EXHIBIT 99.2

DIRECTORS COMPENSATION

Directors who are employees of LII do not receive additional compensation
for positions on the Board of Directors. In 2003, there were two employee Board
members: Messrs. Robert E. Schjerven, Chief Executive Officer; and Thomas W.
Booth, Vice President, Corporate Technology. The 2003 compensation package for
all non-employee Directors, with the exception of the Chairman, included an
annual retainer of $25,000 in cash and $10,000 in common stock, with an
additional annual retainer of $10,000 in cash for serving as a committee chair
of the Audit, Compensation, or Board Governance Committees and an additional
annual retainer of $6,000 in cash for serving as a committee chair of the
Pension and Risk Management, Human Resource, Acquisition or Public Policy
Committees. A fee of $1,500 in cash was paid for attending each meeting day of
the Board of Directors and a fee of $1,200 in cash was paid for attending each
Board committee meeting. The fee paid for participation in a telephonic
conference meeting of the Board or a committee is one-half of the regular
meeting fee. The Chairman's compensation package is twice that of other
Directors: consisting of an annual retainer of $50,000 in cash and $20,000 in
common stock, an additional annual retainer ranging from $12,000 to $20,000 in
cash for serving as a committee chair and a fee of $3,000 in cash for attending
each meeting day of the Board of Directors or $2,400 for attending each Board
committee meeting. The fee paid for the Chairman's participation in a telephonic
conference meeting of the Board or a committee is one-half of his regular
meeting fee. Directors may elect to receive the cash portion of their annual
retainer in cash or shares of common stock. Directors may defer 25% or more of
their annual cash retainer in an interest bearing account under the Non-employee
Directors' Compensation and Deferral Plan. All Directors receive reimbursement
for reasonable out-of-pocket expenses incurred in connection with attendance at
meetings of the Board of Directors or a Board committee.

In addition, each non-employee Director may periodically, under the 1998
Plan administered by the Board of Directors, receive stock options to purchase
shares of common stock at an exercise price equal to the fair market value of
such shares on the date of grant. Under the 1998 Plan, the stock options are
non-qualified, and no such options awarded in any given year shall provide for
the purchase of more than 16,500 shares of common stock by each Director. In
December 2003, each non-employee Director, except for the Chairman, was awarded
12,415 stock options. The Chairman was awarded 16,500 stock options and also
received cash in the amount of $46,065 in order to deliver a total award value
that was twice that of the other Directors, as provided in his compensation
package. All options awarded to Directors in 2003 have a term of seven years and
vest and become exercisable in three equal increments of one-third in each of
the three succeeding Decembers following the grant date.

EXECUTIVE COMPENSATION

The following table sets forth information on compensation earned in 2003,
2002 and 2001 by LII's Chief Executive Officer and its four other most highly
compensated executive officers, such individuals sometimes being referred to in
this proxy statement as the "named executive officers."

Summary Compensation Table

Long-Term Compensation
-------------------------------------
Awards Payouts
------------------------ ----------
Securities
Annual Compensation Restricted Underlying
-------------------- Stock Options/SARs LTIP All Other
Named Executive Officer Year Salary Bonus(1) Awards(2) Granted Payouts(3) Compensation(4)
- --------------------------- ---- -------------------- ---------- ------------ ---------- --------------

Robert E. Schjerven 2003 $802,500 $1,156,043 $1,777,499 123,902 $205,265 $232,703
Chief Executive Officer 2002 750,000 1,725,000 2,094,618 440,950 104,569 148,784
2001 750,000 900,000 0 0 78,137 68,888

Harry J. Ashenhurst, Ph.D. 2003 399,324 470,007 488,772 34,070 108,358 85,581
Executive Vice President 2002 368,376 557,169 1,079,635 88,410 64,350 56,881
and Chief Administrative 2001 368,376 287,333 0 0 58,603 32,817
Officer

Scott J. Boxer 2003 381,688 567,928 883,572 34,070 88,199 126,887
President/COO 2002 320,256 457,934 1,079,635 88,410 48,263 54,578
Service Experts Inc. 2001 320,256 249,800 0 0 0 29,222

Robert J. McDonough 2003 367,866 339,952 883,572 34,070 75,599 78,574
President/COO World Wide 2002 320,004 484,470 1,079,635 88,410 36,192 46,071
Heating & Cooling 2001 300,004 152,102 0 0 0 41,005

Carl E. Edwards Jr. (5) 2003 335,112 394,429 0 0 108,358 76,609
Executive Vice President 2002 320,988 485,494 1,079,635 88,410 64,350 52,281
and Chief Legal Officer 2001 320,988 250,371 0 0 58,603 30,811

- ----------

(1) Includes annual incentive payments for the respective year from annual
variable pay plans and other bonuses.

(2) Represents PSP awards and restricted stock awards of the following number
of shares of LII common stock granted pursuant to the 1998 Plan multiplied
by the average of the high and low price of LII common stock on the New
York Stock Exchange (the "Fair Market Value") on the grant date(s). PSP
awards in December 2003 at a Fair Market Value of $16.76 per share are as
follows: Mr. Schjerven 53,951 shares; Dr. Ashenhurst 14,835 shares; Mr.
Boxer 14,835 shares and Mr. McDonough 14,835 shares. For the December 2003
PSP grant, shares granted will vest in December 2006 providing specific
performance targets are met. If, at the end of the performance period, at
least the minimum performance level has been attained, the earned PSP
award will be vested and will be distributed. To the extent the earned
award payout level attained is less than 100%, the difference between 100%
and the earned award distributed, if any, shall be forfeited. Restricted
stock awards in December 2003 at a Fair Market Value of $16.76 per share
are as follows: Mr. Schjerven 52,105 shares; Dr. Ashenhurst 14,328 shares;
Mr. Boxer 14,328 shares; and Mr. McDonough 14,328 shares. For the December
2003 restricted stock grant, all shares granted will vest and be
distributed in December 2006, providing continued employment with LII. Mr.
Boxer and Mr. McDonough received 30,000 restricted stock awards in July
2003 upon a major management reorganization. PSP awards in December 2002
at a Fair Market Value of $13.375 per share are as follows: Mr. Schjerven
70,800 shares; Dr. Ashenhurst 28,000 shares; Mr. Boxer 28,000 shares; Mr.
McDonough 28,000 shares; and Mr. Edwards 28,000 shares. All December 2002
PSP shares will vest in December 2005 providing performance targets are
met. There were no stock awards in 2001 due to an insufficient number of
shares remaining in the 1998 Plan; therefore, upon Stockholder approval of
additional shares at the 2002 Annual Meeting of Stockholders, the delayed
2001 award was made in May 2002, with the normal grant schedule resuming
in December 2002. PSP awards in May 2002 at a Fair Market Value of $16.21
per share are

as follows: Mr. Schjerven 70,800 shares; Dr. Ashenhurst 28,000 shares; Mr.
Boxer 28,000 shares; Mr. McDonough 28,000 shares; and Mr. Edwards 28,000
shares. All May 2002 PSP shares will vest in December 2004 providing
performance targets are met. For the 2002 and 2001 PSP grants, shares that
do not vest in any performance period due to failure to achieve
performance targets will vest 10 years from the grant date. A special
restricted stock award in July 2002 at a Fair Market Value of $16.21 per
share are as follows: Dr. Ashenhurst 15,500 shares; Mr. Boxer 15,500
shares; Mr. McDonough 15,500 shares; and Mr. Edwards 15,500 shares. For
the July 2002 restricted stock grant, all shares granted will vest and be
distributed in July 2005, providing continued employment with LII.

(3) 2003 amounts represent the value of earned awards in the form of LII
common stock for the PSP for the 2000-2002 performance period, paid in
April 2003. 2002 amounts represent the value of earned awards in the form
of LII common stock for the PSP for the 1999-2001 performance period, paid
in 2002. 2001 amounts represent the value of earned awards in the form of
LII common stock for the PSP for the 1999-2000 performance period, paid in
2001. As discussed in footnote 3 to our financial statements contained in
our Annual Report on Form 10-K for the year ended December 31, 2003, LII
has identified downward adjustments of $1.0 million and $4.6 million
relating, respectively, to 2001 and years prior to 2001. Inclusion of the
relevant adjustment in the 2001 period would have deferred the vesting and
receipt (but not the amount) of the PSP grant for the 2000-2002
performance period until 2009, providing the recipient remains in LII's
employ. Inclusion of the relevant adjustments in the pre-2001 period would
have reduced the amount received by the named executive officers by
$17,000 in the aggregate. Vesting and receipt of this amount would have
been deferred until 2007, provided the recipient remains in LII's employ.
Because Mr. Edwards retired from the company in 2004, his total award for
the 2000-2002 performance period and approximately $5,000 of his award for
the 1999-2000 performance period would have been forfeited.

(4) Composed of contributions by LII to its profit sharing retirement plan and
profit sharing restoration plan and the dollar value of term life
insurance premiums paid by LII. Contributions to the plans were as
follows: In 2003: Mr. Schjerven -- $217,387; Dr. Ashenhurst -- $79,630;
Mr. Boxer -- $69,382, in addition to $46,552 as payment for installation
of LII equipment under executive equipment program; Mr. McDonough --
$67,866; Mr. Edwards -- $68,263. In 2002: Mr. Schjerven -- $133,494; Dr.
Ashenhurst -- $50,953; Mr. Boxer -- $43,642; Mr. McDonough -- $38,001; Mr.
Edwards -- $43,951. In 2001: Mr. Schjerven -- $54,154; Dr. Ashenhurst --
$27,060; Mr. Boxer -- $19,502; Mr. McDonough -- $29,197; Mr. Edwards --
$23,082.

(5) Mr. Edwards announced his upcoming retirement and, therefore, became
ineligible for 2003 long-term incentive awards.

The following table provides information concerning stock options granted to the
named executive officers in 2003.

Option/SAR Grants in Last Fiscal Year

Individual Grants
------------------------------------------------------------------------------
Percent of
Number of Total
Securities Options/SARs
Underlying Granted to Grant Date
Grant Options/SARs Employees in Exercise or Expiration Present
Name Date Granted Fiscal Year Base Price(1) Date Value(2)
- ------------------- -------- ------------ ------------ ------------- ---------- ----------

Robert E. Schjerven.......... 12/11/03 123,902 11.81 $16.76 12/11/10 $784,300
Harry J. Ashenhurst, Ph.D. .. 12/11/03 34,070 3.25 16.76 12/11/10 215,663
Scott J. Boxer............... 12/11/03 34,070 3.25 16.76 12/11/10 215,663
Robert J. McDonough.......... 12/11/03 34,070 3.25 16.76 12/11/10 215,663
Carl E. Edwards, Jr.(3)...... 12/11/03 0 N/A N/A N/A N/A

(1) Equals the Fair Market Value of the LII common stock on the date of grant.

(2) The grant date present values shown in the table were determined using the
Black-Scholes option valuation model using the following assumptions:
stock price volatility of 50.0% which represents an average volatility
among general industry companies; expected option life of 7.0 years;
dividend yield of 2.24%; risk free interest rate of 3.75%; modified
derived value of $6.33, which includes the following additional
assumptions: discounts for the probability of termination for death,
disability, retirement and voluntary/involuntary terminations.

(3) Mr. Edwards announced his upcoming retirement and, therefore, became
ineligible for 2003 long-term incentive awards.

The following table provides the options exercised during 2003 for each of
the named executive officers and the number of options and the value of
unexercised options held by each named executive officer as of December 31,
2003.

Aggregated Option Exercises in Last Fiscal Year and Fiscal Year-End
Option Values

Number of Securities Value of Unexercised
Underlying Unexercised In-the-Money
Options/SARs at Options/SARs
Shares December 31, 2003 at December 31, 2003(1)
Acquired Value --------------------------- --------------------------
Name on Exercise Realized Exercisable Unexercisable Exercisable Unexercisable
- ------------------------ ------------ -------- ----------- ------------- ----------- -------------

Robert E. Schjerven.... 0 $ 0 666,545 347,876 $3,580,974 $625,821
Harry J. Ashenhurst, 0 0 252,823 78,976 1,111,743 127,229
Ph.D...................
Scott J. Boxer......... 0 0 206,691 78,976 899,807 127,229
Robert J. McDonough.... 0 0 209,890 78,976 1,066,996 127,229
Carl E. Edwards, Jr.... 150,000 882,491 102,823 44,906 261,878 120,755

- ----------

(1) Calculated on the basis of the Fair Market Value of the underlying
securities as of December 31, 2003, $16.95 per share, minus the exercise
price for "in-the-money" options.

The following table provides information concerning PSP awards and
restricted stock awards made in 2003 to the named executive officers under the
1998 Plan. The named executive officers were awarded a number of PSP shares of
LII common stock in December 2003 subject to achievement of performance targets
based on the return on invested capital for a three-year period. For PSP grants
made in 2002, information about the portion of the PSP award that becomes vested
regardless of whether the performance goals are met is presented in the notes to
the "Summary Compensation Table" above. Presented below is the maximum number of
PSP shares of LII common stock that may be payable to each of the named
executive officers that is subject to achievement of the performance goals. The
actual number of shares awarded depends on the level of achievement of the
performance objectives. Additionally, the named executive officers were awarded
a restricted stock grant in December 2003 whereby all shares vest in December
2006 providing continued employment.

Long-Term Incentive Plans -- Awards in Last Fiscal Year

Number of Shares, Units Performance or Other Period
Name Date of Grant or Other Rights Until Maturation or Payout
- ----------------------------- ------------- ----------------------- ---------------------------

Robert E. Schjerven.......... 12/11/03 107,902 3 years
Robert E. Schjerven.......... 12/11/03 52,105 3 years
Harry J. Ashenhurst, Ph.D.... 12/11/03 29,670 3 years
Harry J. Ashenhurst, Ph.D.... 12/11/03 14,328 3 years
Scott J. Boxer............... 12/11/03 29,670 3 years
Scott J. Boxer............... 12/11/03 14,328 3 years
Robert J. McDonough.......... 12/11/03 29,670 3 years
Robert J. McDonough.......... 12/11/03 14,328 3 years
Carl E. Edwards, Jr.(1)...... 12/11/03 0 N/A
Carl E. Edwards, Jr.(1)...... 12/11/03 0 N/A

(1) Mr. Edwards announced his upcoming retirement and, therefore, became
ineligible for 2003 long-term incentive awards.

Retirement Plans

The named executive officers participate in four LII-sponsored retirement
plans: the pension plan for salaried employees, the profit sharing retirement
plan, the profit sharing restoration plan and the supplemental retirement plan.
The profit sharing restoration plan and the supplemental retirement plan are
"non-qualified plans" under the Code. LII pays the full cost of each of these
plans.

The pension plan for salaried employees is a floor offset plan. A target
benefit is calculated using credited service and final average pay for the
highest five consecutive years of compensation. The benefit is currently based
on 1.00% of final average pay, plus 0.60% of final average pay above Social
Security covered compensation, multiplied by the number of years of credited
service, not to exceed 30 years. Employees become vested in the pension plan for
salaried employees after five years of service and may commence unreduced
benefits at age 65. Once the specified age and service requirements are met,
benefits may commence earlier on an actuarially reduced basis. At time of
retirement, a participant may choose one of five optional forms of payment.

The profit sharing retirement plan is a "defined contribution plan" under
the Code. Profit sharing contributions, as determined by the Board of Directors,
are credited annually to participants' accounts based on total pay. Participants
are fully vested after six years of service. The assets of the plan are
employer-directed. Distributions may occur at separation of employment and can
be paid directly to the participant.

The profit sharing restoration plan permits accruals that otherwise could
not occur because of Internal Revenue Service limitations on compensation.

The supplemental retirement plan permits income above Internal Revenue
Service limitations to be considered in determining final average pay, doubles
the rate of benefit accrual, limits credited service to 15 years, permits early
retirement on somewhat more favorable terms than the pension plan and provides
for an additional optional form of payment.

The estimates of annual retirement benefits shown in the following table
are the targets established by the supplemental retirement plan. All benefits
are computed as a straight-life annuity and are not subject to deduction for
Social Security.

Years of Service
------------------------------------------------------------------
2003 Final Average Earnings(1) 5 10 15 20 25 30
- ------------------------------ ---------- --------- --------- ---------- --------- ---------

$ 250,000.................... $ 34,780 $ 69,560 $ 104,340 $ 104,340 $ 104,340 $ 104,340
425,000.................... 62,780 125,560 188,340 188,340 188,340 188,340
600,000.................... 90,780 181,560 272,340 272,340 272,340 272,340
775,000.................... 118,780 237,560 356,340 356,340 356,340 356,340
950,000.................... 146,780 293,560 440,340 440,340 440,340 440,340
1,125,000.................... 174,780 349,560 524,340 524,340 524,340 524,340
1,300,000.................... 202,780 405,560 608,340 608,340 608,340 608,340
1,475,000.................... 230,780 461,560 692,340 692,340 692,340 692,340

- ----------

(1) Final Average Earnings are the average of the highest five consecutive
years of includible earnings. Compensation for these purposes includes
salary and bonuses, and excludes extraordinary compensation such as
benefits from the 1998 Plan or its predecessor plans. Bonus numbers used
in these calculations, as per the 1998 Plan requirements, are the bonuses
actually paid in those years. In the "Summary Compensation Table," the
2003 bonus reported is the bonus earned in 2003, but not actually paid
until 2004.

As of December 31, 2003, the final average earnings and the eligible years
of credited service for each of the named executive officers was as follows: Mr.
Schjerven $1,319,354 -- 17.8 years; Dr. Ashenhurst $660,053 -- 15.0 years; Mr.
Boxer $524,822 -- 5.6 years; Mr. McDonough $508,066 -- 8.7 years; Mr. Edwards
$568,761 -- 12.0 years.

EMPLOYMENT AGREEMENTS

LII has entered into employment agreements with the named executive
officers, which are substantially identical except for the name of the named
executive officer who is a party to the agreement and the date of the agreement.
These employment agreements establish the basis of compensation and assignments,
and contain post-employment covenants covering confidential information, the
diverting of employees, vendors and contractors and the solicitation of
customers. These agreements also establish binding arbitration as the mechanism
for resolving disputes and provide benefits and income in the event employment
terminates under specified circumstances. On January 1 of each year, the
agreements automatically renew for an additional year, unless either party
notifies the other, in writing, at least 30 days prior to such date, of a
decision not to renew the agreement.

If LII terminates a named executive officer prior to the expiration of the
term of the agreement or if LII does not renew the agreement for any reason
other than for cause, the employee will be entitled to receive monthly payments
of the greater of the employee's base salary for the remainder of the
agreement's term or three months of the employee's base salary in addition to
any other compensation or benefits applicable to an employee at the employee's
level.

If LII terminates a named executive officer other than for cause,
including LII's non-renewal of the agreement, and the employee agrees to execute
a written general release of any and all possible claims against LII existing at
the time of termination, LII will provide the employee with an enhanced
severance package. This package includes payment of the employee's base monthly
salary for a period of 24 months following the date of termination, a lump sum
in the amount which totals any short-term bonus payments actually paid to the
employee over the 24 month period prior to the date of termination, a lump sum
payment of a sum equal to 10% of the employee's annual base salary in effect at
the time of termination in lieu of perquisites lost, and forgiveness of COBRA
premiums due for group health insurance coverage for up to 18 months following
termination while the employee remains unemployed. If the employee remains
unemployed at the end of 18 months, the equivalent of the COBRA premium will be
paid to the employee

on a month-to-month basis for up to six additional months while the employee
remains unemployed. Outplacement services are provided or, at the employee's
election, a lump-sum payment of 10% of the employee's annual base salary will be
made to the employee in lieu of those services. Additionally, the employee's
beneficiary will receive a lump-sum death benefit equivalent to six months of
the employee's base salary should the employee die while entitled to enhanced
severance payments.

CHANGE OF CONTROL EMPLOYMENT AGREEMENTS

LII has entered into change of control employment agreements with the
named executive officers, which are substantially identical except for the name
of the named executive officer who is a party to the agreement and the date of
the agreement. The change of control agreements provide for certain additional
benefits under specified circumstances if a named executive officer's employment
is terminated following a change of control transaction involving LII. The
change of control agreements are intended to provide protections to the named
executive officers that are not afforded by their existing employment
agreements, but not to duplicate these benefits. The term of the change of
control agreements is generally two years from the date of a change of control
or two years from the date of a potential change of control, as discussed below.
If the named executive officer remains employed at the conclusion of such term,
the officer's existing employment agreement will continue to remain in effect.
The employment rights of the named executive officers under the change of
control agreements would be triggered by either a change of control or a
potential change of control. Following a potential change of control, the term
of the change of control agreement may terminate but the change of control
agreement will remain in force and a new term of the agreement will apply to any
future change of control or potential change of control, if either (a) the Board
of Directors determines that a change of control is not likely or (b) the named
executive officer, upon proper notice to LII, elects to terminate the term of
the officer's change of control agreement as of any anniversary of the potential
change of control.

A "change of control" generally includes the occurrence of any of the
following:

(a) any person, other than specified exempt persons which includes
LII and its subsidiaries and employee benefit plans, becoming
a beneficial owner of 35% or more of the shares of LII voting
securities;

(b) a change in the identity of a majority of the Board of
Directors, unless approved by a majority of the incumbent
members of the Board of Directors;

(1) existing Stockholders would own 65% or less of the
voting securities of the surviving entity;

(2) any person, other than specified exempt persons,
would own 35% or more of the voting securities of the
surviving entity;

(3) less than a majority of the board of the surviving
entity would consist of the then incumbent members of
the Board of Directors; or

(d) approval by the Stockholders of a liquidation or dissolution
of LII, unless such liquidation or dissolution involves a sale
to a company of which following such transaction:

(1) more than 65% of the voting securities of such
company would be owned by existing Stockholders;

(2) no person, other than specified exempt persons, would
own 35% or more of the voting securities of such
company; and

(3) at least a majority of the board of directors of such
company would consist of the then incumbent members
of the Board of Directors.

A "potential change of control" generally includes any of the following:

(a) commencement of a tender or exchange offer for voting stock
that, if consummated, would result in a change of control;

(b) LII entering into an agreement which, if consummated, would
constitute a change of control;

(d) occurrence of any other event that the Board of Directors
determines could result in a change of control.

During the term of the change of control agreement, a named executive
officer's position, authority, duties and responsibilities may not be
diminished, and all forms of compensation, including salary, bonus, regular
salaried employee plan benefits, stock options, restricted stock and other
awards, must continue on a basis no less favorable than at the beginning of the
term of the change of control agreement and, in the case of specified benefits,
must continue on a basis no less favorable in the aggregate than the most
favorable application of such benefits to any of LII's employees.

If a named executive officer terminates employment during the term of the
change of control agreement for good reason or for any reason during a window
period (the 90-day period commencing 366 days after any change of control), LII
will pay such officer:

- his or her then unpaid current salary and a pro rata portion of the
highest bonus earned during the preceding three years, as well as
previously deferred compensation and accrued vacation time;

- a lump-sum cash payment equal to the sum of three times the
officer's annual base salary and three times the highest annual
bonus paid or awarded to the officer during the preceding three
fiscal years;

- a lump-sum cash payment equal to the sum of three times the
officer's annual base salary and three times the highest annual
bonus paid or awarded during the preceding three fiscal years, to
reflect the equity component of the officer's compensation;

- a lump-sum cash payment equal to the sum of 15% of the officer's
annual base salary, in lieu of outplacement services, and three
times 15% of the annual base salary that would have been paid or
awarded to the officer during the fiscal year that includes the date
of termination, for the perquisites component of the officer's
compensation;

- for purposes of LII's supplemental retirement plan and LII's profit
sharing restoration plan, three additional years added to each of
the service and age criteria; and

- continued coverage under LII's employee welfare benefits plans for
up to four and one-half years after termination.

In addition, all options, restricted stock and other compensatory awards
held by the named executive officer will immediately vest and become
exercisable, and the term of these awards will be extended for up to three years
following termination of employment. The named executive officer may also elect
to cash out equity-based compensatory awards at the highest price per share paid
by specified persons during the term of the change of control agreement or the
six-month period prior to the beginning of the term of the change of control
agreement.

In the event of a contest concerning a change of control agreement, unless
the officer's claim is found by a court to be frivolous, LII has no right of
offset, the officer is not required to mitigate damages and LII agrees to pay
any legal fees incurred by the officer in connection with such contest.

LII also agrees to pay all amounts owing to the officer during any period
of dispute, subject only to the officer's agreement to repay any amounts to
which it is determined the officer was not entitled. The change of control
agreements provide for a tax gross-up in the event that specified excise taxes
are applicable to payments made by LII under a change of control agreement or
otherwise. The change of control agreements require the officer to maintain the
confidentiality of LII's information and, for a period of 24 months following
termination of employment, to avoid any attempts to induce LII's employees to
terminate their employment with LII.

INDEMNIFICATION AGREEMENTS

LII has entered into indemnification agreements with its Directors and a
number of its executive officers. Each of these indemnification agreements is
substantially identical except for the name of the Director or executive officer
who is a party to the agreement and the date of the agreement. Under the terms
of the indemnification agreements, LII has generally agreed to indemnify, and
advance expenses to, each indemnitee to the fullest extent permitted by
applicable law on the date of the agreements and to such greater extent as
applicable law may at a future time permit. In addition, the indemnification
agreements contain specific provisions pursuant to which LII has agreed to
indemnify each indemnitee:

- if such person is, by reason of his or her status as a Director,
nominee for Director, officer, agent or fiduciary of LII or of any
other corporation, partnership, joint venture, trust, employee
benefit plan or other enterprise with which such person was serving
at LII's request, any such status being referred to as a "Corporate
Status," made or threatened to be made a party to any threatened,
pending or completed action, suit, arbitration, alternative dispute
resolution mechanism, investigation or other proceeding, other than
a proceeding by or in the right of LII;

- if such person is, by reason of his or her Corporate Status, made or
threatened to be made a party to any proceeding brought by or in the
right of LII to procure a judgment in its favor, except that no
indemnification shall be made in respect of any claim, issue or
matter in such proceeding as to which such indemnitee shall have
been adjudged to be liable to LII if applicable law prohibits such
indemnification, unless and only to the extent that a court shall
otherwise determine;

- against expenses actually and reasonably incurred by such person or
on his or her behalf in connection with any proceeding to which such
indemnitee was or is a party by reason of his or her Corporate
Status and in which such indemnitee is successful, on the merits or
otherwise;

- against expenses actually and reasonably incurred by such person or
on his or her behalf in connection with a proceeding to the extent
that such indemnitee is, by reason of his or her Corporate Status, a
witness or otherwise participates in any proceeding at a time when
such person is not a party in the proceeding; and

- against expenses actually and reasonably incurred by such person in
certain judicial adjudications of or awards in arbitration to
enforce his or her rights under the indemnification agreements.

In addition, under the terms of the indemnification agreements, LII has
agreed to pay all reasonable expenses incurred by or on behalf of an indemnitee
in connection with any proceeding, whether brought by or in the right of LII or
otherwise, in advance of any determination with respect to entitlement to
indemnification and within 15 days after the receipt by LII of a written request
from such indemnitee for such payment. In the indemnification agreements, each
indemnitee has agreed that he or she will reimburse and repay LII for any
expenses so advanced to the extent that it shall ultimately be determined that
he or she is not entitled to be indemnified by LII against such expenses.

The indemnification agreements also include provisions that specify the
procedures and presumptions which are to be employed to determine whether an
indemnitee is entitled to indemnification. In some cases, the nature of the
procedures specified in the indemnification agreements varies depending on
whether LII has undergone a change of control.

CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS

John W. Norris, Jr., LII's Chairman of the Board, Stephen R. Booth, Thomas
W. Booth, David V. Brown and John W. Norris III, each a Director of LII, as well
as other LII Stockholders who may be immediate family members of the foregoing
persons, are, individually or through trust arrangements, members of AOC Land
Investment, L.L.C. AOC Land Investment, L.L.C. owns 70% of AOC Development II,
L.L.C., which owns substantially all of One Lake Park, L.L.C. LII is leasing
part of an office building owned by One Lake Park, L.L.C. for use as the LII
corporate headquarters. The lease, initiated in 1999, has a term of 25 years and
the lease payments for 2003 totaled approximately $2.9 million. LII also leased
a portion of Lennox Center, a retail complex owned by AOC Development, L.L.C.,
for use as offices. The Lennox Center lease had a term of three years, which
terminated in March 2003. The lease payments for 2003 totaled approximately
$20,430. AOC Land Investment, L.L.C. also owns 70% of AOC Development, L.L.C.
LII believes that the terms of its leases with One Lake Park, L.L.C. and AOC
Development, L.L.C. are comparable to terms that could be obtained from
unaffiliated third parties.

These transactions were not the result of arms-length negotiations.
Accordingly, certain of the terms of these transactions may be more or less
favorable to LII than might have been obtained from unaffiliated third parties.
LII does not intend to enter into any future transactions in which its
Directors, executive officers or principal Stockholders and their affiliates
have a material interest unless such transactions are approved by a majority of
the disinterested members of its Board of Directors and are on terms that are no
less favorable to it than those that it could obtain from unaffiliated third
parties.

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

During the fiscal year 2003, the Compensation Committee was composed of
Richard L. Thompson, Janet K. Cooper, James J. Byrne and John E. Major. No
member of the Compensation Committee was an officer or employee of LII or any of
its subsidiaries. None of the LII executive officers served on the board of
directors or on the compensation committee of any other entity, for which any
officers of such other entity served either on our Board or on our Compensation
Committee. For information on insider participation, see "Certain Relationships
and Related Party Transactions."