Exhibit 10.6
[Execution Copy]
January 23, 2001
The Prudential Insurance Company of North 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
Teachers Insurance and Annuity
Association of America
730 Third Avenue
New York, New York 10017
Attention: Securities Division, Private Placements
CIG & Co.
c/o CIGNA Investments, Inc.
900 Cottage Grove Road
Hartford, Connecticut 06152-2307
Attention: Private Securities Division - S-307
United of Omaha Life Insurance Company
Mutual of Omaha Insurance Company
Companion Life Insurance Company
United World Life Insurance Company
Mutual of Omaha Plaza
Omaha, NE 68175
Attention: Investment Division
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First Colony Life Insurance Company
General Electric Capital Assurance Company
GE Life and Annuity Assurance Company
c/o GE Financial Assurance
Two Union Square
601 Union Street
Seattle, WA 98101-2336
RE: LENNOX INTERNATIONAL INC.
7.06% SENIOR PROMISSORY NOTES DUE 2005; 6.73% SENIOR PROMISSORY NOTES
DUE 2008; 6.56% SENIOR NOTES DUE 2005; AND 6.75% SENIOR NOTES DUE 2008
Ladies and Gentlemen:
Reference is made to:
(i) nine separate Note Purchase Agreements, dated as of December 1, 1993
(as amended, the "1993 NOTE AGREEMENTS"), between the Company and each of The
Prudential Insurance Company of America, 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 The
Prudential Insurance Company of America, 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 Holders (as defined below) amending the
Note Agreements (as defined below) to add the "Additional Covenants" set forth
in Schedule A to the 1999 Amendment;
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(v) the Revolving Credit Facility Agreement dated as of July 29, 1999, as
amended (the "1999 CREDIT AGREEMENT") entered into among the Company, the
lenders listed in Schedule 2.01 thereto (the "1999 LENDERS"), The Chase
Manhattan Bank, as administrative agent, Wachovia Bank, N.A., as syndication
agent, and The Bank of Nova Scotia, as documentation agent; and
(vi) the 364 Day Revolving Credit Facility Agreement dated as of January
25, 2000, as amended (the "2000 CREDIT AGREEMENT") entered into among the
Company, the lenders listed in Schedule 2.01 thereto (the "2000 LENDERS"), The
Chase Manhattan Bank, as administrative agent, Wachovia Bank, N.A., as
syndication agent, and The Bank of Nova Scotia, as documentation agent.
The 1993 Note Agreements, 1995 Note Agreement and 1998 Note Agreements, as
amended, are collectively referred to herein as the "NOTE AGREEMENTS". The 1993
Holders, 1995 Holder and 1998 Holders are collectively referred to herein as the
"HOLDERS". The senior notes issued and outstanding under each of the Note
Agreements are collectively referred to herein as the "NOTES". Capitalized terms
used herein and not otherwise defined herein shall have the respective meanings
set forth in the Note Agreements (including Schedule A to the 1999 Amendment
Agreement).
The Company has requested the Holders to enter into this letter agreement (this
"2001 AMENDMENT AGREEMENT") to evidence amendment of the Note Agreements as set
forth herein. Such amendment shall become effective as set forth in Section 3.
The Company has furnished to the Holders evidence that the 1999 Lenders and the
2000 Lenders have agreed to the same covenants as stated in Sections 1 and 2
below in amendments to the 1999 Credit Agreement and 2000 Credit Agreement,
respectively; provided this 2001 Amendment Agreement becomes effective as
provided herein. Therefore, the Holders and the Company hereby agree as follows:
1. AMENDMENT TO ADDITIONAL COVENANTS. Subject to Section 3 hereof,
Section 3(b) of Schedule A to the 1999 Amendment Agreement is hereby amended to
read in its entirety 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 (4) fiscal quarters then ended to
exceed: (i) 3.00 to 1.00 at all times other than as described in the
following clause (ii); or (ii) 3.25 to 1.00 for all fiscal quarters ending
prior to September 30, 2001.
2. AMENDMENT TO DEFINITIONS. Subject to Section 3 hereof, the definition
of "Consolidated Net Income" in each of the Note Agreements is hereby amended to
read in its entirety as follows:
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"CONSOLIDATED NET INCOME" shall mean, for any period, the net income
(or net loss) of the Company and its Restricted Subsidiaries for such
period, determined in accordance with GAAP, excluding:
(a) the proceeds of any life insurance policy;
(b) any gain arising from (1) the sale or other disposition of any
assets (other than current assets) to the extent that the aggregate amount
of gains exceeds the aggregate amount of losses from the sale, abandonment
or other disposition of assets (other than current assets and other than
the losses excluded from Consolidated Net Income under clause (f) below),
(2) any write-up of assets, or (3) the acquisition by the Company or any
Restricted Subsidiary of its outstanding securities constituting
Indebtedness;
(c) any amount representing the interest of the Company or any
Restricted Subsidiary in the undistributed earnings of any other Person;
(d) any earnings of any other Person accrued prior to the date it
becomes a Restricted Subsidiary or is merged into or consolidated with the
Company or a Restricted Subsidiary and any earnings, prior to the date of
acquisition, of any other Person acquired in any other manner;
(e) any deferred credit (or amortization of a deferred credit) arising
from the acquisition of any Person;
(f) any non-recurring loss arising from the sale or other disposition
of any asset in 2001 but only to the extent that the aggregate amount of
such losses is less than $25,000,000; and
(g) any non-recurring restructuring charges recorded in 2001 but only
to the extent that the aggregate amount of such restructuring charges is
less than $25,000,000.
3. EFFECTIVENESS OF AMENDMENT AGREEMENT. This 2001 Amendment Agreement
shall be effective when (i) holders of at least 66-2/3% in aggregate unpaid
principal amount of all Notes under each of the 1993 Note Agreements, 1995 Note
Agreement and 1998 Note Agreements at the time outstanding shall have executed a
counterpart of this 2001 Amendment Agreement, and (ii) the Company shall have
furnished to each of the Holders evidence of the satisfaction of clause (i).
4. NO DEFAULT. The Company hereby represents and warrants that upon the
effectiveness of this 2001 Amendment Agreement, no Default or Event of Default
shall have occurred and be continuing.
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5. MISCELLANEOUS. Except as expressly amended by this 2001 Amendment
Agreement, the Note Agreements shall remain in full force and effect. This 2001
Amendment Agreement shall be binding upon and inure to the benefit of the
Holders and their respective successors and permitted assigns. This 2001
Amendment Agreement may be signed in any number of counterparts, each of which
shall constitute an original.
[signature pages follow]
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If the foregoing correctly describes our understanding with respect to the
subject matter of this Amendment Agreement, please execute this letter in the
place indicated below.
Very truly yours,
LENNOX INTERNATIONAL INC.
By: /s/ CARL E. EDWARDS, JR.
------------------------
Name: Carl E. Edwards, Jr.
Title: Executive Vice President
ACCEPTED AND AGREED:
THE PRUDENTIAL INSURANCE COMPANY
OF NORTH AMERICA
By: /s/ RIC E. ABEL
---------------
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: /s/ RIC E. ABEL
---------------
Name: Ric E. Abel
Title: Vice President
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TEACHERS INSURANCE AND ANNUITY
ASSOCIATION OF AMERICA
By: /s/ RICHARD J. TANNER
---------------------
Name: Richard J. Tanner
Title: Associate Director
CIG & CO.
By: /s/ STEVEN A. OSBORN
--------------------
Name: Steven A. Osborn
Title: Partner
[remainder of page intentionally blank]
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UNITED OF OMAHA LIFE INSURANCE COMPANY
By: /s/ CURTIS R. CALDWELL
----------------------
Name: Curtis R. Caldwell
Title: First Vice President
MUTUAL OF OMAHA INSURANCE COMPANY
By: /s/ CURTIS R. CALDWELL
----------------------
Name: Curtis R. Caldwell
Title: First Vice President
COMPANION LIFE INSURANCE COMPANY
By: /s/ CURTIS R. CALDWELL
----------------------
Name: Curtis R. Caldwell
Title: Authorized Signer
UNITED WORLD LIFE INSURANCE COMPANY
By: /s/ CURTIS R. CALDWELL
----------------------
Name: Curtis R. Caldwell
Title: Authorized Signer
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FIRST COLONY LIFE INSURANCE COMPANY
By: /s/ MORIAN C. MOOERS
--------------------
Name: Morian C. Mooers
Title: Assistant Vice President and Investment Officer
GENERAL ELECTRIC CAPITAL ASSURANCE COMPANY
By: /s/ MORIAN C. MOOERS
--------------------
Name: Morian C. Mooers
Title: Investment Officer
GE LIFE AND ANNUITY ASSURANCE COMPANY
By: /s/ MORIAN C. MOOERS
--------------------
Name: Morian C. Mooers
Title: Investment Officer
cc: Companion Life Insurance Company
Attention: Financial Division
401 Theodore Fremd Avenue
Rye, NY 10580-1493
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