EXHIBIT 10.1
July 31, 2000
Employee
Address
Dear ______:
Lennox International Inc. ("Lennox") recognizes you as a key employee, important
to its future profitability, growth and financial strength. Accordingly, Lennox
proposes to enter into an agreement with you to establish certain terms of your
employment, including a specified duration or term of employment, the basis for
your compensation and assignments, certain post-employment covenants, mechanisms
to resolve disputes and certain benefits and income to you in the event you
leave the employ of Lennox under certain specified circumstances (the
"Agreement"). We believe the Agreement benefits both you and Lennox by
clarifying your employment relationship so that we all understand its terms. The
Agreement provides you with greater certainty and security with various aspects
of your employment relationship, as well as provides you with information to
assist you with future financial planning. In that same regard, the Agreement
assists Lennox in its own financial and business planning. The purpose of this
letter is to describe the terms of your employment with Lennox after the
effective date of this Agreement. You had originally entered into an employment
agreement with Lennox, dated _____________ (the "Original Agreement"), which
both you and Lennox now wish to amend and restate as provided in this Agreement.
The term "Employee" will be used to refer to you in this Agreement where
appropriate. The controlling terms of this Agreement are set forth in the body
of this letter Agreement as well as in the Exhibits to this Agreement which are
incorporated by reference. The specific terms of the Exhibits are controlling
should there be any confusion or conflict between them and this letter. With the
signing by both parties of this Agreement, you and Lennox will have agreed to
the following:
1. NATURE OF EMPLOYMENT. You and Lennox have agreed that your employment
relationship with Lennox will no longer be "at will" and terminable by
either party at any time. Instead, this employment relationship will be
governed by the terms of this Agreement for as long as it remains in effect
and even after its termination for any provisions, which by their terms
survive. The terms agreed upon by you and Lennox provide the consideration
and inducement for each party to enter into this Agreement and are
described more fully throughout the body of this Agreement and the attached
Exhibits A through C.
<PAGE>
2. TERM OF AGREEMENT; TERMINATION DATE. This Agreement will become effective
on the date of signing this Agreement by both parties (the "Effective
Date") and the Original Agreement, as now amended and restated, will be in
effect until December 31 of that year and thereafter for a series of
one-year terms.
3. TERMINATION OF EMPLOYMENT. Your employment with Lennox may be terminated
for a number of reasons prior to the expiration of any term of this
Agreement as described below. The rights of each party under each
circumstance will vary and are described in the attached Exhibits. More
specifically, if Lennox terminates your employment for any reason other
than for "Cause", as defined in Section B.3 of Exhibit A, you will be
entitled to receive, in addition to any other compensation or benefits
described in Section B.2 of Exhibit A, severance benefits consisting of
either the Normal Severance Payment defined in Section 2 of Exhibit C or
the Enhanced Severance Payment defined in Section 3 of Exhibit C as
determined by those provisions. However, the provisions of Sections
C.2(a)-(d) of Exhibit A will continue to be effective after the termination
of this Agreement regardless of the reason for your termination.
a. TERMINATION BY EMPLOYEE. You may terminate your employment at any time
upon 30 days notice to Lennox (or a lesser period if approved by
Lennox) of your intent to terminate or not to renew this Agreement
and, in that event, Lennox shall be obligated only to pay you your
Base Salary and other applicable benefits provided to employees in
your position that are effective at the time of the voluntary
resignation up to the effective date of the termination only.
b. TERMINATION FOR CAUSE. Lennox may terminate your employment, at any
time, for Cause, as defined in Section B.3 of Exhibit A, to be
effective immediately upon delivery to you of notice of termination.
If Lennox terminates you for Cause, you are only entitled to receive
your Base Salary and other applicable benefits provided to employees
in your position that are effective at the time of termination up
through the effective date of termination.
c. TERMINATION OTHER THAN FOR CAUSE. Your employment may also be
terminated by Lennox other than for Cause at any time (including
Lennox' non-renewal of the Agreement) but such a decision triggers
certain defined benefits for you. In the event Lennox elects to
terminate you under this provision, Lennox agrees to pay either the
Normal Severance Payment as defined in Section 2 of Exhibit C or,
solely at your option, the Enhanced Severance Payment as defined in
Section 3 of Exhibit C, provided you comply with all requirements
described in Section 3 of Exhibit C. These benefits are contractually
defined by this Agreement and are not dependent on the other benefits
policies of Lennox at the time of your termination.
d. TERMINATION AS A RESULT OF DISABILITY OR DEATH. Should you die or
become permanently disabled (completely unable to perform your duties
as defined in the
2
<PAGE>
benefit plans of Lennox) during the term of this Agreement, your
employment will be terminated effective as of the date of your death
or permanent disability.
e. WITHHOLDINGS FROM PAYMENT/OFFSET. Any payments made by Lennox to
you under Section 3 will be subject to all applicable local, state,
federal or foreign taxes, including, without limitation, income tax,
withholding tax, and social security tax. Further, to the extent you
have, on the date of termination, any outstanding debts or financial
obligations to Lennox, including, but not limited to, loans,
overpayment of wages, bonuses or other forms of incentive payments,
unauthorized travel or purchasing expenses, or theft of Lennox' funds
or property, you agree that Lennox shall be entitled to set off
against and withhold from such payments due you for such debts or
obligations.
4. NONPAYMENT UPON BREACH. Notwithstanding anything in this Agreement to
the contrary, at any time after the date of termination, if you, by any
intentional or grossly negligent action or omission to act, breach any
covenant, agreement, condition or obligation contained herein, Lennox is
entitled to cease making any payments and to cease providing any of the
benefits to you under this Agreement. Additionally, Lennox reserves the
right to seek repayment of any amounts previously paid hereunder along with
recovery of any other damages caused by you.
5. RESOLUTION OF DISPUTES. In the event that any employment dispute as
defined in Section A of Exhibit B arises between Lennox and any Employee,
the parties involved will make all efforts to resolve any such dispute
through informal means. If these informal attempts at resolution fail,
Lennox and the Employee agree to and shall submit the dispute to final and
binding arbitration pursuant to the policy and terms outlined in Exhibit B,
to which the parties expressly agree to be bound. The parties fully and
completely understand and agree that arbitration is the exclusive forum for
all such arbitrable disputes and that the parties are giving up all rights
to a court trial or jury trial; however, the parties, by agreeing to the
policy for resolution of disputes outlined in Exhibit B are not waiving any
substantive rights or remedies to which they would otherwise be entitled.
6. WAIVER, MODIFICATION, AND INTEGRATION. The waiver by any party hereto of
a breach of any provision of this Agreement shall not operate or be
construed as a waiver of any subsequent breach by any party. This
Agreement, which includes all Exhibits referenced or attached, expresses
the entire agreement of the parties concerning matters contained herein and
supersedes all prior and contemporaneous representations, understandings
and agreement, either oral or in writing, between the parties hereto with
respect to such matters and all such prior or contemporaneous
representations, understandings and agreements, both oral and written, are
hereby terminated. This Agreement may not be modified, altered or amended
except by written agreement of the Employee and the Chief Executive
Officer, except when the Chief Executive Officer is involved, and in that
event, an official designated by the Board of Directors for Lennox.
3
<PAGE>
7. BINDING EFFECT. This Agreement shall be binding and effective upon
Lennox and its successors and permitted assigns, and upon the Employee,
Employee's heirs and representatives. The Employee hereby represents and
warrants to Lennox that Employee has not previously assumed any obligations
inconsistent with those contained in this Agreement, including, but not
limited to, covenants not to compete with another person, firm, corporation
or other entity.
8. GOVERNING LAW, VENUE AND PERSONAL JURISDICTION. It is the intention of
the parties that the laws of the State of Texas should govern the validity
of this Agreement, the construction of its terms, and the interpretation of
the rights and duties of the parties hereto. The parties agree that venue
for all disputes shall be in Dallas County, Texas. The parties further
agree to submit to personal jurisdiction in Dallas County, Texas.
Sincerely,
LENNOX INTERNATIONAL INC.
By: ______________________________
Robert E. Schjerven
ACCEPTED AND AGREED this ______ day of _______________, 2000.
EMPLOYEE
------------------------------
Signature
------------------------------
Printed Name
4
<PAGE>
EXHIBIT A
TERMS OF EMPLOYMENT
The following are the specific agreements of Lennox and the Employee providing
the details and basis for this Agreement and are intended by each as its
consideration to induce the other party to enter into this Agreement. Each party
agrees that the consideration provided by the other is adequate for its
agreements to the following terms:
A. RENEWAL. On January 1 of each year (the "Anniversary Date") after the
end of the first term and for each year thereafter, this Agreement will be
automatically renewed for an additional year, unless either party notifies
the other, in writing, at least 30 days prior to the Anniversary Date, that
it does not wish to renew the Agreement. No reason need be given by either
party for the non-renewal of the Agreement. If Lennox elects not to renew,
however, Employee is nevertheless entitled to the benefits provided in this
Agreement, subject to all of its provisions. If Employee elects not to
renew, Employee will receive only those benefits provided upon voluntary
termination as described in Section 3(a) of the letter agreement.
B. AGREEMENTS BY LENNOX.
1. EMPLOYEE DUTIES. Lennox will assign to the Employee such duties and
responsibilities that would appropriately be performed by an employee
holding Employee's position and/or job title on a permanent basis as
it deems consistent with the Employee's qualifications and experience
provided, however, that Lennox can assign other duties on a temporary
basis. Lennox retains the right to change such duties and to change
the location of the Employee's assignment as and when it deems
appropriate.
2. EMPLOYEE COMPENSATION. Employee shall receive a salary of that
amount in effect at the initial effective or subsequent renewal dates
of this Agreement (as may be, from time to time, adjusted in
accordance with Lennox' applicable salary policies which may be
changed by Lennox in its sole discretion), payable in accordance with
the then applicable payroll policies and subject to all required and
authorized withholdings and deductions ("Base Salary"). When
calculated on an annual basis, this is referred to as Annual Base
Salary, and when calculated on a monthly basis, this is referred to as
Monthly Base Salary. The Base Salary will be set in accordance with
Lennox' policy regarding salaries and will not be reduced during the
annual term of the Agreement unless Employee's job duties are changed,
in which circumstance Lennox reserves the right to lessen Employee's
compensation by no more than ten percent for the remainder of the year
without such change amounting to a breach or termination of this
Agreement. Employee is also entitled to such short
A1
<PAGE>
term bonuses, stock options, long-term incentive program payments and
fringe benefits as are applicable to employees in your position
pursuant to Lennox' then applicable policies and plans. Benefits may
be subject to periodic review and may be changed by Lennox in its sole
discretion.
3. TERMINATION FOR CAUSE DEFINED. Lennox may terminate Employee's
employment, at any time, for Cause as set forth in Section 3(b) of the
body of the Letter Agreement. "Cause" is defined as (a) any violation
by an Employee of Lennox' written policies as they may exist or be
created or modified from time to time in the future, including, as
examples and not as a limitation of the policies to which an Employee
may be subject, those policies prohibiting discrimination in the
workplace, including the prohibition of harassment, on the ground of
race, sex, religion, age or any other prohibited basis; (b) any state
or federal criminal conviction, including, but not limited to, entry
of a plea of nolo contendere or deferred adjudication upon a felony or
misdemeanor charge; (c) the commission by Employee of any material act
of misconduct or dishonesty; (d) any intentional or grossly negligent
action or omission to act which breaches any covenant, agreement,
condition or obligation contained in this Agreement; or (e) acts that
in any way have a direct, substantial and adverse effect on Lennox'
reputation.
Lennox' termination for Cause determination is subject to the
Employee's rights to a resolution of a dispute of that determination
as provided in Exhibit B of this Agreement.
4. PAYMENTS UPON DISABILITY OR DEATH. In the event Employee dies or
becomes permanently disabled during the term of the Agreement,
Employee or Employee's designated beneficiaries will be entitled to
the payments described in Section 3(c) of the Agreement, together with
any other benefits provided to employees in an equivalent position in
effect at that time. Should Employee die during the severance period,
all payments of severance amounts shall cease upon the later of
Employee's death or the expiration of the twenty-fourth month after
the date of Employee's termination in the event the employee has
agreed to the terms of the enhanced severance benefit. Any payments
after Employee's death that may be due hereunder will be paid to
Employee's beneficiary named in connection with Exhibit D of this
Agreement, or if no such designation has been made by Employee, then
to Employee's executors, administrators, heirs, personal
representatives, successors, or assigns, as the case may be.
C. AGREEMENTS BY EMPLOYEE.
1. EFFORT AND COOPERATION. Employee agrees to devote his or her full
efforts and time to the performance of this Agreement and shall not,
without the prior written consent of the Chief Executive Officer, or
in the event the Chief Executive Officer is
A2
<PAGE>
involved, a designee assigned by the Board of Directors, engage in any
other employment, business or other activity that would materially
interfere with the performance of his or her duties under this
Agreement. Employee further agrees that following his or her
termination from employment, Employee will provide reasonable
cooperation with and assistance to Lennox in all respects, including,
but not limited to, the transition of his or her duties and
responsibilities, cooperation on any project for a reasonable period
not to exceed six months, or any litigation involving Lennox related
to your employment at Lennox at any time such litigation may occur.
Lennox will reimburse the Employee any reasonable expenses incurred.
2. PROTECTIVE COVENANTS. Employee recognizes that Employee's employment
by Lennox is one of the highest trust and confidence. In return for
the Employee's agreement to the protective covenants herein, Lennox
agrees that the (i) Employee will become fully familiar with many
aspects of Lennox' business, including future changes customarily
related to the performance of the duties of Employee's position during
the term of the Agreement, (ii) Employee will be given access to
proprietary confidential information of Lennox or its customers and
other information which is of special and peculiar commercial or
competitive value to Lennox or its customers for use in connection
with Lennox' business, which proprietary confidential information is
for the sole and exclusive benefit of Lennox, (iii) Employee will be
given all specialized training necessary to perform his or her
assigned duties, and (iv) Employee will be provided with Lennox'
goodwill in dealing with customers, vendors and potential business
contacts.
Employee acknowledges and agrees that if any such proprietary and
confidential information of either Lennox or its customers were to
become known by any persons outside of Lennox with a need to have such
information, hardship, loss or irreparable injury and damage could
result to Lennox or its customers which would be difficult if not
impossible to measure. Therefore, Employee agrees that (i) it is
necessary for Lennox to protect its business and that of its customers
from such damage, (ii) that the information is of a confidential
nature, (iii) that the following covenants constitute a reasonable and
appropriate means, consistent with the best interests of both Employee
and Lennox, to protect Lennox and its customers against such damage
and to protect the value of their confidential proprietary
information, (iv) that the following covenants are agreed to as a term
and condition of Employee's continued employment with Lennox and are
supported by adequate consideration from Lennox, and (v) shall apply
to and be binding upon Employee as provided herein:
a. TRADE SECRETS, PROPRIETARY AND CONFIDENTIAL INFORMATION.
Employee will have access to, and contact with certain trade
secrets and confidential and proprietary information of
Lennox, including, without limitation, unique skills,
concepts, sales presentations, marketing programs, marketing
strategy,
A3
<PAGE>
business practices, methods of operation, systems, sales
methods, proposals, customer lists, customer leads,
documents identifying past, present and future customers,
hiring and training methods, financial and other customer
data, lists of agents, and other confidential information
("Trade Secrets"). Employee agrees to protect and safeguard
the Trade Secrets, business practices, and confidential and
proprietary information of Lennox. Employee further agrees
and covenants that, except as may be required by Lennox in
connection with this Agreement, or with the prior written
consent of Lennox, Employee shall not, either during his or
her employment with Lennox or thereafter, directly or
indirectly, use for Employee's own benefit or for the
benefit of another, disclose, disseminate, or distribute to
another, any Trade Secret, business practice, or
confidential or proprietary information (whether or not
acquired, learned, obtained, or developed by Employee alone
or in conjunction with others) of Lennox or of others with
whom Lennox has a business relationship. Such Trade Secrets,
business practices, and confidential and proprietary
information include, but are not limited to, Lennox'
patents, trademarks, licenses and technical information
concerning its operations, data bases, Lennox' sales
information and marketing strategy, the identities of
Lennox' customers, contractors, suppliers, and others with
whom Lennox has a business relationship, Lennox arrangements
with such parties, Lennox' customer list and Lennox' pricing
policies and strategy. All memoranda, notes, records,
drawings, documents, or other writings whatsoever made,
compiled, acquired, or received by Employee during the term
of Employee's employment with Lennox, arising out of, in
connection with, or related to any activity or business of
Lennox, including, but not limited to, Lennox' customers,
contractors, suppliers, or others with whom Lennox has a
business relationship, Lennox' arrangements with such
parties, and Lennox' pricing policies and strategy, are, and
shall continue to be, the sole and exclusive property of
Lennox, and shall, together with all copies thereof and all
advertising literature, be returned and delivered to Lennox
by Employee immediately, without demand, upon the
termination of the Employee's employment with Lennox or
shall be returned at any time upon Lennox demand.
b. RESTRICTIONS ON DIVERTING EMPLOYEES OF LENNOX. Employee
agrees that during employment with Lennox, and for a period
of 24 complete calendar months following the termination of
employment, Employee will not, either directly or
indirectly, call on, solicit, induce or attempt to induce
any of the employees or officers of Lennox that Employee had
knowledge of or association with during Employee's
employment with Lennox to terminate their association with
Lennox either personally or through the efforts of his or
her subordinates.
A4
<PAGE>
c. RESTRICTIONS ON DIVERTING VENDORS OR CONTRACTORS. Employee
agrees that during his or her employment with Lennox, and
for a period of 24 complete calendar months following his or
her termination of employment, Employee will not, either
directly or indirectly, call on, solicit, or induce any of
Lennox' vendors or suppliers that Employee had contact with,
direct knowledge of through his or her position with Lennox,
or associated with in the course of employment with Lennox
to terminate their association with Lennox either personally
or through the efforts of his or her subordinates.
d. RESTRICTIONS ON SOLICITING CUSTOMERS. For a period of 24
calendar months following the termination of employment,
Employee will not directly or indirectly call on, service,
or solicit competing business or provide consulting services
regarding the same from customers of Lennox that Employee
had (i) direct contact with or (ii) access to information
and files about as part of Employee's duties with Lennox
within the previous 24 months. This restriction is limited,
by geography, to the specific places, addresses, or
locations where a covered customer is present and available
for solicitation or servicing.
A competing business is defined as a business that is the
same or so substantially similar in nature to Lennox so as
to have the possibility to affect or usurp Lennox' business
opportunities.
e. REMEDIES. In the event of breach or threatened breach by
Employee of any provision of Paragraph C.2 hereof, Lennox
shall be entitled to (i) cease any payments under this
Agreement as set forth in Section 4 of the body of the
Agreement, (ii) relief by temporary restraining order,
temporary injunction, and/or permanent injunction, (iii)
recovery of all attorneys fees and costs incurred by Lennox
in obtaining such relief, and (iv) any other legal and
equitable relief to which it may be entitled, including any
and all monetary damages. Lennox has the right to pursue
partial enforcement and/or to seek declaratory relief
regarding the enforceable scope of this Agreement without
penalty and without waiving Lennox' right to pursue any
other available remedy.
f. SURVIVAL OF COVENANTS. Each covenant of Employee set forth
in Paragraph C.2 shall survive the termination of Employee's
employment. The existence of any claim or cause of action by
Employee against Lennox, whether related to this Agreement
or otherwise, shall not constitute a defense to the
enforcement of the covenants in Paragraph C.2. In the event
an enforcement remedy is necessary under Paragraph C.2, the
restricted time periods provided for in Paragraph C.2 shall
commence on the date enforcement is
A5
<PAGE>
ordered and complied with by Employee and shall be extended
by the period of noncompliance.
g. ACKNOWLEDGMENT OF ANCILLARY AGREEMENTS AND CONSIDERATION.
Employee acknowledges that his or her agreement to be bound
by the protective covenants set forth in Paragraph C.2 is
the inducement for Lennox (i) to enter into the other terms
of this Agreement (ii) to modify existing employment
agreements or other contracts, if any, affected by this
Agreement, (iii) to initiate or continue the employment of
Employee pursuant to the terms of this Agreement, (iv) to
provide Employee with initial or continued use or access to
confidential proprietary information of Lennox, and (v) to
provide the Employee with unique and specialized training
regarding Lennox' Trade Secrets, business practices and
marketing strategy, to provide use of goodwill as a
representative of Lennox and to ensure business expertise in
developing relations with third parties. Employee agrees
that each agreement set forth in this Agreement is otherwise
enforceable and independently sufficient to support all the
protective covenants in Paragraph C.2.
D. SEVERABILITY. If any provision contained in this Agreement is determined to
be Void, illegal or unenforceable, in whole or in part, then it will be
treated as though it never was contained herein and all other provisions
shall remain in full force and effect.
E. NOTICES. All communications required or allowed under this Agreement
shall be in writing and shall be deemed to have been delivered on the date
personally delivered or on the date deposited in the United States Postal
Service, postage prepaid, by certified mail, return receipt requested,
addressed to you at the address provided above and to Lennox at:
Lennox International Inc.
2140 Lake Park Blvd.
Richardson, Texas 75080-2254
Attn: General Counsel
A6
<PAGE>
EXHIBIT B
POLICY FOR RESOLUTION OF DISPUTES
A. AGREEMENT TO ARBITRATE.
1. ARBITRABLE DISPUTES. This Policy covers any legal dispute between
the parties, as set forth below, except for Lennox's right to seek
enforcement of Employee's protective covenants set forth in Paragraph
C.2 of Exhibit A or Employee's claims related to workers compensation
and/or unemployment insurance. The disputes subject to this policy are
all those disputes between the parties arising from any breach or
alleged breach of this Agreement or as to Employee's termination or as
to any allegation by the Employee that Lennox has violated any of the
Employee's rights under state or federal employment or civil rights
laws, or any other laws, statutes or constitutional provisions,
including, but not limited to, the following: unlawful discrimination
or harassment; claims based on any purported breach of contractual
obligations; claims based on any purported breach of duty arising in
tort, including violations of public policy; as well as any actions
recognized under common law or the combination of any of these claims;
and any claims against supervisors or agents of Lennox for which the
supervisors or agents were acting in the course and scope of their
employment or making any decisions or comments related to or connected
with employment, even if the supervisor or agent was not acting within
the course and scope of employment, shall be resolved in accordance
with the provisions of this Policy for Resolution of Disputes as set
forth herein. All arbitrable disputes are subject to applicable
statutes of limitations and other affirmative defenses recognized by
law. Employee or Lennox may seek a court order to enforce or compel
arbitration pursuant to the terms of this Policy.
2. ACCEPTANCE OF POLICY. By accepting or continuing employment with
Lennox, for the provision of a term of employment provided by Lennox,
for Lennox' agreement to pay a severance package, and for Lennox'
agreement to provide Employee access to confidential information,
Employee and Lennox agree that arbitration is the exclusive remedy for
all arbitrable disputes.
3. GOVERNING LAW/WAIVER OF RIGHTS. THIS POLICY AND AGREEMENT TO ARBITRATE
IS MADE PURSUANT TO THE FEDERAL ARBITRATION ACT AND APPLICABLE STATE
LAWS REGARDING ARBITRATION AND IS A FULL AND COMPLETE WAIVER OF THE
PARTIES' RIGHTS TO A CIVIL COURT ACTION AND RIGHTS TO A TRIAL BY JURY.
B1
<PAGE>
B. REQUEST FOR ARBITRATION.
1. ATTEMPT AT INFORMAL RESOLUTION OF DISPUTES.
a. Prior to submission of any dispute to arbitration, Lennox and
the Employee shall attempt to resolve the dispute informally as
set forth below.
b. Lennox and the Employee will select a mutually acceptable
mediator from a list provided by an American Arbitration
Association Employment Dispute Division or other similar agency
who will assist the parties in attempting to reach a settlement
of the dispute. The mediator may make settlement suggestions to
the parties but shall not have the power to impose a settlement
upon them. If the dispute is resolved in mediation, the matter
shall be deemed closed. If the dispute is not resolved in
mediation and goes to the next step (binding arbitration), any
proposals or compromises suggested by either of the parties or
the mediator shall not be referred to or have any bearing on the
arbitration procedure. The mediator cannot also serve as the
arbitrator in the subsequent proceeding unless all parties
expressly agree in writing.
2. ARBITRATION PROCEDURES. The Employee or his/her representative must
submit a "Request for Arbitration" in writing to the Chief Executive
Officer of Lennox within the greater of 300 days or the applicable
statute of limitation that would apply if the claim had been brought
in court of (i) the termination of employment (including resignation),
(ii) the incident giving rise to the dispute or claim, or (iii) in the
case of unlawful discrimination, including sexual or other unlawful
harassment, the alleged conduct. This time limitation will not be
extended for any reason and shall not be subject to tolling, equitable
or otherwise. If the "Request for Arbitration" is not submitted in
accordance with the aforementioned time limitations, the Employee will
not be able to bring his/her claim to this or any other forum. The
Employee can obtain a "Request for Arbitration" form from the Human
Resource Department of Lennox International Inc. or other party
designated by the Chief Executive Officer. Alternatively, the Employee
can create his/her own "Request for Arbitration" form, as long as it
clearly states "Request for Arbitration" at the beginning of the first
page. The "Request for Arbitration" must include the following
information:
a. A factual description of the dispute in sufficient detail to
advise Lennox of the nature of the dispute;
b. The date when the dispute first arose;
c. The names, work locations, telephone numbers of any co-workers or
supervisors with knowledge of the dispute; and
B2
<PAGE>
d. The relief requested by the Employee.
Lennox will respond in a timely manner to this "Request for
Arbitration," so that the parties can begin the process of selecting
an arbitrator. Such response may include any counterclaims that Lennox
chooses to bring against the Employee.
3. SELECTION OF THE ARBITRATOR. All disputes will be resolved by a
single arbitrator. The arbitrator will be mutually selected by Lennox
and the Employee. If the parties cannot agree on an arbitrator, then a
list of seven arbitrators, experienced in employment matters, shall be
provided by the American Arbitration Association. The arbitrator will
be selected by the parties who will alternately strike names from the
list. The last name remaining on the list will be the arbitrator
selected to resolve the dispute. Upon selection, the arbitrator shall
set an appropriate time, date, and place for the arbitration, after
conferring with the parties to the dispute.
4. ARBITRATOR'S AUTHORITY.The arbitrator shall have the powers enumerated
below:
a. Ruling on motions regarding discovery, and ruling on procedural
and evidentiary issues arising during the arbitration;
b. Issuing protective orders on the motion of any party or third
party witness (such protective orders may include, but not be
limited to, sealing the record of the arbitration, in whole or in
part (including discovery proceedings and motions, transcripts,
and the decision and award), to protect the privacy or other
constitutional or statutory rights of parties and/or witnesses);
c. Determining only the issue(s) submitted to him/her (the
issue(s) must be identified in the "Request for Arbitration" or
counterclaims, and any issue(s) not so identified in those
documents shall be deemed to be and is/are outside the scope of
the arbitrator's jurisdiction, and any award involving those
issue(s) shall be subject to a motion to vacate);
d. Shall have no authority to violate state or federal law; and
e. Issuing written opinions on the issues raised in the Arbitration.
5. PLEADINGS.
a. A copy of the "Request for Arbitration" shall be forwarded to the
arbitrator within five calendar days of his/her selection.
b. Within 10 calendar days following submission of the "Request for
Arbitration" to the arbitrator, Lennox shall respond in writing
to the "Request
B3
<PAGE>
for Arbitration" to the arbitrator, Lennox shall respond in
writing to the "Request for Arbitration" by answer and/or
demurrer. The answer or demurrer shall be served on the
arbitrator and the Employee.
c. The answer to the "Request for Arbitration" shall include the
following information:
(1) a response, by admission or denial,to each claim setforth in
the "Request for Arbitration";
(2) all affirmative defenses asserted by Lennox to each claim;
and
(3) all counterclaims Lennox asserts against the Employee and
any related third party claims.
d. If Lennox contends that some or all of the Employee's claims set
forth in the "Request for Arbitration" are barred as a matter of
law, it may respond by demurrer setting forth the legal
authorities in support of its position. If Lennox demurs to less
than the entire "Request for Arbitration," Lennox must answer
those claims to which it does not demur at the same time that it
submits its demurrer.
e. The Employee shall have 20 calendar days to oppose Lennox'
demurrer. Any opposition must be in writing and served on the
arbitrator and Lennox.
f. If the answer alleges a counterclaim, within 20 days of service
of the answer, the Employee shall answer and/or demur to the
counterclaim in writing and serve the answer and/or demurrer on
the arbitrator and Lennox. If the Employee demurs to any
counterclaim, Lennox shall have 20 calendar days from its receipt
of the demurrer to submit a written opposition to the demurrer to
the Employee and the arbitrator.
g. The arbitrator shall rule on demurrer(s) to any claims and/or
counterclaims within 15 calendar days of service of the moving
and opposition papers.
h. If any demurrer is overruled, the moving party must answer those
claims to which it demurred within five calendar days of the
receipt of the arbitrator's ruling. The answer must be served on
the arbitrator and the opposing party.
i. When all claims and counterclaims have been answered, the
arbitrator shall set a time and place for hearing which shall be
no earlier than three months from the day on which the parties
are notified of the date of hearing and no
B4
<PAGE>
later than 12 months from the date on which the arbitrator sets
the date for the hearing.
6. DISCOVERY. The discovery process shall proceed and be governed as
follows:
a. Parties may obtain discovery by any of the following methods:
(1) depositions upon oral examination, one per side as of right,
with more permitted if leave is obtained from the
arbitrator;
(2) written interrogatories, up to a maximum combined total of
20, with the responding party having 20 days to respond;
(3) request for production of documents or things or permission
to enter upon land or other property for inspection, with
the responding party having 20 days to produce the documents
and allow entry or to file objections to the request; and
(4) physical and mental examination, in accordance with the
Federal Rules of Civil Procedure, Rule 35(a).
b. Any motion to compel production, answers to interrogatories or
entry onto land or property must be made to the arbitrator within
15 days of receipt of objections.
c. All discovery requests shall be submitted no less than 60 days
before the hearing date.
d. The scope of discoverable evidence shall be in accordance with
Federal Rule of Civil Procedure 26(b)(1).
e. The arbitrator shall have the power to enforce the
aforementioned discovery rights and obligations by the imposition
of the same terms, conditions, consequences, liabilities,
sanctions, and penalties as can or may be imposed in like
circumstances in a civil action by a federal court under the
Federal Rules of Civil Procedure, except the power to order the
arrest or imprisonment of a person.
7. HEARING PROCEDURE. The hearing shall proceed according to the
American Arbitration Association's Rules with the following
amendments:
a. The arbitrator shall rule at the outset of the arbitration on
procedural issues that bear on whether the arbitration is allowed
to proceed.
B5
<PAGE>
b. Each party has the burden of proving each element of its claim
or counterclaims, and each party has the burden of proving any of
its affirmative defenses.
c. In addition to, or in lieu of, closing arguments, either party
shall have the right to present post-hearing briefs, and the due
date for exchanging post-hearing briefs shall be mutually agreed
on by the parties and the arbitrator.
8. SUBSTANTIVE LAW. The applicable substantive law shall be the law of
the State of Texas or federal law. If both federal and state law speak
to a cause of action, the Employee shall have the right to elect
his/her choice of law. However, choice of law in no way affects the
procedural aspects of the arbitration, which are exclusively governed
by the provisions of this Policy.
9. OPINION AND AWARD. The arbitrator shall issue a written opinion and
award, in conformance with the following requirements:
a. The opinion and award must be signed and dated by the arbitrator.
b. The arbitrator's opinion and award shall decide all issues
submitted.
c. The arbitrator's opinion and award shall set forth the legal
principles supporting each part of the opinion.
d. The arbitrator shall have the same authority to award remedies
and damages as provided to a judge and/or jury under parallel
circumstances.
10. ENFORCEMENT OF ARBITRATOR'S AWARD. Following the issuance of the
arbitrator's decision, any party may petition a court to confirm,
enforce, correct or vacate the arbitrator's opinion and award under
the Federal Arbitration Act, and/or applicable state law.
11. FEES AND COSTS. Fees and costs shall be allocated in the following
manner:
a. Each party shall be responsible for its own attorneys' fees,
except as provided by law.
b. The Employee will pay a $150 filing fee to be paid to the
arbitration agency. Lennox will bear the remainder of the
arbitrator's fees and any costs associated with the facilities
for the arbitration.
c. Lennox and the Employee shall each bear an equal one-half of
any court reporters' fees, assuming both parties want a
transcript of the proceeding. If
B6
<PAGE>
one party elects not to receive a transcript of the proceedings,
the other party will bear all of the court reporters' fee.
However, such an election must be made when the arrangements for
the court reporter are being made.
d. Each party shall be responsible for its costs associated with
discovery.
C. SEVERABILITY. In the event that any provision of this Policy is
determined by a court of competent jurisdiction to be illegal, invalid, or
unenforceable to any extent, such term or provision shall be enforced to
the extent permissible under the law and all remaining terms and provisions
of this Policy shall continue in full force and effect.
B7
<PAGE>
EXHIBIT C
SEVERANCE TERMS
1. EFFECT OF PROTECTIVE COVENANTS. The provisions of Paragraphs C2(a)-(d)
of Exhibit A of this Agreement will continue in full force and effect
regardless of whether Employee continues to be employed by Lennox and
regardless of the reason Employee's employment is terminated and regardless
of the severance compensation to which Employee is entitled as set forth
below, if any.
2. NORMAL SEVERANCE COMPENSATION. Should Employee be terminated by Lennox
prior to the expiration of the term specified in Section 2 of the body of
the Agreement or the Agreement is not renewed by Lennox for any reason
other than for Cause as defined in Section B.3 of Exhibit A, and provided
the Employee does not elect and qualify for the Enhanced Severance Payment
described in Section 3 of Exhibit C set forth below, Employee will be
entitled to receive monthly payments of the greater of the Employee's
Monthly Base Salary for the remainder of the Agreement's term or three
months of Employee's Monthly Base Salary in addition to any other
compensation or benefits applicable to an employee at Employee's level to
the extent the Employee would be eligible for such compensation or benefits
under the terms of those formal programs which are applicable to all
employees at Employee's level in effect at the time of termination and, for
any benefits which continue after termination, subject to any modification
which is made to such programs applicable to the all of the participants at
such time.
3. ENHANCED SEVERANCE BENEFITS. If Lennox terminates an Employee other than
for Cause (including Lennox' non-renewal of the Agreement) and that
Employee elects and meets the conditions of this Paragraph 3 of Exhibit C,
Lennox agrees to pay an Enhanced Severance Payment and provide the other
benefits described below ("Enhanced Severance Benefits"). The Employee must
agree to execute a written General Release of any and all possible claims
against Lennox existing at the time of termination in exchange for which
Lennox agrees to the following severance provisions:
(i) SEVERANCE PAYMENT. Lennox agrees to pay Employee's Monthly Base
Salary for a period of 24 months following the date of termination. In
addition, Lennox agrees to pay to the Employee, within 45 days of
termination, in a lump sum, the total of any short-term bonus payments
actually paid to the Employee over the twenty-four (24) month period
prior to the date of termination. The severance payments will be paid
in installments in accordance with the regular payroll policies of
Lennox then in effect and each installment will be subject to regular
payroll deductions and all applicable taxes.
C1
<PAGE>
(ii) PERQUISITES. Within 45 days following the date of termination,
the Employee will receive in addition to (i) above, in a lump sum, a
payment of a sum equal to 10% of the Employee's Annual Base Salary in
effect at the time of termination in lieu of the continuation of or
payment for any perquisites, including, without limitation,
automobile, club membership, tax preparation, physical examination or
others being received by the Employee at the time of termination.
(iii)COBRA CONTINUATION. Lennox agrees to pay COBRA premiums to allow
Employee to continue to participate in Lennox group health plan on the
same terms as other Lennox employees for up to 18 months while
Employee is unemployed and not eligible for other group health
insurance coverage. Should Employee remain 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 for
his or her use in obtaining health insurance coverage outside the
group health plan.
(iv) OUTPLACEMENT. Lennox agrees to provide Employee with outplacement
services in accordance with Lennox' then applicable policy. In lieu of
such outplacement services, Lennox agrees to pay Employee a lump sum
payment of 10% of Employee's Annual Base Salary within 45 days
following the date of termination should Employee elect not to receive
outplacement services.
(v) DEATH BENEFIT. Employee's beneficiary, as set forth in Exhibit D,
will receive, in a lump sum, a death benefit equivalent to six months
of Employee's Monthly Base Salary in the event that the Employee
should die during the period in which the Employee is entitled to any
severance payment described above.
Nothing herein shall be construed to limit Employee's right to receive any
benefits and entitlements under Lennox' ERISA or other employee benefit
plans, with all such benefits being received by the Employee only to the
extent allowed by and subject to the terms of any such plan as it may from
time to time exist or be modified. Further, this Agreement is not intended
and the parties agree that it will not be interpreted as creating any
obligation for Lennox to create or maintain any employee benefit,
compensation, perquisite or other plan, policy or program for its employees
and Lennox retains the sole discretion to eliminate or modify any existing
plan, program or policy as it deems to be appropriate.
C2
<PAGE>
EXHIBIT D
DESIGNATION OF BENEFICIARY
The following represent the designation of Beneficiary for the Employee named
below:
EMPLOYEE: _________________________
PRIMARY BENEFICIARY(S):
_____________________ ________________________ _________%*
Name Relationship Percent
_____________________ ________________________ _________%*
Name Relationship Percent
*The total should add to 100%
CONTINGENT BENEFICIARY(S):
_____________________ ________________________ _________%*
Name Relationship Percent
_____________________ ________________________ _________%*
Name Relationship Percent
*The total should add to 100%
This is to confirm the designation of my Beneficiary(s) to receive any benefits
provided under this Agreement which are not otherwise covered by Employee
benefit plans with other designations of beneficiary which I intend to supersede
any designation made above.
EMPLOYEE
------------------------------
Signature
------------------------------
Printed Name
------------------------------
Date
