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Exhibit 10.1 LENNOX INTERNATIONAL INC.
CHANGE IN CONTROL AGREEMENT THIS CHANGE IN CONTROL AGREEMENT
(this "Agreement"), effective as of December 11, 2008 (the
"Effective Date") is made by and between Lennox International Inc.,
a Delaware corporation (the "Company"), and [Name]
("Executive"). WHEREAS, the Company considers it essential to the
best interests of its stockholders to foster the continued
employment of key management personnel; WHEREAS, the Board (as
defined in Appendix A hereto) recognizes that, as is
the case with many publicly held corporations, the possibility of a
change in control exists and that such possibility, and the
uncertainty and questions which may raise among management, may
result in the departure or distraction of management personnel to
the detriment of the Company and its stockholders; WHEREAS, the
Board has determined that appropriate steps should be taken to
reinforce and encourage the continued attention and dedication of
key members of the Company’s management, including Executive,
to their assigned duties without the distraction of potentially
disturbing circumstances arising from the possibility of a change
in control; WHEREAS, the Company wishes to enter into this
Agreement to protect Executive’s reasonable expectations
regarding compensation and duties if a change in control of the
Company occurs, thereby encouraging Executive to remain in the
employ of the Company notwithstanding the possibility of a change
in control; WHEREAS, it is understood that if Executive has an
existing employment agreement (the "Employment Agreement") with the
Company, then this Agreement is intended to provide certain
protections to Executive that are not afforded by the Employment
Agreement; provided however, this Agreement is not intended to
provide benefits that are duplicative of Executive’s current
benefits; and WHEREAS, upon the Effective Date, this Agreement will
supersede all previous agreements, if any, between the Company and
Executive that provides benefits to Executive upon a change in
control of the Company; NOW, THEREFORE, in consideration of the
premises and the mutual covenants herein contained, the Company and
Executive hereby agree as follows: 1. Term of
Agreement . The term of this Agreement shall commence on the
Effective Date and shall continue in effect through
December 31, 2009; provided, however, that commencing
on January 1, 2010 and each January 1 thereafter, this Agreement
shall automatically be extended for one additional year
(collectively, the "Term"); and further provided, however,
that if a Change in Control (as defined in Appendix A
hereto) shall have occurred during the Term, the Term shall expire
two years following the event which constitutes a Change in
Control.
2. Company’s Obligations. 2.1 General
Obligations . The Company agrees, under the conditions
described herein, to pay Executive the Severance Payments (as
defined in Section 5.1 herein) and the other payments and
benefits described herein. No Severance Payments shall be payable
under this Agreement unless there shall have been a termination of
Executive’s employment as described in Section 5.1. 2.2
Equity and Other Performance Based Awards . Notwithstanding
anything to the contrary in this Agreement, upon a Change in
Control, each and every stock option, stock appreciation right,
restricted stock award, restricted stock unit award, performance
share unit award and other equity-based award and any other
performance award granted to Executive that is outstanding
immediately prior to the Change in Control shall
(i) immediately vest and become exercisable and any
restrictions on the sale or transfer of such shares (other than any
such restriction arising by operation of law) with respect to such
shares shall terminate, and (ii) be considered to have vested
at the highest possible award level with respect to each such
award. 2.3 Notice of Change in Control . The Company shall
promptly notify Executive in writing of the occurrence of a Change
in Control. 3. Terms of Employment Post-CIC. 3.1
Employment Period . Upon a Change in Control, the Company
hereby agrees to continue Executive in its employ, and Executive
hereby agrees to remain in the employ of the Company, in accordance
with, and subject to, the terms and provisions of this Agreement,
for the period commencing on the date upon which there occurs a
Change in Control and ending on the second anniversary of the
Change in Control (the "CIC Employment Period"). 3.2 Position
and Duties . (i) During the CIC Employment Period,
(A) Executive’s position (including status, offices,
titles and reporting requirements), authority, duties and
responsibilities shall be at least commensurate in all material
respects with the most significant of those held, exercised and
assigned by or to Executive at any time during the 90-day period
immediately preceding the Change in Control, and
(B) Executive’s services shall be performed at the
location where Executive was employed immediately preceding the
Change in Control or at another location within 35 miles thereof.
(ii) During the CIC Employment Period, and excluding any
periods of vacation and sick leave to which Executive is entitled,
Executive agrees to devote reasonable attention and time to the
business and affairs of the Company and, to the extent necessary to
discharge the responsibilities assigned to Executive hereunder, to
use Executive’s reasonable best efforts to perform faithfully
and efficiently such responsibilities. It is expressly understood
and agreed that to the extent that any activities (including, but
not limited to, service on corporate, civic or charitable boards or
committees) have been conducted by Executive prior to the Change in
Control, the continued conduct of such activities (or the conduct
of activities similar in nature and scope thereto) subsequent to
the Change in Control shall not be deemed to interfere with the
performance of Executive’s responsibilities to the
Company.
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3.3 Compensation and Benefits . (i) Annual Base
Salary . During the CIC Employment Period, Executive shall
receive an annual base salary not less than the base salary in
effect immediately prior to the Change in Control ("Annual Base
Salary"), which shall be paid in accordance with the normal
business practice of the Company. During this period, the Annual
Base Salary shall be reviewed at least annually and shall be
increased at any time and from time to time as shall be
substantially consistent with increases in base salary generally
awarded in the ordinary course of business to executives of the
Company and its affiliated companies. Any increase in Annual Base
Salary shall not serve to limit or reduce any other obligation to
Executive under this Agreement. Annual Base Salary shall not be
reduced after any such increase and the term "Annual Base Salary"
as utilized in this Agreement shall refer to Annual Base Salary as
so increased. As used in this Agreement, the term "affiliated
companies" shall include, when used with reference to the Company,
any company controlled by, controlling or under common control with
the Company. (ii) Annual Bonus . In addition to Annual
Base Salary, Executive shall be awarded, for each fiscal year or
portion thereof during the CIC Employment Period, an annual bonus
(the "Annual Bonus") in cash equal to no less than the
Executive’s target short-term incentive bonus percentage
immediately prior to the Change in Control multiplied by the
Executive’s Annual Base Salary, prorated for any period
consisting of less than twelve full months. The Annual Bonus
awarded for a particular fiscal year shall be paid no later than
the fifteenth day of the third month following the end of such
year. (iii) Equity and Performance Based Awards .
During the CIC Employment Period, Executive shall be granted on an
annual basis a long-term incentive package consisting of stock
options, stock appreciation rights, restricted stock awards,
restricted stock unit awards, performance share unit awards and
other equity-based awards and performance awards, as selected by
the Company, with an aggregate value (as determined by an
independent consulting firm selected by Executive and reasonably
acceptable to the Company) that shall be not less than the
aggregate value of the most valuable long-term incentive package
awarded Executive in any of the three years immediately preceding
the Change in Control. (iv) Benefits . During the CIC
Employment Period, Executive shall be entitled to the following
benefits, in each such case, no less favorable, in the aggregate,
than the most favorable plan, practice, program or policy of the
Company and its affiliates applicable to similarly situated
executives immediately in effect prior to the commencement of the
Change in Control or in effect at any time after the Change in
Control:
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(a)
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profit-sharing, savings and retirement plans that are
tax-qualified under Section 401(a) of the Code (as defined in
Appendix A hereto), and all plans that are supplemental
to any such tax-qualified plans; and
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(b)
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welfare benefit plans, practices, policies and programs; and
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(c)
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prompt reimbursement for all reasonable expenses incurred by
Executive; and
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(d)
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fringe benefits and perquisites; and
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(e)
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paid vacation.
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4. Termination of Employment for Disability, Death and
Cause . 4.1 Disability . During the CIC Employment
Period, during any period that Executive fails to perform
Executive’s duties with the Company as a result of incapacity
due to physical or mental illness, the Company shall pay
Executive’s salary to Executive at the rate in effect at the
commencement of any such period, together with all compensation and
benefits payable to Executive under the terms of the
Company’s written plans as in effect during such period,
until Executive’s employment is terminated by the Company for
Disability (as defined in Appendix A hereto). 4.2
Death . During the CIC Employment Period, in the event of
Executive’s death, the Company shall pay to Executive’s
estate, Executive’s salary, together with all compensation
and benefits payable to Executive under the terms of the
Company’s written plans as in effect immediately prior to the
date of death, through the date Executive’s employment is
terminated by death. 4.3 Cause . During the CIC Employment
Period, the Company may terminate Executive’s employment for
Cause (as defined in Appendix A hereto). In such event,
the Company shall pay Executive’s salary, together with all
compensation and benefits payable to Executive under the terms of
the Company’s written plans as in effect immediately prior to
the date the Executive’s employment is terminated for Cause.
5. Termination of Employment by Company without Cause or
by Executive for Good Reason . 5.1 Payments to Executive
. If Executive’s employment is terminated following a Change
in Control and during the CIC Employment Period either (i) by
the Company without Cause or (ii) by Executive with Good
Reason (as defined in Appendix A hereto), then the
Company shall pay Executive the amounts, and provide Executive the
benefits, set forth in this Section 5.1 (collectively referred
to as, "Severance Payments"). (A) Cash Payment . In lieu of
(x) any further salary and bonus payments to Executive for
periods subsequent to the Date of Termination (as defined in
Section 7.2 herein), and (y) any severance benefit
otherwise payable to Executive under the Employment Agreement, if
any, the Company shall pay to Executive a lump sum severance
payment, in cash, on the date that is six months and two days after
Executive’s date of termination (the "Designated Date") from
the Company equal to: (i) three (3) times the
Executive’s Annual Base Salary, plus (ii) three
(3) times the Executive’s target short-term incentive
bonus percentage immediately prior to the Change in Control or in
effect at any time after the Change in Control, whichever is
greater, multiplied by the Executive’s Annual Base Salary,
plus
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(iii) an amount equal to Executive’s target
short-term incentive bonus percentage immediately prior to the
Change in Control or in effect at any time after the Change in
Control, whichever is greater, multiplied by the Executive’s
Annual Base Salary, prorated for any period consisting of less than
twelve full months, plus (iv) any deferred compensation
previously awarded to or earned by Executive (together with any
accrued interest or earnings thereon); provided any amounts paid to
Executive will be paid in accordance with the applicable deferred
compensation plan, plus (v) payment in lieu of any accrued but
unused vacation as of Executive’s Date of Termination, plus
(vi) an amount equal to 15% of Executive’s Annual Base
Salary (this amount being paid in lieu of outplacement services),
plus (vii) an amount equal to 45% of Executive’s Annual
Base Salary (this amount being paid in lieu of the perquisites).
(B) Health and Welfare Benefit Plans . For the 36-month
period immediately following the Date of Termination, the Company
shall provide Executive and covered dependents as of
Executive’s Date of Termination, medical and health benefits
and group life and supplemental group life substantially similar to
those provided to Executive and such covered dependents immediately
prior to the Date of Termination (such continuation of such
benefits shall be hereinafter referred to as "Welfare Benefit
Contribution"). The Company shall timely pay or provide to
Executive and/or Executive’s family any other amounts or
benefits required to be paid or provided or which Executive and/or
Executive’s family is eligible to receive pursuant to this
Agreement and under any plan, program, policy or practice or
contract or agreement of the Company and its affiliated companies
as in effect and applicable generally to other executives and their
families on the Date of Termination. (C) Non-Qualified
Pension . For purposes of calculating benefits under the
Company’s Supplemental Retirement Plan and Profit Sharing
Restoration Plan, the Company shall add an additional three years
of vesting service and credited service to Executive’s years
of vesting and credited service, as well as an incremental three
years added to Executive’s age.
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(D) Certain Pre-Change in Control Terminations . Any
provision in this Agreement to the contrary notwithstanding, if a
Change in Control occurs and if Executive’s employment with
the Company has been terminated by the Company without Cause or by
Executive with Good Reason in either case within six
(6) months prior to the date on which the Change in Control
occurs, then Executive shall be entitled to the severance and other
benefits as if Executive’s termination had been following a
Change in Control, payable on the Designated Date. Any
amounts to be paid to Executive shall be reduced by and offset
dollar-for-dollar by any severance benefits payable to Executive
under the Employment Agreement or any other separation agreement in
connection with such termination. 5.2 Gross-Up Payment .
(A) Whether or not Executive becomes entitled to the Severance
Payments, if any payments or benefits received or to be received by
Executive whether pursuant to the terms of this Agreement or any
other plan, arrangement or agreement with the Company, or with any
Person whose actions result in a Change in Control or any Person
affiliated with the Company or such Person (such payments or
benefits, excluding the Gross-Up Payment (as defined below), being
hereinafter referred to as the "Total Payments") are subject to the
Excise Tax (any excise tax imposed under Section 4999 of the
Code ), the Company shall pay to Executive an additional amount
(the "Gross-Up Payment") such that the net amount retained by
Executive, after deduction of any Excise Tax on the Total Payments
and any federal, state and local income and employment taxes and
Excise Tax upon the Gross-Up Payment, shall be equal to the Total
Payments. (B) For purposes of determining whether any of the
Total Payments will be subject to the Excise Tax and the amount of
such Excise Tax, (i) all of the Total Payments shall be
treated as "parachute payments" (within the meaning of Code
Section 280G(b)(2)) unless, in the opinion of the Company,
such payments or benefits (in whole or in part) do not constitute
parachute payments, including by reason of Code
Section 280G(b)(4)(A), (ii) all "excess parachute
payments" within the meaning of Code Section 280G(b)(1) shall
be treated as subject to the Excise Tax unless, in the opinion of
the Company, such excess parachute payments (in whole or in part)
represent reasonable compensation for services actually rendered
(within the meaning of Code Section 280G(b)(4)(B)) in excess
of the Base Amount allocable to such reasonable compensation, or
are otherwise not subject to the Excise Tax, and (iii) the
value of any noncash benefits or any deferred payment or benefit
shall be determined by the Company in accordance with the
principles of Code Section 280G(d)(3) and (4). The Company and
Executive agree that the determinations described in this
Section 4.2(B) shall take the form of a letter from the
Company accompanied by calculations prepared by the Company and
certified by a national accounting firm selected by the
Company.
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(C) The Gross-Up Payment (or portion thereof) will be paid
to Executive on the day of the payment of the Total Payments (or
portion thereof) that give rise to the Excise Tax; provided,
however, that if the amount of such Gross-Up Payment (or
portion thereof) cannot be fully determined on or before the date
on which payment is due, the Company will pay to E
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