LETTER AMENDMENT NO. 3 TO MASTER SHELF AGREEMENT DATED AS OF OCTOBER 15, 1999 (Lennox International Inc.) As of June 29, 2001 The Prudential Insurance Company of America c/o Prudential Capital Group 2200 Ross Avenue, Suite 4200E Dallas, TX 75201 Attention: Managing Director U.S. Private Placement Fund Prudential Private Placement Investors, Inc. Four Gateway Center 100 Mulberry Street Newark, NJ 07102-4069 Ladies and Gentlemen: We refer to the Master Shelf Agreement dated as of October 15, 1999, as amended by Letter Amendment No. 1 dated February 28, 2000 and Letter Amendment No. 2 dated January 23, 2001 (as so amended, the “Shelf Agreement”), among the undersigned, Lennox International Inc. (the “Company”) and The Prudential Insurance Company of America (“Prudential”). Unless otherwise defined herein, the terms defined in the Agreement shall be used herein as therein defined. Each of you is a Holder of Notes issued pursuant to the Shelf Agreement. The Company has requested the Holders to enter into this Letter Amendment No. 3 (“Amendment No. 3”) to evidence amendment of the Shelf Agreement as set forth herein. Such amendment shall become effective as set forth in Section 3. Therefore, the Holders and the Company hereby agree as follows: 1. Amendment to Definitions. Subject to Section 3 hereof, the definitions in the Shelf Agreement are hereby modified as follows: Adjusted EBITDA. Clause (ii) of the definition of “ Adjusted EBITDA” is amended in full to read as follows: 1“(ii) to the extent deducted in computing such consolidated net income (or loss), without duplication, the sum of (a) any deduction for (or less any gain from) income or franchise taxes included in determining such consolidated net income (or loss); plus (b) interest expense (including the interest portion of Capital Leases) deducted in determining such consolidated net income (or loss); plus (c) amortization and depreciation expense deducted in determining such consolidated net income (or loss); plus (d) any non-recurring and non cash charges resulting from the application of GAAP that requires a charge against earnings for the impairment of goodwill to the extent not already added back or not included in determining such consolidated net income (or loss); minus,” Consolidated Net Income. Clauses (f) and (g) of the definition of “Consolidated Net Income” are amended in full to read as follows and clause (h) is hereby added to the end of such definition to read as follows: “(f) any non-recurring loss arising from the sale or other disposition of assets recorded (i) during the fiscal quarter ended June 30, 2001, but only to the extent that the aggregate amount of such losses plus the restructuring charges allowed in clause (g)(i) hereof for such fiscal quarter is less than $32,400,000; and (ii) after June 30, 2001, in an aggregate amount not to exceed $25,000,000; (g) any non-recurring restructuring charges recorded (i) during the fiscal quarter ended June 30, 2001, but only to the extent that the aggregate amount of such restructuring charges plus the losses allowed in clause (f)(i) hereof for such fiscal quarter is less than $32,400,000; and (ii) after June 30, 2001, in an aggregate amount not to exceed $25,000,000 but provided that cash charges included in such restructuring charges shall not exceed $12,500,000; and (h) any non-recurring and non-cash charges resulting from the application of GAAP that requires a charge against earnings for the impairment of goodwill.” EBITDA. The definition of “EBITDA” is hereby amended in full to read as follows: “EBITDA” means, for any period, the total of the following calculated for the Company and the Restricted Subsidiaries without duplication on a consolidated basis in accordance with GAAP consistently applied for such period: (a) Consolidated Net Income from operations; plus (b) any deduction for (or less any gain from) income or franchise taxes included in determining Consolidated Net Income; plus (c) interest expense (including the interest portion of Capital Leases) deducted in determining Consolidated Net Income; 2 plus (d) amortization and depreciation expense deducted in determining Consolidated Net Income; plus (e) any non-recurring and non-cash charges resulting from application of GAAP that requires a charge against earnings for the impairment of goodwill to the extent not already added back or not included in determining Consolidated Net Income. Material Adverse Effect. The definition of “Material Adverse Effect” is hereby amended in full to read as follows: “Material Adverse Effect” shall mean a material adverse effect on (a) the business, operations, affairs, financial condition, assets or properties of the Company and its Restricted Subsidiaries taken as a whole, or (b) the ability of the Company to perform its obligations under this Agreement and the Notes and the ability of the Material Restricted Subsidiaries to perform their respective obligations under the Subsidiary Guaranty taken as a whole, or (c) the validity or enforceability of this Agreement, the Notes, the Pledge Agreement or the Subsidiary Guaranty. Prudential Affiliate. The definition of “Prudential Affiliate” is hereby amended in full to read as follows: “Prudential Affiliate” shall mean (i) any corporation or other entity controlling, controlled by, or under common control with, Prudential and (ii) any managed account or investment fund which is managed by Prudential or a Prudential Affiliate described in clause (i) of this definition. For purposes of this definition, the terms “control”, “controlling” and “controlled” shall mean the ownership, directly or through subsidiaries, of a majority of a corporation's or other entity's Voting Stock or equivalent voting securities or interests. The following definitions are hereby added to the Agreement: “1999 Lenders” means the lenders listed in Schedule 2.01 to the Revolving Credit Facility Agreement dated as of July 29, 1999, as amended, among the Company, The Chase Manhattan Bank, as administrative agent, Wachovia Bank, N.A., as syndication agent, and The Bank of Nova Scotia, as documentation agent. “364 Day Facility” means that certain 364 Day Revolving Credit Facility Agreement dated as of January 25, 2000 among the Company, Chase Bank of Texas, National Association [now The Chase Manhattan Bank], as administrative agent, the other agents named therein and the lenders named therein, as the same has been and may hereafter be amended or otherwise modified. “Approved Receivables Securitization” means one or more receivables securitizations or other receivables sale programs as long as the aggregate amount of 3 the commitments to purchase receivables under all such programs does not at any time exceed $225,000,000. “Collateral Agent” means The Chase Manhattan Bank, as collateral agent under the terms of the Intercreditor Agreement (for the benefit of the Holders, the Noteholders, the 1999 Lenders and the lenders under the 364 Day Facility and any other lenders which become entitled to the benefits of the Liens granted in the Pledge Agreement under the terms of the Intercreditor Agreement), and its successors and assigns in such capacity. “Credit Agreement” means the Revolving Credit Facility Agreement dated as of July 29, 1999, entered into among the Company, the lenders listed in Schedule 2.01 thereto, The Chase Manhattan Bank, as administrative agent, Wachovia Bank, N.A., as syndication agent, and The Bank of Nova Scotia, as documentation agent, as the same has been and may hereafter be amended or otherwise modified. “Intercreditor Agreement” means that certain Intercreditor Agreement to be executed pursuant to Section 9.11 hereof initially among the Company, the Material Restricted Subsidiaries, The Chase Manhattan Bank, as collateral agent thereunder, the administrative agent for the 1999 Lenders and the lenders under the 364 Day Facility, the Holders and the Noteholders, as the same may be amended or otherwise modified from time to time. “Material Restricted Subsidiary” means Lennox Industries Inc., Armstrong Air Conditioning Inc., Excel Comfort Systems Inc., Service Experts Inc. and each other Restricted Subsidiary (except LPAC Corp.) the book value (determined in accordance with GAAP) of whose total assets equals or exceeds 10% of the book value (determined in accordance with GAAP) of the consolidated total assets of the Company and all Subsidiaries as determined as of the last day of each fiscal quarter. “Material Transfer” means, with respect to the Company or any Restricted Subsidiary, any transaction or group of related transactions having a value in excess of $10,000,000 in which such Person sells, conveys, transfers or leases (as lessor) any of its property, including capital stock of, or a Security issued by, a Subsidiary; provided that the term “Material Transfer” shall not include the sale of receivables sold by the Company and the Restricted Subsidiaries under an Approved Receivables Securitization. For purposes of this definition the term “value” of any property transferred shall be equal to the transfer price specified in the applicable sale, lease or other transfer documents for the property in question. “Note Agreements” means (i) nine separate Note Purchase Agreements, 4 dated as of December 1, 1993 (as amended, the “1993 Note Agreements”), between the Company and each of Prudential, Connecticut General Life Insurance Company, Connecticut General Life Insurance Company, on behalf of One or More Separate Accounts, Life Insurance Company of North America, United of Omaha Life Insurance Company, Mutual of Omaha Insurance Company, Companion Life Insurance Company, United World Life Insurance Company, First Colony Life Insurance Company, General Electric Capital Assurance Company (as a successor), and GE Life and Annuity Assurance Company (as a successor) (collectively, and together with their respective successors and assigns, the “1993 Holders”); (ii) the Note Purchase Agreement, dated as of July 6, 1995 (as amended, the “1995 Note Agreement”), between the Company and Teachers Insurance and Annuity Association of America (together with its successors and assigns, the “1995 Holder”); (iii) eight separate Note Purchase Agreements, dated as of April 3, 1998 (as amended, the “1998 Note Agreements”), between the Company and each of Prudential, U.S. Private Placement Fund, Teachers Insurance and Annuity Association of America, Connecticut General Life Insurance Company, Connecticut General Life Insurance Company, on behalf of One or More Separate Accounts, CIGNA Property and Casualty Insurance Company, United of Omaha Life Insurance Company and Companion Life Insurance Company (collectively, and together with their respective successors and assigns, the “1998 Holders”); (iv) the letter agreement dated July 29, 1999 (the “1999 Amendment Agreement”) among the Company and the 1993 Holders, 1995 Holder and 1998 Holders (collectively referred to herein as the “Noteholders”) amending the Note Agreements to add the “Additional Covenants” set forth in Schedule A to the 1999 Amendment Agreement. “Letter Amendment No. 3” means the Letter Amendment No. 3 dated as of June 29, 2001, as the same may be modified from time to time, among the Company and the Holders to amend certain provisions and covenants of this Agreement. “Pledge Agreement” means that certain Pledge Agreement to be executed by the Company and in favor of the Collateral Agent pursuant to Section 9.11 hereof, as the same may otherwise be modified from time to time. “Subsidiary Guaranty” means the guaranty of the Material Restricted Subsidiaries in favor of the Holders and the Noteholders, substantially in the form of Exhibit A to Letter Amendment No. 3, as the same may be modified pursuant to one or more Subsidiary Joinder Agreements and as the same may be otherwise modified from time to time. “Subsidiary Joinder Agreement” means an agreement which has been or will be executed by a Material Restricted Subsidiary adding it as a party to the 5 Subsidiary Guaranty. 2. Amendments to Covenants and Events of Default. Subject to Section 3 hereof the Shelf Agreement is hereby amended as follows: 7.2. Officer's Certificate. Section 7.2(a) is hereby amended by adding the phrase “the then existing Material Restricted Subsidiaries and” immediately after the phrase “in order to establish”. 9.10. Interest Rate. Section 9.10 is hereby added to the Shelf Agreement to read as follows: “9.10 Interest Rate. Effective as of June 29, 2001, the interest rates prior to the occurrence of any Event of Default with respect to all Notes shall be immediately and automatically increased by 0.25% per annum for so long as any amount shall remain outstanding under the Notes. If upon any subsequent delivery of the compliance certificate pursuant to Section 7.2(a) in connection with the financial statements of the Company and its Restricted Subsidiaries required to be delivered pursuant to Section 7.1, the Consolidated Indebtedness to Adjusted EBITDA Ratio of the Company as set forth in Section 10.12.3(b) of this Agreement shall be less than or equal to 3.00 to 1.00 (the “Reset Event”), then the interest rates with respect to such Notes shall be immediately and automatically reduced by 0.25% per annum commencing upon the date such compliance certificate is delivered, with such interest rates to be subject to increase again by 0.25% per annum at any time that such ratio exceeds 3.00 to 1.00 (and, if so increased then reduced again when such ratio shall be less than or equal to 3.00 to 1.00), and with such interest rates never to be less than the respective interest rates in effect with respect to the Notes on June 28, 2001. If an Event of Default occurs prior to any Reset Event, then the Default Rate shall also be increased by 0.25% for so long as such Event of Default is continuing.” 9.11. Post-closing Agreements; New Material Restricted Subsidiaries. Section 9.11 is hereby added to the Shelf Agreement to read as follows: “9.11. Post-closing Agreements; New Material Restricted Subsidiaries. (a) Items Due by August 15, 2001. On or before August 15, 2001, the Company shall deliver or cause to be delivered each of the following items, each of which must be in form and substance satisfactory to the Required Holders: (i) to the Holders, the Intercreditor Agreement executed by all the parties thereto, and the Pledge Agreement executed by the Company pursuant to which the Company shall have pledged to the Collateral Agent all the capital stock of each Material Restricted Subsidiary; to the 6 Collateral Agent, certificates representing all shares of the capital stock of the Material Restricted Subsidiaries pledged pursuant to the Pledge Agreement together with undated stock powers duly executed in blank for all such certificates; to counsel for the Holders, UCC, tax and judgment Lien search reports listing all documentation on file against the Company and each Material Restricted Subsidiary in each jurisdiction in which it has its principal place of business and jurisdiction of organization; to the Collateral Agent, such executed documentation as the Collateral Agent may deem necessary to perfect or protect the Liens under the Pledge Agreement, including, without limitation, financing statements under the UCC and other applicable documentation under the laws of any jurisdiction with respect to the perfection of such Liens; and duly executed UCC-3 Termination Statements and such other documentation as shall be necessary to terminate or release all Liens encumbering the collateral pledged pursuant to the Pledge Agreement. To assist the Company in complying with the requirements of this paragraph, the Holders agree to use commercially reasonable efforts to cause the Required Holders to approve an Intercreditor Agreement which is in form and substance satisfactory to them on or before August 15, 2001. (ii) a favorable written opinion from counsel to the Company and the Material Restricted Subsidiaries addressed to the holders as to such matters relating to the Intercreditor Agreement, the Pledge Agreement, the collateral pledged pursuant thereto and the capitalization of the Material Restricted Subsidiaries as the Required Holders may request (and the Company hereby instructs its counsel to deliver such opinion to the holders for their benefit); (iii) a certificate of the Secretary or an Assistant Secretary of the Company certifying that attached thereto is a true and complete copy of resolutions, duly adopted by the Board of Directors authorizing the execution, delivery and performance of the Pledge Agreement, the Intercreditor Agreement and the transactions contemplated thereby, and that such resolutions have not been modified, rescinded or amended and are in full force and effect; and (iv) a certificate of the Secretary or an Assistant Secretary of each Material Restricted Subsidiary certifying that attached thereto is a true and complete copy of resolutions, duly adopted by the Board of Directors authorizing the execution, delivery and performance of the Intercreditor Agreement and that such resolutions have not been modified, rescinded or amended and are in full force and effect. 7 (b) New Material Restricted Subsidiaries. Within 45 days after the end of each fiscal quarter, the Company shall cause each Material Restricted Subsidiary created or acquired during the fiscal quarter then ending, and each Restricted Subsidiary that, as a result of a change in assets became a Material Restricted Subsidiary during such fiscal quarter (any such Material Restricted Subsidiary, herein a “New Material Subsidiary”), to execute and deliver to the Holders a Subsidiary Joinder Agreement joining it as a guarantor under the Subsidiary Guaranty and such other documentation, including, but not limited to, corporate resolutions, charter and bylaws of such New Material Subsidiary and an opinion of counsel for such New Material Subsidiary, as the Required Holders may reasonably request in order to cause such New Material Subsidiary to evidence or otherwise implement the guaranty of the repayment of the obligations contemplated by the Subsidiary Guaranty and this Agreement. In addition, within 45 days after the end of a fiscal quarter in which a New Material Subsidiary has been created, acquired or comes into existence, the Company shall take such action as the Collateral Agent may request to cause the capital stock of each such New Material Subsidiary to be pledged to the Collateral Agent under the Pledge Agreement, including without limitation, the proper completion, execution and delivery of an amendment under the terms of the Pledge Agreement, the delivery of the stock certificates evidencing the stock to be pledged, along with stock powers executed in blank, Uniform Commercial Code Financing Statements and such other documentation as the Collateral Agent may reasonably request to cause such stock to be pledged under the Pledge Agreement and for such pledge to be perfected and protected.” 9.12. Use of Material Transfer Proceeds. Section 9.12 is hereby added to the Shelf Agreement to read as follows: “9.12. Use of Material Transfer Proceeds. Immediately after giving effect to a Transfer authorized under Section 10.3(c) that is a Material Transfer, 60% of the net, after tax proceeds of such Transfer shall be used to reduce the outstanding indebtedness under any Senior Secured Credit Facility or Facilities. The Company shall have the option of determining the Senior Secured Credit Facility or Facilities to which to apply such proceeds. The term “Senior Secured Credit Facilities” means this Agreement, the Note Agreements, the Credit Agreement, the 364 Day Facility and any other facility providing Indebtedness which refinances any of the foregoing or is entitled under the Intercreditor Agreement to the benefits of the Liens granted under the Pledge Agreement.” 9.13. Subsequent Indebtedness. Section 9.13 is hereby added to the Shelf Agreement to read as follows: “9.13. Subsequent Indebtedness. If the Company wants any 8 Indebtedness that is hereafter incurred to be entitled under the Intercreditor Agreement to the benefits of the Liens granted under the Pledge Agreement, the Company shall use the proceeds of such Indebtedness to reduce the commitments under the revolving Senior Secured Credit Facilities in existence on June 29, 2001 and/or the outstanding indebtedness under any other Senior Secured Credit Facilities in existence on June 29, 2001. The Company shall have the option of determining which Senior Secured Credit Facility or Facilities to which to apply such proceeds.” 10.3 Sale of Assets, Etc. The last sentence of Section 10.3 is deleted in its entirety, the “.” at the end of clause (c) is deleted and replaced with “; or” and a new clause (d) is added to the end of Section 10.3 to read as follows: “(d) such Transfer is the sale of receivables, or undivided interests therein, pursuant to an Approved Receivables Securitization.” 10.4. Incurrence of Indebtedness. The last paragraph of Section 10.4 is deleted in its entirety from the Shelf Agreement and replaced with the following: “In addition to and not in limitation of the other provisions of this Section 10.4, from June 29, 2001 until the date that the Consolidated Indebtedness to Adjusted EBITDA Ratio is less than 3.00 to 1.00 as calculated for any fiscal quarter after March 31, 2001 and established by the delivery of a Covenant Compliance Certificate under Section 7.2(a) (such period being the “Restriction Period”), the Company shall not permit any Restricted Subsidiary to, directly or indirectly, create, incur, assume, guarantee, or otherwise become directly or indirectly liable with respect to or otherwise permit any Indebtedness, except Indebtedness of such Subsidiaries disclosed on Schedule 10.4 and additional Indebtedness in an aggregate amount not to exceed $10,000,000 for all Restricted Subsidiaries during the Restriction Period. For purposes of this Section 10.4 any Person becoming a Restricted Subsidiary after the date of this Agreement shall be deemed to have incurred all of its then outstanding Indebtedness at the time it becomes a Restricted Subsidiary.” 10.5. Liens. Sections 10.5(f), (g) and (i) are deleted in their entirety from the Shelf Agreement and replaced with the following: “(f) Liens on property or assets of the Company (other than the capital stock of the Material Restricted Subsidiaries) or any of its Restricted Subsidiaries securing Indebtedness or other obligations owing to the Company or to a Wholly Owned Restricted Subsidiary;” “(g) financing statements filed in respect of operating leases, liens 9 granted under capital leases in existence as of June 29, 2001 provided that the amount secured thereby does not exceed $25,000, other Liens existing on the date of this Agreement and described on Schedule 10.5 and Liens granted to the Collateral Agent under the Pledge Agreement;" “(i) other Liens not otherwise permitted by Subsections (a) through (h) above, provided that (i) the fair market value of the assets subject to such other Liens shall not exceed $15,000,000, (ii) such Liens secure Indebtedness of the Company or a Restricted Subsidiary permitted hereby, (iii) the aggregate principal amount of the Indebtedness secured by all Liens granted under the permissions of this clause (i) does not exceed $10,000,000 and (iv) immediately after giving effect to the creation thereof, no Default or Event of Default shall exist.” 10.6. Restricted Payments. Section 10.6 is amended to add the following to the end thereof: “In addition to the foregoing restrictions, the Company will not, and will not permit any of its Restricted Subsidiaries to, redeem or otherwise acquire any of its stock or other equity interests or any warrants, rights or other options to purchase such stock or other equity interests except: (a) when solely in exchange for such stock or other equity interests; (b) when made contemporaneously from the net proceeds of a sale of such stock or other equity interests; (c) the repurchase of up to 577,500 shares of the Company's capital stock for an aggregate purchase price not to exceed $7,500,000 in connection with its obligation to do so arising in connection with the documentation of its acquisition of James N Kirby Pty Ltd; (d) the repurchase by LPAC Corp. from Restricted Subsidiaries of LPAC Corp.'s preferred stock with proceeds of collections on accounts receivable in connection with an Approved Receivables Securitization; and (e) other redemptions or acquisitions of such stock or equity interests if, as of the date of the payment thereof, the Consolidated Indebtedness to Adjusted EBITDA Ratio is less than 3.00 to 1.00 as calculated for any fiscal quarter: (i) that has elapsed since March 31, 2001; (ii) that has ended before the date of payment; and (iii) for which a Covenant Compliance Certificate under Section 7.2(a) has been delivered.” 10 10.12.3. Financial Covenants. Section 10.12.3(a) of the Shelf Agreement is hereby amended in full to read as follows: “(a) Coverage Ratio. As of the end of each fiscal quarter, the Company shall not permit the ratio of Cash Flow for the four fiscal quarters then ending to Interest Expenses for such period to be less than (i) 2.65 to 1.00 for the fiscal quarter ended June 30, 2001; (ii) 2.75 to 1.00 for the fiscal quarter ended September 30, 2001; and (iii) 3.00 to 1.00 for all fiscal quarters ending thereafter.” Section 10.12.3(b) of the Shelf Agreement is amended in full to read as follows: “(b) Consolidated Indebtedness to Adjusted Ebitda. As of the last day of each fiscal quarter during the periods described below, the Company shall not permit the ratio of Consolidated Indebtedness outstanding as of such day to the Adjusted EBITDA for the four fiscal quarters then ended to exceed: (i) 3.90 to 1.00 for the fiscal quarter ended June 30, 2001; (ii) 3.75 to 1.00 for the fiscal quarters ended September 30, 2001 and December 31, 2001; (iii) 3.50 to 1.00 for the fiscal quarters ended March 31, 2002 and June 30, 2002; (iv) 3.25 to 1.00 for the fiscal quarters ended September 30, 2002 and December 31, 2002; and (v) 3.00 to 1.00 for all fiscal quarters ending after December 31, 2002. For the purposes of this Section 10.12.3, the following terms shall have the indicated meanings:” 10.12.5. Restrictions On Transfers to Unrestricted Subsidiaries. Section 10.12.5 is hereby added to the Shelf Agreement to read as follows: “10.12.5. Restrictions On Transfers to Unrestricted Subsidiaries. In addition to the other limitations of this Agreement, from June 29, 2001 until the date that the Consolidated Indebtedness to Adjusted EBITDA Ratio is less than 3.00 to 1.00 as calculated for any fiscal quarter after March 31, 2001 and established by the delivery of a Covenant Compliance Certificate under Section 7.2(a) (such period, herein the “Section 10.12 Restriction Period”), the Company will not, and will not permit any Restricted Subsidiary to, consummate any Unrestricted Subsidiary Transfer except: (a) the sale of inventory to Unrestricted Subsidiaries in the ordinary course of business; (b) payments made to Unrestricted Subsidiaries after June 30, 2001 in an aggregate amount not to exceed $30,500,000 to be used to satisfy the obligation owed to the seller(s) arising under the documentation 11 governing the acquisition of James N Kirby Pty Ltd; and (c) if no Default or Event of Default exists or would result therefrom, Unrestricted Subsidiary Transfers, in addition to the Transfers described in clauses (a) and (b) above, provided that the aggregate amount of the Unrestricted Subsidiary Transfers consummated during the Section 10.12 Restriction Period under this clause (c) shall not exceed $60,000,000. The aggregate amount of the Unrestricted Subsidiary Transfers for purposes of determining compliance with this clause (c) as of any date shall equal the sum of the following: (i) the aggregate outstanding amount of all loans, advances and extensions of credit made by the Company and the Restricted Subsidiaries to Unrestricted Subsidiaries and outstanding on such date; plus (ii) the aggregate amount of all obligations of the Unrestricted Subsidiaries outstanding on such date that are guaranteed by the Company or any Restricted Subsidiary or secured by a Lien granted by the Company or a Restricted Subsidiary; plus (iii) the aggregate Fair Market Value (determined for each Unrestricted Subsidiary Transfer as of the date of the applicable Unrestricted Subsidiary Transfer) of all other property (i.e., other than the property described in clauses (i) and (ii) of this sentence) disposed of during the Restriction Period in Unrestricted Subsidiary Transfers consummated under this clause (c). The term “Unrestricted Subsidiary Transfer” means, a transaction in any form in which an Unrestricted Subsidiary receives (either directly or indirectly) anything (including money or other property) of value from the Company or any Restricted Subsidiary, including, any loan, advance or other extension of credit; any sale, lease, or other disposition of assets; any merger, consolidation or other corporate combination; any purchase or repurchase of stocks, bonds, notes, debentures or other securities or any other capital contribution or investment; any transaction in which a Person provides a Guaranty or grants Liens to secure obligations or Indebtedness of another Person. All covenants in this Agreement shall be given independent effect so that if a particular action or condition is not permitted by any of such covenants (including this Section 10.12), the fact that it would be permitted by an exception to, or be otherwise within the limitations of, another covenant shall not avoid the occurrence of a Default if such action is taken or such condition exists.” 11. Events of Default. Sections 11(c), (d) and (e) of the Shelf Agreement are amended in full to read as follows: “(c) the Company defaults in the performance of or compliance with any term applicable to the Company and contained in Sections 7.1(d), 9.6, 9.11, 10.2 through 10.11 or 10.12.2, 10.12.3, 10.12.4 or 10.12.5 or contained in the Pledge Agreement, or any Material Restricted Subsidiary defaults in the 12 performance of or compliance with any term applicable to it contained in clause (c) of paragraph 6 of the Subsidiary Guaranty; or (d) (i) the Company defaults in the performance of or compliance with any term contained herein (other than those referred to in paragraphs (a), (b) and (c) of this Section 11) or contained in the Intercreditor Agreement or with any Additional Covenant and such default is not remedied within 30 days after the earlier of (A) a Responsible Officer obtaining actual knowledge of such default and (B) the Company receiving written notice of such default from any holder of a Note (any such written notice to be identified as a “notice of default” and to refer specifically to this paragraph (d) of Section 11) or (ii) any Material Restricted Subsidiary defaults in the performance of or compliance with any term contained in the Subsidiary Guaranty (other than those referred to in paragraphs (a), (b) and (c) of this Section 11) or contained in the Intercreditor Agreement or with any Additional Covenant and such default is not remedied within 30 days after the earlier of (A) a Responsible Officer obtaining actual knowledge of such default and (B) the Company receiving written notice of such default from any holder of a Note (any such written notice to be identified as a “notice of default” and to refer specifically to this paragraph (d) of Section 11); or (e) any representation or warranty made in writing by or on behalf of the Company or any Material Restricted Subsidiary or by any officer of the Company or any Material Restricted Subsidiary in this Agreement, the Pledge Agreement, the Intercreditor Agreement, the Subsidiary Guaranty, or in any writing furnished in connection with the transactions contemplated hereby proves to have been false or incorrect in any material respect on the date as of which made; or” Section 11(k) is hereby added to the Shelf Agreement to read as follows: “(k) the occurrence of an Event of Default (as defined in the Intercreditor Agreement); or” Section 11(l) is hereby added to the Shelf Agreement to read as follows: “(l) either the Subsidiary Guaranty or the Pledge Agreement shall for any reason cease to be in full force and effect and valid, binding and enforceable in accordance with its terms, or the Company or any Material Restricted Subsidiary shall so state in writing.” 12. Remedies On Default, Etc. A new sentence is added to end of Section 12.2 as follows: “In addition to the other rights and remedies that the holders of Notes may 13 have upon the occurrence of an Event of Default, the Required Holders may direct the Collateral Agent to exercise the rights and remedies available to the Collateral Agent under the Intercreditor Agreement and the Pledge Agreement.” 3. Effectiveness of Amendment Agreement; Counsel Fees and Expenses. This Amendment No. 3 shall be effective upon the satisfaction of the following conditions: (i) the Holders shall have received a Subsidiary Guaranty executed by each of the Material Restricted Subsidiaries as of the date hereof; (ii) the Holders shall have received a favorable legal opinion or opinions from Bennack & Lowden L.L.P., special counsel to the Company and the Material Restricted Subsidiaries, satisfactory to such Holder; (iii) the Holders shall have received certified copies of the resolutions of the Board of Directors of the Company authorizing this Amendment No. 3, and of all documents evidencing other necessary corporate action and governmental approvals, if any, with respect to this Amendment No. 3; (iv) the Holders shall have received certified copies of the resolutions of the Board of Directors of each Material Restricted Subsidiary authorizing the Subsidiary Guaranty, and of all documents evidencing other necessary corporate action and governmental approvals, if any, with respect to the Subsidiary Guaranty; (v) the Holders shall have received a certificate of the Secretary or Assistant Secretary of the Company certifying the names and true signatures of the officers of the Company authorized to sign this Amendment No. 3 and the other documents to be delivered by the Company hereunder; (vi) the Holders shall have received evidence satisfactory to them that the Credit Agreement, the 364 Day Facility and the Note Agreements shall have been amended in a manner similar to the manner in which the Shelf Agreement is proposed to be amended as herein contemplated and the amendments of the Credit Agreement, the 364 Day Facility and Note Agreements shall be in form and substance satisfactory to the Holders; and (xiii) the Company shall have paid to each of the Holders an amendment fee by wire transfer of immediately available funds in an amount equal to the product of 0.25% and the aggregate principal amount of such Holder's outstanding Notes on the date on which this Amendment No. 3 becomes effective. 4. Continued Effectiveness of Amendment No. 3; Release. (a) Except for Section 9.10, each of the Covenants and Events of Default set forth in Section 2 hereof shall remain in effect only as long as the Company is bound by a substantially 14 similar covenant or event of default contained in the Credit Agreement or the 364 Day Facility or any other agreement creating or evidencing Indebtedness (collectively, the “Additional Agreements”), including but not limited to any covenant or event of default contained in any amendment to or refinancing of the Credit Agreement, the 364 Day Facility or any Additional Agreement. If the Company ceases to be bound by any such Covenant or Event of Default in all Additional Agreements, this Amendment No. 3 shall, without further action on the part of the Company or any Holder, be deemed to be amended automatically to delete such Additional Covenant or Event of Default. (ii) The Holders agree that if the 1999 Lenders and the lenders party to the 364 Day Facility release the obligations of the guarantors under their respective guaranty of Material Restricted Subsidiaries and no new guaranties of Material Restricted Subsidiaries are executed in favor of the Lenders, then the Holders agree to release the obligations of the Guarantors under the Subsidiary Guaranty. 5. Representations and Warranties. The Company represents and warrants to the Holders that: (i) The Company has all requisite corporate power to execute, deliver and perform its obligations under this Amendment No. 3. The Company has duly executed and delivered this Amendment No. 3, and this Amendment No. 3 constitutes the legal, valid and binding obligation of the Company, enforceable against the Company in accordance with its terms. (ii) Neither the execution and delivery of this Amendment No. 3 by the Company, nor the consummation of the transactions contemplated hereby, nor fulfillment of nor compliance with the terms and provisions hereof or thereof will conflict with, or result in a breach of the terms, conditions or provisions of, or constitute a default under, or result in any violation of, or except as contemplated by the Pledge Agreement or herein, result in the creation of any security interest, lien or other encumbrance upon any of the properties or assets of the Company or any of its Subsidiaries pursuant to, the charter or bylaws of the Company or any of its Subsidiaries, any award of any arbitrator or any agreement, instrument, order, judgment, decree, statute, law, rule or regulation to which the Company or any of its Subsidiaries is subject. (iii) Except for notice given to and consents required from the 1999 Lenders, the lenders under the 364 Day Facility and the Noteholders, neither the nature of the business conducted by the Company, nor any of its properties, nor any relationship between the Company and any other Person, nor any circumstance in connection with the transactions contemplated by this Amendment No. 3 is such as to require any authorization, consent, approval, exemption or other action by or notice to or filing with any court or administrative or governmental body or any other Person in connection with the execution and delivery of any amendment document or the fulfillment of or compliance with the terms and provisions hereof or thereof. (iv) Upon the effectiveness of this Amendment No. 3, no Event of Default or Default shall have occurred and be continuing. 15 6. Miscellaneous. (i) Except as expressly amended by this Amendment No. 3, the Shelf Agreement shall remain in full force and effect. This Amendment No. 3 shall be binding upon and inure to the benefit of the Holders and their respective successors and permitted assigns. (ii) Other than as expressly set forth herein, the execution, delivery and effectiveness of this Amendment No. 3 shall not operate as a waiver of any right, power or remedy of any Holder nor constitute a waiver of any provision of the Shelf Agreement, the Notes or any other document, instrument or agreement executed and delivered in connection with this Amendment No. 3. (iii) The Company confirms its agreement, pursuant to Section 15.1 of the Shelf Agreement, to pay all costs and expenses of the Holders related to this Amendment No. 3, the Intercreditor Agreement, the Pledge Agreement and the Subsidiary Guaranty and all matters contemplated herein, including without limitation the reasonable fees and expenses of the Holders' special counsel. (iv) This Amendment No. 3 shall be construed and enforced in accordance with, and the rights of the parties shall be governed by, the law of the State of New York, excluding choice-of-law principles of the law of such State that would require the application of the laws of a jurisdiction other than such State. (v) This Amendment No. 3 may be executed in any number of counterparts, each of which shall be deemed an original and all of which taken together shall constitute one and the same document. Delivery of this Amendment No. 3 may be made by telecopy of a duly executed counterpart copy hereof. 16 If the foregoing correctly describes our understanding with respect to the subject matter of this Amendment No. 3, please execute this letter in the place indicated below. Very truly yours, LENNOX INTERNATIONAL INC. By: -------------------------------- Name: Richard A. Smith Title: Executive Vice President and Chief Financial Officer ACCEPTED AND AGREED: THE PRUDENTIAL INSURANCE COMPANY OF AMERICA By: ---------------------------------------- Name: Ric E. Abel Title: Vice President U.S. PRIVATE PLACEMENT FUND By: Prudential Private Placement Investors, L.P., Investment Advisor By: Prudential Private Placement Investors, Inc., its General Partner By: ------------------------------------- Name: Ric E. Abel Title: Vice President 17 Exhibit A Form of Subsidiary Guaranty
Schedule 10.4 LENNOX INTERNATIONAL INC. AND RESTRICTED SUBSIDIARIES INDEBTEDNESS AS OF May 26, 2001 (except as noted) A. LENNOX INTERNATIONAL INC. (1) Note Purchase Agreement dated as of December 1, 1993 $88,889,000 among Lennox International Inc. and the Noteholders identified at the end thereof, pursuant to which Lennox International Inc. delivered its 6.73% Senior Promissory Notes due 2008 (2) Note Purchase Agreement dated as of July 6, 1995 20,000,000 between Lennox International Inc. and Teachers Insurance and Annuity Association of America, pursuant to which Lennox International Inc. delivered its 7.06% Senior Promissory Notes due 2005. (3) Guaranty dated September 19, 1995 from Lennox 475,000 International Inc. to First Bank of Natchitoches & Trust Company and Regions Bank of Louisiana guaranteeing 50% of debt of Alliance Compressors to such Banks under a Promissory Note dated September 19, 1995. (4) Guaranty of 50% of amounts due from Alliance Compressors 176,762 under a master Equipment Lease Agreement dated March 28, 1995 with NationsBanc Leasing Corporation (5) Note Purchase Agreement dated as of April 3, 1998, between Lennox International Inc. and the Noteholders identified therein, pursuant to which Lennox International Inc. delivered its: 6.56% Senior Notes due April 3, 2005 25,000,000 6.75% Senior Notes due April 3, 2008 50,000,000 (6) Revolving Credit Facility Agreement dated as of July 29, 240,000,000 1999 (7) Revolving Credit Facility Agreement dated as of January 115,700,000 25, 2000 (8) Master Shelf Agreement dated as of October 15, 1999 between Lennox International Inc. and Prudential Insurance Company of America, pursuant to which Lennox International Inc. delivered its: 7.75% Senior Notes due August 25, 2005 25,000,000 8.00% Senior Notes due June 1, 2010 35,000,000 (9) Promissory Note dated April 18, 2001 from Lennox International Inc to Mizuho Financial Group 5,000,000 B. SERVICE EXPERTS INC. Convertible Notes and miscellaneous debt 9,981,479 related to original
acquisitions of centers C. MISCELLANEOUS OTHER DEBT 125,000 TOTAL OUTSTANDING INDEBTEDNESS OF LENNOX INTERNATIONAL INC. AND RESTRICTED SUBSIDIARIES $615,347,241 2Schedule 10.5 EXISTING LIENS JURISDICTION SECURED PARTY UCC-1 FILE NO. DATE FILED DEBTOR: LENNOX INDUSTRIES INC. Texas Secretary of Wachovia Bank, N.A., 00-00521016 6/16/00 State as Administrative Agent for the Secured Parties 191 Peachtree Street, N.E Mail Code GA 04-23 Atlanta, GA 30303 DEBTOR: ARMSTRONG AIR CONDITIONING INC Ohio Secretary of State Wachovia Bank, N.A., AP322733 3/27/01 as Administrative Agent for the Secured Parties 191 Peachtree Street, N.E Mail Code GA 04-23 Atlanta, GA 30303 Huron County, Ohio Wachovia Bank, N.A., 000084073 3/27/01 as Administrative Agent for the Secured Parties 191 Peachtree Street, N.E Mail Code GA 04-23 Atlanta, GA 30303
- LII Dashboard
- Financials
- Filings
- Transcripts
- ETFs
- Insider
- Institutional
- Shorts
- News
- Patents
-
10-Q Filing
Lennox International (LII) 10-Q2001 Q2 Quarterly report
Filed: 14 Aug 01, 12:00am