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EXHIBIT 4.4
LENNOX INTERNATIONAL, INC.
NONEMPLOYEE DIRECTORS' COMPENSATION
AND DEFERRAL PLAN
JANUARY 1, 1999
I. OBJECTIVE AND PURPOSE:
The purpose of the NONEMPLOYEE DIRECTORS' COMPENSATION AND
DEFERRAL PLAN, (the "Plan") is to provide a procedure whereby members of the
Board of Directors of LENNOX INTERNATIONAL, INC. (the "Company") who are not
also employees of the Company may enter into a contractual agreement to receive
all or part of the annual cash retainer payable by the Company to the Directors
on account of their services as Directors (excluding fees payable to Directors
for services as members of one or more committees of the Board) in the form of
common stock of the Company, and, to the extent not taken in stock, to defer 25
percent or more of the cash retainer to the Director's termination of service on
the Board of Directors.
II. PLAN ADMINISTRATION:
The Plan will be administered by the Company's Board of
Directors (the "Board"). Full power to interpret, construe and administer the
Plan shall, except as otherwise provided in this Plan, be vested in the Board.
All actions of the Board shall be by majority vote. The expense of administering
the Plan shall be borne by the Company and shall not be charged against benefits
payable hereunder. No member of the Board may participate in any decision
affecting his particular participation, benefits or any other right or
obligation affecting him hereunder.
III. ELIGIBILITY AND PARTICIPATION:
Directors of the Company who are not full-time employees of
the Company are eligible to participate in the Plan. Amounts subject to deferral
will be evidenced by an individual Deferred Compensation Agreement (the
"Agreement") between the Company and the individual Director. Each such
Agreement shall indicate the amount to be deferred and the Beneficiary or
Beneficiaries to receive payment in the event of the Director's death.
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IV. ELECTIONS:
The annual retainer paid to a Director by the Company shall be
paid in equal quarterly installments in the form of common stock of the Company
("Shares") and in cash in such proportions as may be elected hereunder by the
Director; provided, however, that a minimum amount each year, currently $5,000,
and as hereafter established by the Board, shall be paid to the Director in
Shares. The number of whole Shares to be transferred to a Director each quarter
shall be determined by dividing the amount of the retainer to be paid in Shares
that quarter by the fair market value of a Share as of the last business day
preceding the date of such determination. For this purpose, fair market value
shall mean the value determined most recently by an independent appraiser if
shares are not then publicly traded, or the closing price on the principal stock
exchange on which such Shares are listed, if Shares are then publicly traded.
Prior to the beginning of a calendar year, or prior to the beginning of his
tenure if the Director begins service during a year, the Director may elect to
defer payment of at least 25 percent, and up to the entire amount of the annual
cash retainer to be paid to such Director for services to be rendered in his
capacity as a Director during the calendar year. The Director shall execute his
Agreement to participate in the Plan on a form provided by the Board. An
election to defer a cash retainer shall be irrevocable once made, and it shall
continue to be effective in succeeding years unless revoked or revised at least
30 days prior to the beginning of any calendar year.
V. MAINTENANCE OF ACCOUNT:
The Company shall credit to an account established on the
Company's books in the name of each participating Director the amount elected to
be deferred for each year by the Director. Interest shall be credited to each
such account on a monthly basis at an annual rate equal to the prime rate
charged by the Company's lenders plus one percent per annum.
VI. DISTRIBUTION OF BENEFITS UNDER THE PLAN:
Subject to the terms and conditions mentioned below, the value
of a Director's account under the Plan shall be paid in a cash lump sum as soon
as practicable following the Director's termination of service as a director of
the Company. If the Director has elected, on a form provided by the Board, not
later than the calendar year prior to such Director's termination, his payments
shall be in the form of annual installments over a period of three years,
beginning as soon as practicable following the termination of the Participant's
directorship with the Company.
(a) Attainment of Age 70.
Notwithstanding anything herein to the contrary, upon
a Director's attainment of age 70, the value of his account shall be
paid, in a lump sum or installments, as previously elected by the
Director.
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(b) Death of a Director.
In the event that a Director shall die at any time
prior to the complete distribution of all amounts payable to him under
the Plan, the remaining unpaid value of his account shall be paid to
the Beneficiary or Beneficiaries designated by the Director, or in the
absence of any such designation, to his estate.
(c) Acceleration of Payment.
Notwithstanding anything herein to the contrary, the
value of a Director's account shall be paid to him in a lump sum as
soon as practicable following: (1) his termination of service due to
disability; (2) a Change of Control (as defined in Exhibit A hereto) of
the Company or (3) a severe financial hardship of the Director, as
determined in the sole discretion of the Board.
VII. ASSIGNMENT:
No Director or Beneficiary of a Director shall have any right
to assign, pledge, hypothecate, anticipate or in any way create a lien upon any
amounts payable hereunder. No amounts payable hereunder shall be subject to
assignment or transfer or otherwise be alienable, either by voluntary or
involuntary act or by operation of law, or subject to attachment, execution,
garnishment, sequestration or other seizure under any legal, equitable or other
process, or be liable in any way for the debts or defaults of a Director.
VIII. WITHHOLDING:
Any taxes required to be withheld from payments to a Director
hereunder shall be deducted and withheld by the Company.
IX. AMENDMENT AND TERMINATION:
This Plan may be amended in whole or in part, prospectively or
retroactively, by action of the Company's Board of Directors and may be
terminated at any time by action of the Board of Directors; provided, however,
that no such amendment or termination shall reduce any amount payable hereunder
to the extent such amount accrued prior to the date of amendment or termination.
X. RIGHTS TO PARTICIPATION:
The Company's sole obligation to Directors and their
Beneficiaries shall be to make payment as provided hereunder and in any
Agreement. All payments shall be made from the general assets of the Company and
no Director shall have any right hereunder to any specific assets of the
Company.
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XI. BINDING PROVISIONS:
All of the provisions of this Plan shall be binding upon all
persons who shall be entitled to any benefits hereunder, and their heirs and
personal representatives.
XII. EFFECTIVE DATE:
This Plan shall be effective for compensation earned
commencing January 1, 1999.
XIII. GOVERNING LAW:
This Plan and all determinations made and actions taken
pursuant hereto shall be governed by the law of the State of Texas and shall be
construed accordingly.
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EXHIBIT A
As used in this Exhibit A, the terms set forth below shall have the
following respective meanings:
"Beneficial Owner" shall mean, with reference to any
securities, any Person if:
(i) such Person is the "beneficial owner" of (as
determined pursuant to Rule 13d-3 of the General Rules and Regulations
under the Exchange Act, as in effect on the date of this Agreement)
such securities; provided, however, that a Person shall not be deemed
the "Beneficial Owner" of, or to "beneficially own," any security under
this subsection (i) as a result of an agreement, arrangement or
understanding to vote such security if such agreement, arrangement or
understanding: (x) arises solely from a revocable proxy or consent
given in response to a public (i.e., not including a solicitation
exempted by Rule 14a-2(b)(2) of the General Rules and Regulations under
the Exchange Act) proxy or consent solicitation made pursuant to, and
in accordance with, the applicable provisions of the General Rules and
Regulations under the Exchange Act and (y) is not then reportable by
such Person on Schedule 13D under the Exchange Act (or any comparable
or successor report); or
(ii) such Person is a member of a group (as that term
is used in Rule 13d- 5(b) of the General Rules and Regulations under
the Exchange Act) that includes any other Person that beneficially owns
such securities;
provided, however, that a Person shall not be deemed the "Beneficial Owner" of,
or to "beneficially own" any security held by a Norris Family Trust with respect
to which such Person acts in the capacity of trustee, personal representative,
custodian, administrator, executor or other fiduciary; provided, further, that
nothing in this definition shall cause a Person engaged in business as an
underwriter of securities to be the Beneficial Owner of, or to "beneficially
own," any securities acquired through such Person's participation in good faith
in a firm commitment underwriting until the expiration of forty days after the
date of such acquisition. For purposes hereof, "voting" a security shall include
voting, granting a proxy, consenting or making a request or demand relating to
corporate action (including, without limitation, a demand for a stockholder
list, to call a stockholder meeting or to inspect corporate books and records)
or otherwise giving an authorization (within the meaning of Section 14(a) of the
Exchange Act) in respect of such security.
The terms "beneficially own" and "beneficially owning" shall
have meanings that are correlative to this definition of the term "Beneficial
Owner."
"Change of Control" shall mean any of the following occurring
on or after the effective date of the Plan:
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(i) Any Person (other than an Exempt Person) shall
become the Beneficial Owner of 35% or more of the shares of Common
Stock then outstanding or 35% or more of the combined voting power of
the Voting Stock of the Company then outstanding; provided, however,
that no Change of Control shall be deemed to occur for purposes of this
subsection (i) if such Person shall become a Beneficial Owner of 35% or
more of the shares of Common Stock or 35% or more of the combined
voting power of the Voting Stock of the Company solely as a result of
(x) an Exempt Transaction or (y) an acquisition by a Person pursuant to
a reorganization, merger or consolidation, if, following such
reorganization, merger or consolidation, the conditions described in
clauses (x), (y) and (z) of subsection (iii) of this definition are
satisfied;
(ii) Individuals who, as of the effective date of the
Plan, constitute the Board (the "Incumbent Board") cease for any reason
to constitute at least a majority of the Board; provided, however, that
any individual becoming a director subsequent to the effective date of
the Plan whose election, or nomination for election by the Company's
shareholders, was approved by a vote of at least a majority of the
directors then comprising the Incumbent Board shall be considered as
though such individual were a member of the Incumbent Board; provided,
further, that there shall be excluded, for this purpose, any such
individual whose initial assumption of office occurs as a result of any
actual or threatened election contest that is subject to the provisions
of Rule 14a-11 under the Exchange Act;
(iii) Approval by the shareholders of the Company of
a reorganization, merger or consolidation, in each case, unless,
following such reorganization, merger or consolidation, (x) more than
65% of the then outstanding shares of common stock of the corporation
resulting from such reorganization, merger or consolidation and the
combined voting power of the then outstanding Voting Stock of such
corporation is beneficially owned, directly or indirectly, by all or
substantially all of the Persons who were the Beneficial Owners of the
outstanding Common Stock immediately prior to such reorganization,
merger or consolidation (ignoring, for purposes of this clause (x), the
first proviso in the definition of "Beneficial Owner" set forth above)
in substantially the same proportions as their ownership immediately
prior to such reorganization, merger or consolidation of the
outstanding Common Stock, (y) no Person (excluding any Exempt Person or
any Person beneficially owning, immediately prior to such
reorganization, merger or consolidation, directly or indirectly, 35% or
more of the Common Stock then outstanding or 35% or more of the
combined voting power of the Voting Stock of the Company then
outstanding) beneficially owns, directly or indirectly, 35% or more of
the then outstanding shares of common stock of the corporation
resulting from such reorganization, merger or consolidation or the
combined voting power of the then outstanding Voting Stock of such
corporation and (z) at least a majority of the members of the board of
directors of the corporation resulting from such reorganization, merger
or consolidation were members of the Incumbent Board at the time of the
execution of the initial agreement or initial action by the Board
providing for such reorganization, merger or consolidation; or
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(iv) Approval by the shareholders of the Company of
(x) a complete liquidation or dissolution of the Company, unless such
liquidation or dissolution is approved as part of a plan of liquidation
and dissolution involving a sale or disposition of all or substantially
all of the assets of the Company to a corporation with respect to
which, following such sale or other disposition, all of the
requirements of clauses (y)(A), (B) and (C) of this subsection (iv) are
satisfied, or (y) the sale or other disposition of all or substantially
all of the assets of the Company, other than to a corporation, with
respect to which, following such sale or other disposition, (A) more
than 65% of the then outstanding shares of common stock of such
corporation and the combined voting power of the Voting Stock of such
corporation is then beneficially owned, directly or indirectly, by all
or substantially all of the Persons who were the Beneficial Owners of
the outstanding Common Stock immediately prior to such sale or other
disposition (ignoring, for the purposes of this clause (y)(A), the
first proviso in the definition of "Beneficial Owner" set forth above)
in substantially the same proportions as their ownership, immediately
prior to such sale or other disposition, of the outstanding Common
Stock, (B) no Person (excluding any Exempt Person and any Person
beneficially owning, immediately prior to such sale or other
disposition, directly or indirectly, 35% or more of the Common Stock
then outstanding or 35% or more of the combined voting power of the
Voting Stock of the Company then outstanding) beneficially owns,
directly or indirectly, 35% or more of the then outstanding shares of
common stock of such corporation and the combined voting power of the
then outstanding Voting Stock of such corporation and (C) at least a
majority of the members of the board of directors of such corporation
were members of the Incumbent Board at the time of the execution of the
initial agreement or initial action of the Board providing for such
sale or other disposition of assets of the Company.
"Common Stock" shall mean the common stock, par value $.01 per
share, of the Company.
"Exchange Act" shall mean the Securities Exchange Act of 1934,
as amended.
"Exempt Person" shall mean (i) the Company, any subsidiary of
the Company, any employee benefit plan of the Company or any subsidiary of the
Company, and any Person organized, appointed or established by the Company for
or pursuant to the terms of any such plan and (ii) any Person who is shown under
the caption "Principal and Selling Stockholders" in the Company's Registration
Statement on Form S-1 related to the initial public offering of the Common Stock
as beneficially owning (as determined pursuant to Rule 13d-3 of the General
Rules and Regulations under the Exchange Act, as in effect on the date of this
Agreement) five percent or more of the Common Stock unless and until such Person
individually becomes the Beneficial Owner, other than as a result of a
distribution from a Norris Family Trust, of an amount of Common Stock that is
103% or more of the amount of such Common Stock beneficially owned by such
Person on the date the Registration Statement is declared effective by the
Securities and Exchange Commission.
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"Exempt Transaction" shall mean an increase in the percentage
of the outstanding shares of Common Stock or the percentage of the combined
voting power of the outstanding Voting Stock of the Company beneficially owned
by any Person solely as a result of a reduction in the number of shares of
Common Stock then outstanding due to the repurchase of Common Stock by the
Company, unless and until such time as such Person shall purchase or otherwise
become the Beneficial Owner of additional shares of Common Stock constituting 3%
or more of the then outstanding shares of Common Stock or additional Voting
Stock representing 3% or more of the combined voting power of the then
outstanding Voting Stock.
"Norris Family Trust" shall mean any trust, estate,
custodianship or other fiduciary arrangement (collectively, a "Family Entity")
formed, owned, held, or existing primarily for the benefit of the lineal
descendants of D.W. Norris, but only if such Family Entity shall not at any time
hold Common Stock or Voting Stock of the Company with the primary purpose of
effecting with respect to the Company (i) an extraordinary corporate
transaction, such as a merger, reorganization or liquidation (ii) a sale or
transfer of a material amount of assets, (iii) any material change in
capitalization, (iv) any other material change in business or corporate
structure or operations, (v) changes in corporate charter or bylaws, or (vi) a
change in the composition of the Board or of the members of senior management.
"Person" shall mean any individual, firm, corporation,
partnership, association, trust, unincorporated organization or other entity.
"Voting Stock" shall mean, with respect to a corporation, all
securities of such corporation of any class or series that are entitled to vote
generally in the election of directors of such corporation (excluding any class
or series that would be entitled so to vote by reason of the occurrence of any
contingency, so long as such contingency has not occurred).
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