediately due and payable.

	 
	 	7.9	 	Changes in market circumstances If at any time the Agent determines (which
determination shall be final and conclusive and binding on the Borrowers) that, by
reason of changes affecting the London interbank market, adequate and fair means do not
exist for determining the rate of interest on a Drawing for any Interest Period:

	 	7.9.1	 	the Agent shall give notice to the Lenders and the Borrowers
of the occurrence of such event; and

	 	7.9.2	 	the rate of interest on each Lender’s Commitment in the
relevant Drawing for that Interest Period shall be the rate per annum which is
the sum of:

	 	(a)	 	the relevant Margin; and

	 
	 	(b)	 	the rate notified to the Agent by that Lender
as soon as practicable, and in any event before interest is due to be
paid in respect of that Interest Period, to be that which expresses as
a percentage rate per annum the cost to that Lender of funding its
Commitment in the relevant Drawing from whatever source it may
reasonably select; and

	 
	 	(c)	 	the Mandatory Cost, if any, applicable to that
Lender’s Commitment,

PROVIDED THAT if the resulting rate of interest on any Commitment is not acceptable
to the Borrowers:

	 	7.9.3	 	the Agent on behalf of the Lenders will negotiate with the
Borrowers in good faith with a view to modifying this Agreement to provide a
substitute
basis for determining the rate of interest which is financially a
substantial equivalent to the basis provided for in this Agreement;

 

26

 

	 	7.9.4	 	any substitute basis agreed pursuant to Clause 7.9.3 shall be
binding on all the parties to this Agreement and shall apply to all Commitments
in the relevant Drawing; and

	 	7.9.5	 	if, within thirty (30) days of the giving of the notice
referred to in Clause 7.9.1, the Borrowers and the Agent fail to agree in
writing on a substitute basis for determining the rate of interest in respect
of the relevant Drawing, the relevant Lender shall cease to be obliged to
advance its Proportionate Share of that Drawing, but, if it has already been
advanced, the Borrowers will immediately prepay that Proportionate Share of
that Drawing, together with any Break Costs, and the Maximum Amount shall be
reduced by the amount of that Lender’s Proportionate Share of that Drawing.

	 	7.10	 	Determinations conclusive The Agent shall promptly notify the Borrowers of
the determination of a rate of interest under this Clause 7 and each such determination
shall (save in the case of manifest error) be final and conclusive.

	8	 	Indemnities

	 	8.1	 	Transaction expenses The Borrowers will, within fourteen (14) days of the
Agent’s written demand, pay the Agent (for the account of the Finance Parties) the
amount of all reasonable out of pocket costs and expenses (including legal fees and
Value Added Tax or any similar or replacement tax if applicable) reasonably incurred by
the Finance Parties or any of them in connection with:

	 	8.1.1	 	the negotiation, preparation, printing, execution and
registration of the Finance Documents (whether or not any Finance Document is
actually executed or registered and whether or not a Drawing is advanced);

	 	8.1.2	 	any amendment, addendum or supplement to any Finance Document
(whether or not completed); and

	 	8.1.3	 	any other document which may at any time be required by a
Finance Party to give effect to any Finance Document or which a Finance Party
is entitled to call for or obtain under any Finance Document.

 

27

 

	 	8.2	 	Funding costs The Borrowers shall indemnify each Finance Party, by payment to
the Agent (for the account of that Finance Party) on the Agent’s written demand,
against all losses and costs incurred or sustained by that Finance Party if, for any
reason due to a default or other action by the Borrowers, a Drawing is not advanced to
the Borrowers after the relevant Drawdown Notice has been given to the Agent, or is
advanced on a date other than that requested in the Drawdown Notice.

	 
	 	8.3	 	Break Costs The Borrowers shall indemnify each Finance Party, by payment to
the Agent (for the account of that Finance Party) on the Agent’s written demand,
against all documented costs, losses, premiums or penalties incurred by that Finance
Party as a result of its receiving any prepayment of all or any part of a Drawing
(whether pursuant to Clause 6 or otherwise) on a day other than the last day of an
Interest Period for that Drawing, or any other payment under or in relation to the
Finance Documents on a day other than the due date for payment of the sum in question,
including (without limitation) any losses or costs incurred in liquidating or
re-employing deposits from third parties acquired to effect or maintain all or any part
of a Drawing.

	 
	 	8.4	 	Currency indemnity In the event of a Finance Party receiving or recovering
any amount payable under a Finance Document in a currency other than the Currency of
Account, and if the amount received or recovered is insufficient when converted into
the Currency of Account at the date of receipt to satisfy in full the amount due, the
Borrowers shall, on the Agent’s written demand, pay to the Agent for the account of the
relevant Finance Party such further amount in the Currency of Account as is sufficient
to satisfy in full the amount due and that further amount shall be due to the Agent on
behalf of the relevant Finance Party as a separate debt under this Agreement.

	 
	 	8.5	 	Increased costs (subject to Clause 8.6) If, by reason of the introduction of
any law, or any change in any law, or any change in the interpretation or
administration of any law, or compliance with any request or requirement from any
central bank or any fiscal, monetary or other authority occurring after the date of
this Agreement:

	 	8.5.1	 	a Finance Party (or the Holding Company of a Finance Party)
shall be subject to any Tax with respect to payment of all or any part of the
Indebtedness (other than Tax on overall net income); or

	 	8.5.2	 	the basis of Taxation of payments to a Finance Party in
respect of all or any part of the Indebtedness shall be changed; or

 

28

 

	 	8.5.3	 	any reserve requirements shall be imposed, modified or deemed
applicable against assets held by or deposits in or for the account of or loans
by any branch of a Finance Party; or

	 	8.5.4	 	the manner in which a Finance Party allocates capital
resources to its obligations under this Agreement or any ratio (whether cash,
capital adequacy, liquidity or otherwise) which a Finance Party is required or
requested to maintain shall be affected; or

	 	8.5.5	 	there is imposed on a Finance Party (or on the Holding Company
of a Finance Party) any other condition in relation to the Indebtedness or the
Finance Documents;

and the result of any of the above shall be to increase the cost to a Finance Party
(or to the Holding Company of a Finance Party) of that Finance Party making or
maintaining its Commitment, or to cause a Finance Party to suffer (in its opinion) a
material reduction in the rate of return on its overall capital below the level
which it reasonably anticipated at the date of this Agreement and which it would
have been able to achieve but for its entering into this Agreement and/or performing
its obligations under this Agreement, then, subject to Clause 8.6, the Finance Party
affected shall notify the Agent and the Borrowers shall from time to time pay to the
Agent on demand for the account of that Finance Party the amount which shall
compensate that Finance Party (or the relevant Holding Company) for such additional
cost or reduced return. A certificate signed by an authorised signatory of that
Finance Party setting out the amount of that payment and the basis of its
calculation shall be submitted to the Borrowers and shall be conclusive evidence of
such amount save for manifest error or on any question of law.

	 	8.6	 	Exceptions to increased costs Clause 8.5 does not apply to the extent any
additional cost or reduced return referred to in that Clause is:

	 	8.6.1	 	compensated for by a payment made under Clause 8.10; or

	 
	 	8.6.2	 	compensated for by a payment made under Clause 17.3; or

	 
	 	8.6.3	 	compensated for by the payment of the Mandatory Cost; or

	 
	 	8.6.4	 	attributable to the wilful breach by the relevant Finance
Party (or the Holding Company of that Finance Party) of any law or regulation.

 

29

 

	 	8.7	 	Events of Default The Borrowers shall indemnify each Finance Party from time
to time, by payment to the Agent (for the account of that Finance Party) on the Agent’s
written demand, against all losses and costs incurred or sustained by that Finance
Party as a consequence of any Event of Default.

	 
	 	8.8	 	Enforcement costs The Borrowers shall pay to the Agent (for the account of
each Finance Party) on the Agent’s written demand the amount of all costs and expenses
(including legal fees) incurred by a Finance Party in connection with the enforcement
of, or the preservation of any rights under, any Finance Document including (without
limitation) any losses, costs and expenses which that Finance Party may from time to
time sustain, incur or become liable for by reason of that Finance Party being
mortgagee of a Vessel and/or a lender to the Borrowers, or by reason of that Finance
Party being deemed by any court or authority to be an operator or controller, or in any
way concerned in the operation or control, of each Vessel. No such indemnity will be
given where any such loss or cost has occurred due to gross negligence or wilful
misconduct on the part of that Finance Party; however, this shall not affect the right
of any other Finance Party to receive such indemnity.

	 
	 	8.9	 	Other costs The Borrowers shall pay to the Agent (for the account of each
Finance Party) on the Agent’s written demand the amount of all sums which a Finance
Party may pay or become actually or contingently liable for on account of the Borrowers
in connection with a Vessel (whether alone or jointly or jointly and severally with any
other person) including (without limitation) all sums which that Finance Party may pay
or guarantees which it may give in respect of the Insurances, any expenses incurred by
that Finance Party in connection with the maintenance or repair of a Vessel or in
discharging any lien, bond or other claim relating in any way to a Vessel, and any sums
which that Finance Party may pay or guarantees which it may give to procure the release
of a Vessel from arrest or detention.

	 
	 	8.10	 	Taxes The Borrowers shall pay all Taxes to which all or any part of the
Indebtedness or any Finance Document may be at any time subject (other than Tax on a
Finance Party’s overall net income) and shall indemnify the Finance Parties, by payment
to the Agent (for the account of the Finance Parties) on the Agent’s written demand,
against all liabilities, costs, claims and expenses resulting from any omission to pay
or delay in paying any such Taxes.

 

30

 

	9	 	Fees

	 	9.1	 	Commitment fee The Borrowers shall pay to the Agent (for the account of the
Lenders in proportion to their Commitments) a fee computed at the rate of forty per
cent (40%) of the applicable Margin on the undrawn and uncancelled amount of the
Tranche Maximum Amounts from time to time from the Execution Date until the Commitment
Termination Date. The accrued commitment fee is payable on the last Business Day of
each fiscal quarter following the Execution Date and on the Commitment Termination
Date.

	 
	 	9.2	 	Other fees The Borrowers shall pay to the Agent on behalf of the Lenders the
fees in the amount and at the times agreed in the Fee Letter.

	 
	 	9.3	 	Upsize Fees The Borrowers shall pay to the Agent on behalf of the Lenders the
fees in the amount and at the times agreed in each Upsize Notice.

	 
	 	9.4	 	Agency fee The Borrowers shall pay to the Agent for its own account an agency
fee in the amount and at the times agreed in the Fee Letter.

	10	 	Security and Application of Moneys

	 	10.1	 	Security Documents As security for the payment of the Indebtedness, the
Borrowers shall execute and deliver to the Security Trustee or cause to be executed and
delivered to the Security Trustee the following documents in such forms and containing
such terms and conditions as the Security Trustee shall require:

	 	10.1.1	 	a first priority statutory mortgage over each of the Vessels together with a
collateral Deed of Covenants;

	 	10.1.2	 	a first priority deed of assignment of the Insurances, Earnings, Charter,
Conversion Agreement, Charter Guarantee and Requisition Compensation of each of
the Vessels;

	 
	 	10.1.3	 	an on demand guarantee and indemnity from the Guarantor; and

	 	10.1.4	 	a pledge of the membership interests of each of the Borrowers given by the
Pledgor.

 

31

 

	 	10.2	 	Remittance of Earnings Immediately upon the occurrence of an Event of Default
the Borrowers shall procure that all Earnings are paid to such account(s) as the Agent
shall from time to time specify by notice in writing to the Borrowers.

	 
	 	10.3	 	General application of moneys Whilst an Event of Default is continuing
unremedied and unwaived each of the Borrowers irrevocably authorises the Agent and the
Security Trustee to apply all sums which either of them may receive:

	 	10.3.1	 	pursuant to a sale or other disposition of a Vessel or any right, title or
interest in the Vessel; or

	 	10.3.2	 	by way of payment of any sum in respect of the Insurances, Earnings or
Requisition Compensation; or

	 
	 	10.3.3	 	otherwise arising under or in connection with any Security Document,

in accordance with Clause 3.4.3 or Clause 3.4.4 (if relevant) or otherwise in or
towards satisfaction, or by way of retention on account, of the Indebtedness as
follows:-

	 	(i)	 	first in payment of all outstanding fees and
expenses of the Agent and the Security Trustee;

	 
	 	(ii)	 	secondly in or towards payment of all
outstanding interest hereunder;

	 
	 	(iii)	 	thirdly in or towards payment of all
outstanding principal hereunder;

	 
	 	(iv)	 	fourthly in or towards payment of all other Indebtedness hereunder;

	 
	 	(v)	 	fifthly the balance, if any, shall be remitted
to the Borrowers or whoever may be entitled thereto.

 

32

 

	11	 	Representations and Warranties

Each of the Borrowers represents and warrants to each of the Finance Parties at the
Execution Date and (by reference to the facts and circumstances then pertaining) at the date
of each Drawdown Notice, at each Drawdown Date and at each Interest Payment Date as follows
(except that the representation and warranty contained at Clause 11.6 shall only be made on
the First Drawdown Date and that the representations and warranties contained at Clause 11.2
and 11.21 shall only be made on the Execution Date).

	 	11.1	 	Status and Due Authorisation Each of the Security Parties is a corporation or
limited partnership duly incorporated or formed under the laws of its jurisdiction of
incorporation or formation with power to enter into the Finance Documents and to
exercise its rights and perform its obligations under the Finance Documents and all
corporate and other action required to authorise its execution of the Finance Documents
and its performance of its obligations thereunder has been duly taken.

	 
	 	11.2	 	No Deductions or Withholding Under the laws of the Security Parties’
respective jurisdictions of incorporation or formation in force at the date hereof,
none of the Security Parties will be required to make any deduction or withholding from
any payment it may make under any of the Finance Documents.

	 
	 	11.3	 	Claims Pari Passu Under the laws of the Security Parties’ respective
jurisdictions of incorporation or formation in force at the date hereof, the
Indebtedness will, to the extent that it exceeds the realised value of any security
granted in respect of the Indebtedness, rank at least pari passu with all the Security
Parties’ other unsecured indebtedness save that which is preferred solely by any
bankruptcy, insolvency or other similar laws of general application.

	 
	 	11.4	 	No Immunity In any proceedings taken in any of the Security Parties’
respective jurisdictions of incorporation or formation in relation to any of the
Finance Documents, none of the Security Parties will be entitled to claim for itself or
any of its assets immunity from suit, execution, attachment or other legal process.

	 
	 	11.5	 	Governing Law and Judgments In any proceedings taken in any of the Security
Parties’ jurisdiction of incorporation or formation in relation to any of the Finance
Documents in which there is an express choice of the law of a particular country as
the governing law thereof, that choice of law and any judgment or (if applicable)
arbitral award obtained in that country will be recognised and enforced.

 

33

 

	 	11.6	 	Validity and Admissibility in Evidence As at the date hereof, all acts,
conditions and things required to be done, fulfilled and performed in order (a) to
enable each of the Security Parties lawfully to enter into, exercise its rights under
and perform and comply with the obligations expressed to be assumed by it in the
Finance Documents, (b) to ensure that the obligations expressed to be assumed by each
of the Security Parties in the Finance Documents are legal, valid and binding and (c)
to make the Finance Documents admissible in evidence in the jurisdictions of
incorporation or formation of each of the Security Parties, have been done, fulfilled
and performed.

	 
	 	11.7	 	No Filing or Stamp Taxes Under the laws of the Security Parties’ respective
jurisdictions of incorporation or formation in force at the date hereof, it is not
necessary that any of the Finance Documents be filed, recorded or enrolled with any
court or other authority in its jurisdiction of incorporation or formation (other than
the Registrar of Companies for England and Wales or the relevant maritime registry, to
the extent applicable) or that any stamp, registration or similar tax be paid on or in
relation to any of the Finance Documents.

	 
	 	11.8	 	Binding Obligations The obligations expressed to be assumed by each of the
Security Parties in the Finance Documents are legal and valid obligations, binding on
each of them in accordance with the terms of the Finance Documents and no limit on any
of their powers will be exceeded as a result of the borrowings, granting of security or
giving of guarantees contemplated by the Finance Documents or the performance by any of
them of any of their obligations thereunder.

	 
	 	11.9	 	No Winding-up Neither the Borrowers, the Pledgor nor the Guarantor have taken
any corporate action nor have any other steps been taken or legal proceedings been
started or (to the best of the Borrowers’ knowledge and belief) threatened against the
Borrowers, the Pledgor or the Guarantor for their winding-up, dissolution,
administration or reorganisation or for the appointment of a receiver, administrator,
administrative receiver, trustee or similar officer of it or of any or all of its
assets or revenues which might have a material adverse effect on the business or
financial condition of the Guarantor Group taken as a whole.

 

34

 

	 	11.10	 	Solvency

	 	11.10.1	 	Neither the Borrowers, the Pledgor, the Guarantor nor the Guarantor Group
taken as a whole is unable, or admits or has admitted its inability, to pay its
debts or has suspended making payments in respect of any of its debts.

	 	11.10.2	 	Neither the Borrowers, the Pledgor nor the Guarantor by reason of actual or
anticipated financial difficulties, has commenced, or intends to commence,
negotiations with one or more of its creditors with a view to rescheduling any
of its indebtedness.

	 	11.10.3	 	The value of the assets of each of the Borrowers, the Pledgor, the Guarantor
and the Guarantor Group taken as a whole is not less than the liabilities of
such entity or the Guarantor Group taken as a whole (as the case may be)
(taking into account contingent and prospective liabilities).

	 	11.10.4	 	No moratorium has been, or may, in the reasonably foreseeable future be,
declared in respect of any indebtedness of the Borrowers or the Guarantor.

	 	11.11	 	No Material Defaults

	 	11.11.1	 	Without prejudice to Clause 11.11.2, neither the Borrowers, the Pledgor nor
the Guarantor is in breach of or in default under any agreement to which it is
a party or which is binding on it or any of its assets to an extent or in a
manner which might have a material adverse effect on the business or financial
condition of the Guarantor Group taken as a whole.

	 	11.11.2	 	No Event of Default is continuing or might reasonably be expected to result
from the advance of any Drawing.

	 	11.12	 	No Material Proceedings No action or administrative proceeding of or before
any court, arbitral body or agency which is not covered by adequate insurance or which
might have a material adverse effect on the business or financial condition of the
Guarantor Group taken as a whole has been started or is reasonably likely to be
started.

	 
	 	11.13	 	Guarantor’s Accounts All financial statements relating to the Guarantor
required to be delivered under Clause 9 of the Guarantee, were each prepared in
accordance with GAAP, give (in conjunction with the notes thereto) a true and fair view
of (in the case of annual financial statements) or fairly represent (in the case of
quarterly accounts) the financial condition of the Guarantor at the date as of which
they were prepared and the results of the Guarantor’s operations during the
financial period then ended.

 

35

 

	 	11.14	 	No Material Adverse Change Since the publication of the last financial
statements relating to the Guarantor delivered pursuant to Clause 9 of the Guarantee,
there has been no change that has a Material Adverse Effect.

	 
	 	11.15	 	No Undisclosed Liabilities As at the date to which the Guarantor’s Accounts
were prepared neither the Borrowers, the Pledgor nor the Guarantor had any material
liabilities (contingent or otherwise) which were not disclosed thereby (or by the notes
thereto) or reserved against therein nor any unrealised or anticipated losses arising
from commitments entered into by it which were not so disclosed or reserved against
therein.

	 
	 	11.16	 	No Obligation to Create Security The execution of the Security Documents by
the Security Parties and their exercise of their rights and performance of their
obligations thereunder will not result in the existence of nor oblige the Borrowers,
the Pledgor or the Guarantor to create any Encumbrance over all or any of their present
or future revenues or assets, other than pursuant to the Finance Documents.

	 
	 	11.17	 	No Breach The execution of the Finance Documents by each of the Security
Parties and their exercise of their rights and performance of their obligations under
any of the Finance Documents do not constitute and will not result in any breach of any
agreement or treaty to which any of them is a party.

	 
	 	11.18	 	Security Each of the Security Parties is the legal and beneficial owner of
all assets and other property which it purports to charge, mortgage, pledge, assign or
otherwise secure pursuant to each Finance Document and those Finance Documents to which
it is a party create and give rise to valid and effective security having the ranking
expressed in those Finance Documents.

	 
	 	11.19	 	Necessary Authorisations The Necessary Authorisations required by each
Security Party are in full force and effect, and each Security Party is in compliance
with the material provisions of each such Necessary Authorisation relating to it and,
to the best of its knowledge, none of the Necessary Authorisations relating to it
are the subject of any pending or threatened proceedings or revocation.

 

36

 

	 	11.20	 	Money Laundering Any amount borrowed hereunder, and the performance of the
obligations of the Security Parties under the Finance Documents, will be for the
account of members of the Guarantor Group and will not involve any breach by any of
them of any law or regulatory measure relating to “money laundering” as defined in
Article 1 of the Directive (91/308/EEC) of the Council of the European Communities.

	 
	 	11.21	 	Disclosure of material facts The Borrowers are not aware of any material
facts or circumstances which have not been disclosed to the Agent and which might, if
disclosed, have reasonably been expected to adversely affect the decision of a person
considering whether or not to make loan facilities of the nature contemplated by this
Agreement available to the Borrowers.

	 
	 	11.22	 	Charters etc The copies of the Charters, the Sub-Charters and the Management
Agreements delivered or to be delivered to the Agent are true and complete copies, and
to the best of the Borrowers’ knowledge and belief, each such document is valid,
binding and in full force and effect in accordance with its terms.

	 
	 	11.23	 	Use of Facility The Facility will be used for the purposes specified in the
Recital.

	 
	 	11.24	 	Representations Limited The representation and warranties of the Borrowers in
this Clause 11 are subject to:

	 	11.24.1	 	the principle that equitable remedies are remedies which may be granted or
refused at the discretion of the court;

	 	11.24.2	 	the limitation of enforcement by laws relating to bankruptcy, insolvency,
liquidation, reorganisation, court schemes, moratoria, administration and other
laws generally affecting or limiting the rights of creditors;

	 
	 	11.24.3	 	the time barring of claims under any applicable limitation acts;

	 	11.24.4	 	the possibility that a court may strike out provisions for a contract as
being invalid for reasons of oppression, undue influence or similar; and

	 	11.24.5	 	any other reservations or qualifications of law expressed in any legal
opinions obtained by the Agent in connection with the Facility.

 

37

 

	12	 	Undertakings and Covenants

The undertakings and covenants in this Clause 12 remain in force for the duration of the
Facility Period.

	 	12.1	 	General Undertakings

	 	12.1.1	 	Maintenance of Legal Validity The Borrowers shall obtain, comply with the
terms of and do all that is necessary to maintain in full force and effect all
authorisations, approvals, licences and consents required in or by the laws and
regulations of its jurisdiction of formation and all other applicable
jurisdictions, to enable them lawfully to enter into and perform their
obligations under the Finance Documents and to ensure the legality, validity,
enforceability or admissibility in evidence of the Finance Documents in their
jurisdiction of incorporation or organisation and all other applicable
jurisdictions.

	 	12.1.2	 	Notification of Default The Borrowers shall promptly, upon becoming aware of
the same, inform the Agent in writing of the occurrence of any Event of Default
and, upon receipt of a written request to that effect from the Agent, confirm
to the Agent that, save as previously notified to the Agent or as notified in
such confirmation, no Event of Default has occurred.

	 	12.1.3	 	Claims Pari Passu The Borrowers shall ensure that at all times the claims of
the Finance Parties against them under the Finance Documents rank at least pari
passu with the claims of all their other unsecured creditors save those whose
claims are preferred by any bankruptcy, insolvency, liquidation, winding-up or
other similar laws of general application.

	 	12.1.4	 	Management of Vessels The Borrowers shall ensure that each of the Vessels is
at all times technically and commercially managed by the Managers.

 

38

 

	 	12.1.5	 	Classification The Borrowers shall ensure that each Vessel maintains the
highest classification required for the purpose of the relevant trade of such
Vessel which shall be with a Pre-Approved Classification Society, in each
case, free from any overdue recommendations and conditions affecting that
Vessel’s class.

	 	12.1.6	 	Certificate of Financial Responsibility The Borrowers shall obtain and
maintain a certificate of financial responsibility in relation to any Vessel
which is to call at the United States of America.

	 	12.1.7	 	Negative Pledge The Borrowers shall not create, or permit to subsist, any
Encumbrance (other than pursuant to the Security Documents) over all or any
part of the Vessels or the Insurances other than a Permitted Encumbrance.

	 	12.1.8	 	Registration The Borrowers shall not change or permit a change to the flag
of the Vessels during the Facility Period other than to a Pre-Approved Flag or
under such other flag as may be approved by the Agent acting on the
instructions of the Majority Lenders, such approval not to be unreasonably
withheld or delayed.

	 	12.1.9	 	ISM and ISPS Compliance The Borrowers shall ensure that the relevant Company
complies in all material respects with the ISM Code and the ISPS Code or any
replacements thereof and in particular (without prejudice to the generality of
the foregoing) shall ensure that the Company holds (i) a valid and current
Document of Compliance issued pursuant to the ISM Code, (ii) a valid and
current SMC issued in respect of each Vessel pursuant to the ISM Code, and
(iii) an ISSC in respect of each Vessel, and the Borrowers shall promptly, upon
request, supply the Agent with copies of the same.

	 	12.1.10	 	Necessary Authorisations Without prejudice to Clause 12.1.9 or any other
specific provision of the Security Documents relating to an Authorisation, the
Borrowers shall (i) obtain, comply with and do all that is necessary to
maintain in full force and effect all Necessary Authorisations if a failure to
do the same may cause a Material Adverse Effect; and (ii) promptly upon
request, supply certified copies to the Agent of all Necessary Authorisations.

 

39

 

	 	12.1.11	 	Compliance with Applicable Laws The Borrowers shall comply with all
applicable laws to which they may be subject if a failure to do the same may
have a Material Adverse Effect.

	 	12.1.12	 	Loans and Guarantees The Borrowers shall be permitted to make loans and
grant credit upon such terms as they may determine to any other member of the
Guarantor Group and may otherwise give any guarantee or indemnity to procure
financing for other members of the Guarantor Group, but shall not otherwise
make any loans or grant any credit (save in the ordinary course of business) or
give any guarantee or indemnity (except pursuant to the Security Documents);
Provided that the Borrowers shall not make any such loans or guarantees
following the occurrence of an Event of Default which is continuing unremedied
or unwaived.

	 	12.1.13	 	Further Assurance The Borrowers shall at their own expense, promptly take
all such action as the Agent may reasonably require for the purpose of
perfecting or protecting any Finance Party’s rights with respect to the
security created or evidenced (or intended to be created or evidenced) by the
Security Documents.

	 	12.1.14	 	Other information The Borrowers will promptly supply to the Agent such
information and explanations as the Majority Lenders may from time to time
reasonably require in connection with the operation of the Vessels and any
reasonable financial information in connection with the Borrowers, and will
procure that the Agent be given the like information and explanations relating
to all other Security Parties.

	 	12.1.15	 	Inspection of records Following the occurrence of an Event of Default which
is continuing unremedied and unwaived the Borrowers will permit the inspection
of their financial records and accounts on reasonable notice from time to time
during business hours by the Agent or its nominee.

	 	12.1.16	 	Valuations The Borrowers will deliver to the Agent a Valuation of each of
the Vessels (i) on the due date for delivery of the annual Guarantor’s Accounts
pursuant to clause 9 of the Guarantee and (ii) following the occurrence of an
Event of Default which is continuing unremedied and unwaived, on such other
occasions as the Agent may request.

 

40

 

	 	12.1.17	 	Insurance The Borrowers shall ensure at their own expense throughout the
Facility Period that the Vessels are insured and operated in accordance with
the provisions set out in the relevant Security Documents.

	 	12.1.18	 	Change of Control The Borrowers shall procure that throughout the Facility
Period:

	 	(a)	 	Ownership of the Guarantor the Charter
Guarantor shall at all times own (directly or indirectly) a majority of
the limited liability company interests in the General Partner;

	 
	 	(b)	 	Ownership of the Pledgor the Guarantor shall
remain the one hundred percent (100%) legal and beneficial owner of the
Pledgor (either directly or indirectly).

	 
	 	(c)	 	Ownership of the Borrowers the Pledgor shall
remain the one hundred percent (100%) legal and beneficial owner of
each of the Borrowers (either directly or indirectly).

	 	12.1.19	 	“Know your customer” checks If:

	 	(a)	 	the introduction of or any change in (or in the
interpretation, administration or application of) any law or regulation
made after the date of this Agreement;

	 
	 	(b)	 	any change in the status of the Borrowers after
the Execution Date; or

	 
	 	(c)	 	a proposed assignment or transfer by a Lender
of any of its rights and obligations under this Agreement to a party
that is not a Lender prior to such assignment or transfer,

 

41

 

obliges the Agent or any Lender (or, in the case of (c) above, any
prospective new Lender) to comply with “know your customer” or similar
identification procedures in circumstances where the necessary information
is not already available to it, the Borrowers shall promptly upon the
request of the Agent or any Lender supply, or procure the supply of, such
documentation and other evidence as is reasonably requested by the Agent
(for itself or on behalf of any Lender) or any Lender for itself (or, in the
case of (c) above, on behalf of any prospective new Lender) in order for the
Agent or that Lender (or, in the case of (c) above, any prospective new
Lender) to carry out and be satisfied it has complied with all necessary
“know your customer” or other similar checks under all applicable laws and
regulations pursuant to the transactions contemplated in the Finance
Documents.

	 	12.1.20	 	Borrowings The Borrowers will not (save hereunder) borrow from entities
other than members of the Guarantor Group and Teekay Corporation on a
subordinated and unsecured basis.

	 	12.1.21	 	No Dividends The Borrowers shall not pay dividends or make other
distributions to shareholders whilst an Event of Default has occurred and is
continuing unremedied and unwaived.

	 	12.1.22	 	No disposal of Assets The Borrowers shall not dispose of any material
assets other than as permitted in the Finance Documents.

	 
	 	12.1.23	 	Chartering The Borrowers shall not:

	 	(a)	 	bareboat charter any of the Vessels during the Facility Period; or

	 
	 	(b)	 	without the prior written consent of the
Lenders, permit any termination of, alteration to, or waiver of any
material term of either of the Charters.

	 	12.1.24	 	Conversion The Borrowers may proceed with any conversion in respect of the
Vessels without the prior written consent of the Lenders PROVIDED that the
Vessels maintain the ability to operate within the LNG sector following any
conversion works.

 

42

 

	13	 	Events of Default

	 	13.1	 	Events of Default Each of the events or circumstances set out in this Clause
13.1 is an Event of Default.

	 	13.1.1	 	Borrowers’ Failure to Pay under this Agreement The Borrowers fail to pay any
amount of principal due from them under this Agreement at the time, in the
currency and otherwise in the manner specified herein provided
that, if the Borrowers can demonstrate to the reasonable satisfaction of the
Agent that all necessary instructions were given to effect such payment and
the non-receipt thereof is attributable solely to an error in the banking
system, such payment shall instead be deemed to be due, solely for the
purposes of this paragraph, within three (3) Business Days of the date on
which it actually fell due under this Agreement (if a payment of principal),
five (5) Business Days (if a payment of interest or fees) or ten (10)
Business Days (if a sum payable on demand); or

	 	13.1.2	 	Misrepresentation Any representation or statement made by any Security Party
in any Security Document to which it is a party or in any notice or other
document, certificate or statement delivered by it pursuant thereto or in
connection therewith is or proves to have been incorrect or misleading in any
material respect, where the circumstances causing the same give rise to a
Material Adverse Effect; or

	 	13.1.3	 	Specific Covenants A Security Party fails duly to perform or comply with any
of the obligations expressed to be assumed by or procured by the Borrowers under
Clauses 12.1.7, 12.1.17 or 12.1.18; or

	 	13.1.4	 	Financial Covenants The Guarantor is in breach of the Guarantor’s financial
covenants set out in Clauses 8.1.1 or 8.1.2 of the Guarantee at any time; or

	 	13.1.5	 	Other Obligations A Security Party fails duly to perform or comply with any of
the obligations expressed to be assumed by it in any Security Document (other
than those referred to in Clause 13.1.3 or Clause 13.1.4) and such failure is not
remedied within 30 days after the Agent has given notice thereof to the
Borrowers; or

 

43

 

	 	13.1.6	 	Cross Default Any indebtedness of any member of the Guarantor Group or the
Charter Guarantor is not paid when due (or within any applicable grace period) or
any indebtedness of any member of the Guarantor Group or the Charter Guarantor is
declared to be or otherwise becomes due and payable prior to its specified
maturity where (in either case) the aggregate of all such unpaid or accelerated
indebtedness of:

	 	(a)	 	each of the Borrowers is equal to or greater
than ten million Dollars ($10,000,000) or its equivalent in any other
currency; or

	 
	 	(b)	 	any other member of the Guarantor Group (save
for the Guarantor and the Pledgor) is equal to or greater than twenty
five million Dollars ($25,000,000) or its equivalent in any other
currency; or

	 
	 	(c)	 	the Charter Guarantor is equal to or greater
than one hundred million Dollars ($100,000,000) or its equivalent in
any other currency; or

	 
	 	(d)	 	the Guarantor is equal to or greater than fifty
million Dollars ($50,000,000) or its equivalent in any other currency;
or

	 
	 	(e)	 	the Pledgor is equal to or greater than fifty
million Dollars ($50,000,000), or its equivalent in any other currency;
or

	 	13.1.7	 	Insolvency and Rescheduling A Security Party is unable to pay its debts as
they fall due, commences negotiations with any one or more of its creditors with
a view to the general readjustment or rescheduling of its indebtedness or makes a
general assignment for the benefit of its creditors or a composition with its
creditors; or

	 	13.1.8	 	Winding-up A Security Party takes any corporate action or other steps are
taken or legal proceedings are started for its winding-up, dissolution,
administration or re-organisation or for the appointment of a liquidator,
receiver, administrator, administrative receiver, conservator, custodian, trustee
or similar officer of it or of any or all of its revenues or assets or any
moratorium is declared or sought in respect of any of its indebtedness; or

 

44

 

	 	13.1.9	 	Execution or Distress

	 	(a)	 	Any Security Party fails to comply with or pay
any sum due from it (within 30 days of such amount falling due) under
any final judgment or any final order made or given by any court or
other official body of a competent jurisdiction in an aggregate (i) in
respect of the Guarantor equal to or greater than fifty million Dollars
($50,000,000) or its equivalent in any other currency; or (ii)
in respect of the Pledgor equal to or greater than fifty million
Dollars ($50,000,000) or its equivalent in any other currency, or
(iii) in respect of each Borrower equal to or greater than ten
million Dollars ($10,000,000) or its equivalent in any other
currency being a judgment or order against which there is no right
of appeal or if a right of appeal exists, where the time limit for
making such appeal has expired.

	 	(b)	 	Any execution or distress is levied against, or
an encumbrancer takes possession of, the whole or any part of, the
property, undertaking or assets of a Security Party in an aggregate
amount (i) in respect of the Guarantor equal to or greater than fifty
million Dollars ($50,000,000) or its equivalent in any other currency;
or (ii) in respect of the Pledgor equal to or greater than fifty
million Dollars ($50,000,000) or its equivalent in any other currency,
or (iii) in respect of each Borrower equal to or greater than ten
million Dollars ($10,000,000) or its equivalent in any other currency
other than any execution or distress which is being contested in good
faith and which is either discharged within 30 days or in respect of
which adequate security has been provided within 30 days to the
relevant court or other authority to enable the relevant execution or
distress to be lifted or released.

	 
	 	(c)	 	Notwithstanding the foregoing paragraphs of
this Clause 13.1.9, any levy of any distress on or any arrest,
condemnation, confiscation, requisition for title or use, compulsory
acquisition, seizure, detention or forfeiture of a Vessel (or any part
thereof) or any exercise or purported exercise of any lien or claim on
or against a Vessel where the release of or discharge the lien or claim
on or against such Vessel has not been procured within 30 days; or

	 	13.1.10	 	Similar Event Any event occurs which, under the laws of any jurisdiction,
has a similar or analogous effect to any of those events mentioned in Clauses
13.1.7, 13.1.8 and 13.1.9; or

 

45

 

	 	13.1.11	 	Insurances Insurance is not maintained in respect of each Vessel in
accordance with the terms of the relevant Security Document in respect of that
Vessel; or

	 	13.1.12	 	Class A Vessel has its classification withdrawn by the relevant
classification society PROVIDED THAT if such withdrawal is (in the opinion of
the Agent in its absolute discretion) capable of remedy such Event of Default
shall only occur if the Vessel’s classification is not reinstated to the
satisfaction of the Agent within twenty one (21) days; or

	 
	 	13.1.13	 	Environmental Matters

	 	(a)	 	Any Environmental Claim is pending or made
against an Owner or any of an Owner’s Environmental Affiliates or in
connection with a Vessel, where such Environmental Claim has a Material
Adverse Effect.

	 
	 	(b)	 	Any actual Environmental Incident occurs in
connection with a Vessel, where such Environmental Incident has a
Material Adverse Effect; or

	 	13.1.14	 	Repudiation Any Security Party repudiates any Security Document to which it
is a party or does or causes to be done any act or thing evidencing an
intention to repudiate any such Security Document; or

	 	13.1.15	 	Validity and Admissibility At any time any act, condition or thing required
to be done, fulfilled or performed in order:

	 	(a)	 	to enable any Security Party lawfully to enter
into, exercise its rights under and perform the respective obligations
expressed to be assumed by it in the Security Documents;

	 
	 	(b)	 	to ensure that the obligations expressed to be
assumed by each of the Security Parties in the Security Documents are
legal, valid and binding; or

	 
	 	(c)	 	to make the Security Documents admissible in
evidence in any applicable jurisdiction

is not done, fulfilled or performed within 30 days after notification from
the Agent to the relevant Security Party requiring the same to be done,
fulfilled or performed; or

 

46

 

	 	13.1.16	 	Illegality At any time it is or becomes unlawful for any Security Party to
perform or comply with any or all of its obligations under the Security
Documents to which it is a party or any of the obligations of the Borrowers
hereunder are not or cease to be legal, valid and binding and such illegality
is not remedied or mitigated to the satisfaction of the Agent within thirty
(30) days after it has given notice thereof to the relevant Security Party; or

	 	13.1.17	 	Material Adverse Change At any time there shall occur a change in the
business or operations of a Security Party or a change in the financial
condition of any Security Party which, in the reasonable opinion of the
Majority Lenders, materially impairs such Security Party’s ability to discharge
its obligations under the Security Documents in the manner provided therein,
and such change, if capable of remedy, is not so remedied within thirty (30)
days of the delivery of a notice confirming such change by the Agent to the
relevant Security Party; or

	 	13.1.18	 	Qualifications of Financial Statements The auditors of the Guarantor Group
qualify their report on any audited consolidated financial statements of the
Guarantor Group in any regard which, in the reasonable opinion of the Agent,
has a Material Adverse Effect; or

	 	13.1.19	 	Conditions Subsequent if any of the conditions set out in Clause 3.6 is not
satisfied within thirty (30) days or such other time period specified by the
Agent in its discretion; or

	 	13.1.20	 	Revocation or Modification of consents etc. if any Necessary Authorisation
which is now or which at any time during the Facility Period becomes necessary
to enable any of the Security Parties to comply with any of their obligations
in or pursuant to any of the Security Documents is revoked, withdrawn or
withheld, or modified in a manner which the Agent reasonably considers is, or
may be, prejudicial to the interests of a Finance Party in a material manner,
or if such Necessary Authorisation ceases to remain in full force and effect;
or

 

47

 

	 	13.1.21	 	Curtailment of Business if the business of any of the Security Parties is
wholly or materially curtailed by any intervention by or under authority of any
government, or if all or a substantial part of the undertaking, property or
assets of any of the Security Parties is seized, nationalised, expropriated or
compulsorily acquired by or under authority of any government or any Security
Party disposes or threatens to dispose of a substantial part of its business or
assets; or

	 	13.1.22	 	Challenge to Registration if the registration of any Vessel or any Mortgage
becomes void or voidable or liable to cancellation or termination; or

	 	13.1.23	 	War if the country of registration of any Vessel becomes involved in war
(whether or not declared) or civil war or is occupied by any other power and
the Agent reasonably considers that, as a result, the security conferred by the
Security Documents is materially prejudiced; or

	 	13.1.24	 	Notice of Termination if the Guarantor gives notice to the Agent to
determine its obligations under the Guarantee; or

	 	13.1.25	 	Status of Guarantor if the Guarantor ceases to be a publicly listed
limited partnership, or merges or demerges without the prior written approval
of the Lenders; or

	 
	 	13.1.26	 	Termination of Charters If either of the Charters is terminated.

	 	13.2	 	Acceleration If an Event of Default is continuing unremedied or unwaived the
Agent may (with the consent of the Majority Lenders) and shall (at the request of the
Majority Lenders) by notice to the Borrowers cancel any part of the Maximum Amount not
then advanced and:

	 	13.2.1	 	declare that the Facility, together with accrued interest, and all other
amounts accrued or outstanding under the Finance Documents are immediately due
and payable, whereupon they shall become immediately due and payable; and/or

	 	13.2.2	 	declare that the Facility is payable on demand, whereupon it shall
immediately become payable on demand by the Agent; and/or

	 
	 	13.2.3	 	declare the Commitments terminated and the Maximum Amount reduced to zero.

 

48

 

	14	 	Assignment and Sub-Participation

	 	14.1	 	Lenders’ rights Subject to the Borrowers’ consent (not to be unreasonably
withheld or delayed) a Lender may assign any of its rights under this Agreement or sell
participations in its rights and obligations under this Agreement, or transfer by
novation any of its rights and obligations under this Agreement to any other branch or
Affiliate of that Lender or (subject to a minimum assignment amount of five million
Dollars ($5,000,000)) to any other bank or financial institution or special purpose
vehicles wholly owned by a bank or financial institution, and may grant
sub-participations in all or any part of its Commitment PROVIDED any assignment, sale
or transfer under this Clause 14.1 shall not result in increased costs to the Borrowers
at the time of any such assignment, sale or transfer. Any such assignment, sale or
transfer must include a pro rata share of that Lender’s Commitment in respect of
Tranche A and Tranche B.

	 
	 	14.2	 	Borrowers’ co-operation The Borrowers will co-operate fully with a Lender in
connection with any assignment, transfer or sub-participation by that Lender; will
execute and procure the execution of such documents as that Lender may require in that
connection; and irrevocably authorises any Finance Party to disclose to any proposed
assignee, transferee or sub-participant (whether before or after any assignment,
transfer or sub-participation and whether or not any assignment, transfer or
sub-participation shall take place) all information relating to the Security Parties,
the Facility, the Relevant Documents and the Vessels which any Finance Party may in its
discretion consider necessary or desirable (subject to any duties of confidentiality
applicable to the Lenders generally). Additionally, (but subject to the same duties of
confidentiality), any Lender may disclose the size and term of the Facility and the
names of each Security Party to any investor or potential investor in a securitisation
whether of a true sale, synthetic or other nature (or similar transaction of broadly
equivalent economic effect) of that Lender’s rights and obligations under the Finance
Documents or to any ratings agency, professional adviser, financial institution or
other person for the same purpose.

 

49

 

	 	14.3	 	Rights of assignee Any assignee of a Lender shall (unless limited by the
express terms of the assignment) take the full benefit of every provision of the
Finance
Documents benefiting that Lender PROVIDED THAT an assignment will only be
effective on notification by the Agent to that Lender and the assignee that the
Agent is satisfied it has complied with all necessary “Know your customer” or other
similar checks under all applicable laws and regulations in relation to the
assignment to the assignee.

	 
	 	14.4	 	Transfer Certificates If a Lender wishes to transfer any of its rights and
obligations under or pursuant to this Agreement, it may do so by delivering to the
Agent a duly completed Transfer Certificate, in which event on the Transfer Date:

	 	14.4.1	 	to the extent that that Lender seeks to transfer its rights and obligations,
the Borrowers (on the one hand) and that Lender (on the other) shall be
released from all further obligations towards the other;

	 	14.4.2	 	the Borrowers (on the one hand) and the transferee (on the other) shall
assume obligations towards the other identical to those released pursuant to
Clause 14.4.1; and

	 	14.4.3	 	the Agent, each of the Lenders and the transferee shall have the same rights
and obligations between themselves as they would have had if the transferee had
been an original party to this Agreement as a Lender

PROVIDED THAT the Agent shall only be obliged to execute a Transfer Certificate
once:

	 	(a)	 	it is satisfied it has complied with all necessary “know your
customer” or other similar checks under all applicable laws and regulations in
relation to the transfer to the transferee; and

	 	(b)	 	the transferee has paid to the Agent for its own account a
transfer fee of three thousand five hundred Dollars ($3,500).

The Agent shall, as soon as reasonably practicable after it has executed a Transfer
Certificate, send to the Borrowers a copy of that Transfer Certificate.

	 	14.5	 	Finance Documents Unless otherwise expressly provided in any Finance Document
or otherwise expressly agreed between a Lender and any proposed transferee and notified
by that Lender to the Agent on or before the relevant Transfer Date, there shall
automatically be assigned to the transferee with any
transfer of a Lender’s rights and obligations under or pursuant to this Agreement
the rights of that Lender under or pursuant to the Finance Documents (other than
this Agreement) which relate to the portion of that Lender’s rights and obligations
transferred by the relevant Transfer Certificate.

 

50

 

	 	14.6	 	No assignment or transfer by the Borrowers, the Pledgor or the Guarantor The
Borrowers, the Pledgor and the Guarantor may not assign any of their rights or transfer
any of their rights or obligations under the Finance Documents without the prior
written consent of the Lenders.

	15	 	The Agent, the Security Trustee and the Lenders

	 	15.1	 	Appointment

	 	15.1.1	 	Each Lender appoints the Agent to act as its agent under and in connection
with the Finance Documents and each Lender and the Agent appoints the Security
Trustee to act as its security agent for the purpose of the Security Documents.

	 	15.1.2	 	Each Lender authorises the Agent, and each Lender and the Agent authorises
the Security Trustee, to exercise the rights, powers, authorities and
discretions specifically given to the Agent or the Security Trustee (as the
case may be) under or in connection with the Finance Documents together with
any other incidental rights, powers, authorities and discretions.

	 	15.1.3	 	Except where the context otherwise requires, references in this Clause 15 to
the “Agent” shall mean the Agent and the Security Trustee individually and
collectively.

	 	15.2	 	Authority Each Lender irrevocably authorises the Security Trustee (in the
case of Clause 15.2.1) and the Agent (in the case of Clauses 15.2.2, 15.2.3 and 15.2.4)
(in each case subject to Clauses 15.4 and 15.18):

	 	15.2.1	 	to execute any Finance Document (other than this Agreement) on its behalf;

	 	15.2.2	 	to collect, receive, release or pay any money on its behalf;

 

51

 

	 	15.2.3	 	acting on the instructions from time to time of the Majority Lenders (save
where the terms of any Security Document expressly provide otherwise) to give
or withhold any waivers, consents or approvals under or pursuant to any Finance
Document; and

	 	15.2.4	 	acting on the instructions from time to time of the Majority Lenders (save
where the terms of any Security Document expressly provide otherwise) to
exercise, or refrain from exercising, any rights, powers, authorities or
discretions under or pursuant to any Finance Document.

The Agent shall have no duties or responsibilities as agent or as security agent
other than those expressly conferred on it by the Finance Documents and shall not be
obliged to act on any instructions from the Lenders or the Majority Lenders if to do
so would, in the opinion of the Agent, be contrary to any provision of the Finance
Documents or to any law, or would expose the Agent to any actual or potential
liability to any third party.

	 	15.3	 	Trust The Security Trustee agrees and declares, and each of the other Finance
Parties acknowledges, that, subject to the terms and conditions of this Clause 15.3,
the Security Trustee holds the Trust Property on trust for the Finance Parties
absolutely. Each of the other Finance Parties agrees that the obligations, rights and
benefits vested in the Security Trustee shall be performed and exercised in accordance
with this Clause 15.3. The Security Trustee shall have the benefit of all of the
provisions of this Agreement benefiting it in its capacity as security agent for the
Finance Parties, and all the powers and discretions conferred on trustees by the
Trustee Act 1925 (to the extent not inconsistent with this Agreement). In addition:

	 	15.3.1	 	the Security Trustee and any attorney, agent or delegate of the Security
Trustee may indemnify itself or himself out of the Trust Property against all
liabilities, costs, fees, damages, charges, losses and expenses sustained or
incurred by it or him in relation to the taking or holding of any of the Trust
Property or in connection with the exercise or purported exercise of the
rights, trusts, powers and discretions vested in the Security Trustee or any
other such person by or pursuant to the Security Documents or in respect of
anything else done or omitted to be done in any way relating to the Security
Documents other than as a result of its gross negligence or wilful misconduct;

 

52

 

	 	15.3.2	 	the other Finance Parties acknowledge that the Security Trustee shall be
under no obligation to insure any property nor to require any other person to
insure any property and shall not be responsible for any loss which may be
suffered by any person as a result of the lack or insufficiency of any
insurance; and

	 	15.3.3	 	the Finance Parties agree that the perpetuity period applicable to the trusts
declared by this Agreement shall be the period of eighty years from the date of
this Agreement.

	 	15.4	 	Limitations on authority Except with the prior written consent of all the
Lenders, the Agent shall not be entitled to:

	 	15.4.1	 	release or vary any security given for the Borrowers’ obligations under this
Agreement; nor

	 	15.4.2	 	waive, or agree to the reduction of, a payment of any sum of money payable by
any Security Party under the Finance Documents; nor

	 	15.4.3	 	change the meaning of the expressions “Majority Lenders”, “Margin”,
“Commitment Commission” or “Default Rate”; nor

	 	15.4.4	 	exercise, or refrain from exercising, any right, power, authority or
discretion, or give or withhold any consent, the exercise or giving of which
is, by the terms of this Agreement, expressly reserved to the Lenders; nor

	 	15.4.5	 	extend the due date for the payment of any sum of money payable by any
Security Party under any Finance Document; nor

	 	15.4.6	 	take or refrain from taking any step if the effect of such action or inaction
may lead to the increase of the obligations of a Lender under any Finance
Document; nor

	 	15.4.7	 	agree to change the currency in which any sum is payable under any Finance
Document (other than in accordance with the terms of the relevant Finance
Document); nor

	 	15.4.8	 	agree to amend this Clause 15.4.

 

53

 

	 	15.5	 	Liability Neither the Agent nor any of its directors, officers, employees or
agents shall be liable to the Lenders for anything done or omitted to be done by the
Agent under or in connection with any of the Relevant Documents unless as a result of
the Agent’s gross negligence or wilful misconduct.

	 
	 	15.6	 	Acknowledgement Each Lender acknowledges that:

	 	15.6.1	 	it has not relied on any representation made by the Agent or any of the
Agent’s directors, officers, employees or agents or by any other person acting
or purporting to act on behalf of the Agent to induce it to enter into any
Finance Document;

	 	15.6.2	 	it has made and will continue to make without reliance on the Agent, and
based on such documents and other evidence as it considers appropriate, its own
independent investigation of the financial condition and affairs of the
Security Parties in connection with the making and continuation of the
Facility;

	 	15.6.3	 	it has made its own appraisal of the creditworthiness of the Security
Parties; and

	 	15.6.4	 	the Agent shall not have any duty or responsibility at any time to provide it
with any credit or other information relating to any Security Party unless that
information is received by the Agent pursuant to the express terms of a Finance
Document.

Each Lender agrees that it will not assert nor seek to assert against any director,
officer, employee or agent of the Agent or against any other person acting or
purporting to act on behalf of the Agent any claim which it might have against them
in respect of any of the matters referred to in this Clause 15.6.

	 	15.7	 	Limitations on responsibility The Agent shall have no responsibility to any
Security Party or to any Lender on account of:

	 	15.7.1	 	the failure of a Lender or of any Security Party to perform any of its
obligations under a Finance Document; nor

	 	15.7.2	 	the financial condition of any Security Party; nor

 

54

 

	 	15.7.3	 	the completeness or accuracy of any statements, representations or warranties
made in or pursuant to any Finance Document, or in or pursuant to any document
delivered pursuant to or in connection with any Finance Document; nor

	 	15.7.4	 	the negotiation, execution, effectiveness, genuineness, validity,
enforceability, admissibility in evidence or sufficiency of any Finance
Document or of any document executed or delivered pursuant to or in connection
with any Finance Document.

	 	15.8	 	The Agent’s rights The Agent may:

	 	15.8.1	 	assume that all representations or warranties made or deemed repeated by any
Security Party in or pursuant to any Finance Document are true and complete,
unless, in its capacity as the Agent, it has acquired actual knowledge to the
contrary;

	 	15.8.2	 	assume that no Default has occurred unless, in its capacity as the Agent, it
has acquired actual knowledge to the contrary;

	 
	 	15.8.3	 	rely on any document or notice believed by it to be genuine;

	 	15.8.4	 	rely as to legal or other professional matters on opinions and statements of
any legal or other professional advisers selected or approved by it;

	 	15.8.5	 	rely as to any factual matters which might reasonably be expected to be
within the knowledge of any Security Party on a certificate signed by or on
behalf of that Security Party; and

	 	15.8.6	 	refrain from exercising any right, power, discretion or remedy unless and
until instructed to exercise that right, power, discretion or remedy and as to
the manner of its exercise by the Lenders (or, where applicable, by the
Majority Lenders) and unless and until the Agent has received from the Lenders
any payment which the Agent may require on account of, or any security which
the Agent may require for, any costs, claims, expenses (including legal and
other professional fees) and liabilities which it considers it may incur or
sustain in complying with those instructions.

 

55

 

15.9 The Agent’s duties The Agent shall:

	 	15.9.1	 	if requested in writing to do so by a Lender, make enquiry and advise the
Lenders as to the performance or observance of any of the provisions of any
Finance Document by any Security Party or as to the existence of an Event of
Default; and

	 	15.9.2	 	inform the Lenders promptly of any Event of Default of which the Agent has
actual knowledge.

	 	15.10	 	No deemed knowledge The Agent shall not be deemed to have actual knowledge
of the falsehood or incompleteness of any representation or warranty made or deemed
repeated by any Security Party or actual knowledge of the occurrence of any Default
unless a Lender or a Security Party shall have given written notice thereof to the
Agent in its capacity as the Agent. Any information acquired by the Agent other than
specifically in its capacity as the Agent shall not be deemed to be information
acquired by the Agent in its capacity as the Agent.

	 
	 	15.11	 	Other business The Agent may, without any liability to account to the
Lenders, generally engage in any kind of banking or trust business with a Security
Party or with a Security Party’s subsidiaries or associated companies or with a Lender
as if it were not the Agent.

	 
	 	15.12	 	Indemnity The Lenders shall, promptly on the Agent’s request, reimburse the
Agent in their respective Proportionate Shares, for, and keep the Agent fully
indemnified in respect of all liabilities, damages, costs and claims sustained or
incurred by the Agent in connection with the Finance Documents, or the performance of
its duties and obligations, or the exercise of its rights, powers, discretions or
remedies under or pursuant to any Finance Document, to the extent not paid by the
Security Parties and not arising solely from the Agent’s gross negligence or wilful
misconduct.

	 
	 	15.13	 	Employment of agents In performing its duties and exercising its rights,
powers, discretions and remedies under or pursuant to the Finance Documents, the Agent
shall be entitled to employ and pay agents to do anything which the Agent is empowered
to do under or pursuant to the Finance Documents (including the receipt of money and
documents and the payment of money) and to act or refrain
from taking action in reliance on the opinion of, or advice or information obtained
from, any lawyer, banker, broker, accountant, valuer or any other person believed by
the Agent in good faith to be competent to give such opinion, advice or information.

 

56

 

	 	15.14	 	Distribution of payments The Agent shall pay promptly to the order of each
Lender that Lender’s Proportionate Share of every sum of money received by the Agent
pursuant to the Finance Documents (with the exception of any amounts payable pursuant
to Clause 9 and/or any Fee Letter and any amounts which, by the terms of the Finance
Documents, are paid to the Agent for the account of the Agent alone or of one or more
Lenders) and until so paid such amount shall be held by the Agent on trust absolutely
for that Lender.

	 
	 	15.15	 	Reimbursement The Agent shall have no liability to pay any sum to a Lender
until it has itself received payment of that sum. If, however, the Agent does pay any
sum to a Lender on account of any amount prospectively due to that Lender pursuant to
Clause 15.14 before it has itself received payment of that amount, and the Agent does
not in fact receive payment within five (5) Business Days after the date on which that
payment was required to be made by the terms of the Finance Documents, that Lender
will, on demand by the Agent, refund to the Agent an amount equal to the amount
received by it, together with an amount sufficient to reimburse the Agent for any
amount which the Agent may certify that it has been required to pay by way of interest
on money borrowed to fund the amount in question during the period beginning on the
date on which that amount was required to be paid by the terms of the Finance Documents
and ending on the date on which the Agent receives reimbursement.

	 
	 	15.16	 	Redistribution of payments Unless otherwise agreed between the Finance
Parties, if at any time a Finance Party receives or recovers by way of set-off, the
exercise of any lien or otherwise from any Security Party, an amount greater than that
Finance Party’s entitlement to any sum due from that Security Party under the Finance
Documents (the amount of the excess being referred to in this Clause 15.16 and in
Clause 15.17 as the “Excess Amount”) then:

	 	15.16.1	 	that Finance Party shall promptly notify the Agent (which shall promptly
notify each other Finance Party);

 

57

 

	 	15.16.2	 	that Finance Party shall pay to the Agent an amount equal to the Excess
Amount within ten (10) days of its receipt or recovery of the Excess Amount;
and

	 	15.16.3	 	the Agent shall treat that payment as if it were a payment by the Security
Party in question on account of the sum due from that Security Party to the
Finance Party and shall account to the Finance Parties in respect of the Excess
Amount in accordance with the provisions of this Clause 15.16.

However, if a Finance Party has commenced any legal proceedings to recover sums
owing to it under the Finance Documents and, as a result of, or in connection with,
those proceedings has received an Excess Amount, the Agent shall not distribute any
of that Excess Amount to any other Finance Party which had been notified of the
proceedings and had the legal right to, but did not, join those proceedings or
commence and diligently prosecute separate proceedings to enforce its rights in the
same or another court.

	 	15.17	 	Rescission of Excess Amount If all or any part of any Excess Amount is
rescinded or must otherwise be restored to any Security Party or to any other third
party, the Finance Parties which have received any part of that Excess Amount by way of
distribution from the Agent pursuant to Clause 15.16 shall repay to the Agent for the
account of the Finance Party which originally received or recovered the Excess Amount,
the amount which shall be necessary to ensure that the Finance Parties share in the
amount of the receipt or payment retained in accordance with the provisions of the
Finance Documents, together with interest on that amount at a rate equivalent to that
(if any) paid by the Lender receiving or recovering the Excess Amount to the person to
whom that Lender is liable to make payment in respect of such amount, and Clause
15.16.3 shall apply only to the retained amount.

	 	15.18	 	Instructions Where the Agent is authorised or directed to act or refrain
from acting in accordance with the instructions of the Lenders or of the Majority
Lenders each of the Lenders shall provide the Agent with instructions within three (3)
Business Days of the Agent’s request (which request may be made orally or in writing).
If a Lender does not provide the Agent with instructions within that period, that
Lender shall be bound by the decision of the Agent. Nothing in this Clause 15.18 shall
limit the right of the Agent to take, or refrain from taking, any action without
obtaining the instructions of the Lenders or the Majority Lenders if
the Agent in its discretion considers it necessary or appropriate to take, or
refrain from taking, such action in order to preserve the rights of the Lenders
under or in connection with the Finance Documents. In that event, the Agent will
notify the Lenders of the action taken by it as soon as reasonably practicable, and
the Lenders agree to ratify any action taken by the Agent pursuant to this Clause
15.18.

 

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	 	15.19	 	Payments All amounts payable to a Lender under this Clause 15 shall be paid
to such account at such bank as that Lender may from time to time direct in writing to
the Agent.

	 	15.20	 	“Know your customer” checks Each Lender shall promptly upon the request of
the Agent supply, or procure the supply of, such documentation and other evidence as is
reasonably requested by the Agent (for itself) in order for the Agent to carry out and
be satisfied it has complied with all necessary “know your customer” or other similar
checks under all applicable laws and regulations pursuant to the transactions
contemplated in the Finance Documents.

	 	15.21	 	Resignation Subject to a successor being appointed in accordance with this
Clause 15.21, the Agent may resign as agent and/or the Security Trustee may resign as
security agent at any time without assigning any reason by giving to the Borrowers and
the Finance Parties notice of its intention to do so, in which event the following
shall apply:

	 	15.21.1	 	with the consent of the Borrowers not to be unreasonably withheld (but such
consent not to be required at any time after an Event of Default which is
continuing unremedied and unwaived) the Finance Parties may within thirty (30)
days after the date of the notice from the Agent or the Security Trustee (as
the case may be) appoint a successor to act as agent and/or security agent or,
if they fail to do so with the consent of the Borrowers, not to be unreasonably
withheld (but such consent not to be required at any time after an Event of
Default which is continuing unremedied and unwaived), the Agent or the Security
Trustee (as the case may be) may appoint any other bank or financial
institution as its successor;

	 	15.21.2	 	the resignation of the Agent or the Security Trustee (as the case may be)
shall take effect simultaneously with the appointment of its successor on
written notice of that appointment being given to the Borrowers and the
Finance Parties;

 

59

 

	 	15.21.3	 	the Agent or the Security Trustee (as the case may be) shall thereupon be
discharged from all further obligations as agent and/or security agent but
shall remain entitled to the benefit of the provisions of this Clause 15; and

	 	15.21.4	 	the successor of the Agent or the Security Trustee (as the case may be) and
each of the other parties to this Agreement shall have the same rights and
obligations amongst themselves as they would have had if that successor had
been a party to this Agreement.

	 	15.22	 	No fiduciary relationship Except as provided in Clauses 15.3 and 15.14, the
Agent shall not have any fiduciary relationship with or be deemed to be a trustee of or
for any other person and nothing contained in any Finance Document shall constitute a
partnership between any two or more Finance Parties or between the Agent and any other
person.

	16	 	Set-Off

	 
	 	 	Set-off A Finance Party may set off any matured obligation due from the Borrowers under
any Finance Document (to the extent beneficially owned by that Finance Party) against any
matured obligation owed by that Finance Party to the Borrowers, regardless of the place of
payment, booking branch or currency of either obligation. If the obligations are in
different currencies, that Finance Party may convert either obligation at a market rate of
exchange in its usual course of business for the purpose of the set-off.

	17	 	Payments

	 	17.1	 	Payments Each amount payable by the Borrowers under a Finance Document shall
be paid to such account at such bank as the Agent may from time to time direct to the
Borrowers in the Currency of Account and in such funds as are customary at the time for
settlement of transactions in the relevant currency in the place of payment. Payment
shall be deemed to have been received by the Agent on the date on which the Agent
receives authenticated advice of receipt, unless that advice is received by the Agent
on a day other than a Business Day or at a time of day (whether on a Business Day or
not) when the Agent in its reasonable discretion considers that it is impossible or
impracticable for the Agent to utilise the amount
received for value that same day, in which event the payment in question shall be
deemed to have been received by the Agent on the Business Day next following the
date of receipt of advice by the Agent.

 

60

 

	 	17.2	 	No deductions or withholdings Each payment (whether of principal or interest
or otherwise) to be made by the Borrowers under a Finance Document shall, subject only
to Clause 17.3, be made free and clear of and without deduction for or on account of
any Taxes or other deductions, withholdings, restrictions, conditions or counterclaims
of any nature.

	 	17.3	 	Grossing-up If at any time any law requires (or is interpreted to require)
the Borrowers to make any deduction or withholding from any payment, or to change the
rate or manner in which any required deduction or withholding is made, the Borrowers
will promptly notify the Agent and, simultaneously with making that payment, will pay
to the Agent whatever additional amount (after taking into account any additional Taxes
on, or deductions or withholdings from, or restrictions or conditions on, that
additional amount) is necessary to ensure that, after making the deduction or
withholding, the relevant Finance Parties receive a net sum equal to the sum which they
would have received had no deduction or withholding been made.

	 	17.4	 	Evidence of deductions If at any time the Borrowers are required by law to
make any deduction or withholding from any payment to be made by them under a Finance
Document, the Borrowers will pay the amount required to be deducted or withheld to the
relevant authority within the time allowed under the applicable law and will, no later
than thirty (30) days after making that payment, deliver to the Agent an original
receipt issued by the relevant authority, or other evidence reasonably acceptable to
the Agent, evidencing the payment to that authority of all amounts required to be
deducted or withheld.

	 	17.5	 	Rebate If a Borrower pays any additional amount under Clause 17.3, and a
Finance Party subsequently receives a refund or allowance from any tax authority which
that Finance Party identifies as being referable to that increased amount so paid by
that Borrower, that Finance Party shall, as soon as reasonably practicable, pay to that
Borrower an amount equal to the amount of the refund or allowance received, if and to
the extent that it may do so without prejudicing its right to retain that refund or
allowance and without putting itself in any worse financial position
than that in which it would have been had the relevant deduction or withholding not
been required to have been made. Nothing in this Clause 17.5 shall be interpreted
as imposing any obligation on any Finance Party to apply for any refund or allowance
nor as restricting in any way the manner in which any Finance Party organises its
tax affairs, nor as imposing on any Finance Party any obligation to disclose to the
Borrowers any information regarding its tax affairs or tax computations.

 

61

 

	 	17.6	 	Adjustment of due dates If any payment or transfer of funds to be made under
a Finance Document, other than a payment of interest on a Drawing, shall be due on a
day which is not a Business Day, that payment shall be made on the next succeeding
Business Day (unless the next succeeding Business Day falls in the next calendar month
in which event the payment shall be made on the next preceding Business Day). Any such
variation of time shall be taken into account in computing any interest in respect of
that payment.

	 	17.7	 	Control Account The Agent shall without further input required from the
Borrowers open and maintain on its books a control account in the name of the Borrowers
showing the advance of the Facility and the computation and payment of interest and all
other sums due under this Agreement. The Borrowers’ obligations to repay the Facility
and to pay interest and all other sums due under this Agreement shall be evidenced by
the entries from time to time made in the control account opened and maintained under
this Clause 17.7 by the Agent and those entries will, in the absence of manifest error,
be conclusive and binding.

	18	 	Notices

	 	18.1	 	Communications in writing Any communication to be made under or in connection
with this Agreement shall be made in writing and, unless otherwise stated, may be made
by fax or letter or (subject to Clause 18.6) electronic mail.

	 	18.2	 	Addresses The address and fax number (and the department or officer, if any,
for whose attention the communication is to be made) of each party to this Agreement
for any communication or document to be made or delivered under or in connection with
this Agreement are:

	 	18.2.1	 	in the case of the Borrowers, c/o Teekay Shipping (Canada) Ltd Suite 2000,
Bentall 5, 550 Burrard Street, Vancouver, B.C., Canada V6C 2K2 (fax no: +1 604
681 3011) marked for the attention of Vice President, Finance;

 

62

 

	 	18.2.2	 	in the case of each Lender, those appearing opposite its name in Schedule 1;

	 	18.2.3	 	in the case of the Agent, 200 Park Avenue, 31st Floor, New York,
NY 10166, USA (fax no: +1 212 681 4123) marked for the attention of Teresa
Rosu; and

	 	18.2.4	 	in the case of the Security Trustee, 200 Park Avenue, 31st Floor,
New York, NY 10166, USA (fax no: +1 212 681 4123)marked for the attention of
Teresa Rosu;

or any substitute address, fax number, department or officer as any party may notify
to the Agent (or the Agent may notify to the other parties, if a change is made by
the Agent) by not less than five (5) Business Days’ notice.

	 	18.3	 	Delivery Any communication or document made or delivered by one party to this
Agreement to another under or in connection this Agreement will only be effective:

	 	18.3.1	 	if by way of fax, when received in legible form; or

	 	18.3.2	 	if by way of letter, when it has been left at the relevant address or five
(5) Business Days after being deposited in the post postage prepaid in an
envelope addressed to it at that address; or

	 	18.3.3	 	if by way of electronic mail, in accordance with Clause 18.6;
 

and,
if a particular department or officer is specified as part of its address
details provided under Clause 18.2, if addressed to that department or officer.

Any communication or document to be made or delivered to the Agent will be effective
only when actually received by the Agent.

All notices from or to the Borrowers shall be sent through the Agent.

 

63

 

	 	18.4	 	Notification of address and fax number Promptly upon receipt of notification
of an address, fax number or change of address, pursuant to Clause 18.2 or changing
its own address or fax number, the Agent shall notify the other parties to this
Agreement.

	 	18.5	 	English language Any notice given under or in connection with this Agreement
must be in English. All other documents provided under or in connection with this
Agreement must be:

	 	18.5.1	 	in English; or

	 	18.5.2	 	if not in English, and if so required by the Agent, accompanied by a
certified English translation and, in this case, the English translation will
prevail unless the document is a constitutional, statutory or other official
document.

	18.6	 	Electronic communication

	 	(a)	 	Any communication to be made in connection with this Agreement
may be made by electronic mail or other electronic means, if the Borrowers and
the relevant Finance Party:

	 	(i)	 	agree that, unless and until notified to the
contrary, this is to be an accepted form of communication;

	 	(ii)	 	notify each other in writing of their
electronic mail address and/or any other information required to enable
the sending and receipt of information by that means; and

	 	(iii)	 	notify each other of any change to their
address or any other such information supplied by them.

	 	(b)	 	Any electronic communication made between the Borrowers and the
relevant Finance Party will be effective only when actually received in
readable form and acknowledged by the recipient (it being understood that any
system generated responses do not constitute an acknowledgement) and in the
case of any electronic communication made by the Borrowers to a Finance Party
only if it is addressed in such a manner as the Finance Party shall specify for
this purpose.

 

64

 

	19	 	Partial Invalidity

If, at any time, any provision of a Finance Document is or becomes illegal, invalid or
unenforceable in any respect under any law of any jurisdiction, neither the legality,
validity or enforceability of the remaining provisions nor the legality, validity or
enforceability of such provision under the law of any other jurisdiction will in any way be
affected or impaired.

	20	 	Remedies and Waivers

No failure to exercise, nor any delay in exercising, on the part of any Finance Party, any
right or remedy under a Finance Document shall operate as a waiver, nor shall any single or
partial exercise of any right or remedy prevent any further or other exercise or the
exercise of any other right or remedy. The rights and remedies provided in this Agreement
are cumulative and not exclusive of any rights or remedies provided by law.

	21	 	Joint and several liability

	 	21.1	 	Nature of liability of the Borrowers The representations, warranties,
covenants, obligations and undertakings of the Borrowers contained in this Agreement
shall be joint and several so that each Borrower shall be jointly and severally liable
with the other Borrower for all of the same and such liability shall not in any way be
discharged, impaired or otherwise affected by:

	 	21.1.1	 	any forbearance (whether as to payment or otherwise) or any time or other
indulgence granted to the other Borrower or any other Security Party under or
in connection with any Finance Document;

	 	21.1.2	 	any amendment, variation, novation or replacement of any other Finance
Document;

	 	21.1.3	 	any failure of any Finance Document to be legal valid binding and enforceable
in relation to the other Borrower or any other Security Party for any reason;

	 	21.1.4	 	the winding-up or dissolution of the other Borrower or any other Security
Party;

 

65

 

	 	21.1.5	 	the release (whether in whole or in part) of, or the entering into of any
compromise or composition with, the other Borrower or any other Security Party;
or

	 	21.1.6	 	any other act, omission, thing or circumstance which would or might, but for
this provision, operate to discharge, impair or otherwise affect such
liability.

	 	21.2	 	No rights as surety Until the Indebtedness has been unconditionally and
irrevocably paid and discharged in full, each Borrower agrees that it shall not, by
virtue of any payment made under this Agreement on account of the Indebtedness or by
virtue of any enforcement by a Finance Party of its rights under this Agreement or by
virtue of any relationship between, or transaction involving, the relevant Borrower and
the other Borrower or any other Security Party:

	 	21.2.1	 	exercise any rights of subrogation in relation to any rights, security or
moneys held or received or receivable by a Finance Party or any other person;
or

	 	21.2.2	 	exercise any right of contribution from the other Borrower or any other
Security Party under any Finance Document; or

	 	21.2.3	 	exercise any right of set-off or counterclaim against the other Borrower or
any other Security Party; or

	 	21.2.4	 	receive, claim or have the benefit of any payment, distribution, security or
indemnity from the other Borrower or any other Security Party; or

	 	21.2.5	 	unless so directed by the Agent (when the relevant Borrower will prove in
accordance with such directions), claim as a creditor of the other Borrower or
any other Security Party in competition with any Finance Party

and each Borrower shall hold in trust for the Finance Parties and forthwith pay or
transfer (as appropriate) to the Agent any such payment (including an amount equal
to any such set-off), distribution or benefit of such security, indemnity or claim
in fact received by it.

 

66

 

	22	 	Miscellaneous

	 	22.1	 	No oral variations No variation or amendment of a Finance Document shall be
valid unless in writing and signed on behalf of all the Finance Parties.

	 	22.2	 	Further Assurance If any provision of a Finance Document shall be invalid or
unenforceable in whole or in part by reason of any present or future law or any
decision of any court, or if the documents at any time held by or on behalf of the
Finance Parties or any of them are considered by the Lenders for any reason
insufficient to carry out the terms of this Agreement, then from time to time the
Borrowers will promptly, on demand by the Agent, execute or procure the execution of
such further documents as in the opinion of the Lenders are necessary to provide
adequate security for the repayment of the Indebtedness.

	 	22.3	 	Rescission of payments etc. Any discharge, release or reassignment by a
Finance Party of any of the security constituted by, or any of the obligations of a
Security Party contained in, a Finance Document shall be (and be deemed always to have
been) void if any act (including, without limitation, any payment) as a result of which
such discharge, release or reassignment was given or made is subsequently wholly or
partially rescinded or avoided by operation of any law.

	 	22.4	 	Certificates Any certificate or statement signed by an authorised signatory
of the Agent purporting to show the amount of the Indebtedness (or any part of the
Indebtedness) or any other amount referred to in any Finance Document shall, save for
manifest error or on any question of law, be conclusive evidence as against the
Borrowers of that amount.

	 	22.5	 	Counterparts This Agreement may be executed in any number of counterparts
each of which shall be original but which shall together constitute the same
instrument.

	 	22.6	 	Contracts (Rights of Third Parties) Act 1999 A person who is not a party to
this Agreement has no right under the Contracts (Rights of Third Parties) Act 1999 to
enforce or to enjoy the benefit of any term of this Agreement.

 

67

 

	 	22.7	 	Disclosure of Information In addition to the disclosure of information
permitted under Clause 14.2, each of the Borrowers authorises each Lender to disclose
any information and/or document(s) concerning its relationship with such Lender (i) to
authorities in any other countries where such Lender or any Affiliate is represented
and/or where any Lender or any Affiliate may be requested information by any
regulatory authority, when this shall be deemed necessary in order for such Lender
or any Affiliate to meet its requirements for the contribution to reduction or
prevention of money laundering, terrorism and corruption, and (ii) to any Affiliate
of that Lender making it possible to consolidate the client’s total commitments and
offer the client any other products offered by that Lender or any Affiliate, subject
always to the duties of confidentiality on the Lenders set out herein.

	23	 	Law and Jurisdiction

	 	23.1	 	Governing law This Agreement shall in all respects be governed by and
interpreted in accordance with English law.

	 	23.2	 	Jurisdiction For the exclusive benefit of the Finance Parties, the parties to
this Agreement irrevocably agree that the courts of England are to have jurisdiction to
settle any disputes which may arise out of or in connection with this Agreement and
that any proceedings may be brought in those courts.

	 	23.3	 	Alternative jurisdictions Nothing contained in this Clause 23 shall limit the
right of the Finance Parties to commence any proceedings against the Borrowers in any
other court of competent jurisdiction nor shall the commencement of any proceedings
against the Borrowers in one or more jurisdictions preclude the commencement of any
proceedings in any other jurisdiction, whether concurrently or not.

	 	23.4	 	Waiver of objections Each of the Borrowers irrevocably waives any objection
which it may now or in the future have to the laying of the venue of any proceedings in
any court referred to in this Clause 23, and any claim that those proceedings have been
brought in an inconvenient or inappropriate forum, and irrevocably agrees that a
judgment in any proceedings commenced in any such court shall be conclusive and binding
on it and may be enforced in the courts of any other jurisdiction.

	 	23.5	 	Service of process Without prejudice to any other mode of service allowed
under any relevant law, each of the Borrowers:

	 	23.5.1	 	irrevocably appoints Teekay Shipping (UK) Ltd of 2nd Floor, 86
Jermyn Street, London SW1Y 6JD England as its agent for service of process in
relation to any proceedings before the English courts in connection with this
Agreement; and

	 	23.5.2	 	agrees that failure by a process agent to notify the Borrowers of the process
will not invalidate the proceedings concerned.

 

68

 

SCHEDULE 1: The Lenders and the Commitments

	 	 	 
	The Lenders	 	The Commitments
	 	 	(US$)
	 
	DNB NOR Bank ASA
	 	34,500,000
	 
	 	 
	200 Park Avenue
	 	 
	31st Floor
	 	 
	New York
	 	 
	NY 10166
	 	 
	USA
	 	 
	 
	 	 
	For Credit Matters:
	 	 
	Attention: Asa Jemseby-Rodgers / Sanjiv Nayar
	 	 
	Fax no: +1 212 681 3900
	 	 
	Tel: +1 212 681 3856 / +1 212 681 3862
	 	 
	Email: asa.jemseby@dnbnor.no
	 	 
	                    sanjiv.nayar@dnbnor.no
	 	 
	 
	 	 
	For Administrative Matters:
	 	 
	Attention: Teresa Rosu / Ahelia Singh
	 	 
	Fax no. + 1 212 681 3845
	 	 
	Tel: +1 212 681 3900
	 	 
	Email: teresa.rosu@dnbnor.no
	 	 
	                    ahelia.singh@dnbnor.no
	 	 
	 
	 	 
	Nordea Bank Norge ASA, Cayman Islands Branch
	 	34,500,000
	 
	 	 
	437 Madison Avenue
	 	 
	New York
	 	 
	NY 10022
	 	 
	USA
	 	 
	 
	 	 
	For Credit Matters:
	 	 
	Attention: Hans Kjelsrud/Colleen Durkin
	 	 
	Fax no: +1 212 421 4420
	 	 
	Email: hans.kjelsrud@nordea.com
	 	 
	                    colleen.durkin@nordea.com
	 	 
	 
	 	 
	For administration matters:
	 	 
	Attention: Jacqueline Ng/Sonia Earle
	 	 
	Fax no: +1 212 750 9188
	 	 
	Email: jackie.ng@nordea.com
	 	 
	                     sonia.earle@nordea.com
	 	 

 

69

 

	 	 	 
	The Lenders	 	The Commitments
	 	 	(US$)
	 
	Sumitomo Mitsui Banking Corporation, Brussels Branch
	 	34,500,000
	 
	 	 
	For Credit Matters:
	 	 
	 
	 	 
	99 Queen Victoria Street
	 	 
	London EC4V 4EH
	 	 
	United Kingdom
	 	 
	Attention: Robert Taylor / Cyrille Martin
	 	 
	Fax no: + 44 207 786 101
	 	 
	Email: robert_taylor@gb.smbcgroup.com
	 	 
	  cyrille_martin@gb.smbcgroup.com
	 	 
	 
	 	 
	With copy to
	 	 
	 
	 	 
	20 rue de la ville l’evêque
	 	 
	75008 Paris
	 	 
	Attention: Guillaume Dufour / Touf-itri Akdime
	 	 
	Fax No: +33 1 44 71 40 50
	 	 
	Email: guillaume_dufour@fr.smbcgroup.com
	 	 
	   Touf-itri_akdime@fr.smbcgroup.com
	 	 
	 
	 	 
	And
	 	 
	 
	 	 
	Avenue des Arts 58, Box 18
	 	 
	1000 Brussels
	 	 
	Belgium
	 	 
	Attention: Francoise Bouchat / Nadine Boudart
	 	 
	Fax No: + 32 2 502 07 80
	 	 
	Email: francoise_bouchat@be.smbcgroup.com
	 	 
	   nadine_boudart@be.smbcgroup.com
	 	 
	 
	 	 
	For Administrative Matters:
	 	 
	 
	 	 
	European Loan Operations
	 	 
	Attention: David Griffiths / Jo Dunnage
	 	 
	99 Queen Victoria Street
	 	 
	London EC4V 4EH
	 	 
	Fax No: +44 207 786 1569
	 	 
	(fax correspondence only)
	 	 
	 
	 	 
	Lloyds TSB Bank Plc
	 	34,500,000
	 
	 	 
	10 Gresham Street
	 	 
	London EC2V 7EA
	 	 
	 
	 	 
	For Credit Matters:
	 	 
	 
	 	 
	Attention: Tony Stevens / David Sumner
	 	 
	Tel: +44 207 158 2647 / +44 207 158 2749
	 	 
	Fax: +44 207 158 3271 / +44 207 158 3273
	 	 
	Email: tony.stevens@lloydstsb.co.uk
	 	 
	  david.sumner@lloydstsb.co.uk
	 	 

 

70

 

	 	 	 
	The Lenders	 	The Commitments
	 	 	(US$)
	 
	For Administrative Matters:
	 	 
	 
	 	 
	Bank House
	 	 
	Wine Street,
	 	 
	Bristol BS1 2AN
	 	 
	 
	 	 
	Attention: Martina Rogers / S-Z Team
	 	 
	Tel: +44 117 923 3006 / +44 117 923 3086
	 	 
	Fax: +44 207 158 3204
	 	 
	Email: martina.rogers@lloydstsb.co.uk
	 	 
	  LoansAdmin_S-Z@lloydstsb.co.uk
	 	 
	 
	 	 
	Skandinaviska Enskilda Banken AB
	 	34,500,000
	 
	 	 
	For Credit Matters:
	 	 
	 
	 	 
	SEB Merchant Banking
	 	 
	Shipping Finance, KBBV
	 	 
	SE-10640 Stockholm
	 	 
	Sweden
	 	 
	Attention: Arne Juell-Skielse
	 	 
	Fax no: + 46 8 678 0206
	 	 
	Email: arne.juell-skielse@seb.se
	 	 
	 
	 	 
	With copy to
	 	 
	 
	 	 
	SEB Merchant Banking
	 	 
	2 Cannon Street
	 	 
	London EC4M 6XX
	 	 
	Attention: Egil Aarrestad
	 	 
	Fax No: +44 20 7236 5144
	 	 
	Email: egil.aarrestad@seb.co.uk
	 	 
	 
	 	 
	For Administrative Matters:
	 	 
	 
	 	 
	Skandinaviska Enskilda Banken AB
	 	 
	Structured Finance Operations
	 	 
	Rissneleden 110
	 	 
	SE-10640 Stockholm
	 	 
	Sweden
	 	 
	Attention: Lars Hansson
	 	 
	Fax No: +46 8 611 0384
	 	 

 

71

 

SCHEDULE 2: The Borrowers and the Vessels

	 	 	 	 	 	 	 
	Borrower	 	Vessel Name	 	Year Built	 
	Arctic Spirit L.L.C.
	 	“ARCTIC SPIRIT”	 	 	1993	 
	 
	 	 	 	 	 	 
	Polar Spirit L.L.C.
	 	“POLAR SPIRIT”	 	 	1993	 

 

72

 

SCHEDULE 3: Conditions Precedent and Subsequent

Part I: Conditions precedent to the First Drawdown Date in respect of either Tranche A or Tranche B

	1	 	Security Parties

	 	(a)	 	Constitutional Documents Copies of the constitutional documents of each
Security Party, the Charterer and the Charter Guarantor together with such other
evidence as the Agent may reasonably require that each Security Party, the Charterer
and the Charter Guarantor is duly formed or incorporated in its country of
incorporation or formation and remains in existence with power to enter into, and
perform its obligations under, the Relevant Documents to which it is or is to become a
party.

	 	(b)	 	Certificates of good standing A certificate of good standing in respect of
each Security Party, the Charterer and the Charter Guarantor (if such a certificate can
be obtained).

	 	(c)	 	Board resolutions A copy of a resolution of the board of directors of each
Security Party, the Charterer and the Charter Guarantor (or its sole member):

	 	(i)	 	approving the terms of, and the transactions contemplated by,
the Relevant Documents to which it is a party and ratifying or resolving that
it execute those Relevant Documents; and

	 	(ii)	 	if required authorising a specified person or persons to
execute those Relevant Documents (and all documents and notices to be signed
and/or despatched under those documents) on its behalf.

	 	(d)	 	Officer’s certificates A certificate of a duly authorised officer or
representative of each Security Party, the Charterer and the Charter Guarantor
certifying that each copy document relating to it specified in this Part I of Schedule
3 is correct, complete and in full force and effect as at a date no earlier than the
date of this Agreement and setting out the names of the directors and officers of that
Security Party, the Charterer and the Charter Guarantor (or its sole member) and the
proportion of shares held by each shareholder.

 

73

 

	 	(e)	 	Powers of attorney The notarially attested and legalised (where necessary for
registration purposes) power of attorney of each Security Party, the Charterer and the
Charter Guarantor under which any documents are to be executed or transactions
undertaken by that Security Party, the Charterer and the Charter Guarantor.

	2	 	Security and related documents

	 	(a)	 	Vessel documents In respect of the relevant Vessel photocopies, certified as
true, accurate and complete by a duly authorised representative of the relevant Owner,
of any relevant Management Agreement, the Charter, the Sub-Charter and the Conversion
Agreement, together in each case with all addenda, amendments or supplements.

	 	(b)	 	Evidence of Owner’s title Evidence that on the Drawdown Date (i) the relevant
Vessel is registered under the flag stated in Schedule 2 in the ownership of the
relevant Owner and (ii) the relevant Mortgage will be capable of being registered
against the relevant Vessel with first priority.

	 	(c)	 	Evidence of insurance Evidence that the relevant Vessel is insured in the
manner required by the Security Documents and that letters of undertaking will be
issued in the manner required by the Security Documents, together with the written
approval of the Insurances by an insurance adviser appointed by the Agent.

	 	(d)	 	Confirmation of class Certificate of Confirmation of Class for hull and
machinery confirming that such Vessel is classed with the highest class applicable to
vessels of her type with a Pre-Approved Classification Society.

	 	(e)	 	Security Documents The Security Documents, together with all other documents
required by any of them, including, without limitation, all notices of assignment
and/or charge and evidence that those notices will be duly acknowledged by the
recipients.

	 	(f)	 	Other Relevant Documents Copies of each of the Relevant Documents not
otherwise comprised in the documents listed in this Part I of Schedule 3.

 

74

 

	3	 	Legal opinions

If a Security Party is incorporated or formed in a jurisdiction other than England and Wales
or if any Finance Document is governed by the laws of a jurisdiction other than England and
Wales, a legal opinion of the legal advisers to the Lenders in each relevant jurisdiction,
substantially in the form provided to the Agent prior to the Drawdown Date or confirmation
satisfactory to the Agent that such an opinion will be given.

	4	 	Other documents and evidence

	 	(a)	 	Drawdown Notice A duly completed Drawdown Notice.

	 	(b)	 	Process agent Evidence that any process agent referred to in Clause 23.5 and
any process agent appointed under any other Finance Document has accepted its
appointment.

	 	(c)	 	Other authorisations A copy of any other consent, licence, approval,
authorisation or other document, opinion or assurance which the Agent considers to be
necessary or desirable (if it has notified the Borrowers accordingly) in connection
with the entry into and performance of the transactions contemplated by any of the
Relevant Documents or for the validity and enforceability of any of the Relevant
Documents.

	 	(d)	 	Fees Evidence that the fees, costs and expenses then due from the Borrowers
under Clause 8 and Clause 9 (other than Clause 9.3) have been paid or will be paid by
the Drawdown Date.

	 	(e)	 	“Know your customer” documents Such documentation and other evidence as is
reasonably requested by the Agent in order for the Lenders to comply with all necessary
“know your customer” or similar identification procedures in relation to the
transactions contemplated in the Finance Documents.

 

75

 

Part II: Conditions subsequent to the First Drawdown Date in respect of either Tranche A or Tranche
B

	1	 	Evidence of Owner’s title Certificate of ownership and encumbrance (or equivalent) issued
by the Registrar of Ships (or equivalent official) of the relevant Vessel’s flag state
confirming that (a) the relevant Vessel is permanently registered under that flag in the
ownership of the relevant Owner, (b) the relevant Mortgage has been registered with first
priority against the relevant Vessel and (c) there are no further Encumbrances registered
against the relevant Vessel.

	2	 	Letters of undertaking Letters of undertaking in respect of the Insurances in respect of
the Vessels as required by the Security Documents together with copies of the relevant
policies or cover notes or entry certificates duly endorsed with the interest of the Finance
Parties.

	3	 	Acknowledgements of notices Acknowledgements of all notices of assignment and/or charge
given pursuant to the Security Documents.

	4	 	Legal opinions Such of the legal opinions specified in Part I of this Schedule 3 as have
not already been provided to the Agent.

	5	 	Companies Act registrations Evidence that the prescribed particulars of the Security
Documents have been delivered to the Registrar of Companies of England and Wales and (where
relevant) the appropriate registry in Singapore within the statutory time limit.

 

76

 

Part III: Conditions precedent to any subsequent drawing

	1.	 	A certificate from a duly authorised officer or representative of each Security
Party, the Charterer and the Charter Guarantor confirming that none of the documents
delivered to the Agent pursuant to Schedule 3 Part I (a), (b), (c), (d) and (e) have
been amended or modified in any way since the date of their delivery to the Agent or
otherwise confirming such amendments or modifications. Such confirmations may be
provided in the form of a single certificate issued by a duly authorised officer or
representative of one of the Security Parties.

	2.	 	Drawdown Notice A duly completed Drawdown Notice.

 

77

 

Part IV: Conditions precedent to an Upsize Amount Drawdown Date

	1	 	Security Parties

	 	(a)	 	A certificate from a duly authorised officer or representative of each Security
Party, the Charterer and the Charter Guarantor confirming that none of the documents
delivered to the Agent pursuant to Schedule 3 Part I (a), (b), (c), (d) and (e) have
been amended or modified in any way since the date of their delivery to the Agent or
otherwise confirming such amendments or modifications.

	 	(b)	 	Officer’s certificates A certificate of a duly authorised officer or
representative of each Borrower (a) certifying that each copy document relating to it
specified in this Part IV of Schedule 3 is correct, complete and in full force and
effect as at a date no earlier than the date of the Upsize Trigger Date (b) confirming
that the representations and warranties referred to in Clause 11 are true and accurate
as at the date of the Upsize Trigger Date and (c) setting out the names of the
directors and officers of each Borrower (or its sole member) and the proportion of
 shares held by each shareholder.

Such confirmation and/or certification may be provided in the form of a single
certificate issued by a duly authorised officer or representative of one of the Security
Parties.

	3	 	Legal opinions

If a Security Party is incorporated or formed in a jurisdiction other than England and Wales
or if any Finance Document is governed by the laws of a jurisdiction other than England and
Wales, a legal opinion of the legal advisers to the Lenders in each relevant jurisdiction,
substantially in the form provided to the Agent prior to the Upsize Amount Drawdown Date or
confirmation satisfactory to the Agent that such an opinion will be given.

	4	 	Other documents and evidence

	 	(a)	 	Upsize Notice A duly completed Upsize Notice, accepted in writing by the
Agent.

	 	(b)	 	Drawdown Notice A duly completed Drawdown Notice.

	 	(c)	 	Process agent Evidence that any process agent appointed under any new Finance
Document has accepted its appointment.

 

78

 

	 	(d)	 	Other authorisations A copy of any other consent, licence, approval,
authorisation or other document, opinion or assurance which the Agent considers to be
necessary or desirable (if it has notified the relevant Owner accordingly) in
connection with the entry into and performance of the transactions contemplated by any
of the Relevant Documents or for the validity and enforceability of any of the Relevant
Documents.

	 	(e)	 	Conversion Project Price A certificate from the Borrowers which provides
information satisfactory to the Agent (in its reasonable opinion) in respect of the
conversion costs relating to the Vessels which shows that (i) the requested increase in
the Maximum Amount is no more than seventy five per cent (75%) of the conversion costs
incurred and (ii) an amount equivalent to the balance of the conversion costs incurred
has been paid to the party carrying out the conversion works.

	 	(f)	 	Fees Evidence that the fees, costs and expenses then due from the Borrowers
under Clause 9.3 have been paid or will be paid by the Drawdown Date.

 

79

 

Part V: Conditions subsequent to an Upsize Amount Drawdown Date

Legal opinions Such of the legal opinions specified in Part IV of this Schedule 3 as have not
already been provided to the Agent.

 

80

 

SCHEDULE 4: Calculation of Mandatory Cost

	1	 	The Mandatory Cost is an addition to the interest rate to compensate the Lenders for the cost
of compliance with (a) the requirements of the Bank of England and/or the Financial Services
Authority (or, in either case, any other authority which replaces all or any of its functions)
or (b) the requirements of the European Central Bank.

	(a)	 	On the first day of each Interest Period (or as soon as possible thereafter) the Agent shall
calculate, as a percentage rate, a rate (the “Additional Cost
Rate”) for each Lender in
accordance with the paragraphs set out below. The Mandatory Cost will be calculated by the
Agent as a weighted average of the Lenders’ Additional Cost Rates (weighted in proportion to
the percentage participation of each Lender in the Facility) and will be expressed as a
percentage rate per annum.

	(b)	 	The Additional Cost Rate for any Lender lending from an office in the euro-zone will be the
percentage notified by that Lender to the Agent to be its reasonable determination of the cost
(expressed as a percentage of that Lender’s participation in the Facility) of complying with
the minimum reserve requirements of the European Central Bank as a result of participating in
the Facility from that office.

	(c)	 	The Additional Cost Rate for any Lender lending from an office in the United Kingdom will be
calculated by the Agent as follows:

	 	 	 	 	 
	 

	 	F x 0.01
 

300
	 	per cent per annum 

where F is the charge payable by that Lender to the Financial Services Authority under
paragraph 2.02 or 2.03 (as appropriate) of the Fees Regulations or the equivalent provisions
in any replacement regulations (with, for this purpose, the figure for the minimum amount in
paragraph 2.02b or such equivalent provision deemed to be zero), expressed in pounds per £1
million of the fee base of that Lender.

	2	 	For the purpose of this Schedule:

	 	(a)	 	“eligible liabilities” and “special deposits” have the meanings given to them
at the time of application of the formula by the Bank of England;

	 	(b)	 	“fee base” has the meaning given to it in the Fees Regulations;

 

81

 

	 	(c)	 	“Fees Regulations” means the regulations governing periodic fees contained in
the FSA Supervision Manual or such other law or regulation as may be in force from time
to time in respect of the payment of fees for the acceptance of deposits.

	3	 	If a Lender does not supply the information required by the Agent to determine its Additional
Cost Rate when requested to do so, the applicable Mandatory Cost shall be determined on the
basis of the information supplied by the remaining Lenders.

	4	 	If a change in circumstances has rendered, or will render, the formula inappropriate, the
Agent shall notify the Borrowers of the manner in which the Mandatory Cost will subsequently
be calculated. The manner of calculation so notified by the Agent shall, in the absence of
manifest error, be binding on the Borrowers.

 

82

 

SCHEDULE 5: Form of Drawdown Notice

To: DNB NOR Bank ASA

From: [                     ]

[Date]

Dear Sirs,

Drawdown Notice

We refer to the Facility Agreement dated                                         2008 made between, amongst
others, ourselves and yourselves (the “Agreement”).

Words and phrases defined in the Agreement have the same meaning when used in this Drawdown
Notice.

Pursuant to Clause 4.1 of the Agreement, we irrevocably request that you advance a Drawing in
respect of [Tranche A] [Tranche B] in the sum of [                    ]
to us on                                         200 , which is a Business Day, by paying the
amount of the advance to [                    ].

We warrant that the representations and warranties contained in Clause 11.1 of the Agreement
are true and correct at the date of this Drawdown Notice and will be true and correct on
200 , that no Default has occurred and is continuing, and that no Default will result from the
advance of the sum requested in this Drawdown Notice.

We select the period of [           ] months as the Interest Period in respect of the said
Drawing.

Yours faithfully

                                                            

For and on behalf of

[                     ]

 

83

 

SCHEDULE 6: Form of Transfer Certificate

To: DNB NOR Bank ASA

TRANSFER CERTIFICATE

This transfer certificate relates to a secured loan facility agreement (as from time to time
amended, varied, supplemented or novated the “Facility Agreement”) dated [                     ]
2008, on the terms and subject to the conditions of which a secured revolving credit facility was
made available to Arctic Spirit L.L.C. and Polar Spirit L.L.C., by a syndicate of banks on whose
behalf you act as agent and security agent.

	1	 	Terms defined in the Facility Agreement shall, unless otherwise expressly indicated, have the
same meaning when used in this certificate. The terms “Transferor” and “Transferee” are
defined in the schedule to this certificate.

	2	 	The Transferor:

	 	2.1	 	confirms that the details in the Schedule under the heading “Transferor’s
Commitment” accurately summarise its Commitment; and

	 	2.2	 	requests the Transferee to accept by way of novation the transfer to the
Transferee of the amount of the Transferor’s Commitment specified in the Schedule by
counter-signing and delivering this certificate to the Agent at its address for
communications specified in the Facility Agreement.

	3	 	The Transferee requests the Agent to accept this certificate as being delivered to the Agent
pursuant to and for the purposes of clause 14.4 of the Facility Agreement so as to take effect
in accordance with the terms of that clause on the Transfer Date specified in the Schedule.

	4	 	The Agent confirms its acceptance of this certificate for the purposes of clause 14.4 of the
Facility Agreement.

 

84

 

	5	 	The Transferee confirms that:

	 	5.1	 	it has received a copy of the Facility Agreement together with all other
information which it has required in connection with this transaction;

	 	5.2	 	it has not relied and will not in the future rely on the Transferor or any
other party to the Facility Agreement to check or enquire on its behalf into the
legality, validity, effectiveness, adequacy, accuracy or completeness of any such
information; and

	 	5.3	 	it has not relied and will not in the future rely on the Transferor or any
other party to the Facility Agreement to keep under review on its behalf the financial
condition, creditworthiness, condition, affairs, status or nature of any Security
Party.

	6	 	Execution of this certificate by the Transferee constitutes its representation and warranty
to the Transferor and to all other parties to the Facility Agreement that it has the power to
become a party to the Facility Agreement as a Lender on the terms of the Facility Agreement
and has taken all steps to authorise execution and delivery of this certificate.

	7	 	The Transferee undertakes with the Transferor and each of the other parties to the Facility
Agreement that it will perform in accordance with their terms all those obligations which by
the terms of the Facility Agreement will be assumed by it after delivery of this certificate
to the Agent and the satisfaction of any conditions subject to which this certificate is
expressed to take effect.

	8	 	The Transferor makes no representation or warranty and assumes no responsibility with respect
to the legality, validity, effectiveness, adequacy or enforceability of any Finance Document
or any document relating to any Finance Document, and assumes no responsibility for the
financial condition of any Finance Party or for the performance and observance by any Security
Party of any of its obligations under any Finance Document or any document relating to any
Finance Document and any conditions and warranties implied by law are expressly excluded.

	9	 	The Transferee acknowledges that nothing in this certificate or in the Facility Agreement
shall oblige the Transferor to:

	 	9.1	 	accept a re-transfer from the Transferee of the whole or any part of the
rights, benefits and/or obligations transferred pursuant to this certificate; or

	 	9.2	 	support any losses directly or indirectly sustained or incurred by the
Transferee for any reason including, without limitation, the non-performance by any
party to any Finance Document of any obligations under any Finance Document.

 

85

 

	10	 	The address and fax number of the Transferee for the purposes of clause 18 of the Facility
Agreement are set out in the
Schedule.

	11	 	This certificate may be executed in any number of counterparts each of which shall be
original but which shall together constitute the same instrument.

	12	 	This certificate shall be governed by and interpreted in accordance with English law.

THE SCHEDULE

	1	 	Transferor:

	2	 	Transferee:

	3	 	Transfer Date (not earlier that the fifth Business Day after the date of delivery of the
Transfer Certificate to the Agent):

	4	 	Transferor’s Commitment:

	5	 	Amount transferred:

	6	 	Transferee’s address and fax number for the purposes of clause 18 of the Facility Agreement:

	 	 	 
	[name of Transferor]

	 	[name of Transferee]
	By:

	 	By:
	 
	 	 
	Date: Date:
	 	 

DNB NOR Bank ASA as Agent

By:

Date:

 

86

 

SCHEDULE 7: Form of Upsize Notice

To: DNB NOR Bank ASA

From: [                    ]

Facility
Agreement
dated                  2008 (the “Agreement”)

We refer to the Agreement. This is an Upsize Notice. Terms defined in the Agreement have the same
meaning when used in this Upsize Notice unless given a different meaning in this Upsize Notice.

We hereby request an increase in the Maximum Amount by
[                 ] Dollars ($[                 ]) to up to
[                 ] Dollars ($[                 ]) which increase to
be effective from [insert date at least 30 days after date of this Notice] (the “Upsize Trigger
Date”), such increase to be allocated as to [                 ] Dollars
($[                 ]) to Tranche A and as to [                 ]
Dollars ($[                 ]) to Tranche B.]

We agree to pay you as Agent a fee of [                 ] Dollars ($[                 
]) for distribution to the Participating Lenders on the Upsize Trigger Date.

	 	 	 	 	 
	Signed
	 	 	 	 
	 

	 	 

Duly authorised representative of
	 	 
	 

	 	[                    ]	 	 

 

87

 

SCHEDULE 8: Reductions

Reductions

	 	 	 	 	 	 	 
	Reduction Dates	 	 	 	 	 	 
	(from the date of	 	 	 	 	 	Initial Reduction
	this Agreement)	 	Reductions	 	Committed amount	 	Amounts
	0
	 	 	 	$172,500,000	 	0
	6 months
	 	1st reduction	 	$172,500,000	 	$6,100,000
	1 year
	 	2nd reduction	 	$166,400,000	 	$6,100,000
	1 year 6 months
	 	3rd reduction	 	$160,300,000	 	$6,100,000
	2 years
	 	4th reduction	 	$154,200,000	 	$6,100,000
	2 years 6 months
	 	5th reduction	 	$148,100,000	 	$6,100,000
	3 years
	 	6th reduction	 	$142,000,000	 	$6,100,000
	3 years 6 months
	 	7th reduction	 	$135,900,000	 	$6,100,000
	4 years
	 	8th reduction	 	$129,800,000	 	$6,100,000
	4 years 6 months
	 	9th reduction	 	$123,700,000	 	$6,100,000
	5 years
	 	10th reduction	 	$117,600,000	 	$6,100,000
	5 years 6 months
	 	11th reduction	 	$111,500,000	 	$6,100,000
	6 years
	 	12th reduction	 	$105,400,00	 	$6,100,000
	6 years 6 months
	 	13th reduction	 	$99,300,000	 	$6,100,000
	7 years
	 	14th reduction	 	$93,200,000	 	$6,100,000
	7 years 6 months
	 	15th reduction	 	$87,100,000	 	$6,100,000
	8 years
	 	16th reduction	 	$81,000,000	 	$6,100,000
	8 years 6 months
	 	17th reduction	 	$74,900,000	 	$6,100,000
	9 years
	 	18th reduction	 	$68,800,000	 	$6,100,000
	9 years 6 months
	 	19th reduction	 	$62,700,000	 	$6,100,000
	10 years
	 	20th reduction	 	$56,600,000	 	$56,600,000
	 
	 	 	 	0	 	 

 

88

 

IN WITNESS of which the parties to this Agreement have executed this Agreement the day and year
first before written.

	 	 	 	 	 
	SIGNED by

	 	 	)	 
	duly authorised for and on behalf

	 	 	)	 
	of ARCTIC SPIRIT L.L.C.

	 	 	)	 
	 
	 	 	 	 
	SIGNED by

	 	 	)	 
	duly authorised for and on behalf

	 	 	)	 
	of POLAR SPIRIT L.L.C.

	 	 	)	 
	 
	 	 	 	 
	SIGNED by

	 	 	)	 
	duly authorised for and on behalf

	 	 	)	 
	of DNB NOR BANK ASA

	 	 	)	 
	(as a Lender)

	 	 	)	 
	 
	 	 	 	 
	SIGNED by

	 	 	)	 
	duly authorised for and on behalf

	 	 	)	 
	of NORDEA NORGE ASA, Cayman

	 	 	)	 
	Islands Branch

	 	 	)	 
	(as a Lender)

	 	 	)	 
	 
	 	 	 	 
	SIGNED by

	 	 	)	 
	duly authorised for and on behalf

	 	 	)	 
	of SUMITOMO MITSUI BANKING

	 	 	)	 
	CORPORATION, Brussels Branch

	 	 	)	 
	(as a Lender)

	 	 	)	 
	 
	 	 	 	 
	SIGNED by

	 	 	)	 
	duly authorised for and on behalf

	 	 	)	 
	of LLOYDS TSB BANK PLC

	 	 	)	 
	(as a Lender)

	 	 	)	 

 

89

 

	 	 	 	 	 
	SIGNED by

	 	 	)	 
	duly authorised for and on behalf

	 	 	)	 
	of SKANDINAVISKA ENSKILDA

	 	 	)	 
	BANKEN AB

	 	 	)	 
	(as a Lender)

	 	 	)	 
	 
	 	 	 	 
	SIGNED by

	 	 	)	 
	duly authorised for and on behalf

	 	 	)	 
	of DNB NOR BANK ASA

	 	 	)	 
	(as the Agent)

	 	 	)	 
	 
	 	 	 	 
	SIGNED by

	 	 	)	 
	duly authorised for and on behalf

	 	 	)	 
	of DNB NOR BANK ASA

	 	 	)	 
	(as the Security Trustee)

	 	 	)	 
	 
	 	 	 	 
	SIGNED by

	 	 	)	 
	duly authorised for and on behalf

	 	 	)	 
	of DNB NOR BANK ASA

	 	 	)	 
	(as an MLA)

	 	 	)	 
	 
	 	 	 	 
	SIGNED by

	 	 	)	 
	duly authorised for and on behalf

	 	 	)	 
	of NORDEA BANK FINLAND PLC,

	 	 	)	 
	New York Branch

	 	 	)	 
	(as an MLA)

	 	 	)	 
	 
	 	 	 	 
	SIGNED by

	 	 	)	 
	duly authorised for and on behalf

	 	 	)	 
	of SUMITOMO MITSUI BANKING

	 	 	)	 
	CORPORATION, Brussels Branch

	 	 	)	 
	(as an MLA)

	 	 	)	 

 

90

 

	 	 	 	 	 
	SIGNED by

	 	 	)	 
	duly authorised for and on behalf

	 	 	)	 
	of LLOYDS TSB BANK PLC

	 	 	)	 
	(as an MLA)
	 	 	 	 
	 
	 	 	 	 
	 

	 	 	)	 
	SIGNED by

	 	 	)	 
	duly authorised for and on behalf

	 	 	)	 
	of DNB NOR BANK ASA

	 	 	)	 
	(as a bookrunner)

	 	 	)	 
	 
	 	 	 	 
	SIGNED by

	 	 	)	 
	duly authorised for and on behalf

	 	 	)	 
	of NORDEA BANK FINLAND PLC

	 	 	)	 
	New York Branch

	 	 	)	 
	(as a bookrunner)

	 	 	)	 

 

91

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