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SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
Form 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For 3 Months Ended Commission File
March 31, 1994 No. 0-1402
THE LINCOLN ELECTRIC COMPANY
(Exact name of registrant as specified in its charter)
State of Incorporation: I.R.S. Employer
Ohio Ident. No:34-0359955
Shares of Common Stock Outstanding: 10,396,450
Shares of Class A Common Stock Outstanding: 499,840
Address of Principal Executive Offices:
22801 St. Clair Avenue
Cleveland, Ohio 44117
Registrant's Telephone Number:
(216) 481-8100
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months, and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
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<TABLE>
STATEMENTS OF CONSOLIDATED OPERATIONS
THE LINCOLN ELECTRIC COMPANY AND SUBSIDIARIES
(Amounts in thousands of dollars except per share data)
"UNAUDITED"
<CAPTION>
Three months ended March 31
----------------------------
1994 1993
-------- --------
<S> <C> <C>
Net sales $210,525 $211,168
Cost of goods sold 128,559 131,412
-------- --------
Gross profit 81,966 79,756
Distribution cost/selling, general
& administrative expenses 61,024 65,647
-------- --------
Operating income 20,942 14,109
Other income/(expense):
Interest income 293 441
Other income 448 341
Interest expense 3,898 4,785
-------- --------
Total other income/(expense) (3,157) (4,003)
-------- --------
Income before income taxes and
cumulative effect of accounting change 17,785 10,106
Provision for income taxes 7,378 5,300
-------- --------
Income before cumulative effect
of accounting change 10,407 4,806
Cumulative effect to January 1, 1993
of change in method of accounting for
income taxes (Note E) 2,468
-------- --------
Net income $ 10,407 $ 7,274
======== ========
Net income per share:
Income before cumulative effect
of accounting change $ 0.96 $ 0.44
Cumulative effect to January 1, 1993
of change in method of accounting
for income taxes .23
------ ------
Net income $ 0.96 $ 0.67
====== ======
Dividends paid $ 0.18 $ 0.18
Average number of shares
outstanding: (in 000's of shares) 10,896 10,805
</TABLE>
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<TABLE>
STATEMENTS OF CONSOLIDATED FINANCIAL CONDITION
THE LINCOLN ELECTRIC COMPANY AND SUBSIDIARIES
(in thousands of dollars)
<CAPTION>
"Unaudited"
March 31, 1994 December 31, 1993
-------------- -----------------
<S> <C> <C>
ASSETS
Current Assets
Cash and cash equivalents $ 24,307 $ 20,381
Accounts receivable (less allowance
for doubtful accounts of $6,433 in
1994 and $6,258 in 1993) 129,548 110,504
Inventories: (Note C)
Raw materials and in-process 68,101 66,987
Finished goods 72,705 76,698
--------- --------
140,806 143,685
Deferred income taxes 43,002 42,960
Prepaid expenses 4,775 3,241
Other current assets 5,465 4,937
-------- --------
TOTAL CURRENT ASSETS 347,903 325,708
OTHER ASSETS
Notes receivable from employees 4,088 4,747
Goodwill 39,891 39,732
Other 17,518 19,665
-------- --------
61,497 64,144
PROPERTY, PLANT AND EQUIPMENT
Land 12,938 12,802
Buildings 114,580 113,927
Machinery, tools and equipment 288,175 279,933
-------- --------
415,693 406,662
Less allowances for depreciation
and amortization (243,875) (236,971)
-------- --------
171,818 169,691
-------- --------
TOTAL ASSETS $581,218 $559,543
======== ========
</TABLE>
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<TABLE>
<CAPTION>
"Unaudited"
March 31, 1994 December 31, 1993
-------------- -----------------
<S> <C> <C>
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Trade accounts payable $ 48,328 $ 43,471
Notes payable to banks 12,446 23,198
Salaries, wages and amounts withheld 12,360 12,779
Taxes, including income 30,496 23,061
Dividends payable 1,998 1,959
Current portion of long-term debt 10,185 10,200
Accrued restructuring charges 29,478 29,618
Other current liabilities (Note D) 44,838 31,569
-------- --------
TOTAL CURRENT LIABILITIES 190,129 175,855
Long-term debt, less current portion 211,022 216,915
Deferred taxes, long-term 5,904 6,128
Other long-term liabilities 11,076 9,221
Minority interest 6,519 7,929
Shareholders' equity
Common Stock 2,079 2,076
Common Class A Capital Stock 100 100
Additional paid-in-capital 23,197 22,926
Retained earnings 145,753 137,307
Cumulative translation adjustments (14,561) (18,914)
-------- --------
TOTAL SHAREHOLDERS' EQUITY 156,568 143,495
-------- --------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $581,218 $559,543
======== ========
</TABLE>
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<TABLE>
STATEMENTS OF CONSOLIDATED CASH FLOWS
THE LINCOLN ELECTRIC COMPANY AND SUBSIDIARIES
"UNAUDITED"
(in thousands of dollars)
<CAPTION>
Three Months Ended
March 31
----------------------
1994 1993
------- --------
<S> <C> <C>
OPERATING ACTIVITIES
Net income $10,407 $ 7,274
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation and amortization 7,189 7,183
Cumulative effect of accounting change (2,468)
Employee stock ownership plan 229 550
Minority interest 121 (387)
Change in operating assets and liabilities
net of effects from acquisitions:
(Increase) in accounts receivable (15,482) (17,180)
Decrease in inventories 5,099 8,232
(Increase) in other current assets (1,093) (2,662)
Increase (decrease) in accounts payable 1,655 (4,965)
Increase in other current liabilities 23,508 18,407
Gross change in other noncurrent assets (1,209) 2,734
Gross change in other noncurrent liabilities (562) 240
Other-net 419 (2,568)
------- ------
NET CASH PROVIDED BY OPERATING ACTIVITIES 30,281 14,390
INVESTING ACTIVITIES
Purchases of property, plant and equipment (6,466) (3,315)
Proceeds from sale of property, plant and equipment 602 103
------ ------
NET CASH (USED) BY INVESTING ACTIVITIES (5,864) (3,212)
FINANCING ACTIVITIES
Short-term borrowings-net (8,401) 1,364
Repayment on short-term borrowings, maturities
greater than three months (13,770) (45)
Proceeds on short-term borrowings, maturities
greater than three months 10,595 4,320
Proceeds from long-term borrowings 122,651 122,991
Repayments on long-term borrowings (129,435) (132,236)
Dividends paid (1,959) (1,941)
Other (840) 228
------- -------
NET CASH (USED) BY FINANCING ACTIVITIES (21,159) (5,319)
Effect of exchange rate changes on cash and
cash equivalents 668 (668)
------- -------
INCREASE IN CASH AND CASH EQUIVALENTS 3,926 5,191
Cash and cash equivalents at beginning of period 20,381 20,627
------- -------
Cash and cash equivalents at end of period $ 24,307 $ 25,818
======= =======
Cash paid during the period: Interest $ 4,406 $ 5,496
Income taxes $ 2,876 $ 1,626
</TABLE>
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS "UNAUDITED"
(all amounts are in thousands of dollars except earnings per share
information)
March 31, 1994
NOTE A - BASIS OF PRESENTATION
The accompanying unaudited financial statements have been prepared in
accordance with the instructions to Form 10-Q and contain all the adjustments
(consisting of only normal recurring accruals) necessary to fairly present the
financial position, results of operations and changes in cash flows for the
period. Results of operations for any interim period are not necessarily
indicative of the results to be expected for the year. For further
information, refer to the Consolidated Financial Statements and Footnotes
thereto included in the Company's annual report on Form 10-K for the year ended
December 31, 1993.
NOTE B - RECLASSIFICATIONS
Certain reclassifications have been made to amounts previously presented to
conform with the current reporting presentations.
NOTE C - INVENTORY VALUATION
An actual valuation of inventory under the LIFO method can be made only at the
end of each year based on the inventory levels and costs at that time.
Accordingly, interim LIFO calculations must necessarily be based on
management's estimates of expected year-end inventory levels and costs. Since
these are subject to many forces beyond management's control, interim results
are subject to the final year-end LIFO inventory valuation.
NOTE D - OTHER CURRENT LIABILITIES
The other current liabilities category includes provisions for possible
year-end bonus, annuity expense, Employees' Stock Ownership Plan and
contributions. These expenditures are wholly discretionary each year as
determined by the Board of Directors
NOTE E - CHANGE IN THE METHOD OF ACCOUNTING FOR INCOME TAXES
Effective January 1, 1993, the Company adopted FASB Statement No. 109,
"Accounting for Income Taxes." Under Statement No. 109, the liability method
is used in accounting for income taxes. Under this method, deferred tax assets
and liabilities are determined based on differences between financial reporting
and tax bases of assets and liabilities and are measured using the enacted tax
rates and laws that will be in effect when the differences are expected to
reverse. Prior to the adoption of Statement No. 109, income tax expense was
determined using the deferred method. Deferred tax expense was based on items
of income and expense that were reported in different years in the financial
statements and tax returns and were measured at the tax rate in effect in the
year the difference originated.
As permitted by Statement No. 109, the Company has elected not to restate the
financial statements of any prior years. The effect of the
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS "UNAUDITED"- Continued
(all amounts are in thousands of dollars except earnings per share
information)
March 31, 1994
NOTE E - CHANGE IN THE METHOD OF ACCOUNTING FOR INCOME TAXES (Continued)
change on pretax income for the three months ended March 31, 1993 was not
material; however, the cumulative effect of the change increased net income by
$2,468 or $.23 per share.
Part 1 - Item 2
Management's Discussion of Financial Condition and Results
- - ----------------------------------------------------------
of Operations--(all dollar amounts are in thousands of dollars)
- - -------------
Net sales for the quarter ended March 31, 1994 were $210,500, compared to
reported net sales of $211,200 for the comparable period in 1993. Net sales
and operations for 1994 exclude the operations of the Company's German
manufacturing subsidiary and two other manufacturing subsidiaries that were
closed as part of the restructuring decisions that were reflected in the
December 31, 1993 financial statements. Excluding the net sales of these
entities from the quarter ended March 31, 1993, net sales for the first quarter
of 1993 were approximately $186,400.
In the first quarter of 1994, domestic sales were up 19.3%, or $26,500, while
sales of foreign companies, excluding the effects of restructured locations,
decreased 2.5% over the same period in 1993. The domestic market is expected
to remain strong throughout 1994, however, recovery of the foreign markets is
not anticipated in 1994. Approximately 87% of the increase in domestic sales
in the first quarter of 1994 was attributable to increases in volume and the
remaining 13% was the result of price increases.
Gross profit increased to $82,000 (38.9% of sales) in the first quarter of
1994, as compared to $79,800 (37.8% of sales) for the same period in 1993.
However, excluding the effects of the restructured locations, gross profit for
the quarter ended March 31, 1993 was $71,600 (38.4% of sales). Domestically,
gross profit increased 22.4% over 1993. The improvement in domestic gross
profit was largely attributable to the sales volume increases as noted above,
coupled with the effects of improved absorption of manufacturing costs and the
relative stability of these costs relative to the price increases realized
during 1994. However, these improvements were offset in the foreign markets by
the effects of decreases in the sales volume of the non-U.S. operations.
Distribution cost/selling, general and administrative expenses were $61,000
(29.0% of sales) for the first quarter of 1994 and $65,700 (31.1% of sales) for
the same period in 1993. Excluding expenses relating to restructured
locations, distribution cost/selling, general and administrative expenses in
the first quarter of 1993 were $55,000 (30.0% of sales). The maintenance of
distribution cost/selling, general
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Management's Discussion of Financial Condition and Results
- - ----------------------------------------------------------
of Operations-- Continued
- - --------------
(all dollar amounts are in thousands of dollars)
and administrative expenses relative to sales volume evidences the Company's
successful attempt to control costs in 1994.
Income taxes for the quarter ended March 31, 1994 were $7,400 on income before
taxes and cumulative effects of accounting change of $17,800, compared to
income taxes of $5,300 on similar income in 1993 of $10,100. The decrease in
the effective tax rate is principally the result of the decrease in the amount
of foreign losses without tax benefits and the increase in the percentage of
U.S. source income.
Net income was $10,400 or $.96 per share for the quarter ended March 31, 1994
compared with $7,300 or $.67 per share for the comparable period in 1993. Net
income for the first quarter 1993 benefited from the cumulative effect of a
change in the method of accounting for income taxes, which increased net income
$2,468 or $.23 per share.
Liquidity and Capital Resources
- - -------------------------------
The Company's cash flows for the quarters ended March 31, 1994 and 1993 are
presented in the consolidated statements of cash flows. Cash provided from
operating activities for the quarter ended March 31, 1994 amounted to $30,300
compared to $14,400 for the comparable period in 1993. Cash flows from
operations for 1994 were used primarily for net capital expenditures of $5,900,
net debt repayments of $18,400 and the payment of dividends in the amount of
$2,000 with the balance increasing the amount of cash and cash equivalents at
March 31, 1994.
Total debt at March 31, 1994 was $233,700 compared to $250,300 at December 31,
1993. At March 31, 1994 debt was 60% of total capitalization (shareholders'
equity and debt) compared with 64% at year-end 1993. The improvement in the
ratio of debt to total capitalization was the result of the reduction in debt
and the increase in shareholders' equity as a result of the earnings for the
quarter, net of dividend payments, and the change in the cumulative translation
adjustments in shareholders' equity.
The ratio of current assets to current liabilities was 1.8 at the end of the
first quarter of 1994, compared to 1.9 at the prior year-end which reflects a
satisfactory liquidity position.
The Company's Credit Agreement and 8.98% Senior Note Agreement contain various
financial covenants that place limitations on the payments of dividends, the
purchase of unrestricted stock, capital expenditures, and the incurrence of
additional indebtedness. While the operating losses for 1993 and 1992 have
placed constraints on the Company's financial flexibility, the Company is in
compliance with the financial covenants of the agreements and management
believes that the Company will continue to meet such covenants throughout 1994.
Management believes that the current financing arrangement and cash flows
generated from operations will provide adequate funds to support the operations
of the Company and
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Management's Discussion of Financial Condition and Results
- - ----------------------------------------------------------
of Operations-- Continued
- - --------------
(all dollar amounts are in thousands of dollars)
satisfy both its capital requirements and regular dividend practices throughout
the term of the Credit Agreement. The Company reviews its dividend on a
quarterly basis and makes determinations annually during the fourth quarter as
to any possible employee incentive bonus and extra dividend. Each of the
latter amounts may have material impact on the short-term liquidity and capital
resources of the Company.
Part II - Other Information
Item 1. Legal proceedings -- No change.
Item 2. Changes in Securities -- No change.
Item 3. Defaults Upon Senior Securities -- None.
Item 4. Submission of Matter to a vote of Security Holdings -- None.
Item 5. Other Information -- None.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
--------
The following Exhibits are being re-filed in order to update
previously filed SEC exhibits of record.
Exhibit Reference No.
---------------------
3(b) Amended and Restated Code of Regulations of
The Lincoln Electric Company.
10(b) Form of Indemnification Agreement.
(b) Reports on Form 8K - None.
<PAGE> 10
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934 the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
THE LINCOLN ELECTRIC COMPANY
/s/ Jay Elliott /s/ Graham A. Peters
- - ------------------------ --------------------
Jay Elliott Graham A. Peters
Chief Financial Officer Corporate Controller
and Treasurer
May 13, 1994 May 13, 1994
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T H E L I N C O L N E L E C T R I C C O M P A N Y
AMENDED AND RESTATED
CODE OF REGULATIONS
ARTICLE I
SHARES
1. REGISTRATION AND TRANSFER OF CERTIFICATES. Each shareholder of the
Corporation whose shares have been fully paid for shall be entitled to a
certificate or certificates showing the number of shares registered in his
name on the books of the Corporation. Each certificate shall be signed by
the Chairman of the Board or the President or Vice-President of the
Corporation and the Secretary or Assistant Secretary or the Treasurer or an
Assistant Treasurer. Shares shall be transferred only on the books of the
Corporation by the holder thereof, in person or by Attorney, upon surrender
and cancellation of certificates for a like number of shares.
2. SUBSTITUTED CERTIFICATES. The Board of Directors may authorize the issuance
of a new certificate in place of any certificate theretofore issued by the
Corporation alleged to have been lost or destroyed; in its discretion
requiring the owner of the lost or destroyed certificate, or the legal
representative, to give the Corporation a bond in such sum as the Board of
Directors may direct as indemnity against any claim that may be made against
the Corporation; or, if in the judgment of the Board it is proper to do so,
a new certificate may be issued without requiring any bond.
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3. SHAREHOLDERS ENTITLED TO NOTICE AND TO VOTE. The Board of Directors may fix
a time not exceeding forty-five (45) days preceding the date of any meeting
of shareholders, or any dividend payment date, or any date for the allotment
of rights, as a record date for the determination of the shareholders
entitled to notice of such meeting, or to vote thereat, or to receive such
dividends or rights, as the case may be, or in lieu thereof, the Board of
Directors may close the books of the Corporation against the transfer of
shares during the whole or any part of such period.
ARTICLE II
MEETINGS OF SHAREHOLDERS
1. ANNUAL MEETING. The Annual Meeting of shareholders shall be held on the
fourth Tuesday of the month of May each year at the principal office of the
Corporation, if not a legal holiday, and if a legal holiday, then on the
next day not a legal holiday, for the election of Directors and the
consideration of reports to be laid before the meeting. Upon due notice
there may also be considered and acted upon at the Annual Meeting any matter
which can properly be considered and acted upon at a special meeting, in
which case and for which purpose the Annual Meeting shall also be considered
as, and shall be, a special meeting. When an Annual Meeting is not held or
Directors are not elected thereat, they may be elected at a special meeting
called for that purpose.
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2. SPECIAL MEETINGS. Special meetings of the shareholders may be called by the
President, or a Vice-President, or the Chairman of the Board of Directors,
or by the Executive Committee, or by a majority of the Board of Directors,
acting with or without a meeting, or by persons who hold twenty-five percent
of all the shares outstanding and entitled to vote thereat, at such place or
places as may be designated in the call therefore, and notice thereof;
provided, however, that a meeting for the election of Directors may be held
only within the State of Ohio.
3. NOTICE OF MEETINGS. Notice of meetings of shareholders shall be given in
writing by the Secretary, or in his absence by the Chairman of the Board or
President or a Vice- President, and such notice shall state the purpose or
purposes for which the meeting is called, and the time and place where it is
to be held, and shall be served or mailed to each shareholder of record
entitled to vote at such meeting or entitled to notice thereof, at least ten
(10) days prior to the meeting. If mailed, it shall be directed to the
shareholder at his address as it appears upon the records of the
Corporation. In the event of the transfer of shares after notice has been
given and prior to the holding of the meeting, it shall not be necessary to
serve notice upon the transferee. Notice of the time, place and purpose of
any meeting of shareholders may be waived by the written assent of every
shareholder entitled to notice, filed with
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or entered upon the records of the meeting, either before or after the
holding thereof.
4. QUORUM. The holders of a majority of the shares issued and outstanding,
entitled to vote, present either in person or by proxy, shall constitute a
quorum, unless a larger number is required by the laws of Ohio, in which
case the number required by the laws of Ohio, present either in person or by
proxy, shall constitute a quorum, but any less number may adjourn the
meeting from time to time, until a quorum is obtained, and no further notice
of such adjourned meeting need be given other than by announcement at the
meeting at which such adjournment is taken.
5. PROXIES. Each shareholder entitled to vote shall be entitled to one vote,
either in person or by proxy, for each share of the Corporation standing in
his name at the time of the closing of the books for such meeting. No proxy
shall be valid after the expiration of eleven (11) months from the date
thereof, unless a longer time be specified therein. Proxies shall be in
writing but need not be sealed, witnessed or acknowledged and shall be filed
with the Secretary at or before the meeting.
VOL402CL Doc: 94943.1
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ARTICLE III
BOARD OF DIRECTORS
1. NUMBER AND ELECTION. The powers and authority of the Corporation shall be
exercised and its business managed and controlled by a Board of Directors.
The election of Directors shall be by ballot and shall be held at the Annual
Meeting of shareholders or at a special meeting called for that purpose.
The maximum number of the Directors of the Corporation shall be eighteen.
Subject to such maximum, the number of Directors may be fixed or changed (a)
at a meeting of the shareholders called for the purpose of electing
Directors at which a quorum is present, by the affirmative vote of the
holders of a majority of the shares that are represented at the meeting and
entitled to vote on the proposal, and (b) by the Directors, by the vote of a
majority of their number, who may also fill any Director's office that is
created by an increase in the number of Directors. The Directors shall be
divided into three classes, as nearly equal in number as possible, as
determined by the Board of Directors of the Corporation. A separate
election shall be held for each class of Directors as hereinafter provided.
Directors elected at the first election for the first class shall hold
office for the term of one year from the date of their election and until
the election of their successors, Directors elected at the first election
for the second class shall hold office for the term of two years from the
date of their election and until the
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election of their successors, and Directors elected at the first election for
the third class shall hold office for the term of three years from the date
of their election and until the election of their successors. At each annual
election, the successors to the Directors of each class whose terms shall
expire in that year shall be elected to hold office for the term of three
years from the date of their election and until the election of their
successors. In case of any increase in the number of Directors of any class,
any additional Directors elected to such class shall hold office for a term
which shall coincide with the term of such class.
2. VACANCY AND REMOVAL. All Directors, for whatever terms elected, shall hold
office subject to applicable statutory provisions as to the creation of
vacancies and removal; provided, however, that all Directors, all the
Directors of a particular class or any individual Director may be removed
from office, without assigning any cause, only by the affirmative vote of
the holders of at least two-thirds of the voting power of the outstanding
shares of stock entitled to vote generally on the election of Directors.
3. RESIGNATION. Any Director may resign at any time. Such resignation shall be
made in writing and shall take effect at the time specified therein. If no
time is specified, it shall become effective from the time of its receipt by
the
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Corporation, and the Secretary shall record such resignation, noting the day,
hour and minute of its reception. The acceptance of a resignation shall not
be necessary to make it effective.
4. MEETINGS. Directors may meet at such times and at such places within or
without the State of Ohio as they may determine. A majority of the Board of
Directors shall be necessary to constitute a quorum for the transaction of
business, and the act of a majority of Directors present at a meeting at
which a quorum is present shall be the act of the Board of Directors.
5. BY-LAWS. The Board of Directors may adopt By-Laws for its own government
not inconsistent with the Articles of Incorporation or Regulations of the
Corporation.
ARTICLE IV
INDEMNIFICATION AND INSURANCE
1. INDEMNIFICATION. (a) The Corporation shall indemnify any person who was or
is a party or is threatened to be made a party, to any threatened, pending
or completed action, suit or proceeding, whether civil, criminal,
administrative or investigative, by reason of the fact that he is or was a
Director, officer, employee or agent of the Corporation, or is or was
serving at the request of the Corporation as a Director, trustee, officer,
employee or agent of another
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corporation, domestic or foreign, nonprofit or for profit, partnership, joint
venture, trust or other enterprise, to the full extent permitted from time to
time under the laws of the State of Ohio; provided, however, that the
Corporation shall indemnify any such agent (as opposed to any Director,
officer or employee) of the Corporation to an extent greater than that
required by law only if and to the extent that the Directors may, in their
discretion, so determine.
(b) The indemnification authorized by this Article shall not be exclusive
of, and shall be in addition to, any other rights granted to those seeking
indemnification hereunder or under the Articles or any agreement, vote of
shareholders or disinterested Directors, or otherwise, both as to action in
his official capacity and as to action in another capacity while holding such
office, and shall continue as to a person who has ceased to be a Director,
trustee, officer, employee or agent and shall inure to the benefit of the
heirs, executors and administrators of such a person.
(c) No amendment, termination or repeal of this Article IV shall affect or
impair in any way the rights of any Director or officer of the Corporation to
indemnification under the provisions hereof with respect to any action, suit
or proceeding arising out of, or relating to, any actions, transactions or
facts occurring prior to the final adoption of such amendment, termination or
repeal.
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2. LIABILITY INSURANCE. The Corporation may purchase and maintain insurance or
furnish similar protection, including but not limited to trust funds,
letters of credit or self-insurance, on behalf of or for any person who is
or was a Director, officer, employee or agent of the Corporation, or is or
was serving at the request of the Corporation as a Director, trustee,
officer, employee or agent of another corporation, domestic or foreign,
nonprofit or for profit, partnership, joint venture, trust or other
enterprise, against any liability asserted against him and incurred by him
in any such capacity, or arising out of his status as such, whether or not
the Corporation would have the power to indemnify him against such liability
under this Article. Insurance may be purchased from or maintained with a
person in which the Corporation has a financial interest.
ARTICLE V
NOMINATION OF DIRECTOR CANDIDATES
1. NOTIFICATION OF NOMINEES. Nominations for the election of Directors may be
made by the Board of Directors or a committee appointed by the Board of
Directors or by any shareholder entitled to vote in the election of
Directors generally. However, any shareholder entitled to vote in the
election of Directors generally may nominate one or more persons for
election as Directors at a meeting only if written notice of such
shareholder's intent to make such nomination or nominations has been
received by the Secretary
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of the Corporation not less than 80 days in advance of such meeting;
provided, however, that in the event that the date of the meeting was not
publicly announced by the Corporation by mail, press release or otherwise
more than 90 days prior to the meeting, notice by the shareholder to be
timely must be delivered to the Secretary of the Corporation not later than
the close of business on the tenth day following the day on which such
announcement of the date of the meeting was communicated to shareholders.
Each such notice shall set forth: (a) the name and address of the shareholder
who intends to make the nomination and of the person or persons to be
nominated; (b) a representation that the shareholder is a holder of record of
stock of the Corporation entitled to vote for the election of Directors on
the date of such notice and intends to appear in person or by proxy at the
meeting to nominate the person or persons specified in the notice; (c) a
description of all arrangements or understandings between the shareholder and
each nominee and any other person or persons (naming such person or persons)
pursuant to which the nomination or nominations are to be made by the
shareholder; (d) such other information regarding each nominee proposed by
such shareholder as would be required to be included in a proxy statement
filed pursuant to the proxy rules of the Securities and Exchange Commission,
had the nominee been nominated, or intended to be nominated, by the Board of
Directors; and (e) the consent
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of each nominee to serve as a Director of the Corporation if so elected.
2. SUBSTITUTION OF NOMINEES. In the event that a person is validly designated
as a nominee in accordance with paragraph 1 above, and shall thereafter
become unable or unwilling to stand for election to the Board of Directors,
the Board of Directors or the shareholder who proposed such nominee, as the
case may be, may designate a substitute nominee upon delivery, not fewer
than five days prior to the date of the meeting for the election of such
nominee of a written notice to the Secretary setting forth such information
regarding such substitute nominee as would have been required to be
delivered to the Secretary pursuant to paragraph l above had such substitute
nominee been initially proposed as a nominee. Such notice shall include a
signed consent to serve as a Director of the Corporation, if elected, of
each such substitute nominee.
3. COMPLIANCE WITH PROCEDURES. If the chairman of the meeting for the election
of Directors determines that a nomination of any candidate for election as a
Director at such meeting was not made in accordance with the applicable
provisions of paragraphs 1 and 2 above, such nomination shall be void.
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ARTICLE VI
EXECUTIVE COMMITTEE
1. NUMBER AND ELECTION. The Board of Directors may elect from its own number
an Executive Committee consisting of three or more members. The Chairman of
the Board and the President shall be members of such committee and the
officer designated as Chief Executive Officer shall act as the Chairman
thereof. The Board of Directors shall fill vacancies in the Executive
Committee by election from the Directors and at all times it shall be the
duty of the Board of Directors to keep the membership of such committee
full.
2. POWERS OF EXECUTIVE COMMITTEE. During the intervals between the meetings of
the Board of Directors, the Executive Committee shall possess and may
exercise all of the powers of the Board of Directors, in the management of
the usual and ordinary affairs of the Corporation, subject, however, at all
times to the control and direction of the Board of Directors.
3. QUORUM. A majority of the Executive Committee shall be necessary to
constitute a quorum and in every case the affirmative vote of a majority of
the members shall be necessary to pass any resolution. A resolution, in
writing, signed by all the members, shall be deemed the action of the
Committee, although not formally convened, and record thereof shall be kept
in the record book of the Committee
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under its proper date. The Committee shall keep a record of its proceedings
and shall fix its own rules.
ARTICLE VII
OFFICERS
1. OFFICERS. The Directors shall, immediately after the adjournment of the
meeting of shareholders at which they were elected, or as soon thereafter as
is convenient, meet for organization and the election of officers, and for
the transaction of such other business as may come before the meeting. No
notice of such meeting shall be required. The Board of Directors shall,
from its own number, annually elect a President and may elect a Chairman of
the Board, each of whom shall hold office for one year and until their
respective successors are chosen and qualified, and shall designate either
the Chairman of the Board or the President as Chief Executive Officer of the
Corporation. The Board of Directors may also from time to time choose such
other officers (who need not be members of the Board) as it may deem
necessary and fix the duties and authority thereof. Any two or more offices
may be held by the same person, but no officer shall execute, acknowledge,
or verify any instrument in more than one capacity, if such instrument is
required by law or by the Articles, the Regulations, or the By-Laws to be
executed, acknowledged, or verified by two or more officers.
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2. REMOVAL. The Board of Directors shall have the power, by a vote of
three-fourths of the entire membership of the Board, to remove any officer
of the Company and to fill any vacancy in any office for the unexpired term.
ARTICLE VIII
DUTIES OF OFFICERS
1. CHAIRMAN OF THE BOARD. The Chairman of the Board, when such Chairman is
elected, when present, shall preside at meetings of Directors and
shareholders and perform such other duties as may be designated by the Board
of Directors. If designated by the Board of Directors as Chief Executive
Officer of the Corporation he shall have general control and management of
the affairs of the Corporation, subject, however, to the direction and
control of the Board of Directors, and shall be an ex officio member of all
standing committees of the Board of Directors.
2. PRESIDENT. If designated by the Board of Directors as Chief Executive
Officer of the Corporation, the President shall have general control and
management of the affairs of the Corporation, subject, however, to the
direction and control of the Board of Directors, and shall be an ex officio
member of all standing committees of the Board of Directors. If not so
designated, the President shall have such duties as the Board of Directors
or the Chief Executive Officer may from time to time prescribe. In the
absence of the Chairman
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of the Board, the President shall preside at meetings of Directors and
shareholders.
3. VICE PRESIDENT. In the absence or disability of the Chairman of the Board,
the President shall exercise the powers and perform the duties of the
Chairman of the Board and in the absence or disability of the President a
Vice President designated by the Board of Directors shall exercise the
powers and perform the duties of the President. Each Vice President shall
perform such other duties as shall from time to time be imposed upon him by
the Chief Executive Officer or the Board of Directors. The performance of
any such duty by any Vice President shall be conclusive evidence, to anyone
dealing with the Corporation, of his authority to act.
4. SECRETARY. The Secretary shall keep the minutes of the proceedings of
shareholders, Directors and committees and make proper record of the same,
which shall be attested by him. He shall keep such books as may be required
by the Board of Directors. He shall have charge of the seal, and until a
Transfer Agent or Agents is appointed for the shares of the Corporation, he
shall have charge of the certificate books of the Corporation, shall issue
all certificates of shares, shall keep a record thereof, and shall prepare
and furnish lists thereof when required by the Board of Directors, or at any
meeting of shareholders.
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He shall also perform such other duties as may be required of him by the
Board of Directors or Executive Committee.
5. TREASURER. The Treasurer shall keep and maintain full and accurate accounts
of all receipts and disbursements of the Corporation. He shall prepare and
lay before shareholders such statements of profit and loss and such balance
sheets as are required to be laid before such meetings, and shall mail, on
request, a copy of such statement and balance sheet as required by law. He
shall deposit all monies, checks and other obligations to the credit of the
Corporation in such depositary or depositaries as may be designated by the
Board of Directors, to be disbursed on signature of such officers and/or
agents as the Board of Directors may designate. He shall render a statement
of his accounts and transactions whenever required by the Board of
Directors, and generally perform all duties incident to the office of
Treasurer, subject to the control of the Chief Executive Officer, and also
perform such other duties as may be required of him by the Chief Executive
Officer or Board of Directors. In case the Treasurer shall die, resign,
retire or be removed from office, all books, papers, vouchers, money and
other property of whatsoever kind in his possession or under his control
belonging to the Corporation shall be delivered to the Chief Executive
Officer or as such Chief Executive Officer may direct.
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6. SURETY BONDS. If required by the Board of Directors, any officer of the
Corporation shall give the Corporation a bond in such sum and with sureties
satisfactory to the Board for the faithful performance of the duties of his
office, the premium therefor to be paid by the Corporation.
7. ABSENCE OR DISABILITY. In the absence or disability of any officer of the
Corporation, the Board of Directors may delegate his powers and duties to
any other executive officer or to any Director during such absence or
disability, and the person so delegated shall for the time being be the
officer whose powers and duties he so assumes.
ARTICLE IX
COMPENSATION OF DIRECTORS AND OFFICERS
The compensation of the Directors and officers of the Corporation shall be such
as the Board of Directors may from time to time designate.
ARTICLE X
AMENDMENTS
These regulations may be altered, changed, amended or repealed by the written
consent of the holders of record of shares entitling them to exercise not less
than two-thirds of the voting power of the Corporation, or at a meeting called
and held for that purpose, by the affirmative vote of the holders of record of
shares entitling them to exercise not less than a majority of the
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voting power of the Corporation; provided, however, that paragraphs l and 2 of
Article III and all of Article V shall not be altered, changed, amended or
repealed, nor shall any provision inconsistent with such provisions be adopted,
without the affirmative vote of the holders of record of shares entitling them
to exercise not less than two-thirds of the voting power of the Corporation
entitled to vote generally in the election of Directors.
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EXHIBIT A
INDEMNIFICATION AGREEMENT
This Indemnification Agreement ("Agreement") is made as of the _______________
day of ______________, 19__, by and between The Lincoln Electric Company, an
Ohio corporation (the "Company"), and _________________________________ (the
"Indemnitee"), a Director of the Company.
RECITALS
A. The Indemnitee is presently serving as a Director of the Company and
the Company desires the Indemnitee to continue in that capacity. The
Indemnitee is willing, subject to certain conditions, including,
without limitation, the execution and performance of this Agreement by
the Company, to continue in that capacity.
B. In addition to the indemnification to which the Indemnitee is entitled
under the Code of Regulations, as amended, of the Company (the
"Regulations"), the Company has obtained, at its sole expense,
insurance protecting the Company and its officers and directors
including the Indemnitee against certain losses arising out of actual
or threatened actions, suits or proceedings to which such persons may
be made or threatened to be made parties. However, as a result of
circumstances having no relation to, and beyond the control of, the
Company and the Indemnitee, the scope of that insurance has been
reduced, and there can be no assurance of the continuation or renewal
of that insurance.
Accordingly, and in order to induce the Indemnitee to continue to
serve in his present capacity, the Company and the Indemnitee agree as
follows:
1. CONTINUED SERVICE. The Indemnitee shall continue to serve at
the will of the Company as a Director of the Company so long
as he is duly elected and qualified in accordance with the
Regulations or until he resigns in writing in accordance with
applicable law.
2. INITIAL INDEMNITY. (a) The Company shall indemnify the
Indemnitee, if or when he is a party or is threatened to be
made a party to any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative or
investigative (other than an action by or in the right of the
Company), by reason of the fact that he is or was a Director
of the Company or is or was serving at the request of the
Company as a director, trustee, officer, employee or agent of
another corporation, domestic or foreign, nonprofit or
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for profit, partnership, joint venture, trust or other
enterprise, or by reason of any action alleged to have been
taken or omitted in any such capacity, against any and all
costs, charges, expenses (including without limitation fees
and expenses of attorneys and/or others; all such costs,
charges and expenses being herein jointly referred to as
"Expenses"), judgments, fines and amounts paid in settlement,
actually and reasonably incurred by the Indemnitee in
connection therewith including any appeal of or from any
judgment or decision, unless it is proved by clear and
convincing evidence in a court of competent jurisdiction that
the Indemnitee's action or failure to act involved an act or
omission undertaken with deliberate intent to cause injury to
the Company or undertaken with reckless disregard for the best
interests of the Company. In addition, with respect to any
criminal action or proceeding, indemnification hereunder shall
be made only if the Indemnitee had no reasonable cause to
believe his conduct was unlawful. The termination of any
action, suit or proceeding by judgment, order, settlement or
conviction, or upon a plea of "nolo contendere" or its
equivalent, shall not, of itself, create a presumption that
the Indemnitee did not satisfy the foregoing standard of
conduct to the extent applicable thereto.
(b) The Company shall indemnify the Indemnitee, if or when he
is a party or is threatened to be made a party to any
threatened, pending or completed action, suit or proceeding by
or in the right of the Company to procure a judgment in its
favor, by reason of the fact that the Indemnitee is or was a
Director of the Company or is or was serving at the request of
the Company as a director, trustee, officer, employee or agent
of another corporation, domestic or foreign, nonprofit or for
profit, partnership, joint venture, trust or other enterprise,
against any and all Expenses actually and reasonably incurred
by the Indemnitee in connection with the defense or settlement
thereof or any appeal of or from any judgment or decision,
unless it is proved by clear and convincing evidence in a
court of competent jurisdiction that the Indemnitee's action
or failure to act involved an act or omission undertaken with
deliberate intent to cause injury to the Company or undertaken
with reckless disregard for the best interests of the Company,
except that no indemnification shall be made in respect of any
action or suit in which the only liability asserted against
the Indemnitee is pursuant to Section 1701.95 of the Ohio
Revised Code (the "ORC").
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(c) Any indemnification under Section 2(a) or 2(b) (unless
ordered by a court) shall be made by the Company only as
authorized in the specific case upon a determination that
indemnification of the Indemnitee is proper in the
circumstances because he has met the applicable standard of
conduct set forth in Section 2(a) or 2(b). Such authorization
shall be made (i) by the Directors of the Company (the
"Board") by a majority vote of a quorum consisting of
Directors who were not and are not parties to or threatened
with such action, suit or proceeding, or (ii) if such a quorum
of disinterested Directors is not available or if a majority
of such quorum so directs, in a written opinion by independent
legal counsel (designated for such purpose by the Board) which
shall not be an attorney, or a firm having associated with it
an attorney, who has been retained by or who has performed
services for the Company, or any person to be indemnified,
within the five years preceding such determination, or (iii)
by the shareholders of the Company (the "Shareholders"), or
(iv) by the court in which such action, suit or proceeding was
brought.
(d) To the extent that the Indemnitee has been successful on
the merits or otherwise, including without limitation the
dismissal of an action without prejudice, in defense of any
action, suit or proceeding referred to in Section 2(a) or
2(b), or in defense of any claim, issue or matter therein, he
shall be indemnified against Expenses actually and reasonably
incurred by him in connection therewith. Expenses actually
and reasonably incurred by the Indemnitee in defending any
such action, suit or proceeding shall be paid by the Company
as they are incurred in advance of the final disposition of
such action, suit or proceeding under the procedure set forth
in Section 4(b) hereof.
(e) For purposes of this Agreement, references to "other
enterprises" shall include employee benefit plans; references
to "fines" shall include any excise taxes assessed on the
Indemnitee with respect to any employee benefit plan;
references to "serving at the request of the Company" shall
include any service as a director, officer, employee or agent
of the Company which imposes duties on, or involves services
by, the Indemnitee with respect to an employee benefit plan,
its participants or beneficiaries; references to the masculine
shall include the feminine; and references to the singular
shall include the plural and vice versa.
3. ADDITIONAL INDEMNIFICATION. Pursuant to Section 1701.13(E)(6)
of the ORC, without limiting any right
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which the Indemnitee may have pursuant to Section 2 hereof or
any other provision of this Agreement or the Articles of
Incorporation, as amended, of the Company (the "Articles"),
the Regulations, the ORC, any policy of insurance or
otherwise, but subject to any limitation on the maximum
permissible indemnity which may exist under applicable law at
the time of any request for indemnity hereunder and subject to
the following provisions of this Section 3, the Company shall
indemnify the Indemnitee against any amount which he is or
becomes obligated to pay relating to or arising out of any
claim made against him because of an act, failure to act or
neglect or breach of duty, including any actual or alleged
error, misstatement or misleading statement, which he commits,
suffers, permits or acquiesces in while acting in his capacity
as a Director of the Company. The payments which the Company
is obligated to make pursuant to this Section 3 shall include,
without limitation, judgments, fines and amounts paid in
settlement and any and all Expenses actually and reasonably
incurred by the Indemnitee in connection therewith including
any appeal of or from any judgment or decision; provided,
however, that the Company shall not be obligated under this
Section 3 to make any payment in connection with any claim
against the Indemnitee:
(a) to the extent of any fine or similar governmental
imposition which the Company is prohibited by
applicable law from paying which results from a
final, nonappealable order; or
(b) to the extent based upon or attributable to the
Indemnitee having actually realized a personal gain
or profit to which he was not legally entitled,
including without limitation profit from the purchase
and sale by the Indemnitee of equity securities of
the Company which are recoverable by the Company
pursuant to Section 16(b) of the Securities Exchange
Act of 1934, or profit arising from transactions in
publicly traded securities of the Company which were
effected by the Indemnitee in violation of Section
10(b) of the Securities Exchange Act of 1934, or Rule
10b-5 promulgated thereunder.
A determination as to whether the Indemnitee shall be entitled
to indemnification under this Section 3 shall be made in
accordance with Section 4(a) hereof. Expenses incurred by the
Indemnitee in defending any claim to which this Section 3
applies shall be paid by the Company as they are actually and
reasonably incurred in advance of the final disposition of
such
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claim under the procedure set forth in Section 4(b) hereof.
4. CERTAIN PROCEDURES RELATING TO INDEMNIFICATION. (a) For
purposes of pursuing his rights to indemnification under
Section 3 hereof, the Indemnitee shall (i) submit to the Board
a sworn statement of request for indemnification substantially
in the form of Exhibit 1 attached hereto and made a part
hereof (the "Indemnification Statement") averring that he is
entitled to indemnification hereunder; and (ii) present to the
Company reasonable evidence of all amounts for which
indemnification is requested. Submission of an
Indemnification Statement to the Board shall create a
presumption that the Indemnitee is entitled to indemnification
hereunder, and the Company shall, within sixty (60) calendar
days after submission of the Indemnification Statement, make
the payments requested in the Indemnification Statement to or
for the benefit of the Indemnitee, unless (i) within such
60-calendar-day period the Board shall resolve by vote of a
majority of the Directors at a meeting at which a quorum is
present that the Indemnitee is not entitled to indemnification
under Section 3 hereof, (ii) such vote shall be based upon
clear and convincing evidence (sufficient to rebut the
foregoing presumption) and (iii) the Indemnitee shall have
received within such period notice in writing of such vote,
which notice shall disclose with particularity the evidence
upon which the vote is based. The foregoing notice shall be
sworn to by all persons who participated in the vote and voted
to deny indemnification. The provisions of this Section 4(a)
are intended to be procedural only and shall not affect the
right of Indemnitee to indemnification under Section 3 of this
Agreement so long as Indemnitee follows the prescribed
procedure, and any determination by the Board that Indemnitee
is not entitled to indemnification and any failure to make the
payments requested in the Indemnification Statement shall be
subject to judicial review by any court of competent
jurisdiction.
(b) For purposes of obtaining payments of Expenses in advance of
final disposition pursuant to the second sentence of Section
2(d) or the last sentence of Section 3 hereof, the Indemnitee
shall submit to the Company a sworn request for advancement of
Expenses substantially in the form of Exhibit 2 attached
hereto and made a part hereof (the "Undertaking"), averring
that he has reasonably incurred actual Expenses in defending
an action, suit or proceeding referred to in Section 2(a) or
2(b) or any claim referred to in Section 3, or pursuant to
Section 7 hereof. Unless at
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the time of the Indemnitee's act or omission at issue, the
Articles or Regulations of the Company prohibit such advances
by specific reference to ORC Section 1701.13(E)(5)(a) and
unless the only liability asserted against the Indemnitee in
the subject action, suit or proceeding is pursuant to ORC
Section 1701.95, the Indemnitee shall be eligible to execute
Part A of the Undertaking by which he undertakes to (a) repay
such amount if it is proved by clear and convincing evidence
in a court of competent jurisdiction that the Indemnitee's
action or failure to act involved an act or omission
undertaken with deliberate intent to cause injury to the
Company or undertaken with reckless disregard for the best
interests of the Company and (b) reasonably cooperate with the
Company concerning the action, suit, proceeding or claim. In
all cases, the Indemnitee shall be eligible to execute Part B
of the Undertaking by which he undertakes to repay such amount
if it ultimately is determined that he is not entitled to be
indemnified by the Company under this Agreement or otherwise.
In the event that the Indemnitee is eligible to and does
execute both Part A and Part B of the Undertaking, the
Expenses which are paid by the Company pursuant thereto shall
be required to be repaid by the Indemnitee only if he is
required to do so under the terms of both Part A and Part B of
the Undertaking. Upon receipt of the Undertaking, the Company
shall thereafter promptly pay such Expenses of the Indemnitee
as are noticed to the Company in writing and in reasonable
detail arising out of the matter described in the Undertaking.
No security shall be required in connection with any
Undertaking.
5. LIMITATION ON INDEMNITY. Notwithstanding anything contained
herein to the contrary, the Company shall not be required
hereby to indemnify the Indemnitee with respect to any action,
suit or proceeding that was initiated by the Indemnitee unless
(i) such action, suit or proceeding was initiated by the
Indemnitee to enforce any rights to indemnification arising
hereunder and such person shall have been formally adjudged to
be entitled to indemnity by reason hereof, (ii) authorized by
another agreement to which the Company is a party whether
heretofore or hereafter entered or (iii) otherwise ordered by
the court in which the suit was brought.
6. SUBROGATION; DUPLICATION OF PAYMENTS. (a) In the event of
payment under this Agreement, the Company shall be subrogated
to the extent of such payment to all of the rights of recovery
of the Indemnitee, who shall execute all papers required and
shall do everything that may be necessary to secure such
rights, including the
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execution of such documents necessary to enable the Company
effectively to bring suit to enforce such rights.
(b) The Company shall not be liable under this Agreement to make
any payment in connection with any claim made against the
Indemnitee to the extent the Indemnitee has actually received
payment (under any insurance policy, the Company's Regulations
or otherwise) of the amounts otherwise payable hereunder.
7. FEES AND EXPENSES OF ENFORCEMENT. It is the intent of the
Company that the Indemnitee not be required to incur the
expenses associated with the enforcement of his rights under
this Agreement by litigation or other legal action because the
cost and expense thereof would substantially detract from the
benefits intended to be extended to the Indemnitee hereunder.
Accordingly, if it should appear to the Indemnitee that the
Company has failed to comply with any of its obligations under
this Agreement or in the event that the Company or any other
person takes any action to declare this Agreement void or
unenforceable, or institutes any action, suit or proceeding to
deny, or to recover from, the Indemnitee the benefits intended
to be provided to the Indemnitee hereunder, the Company
irrevocably authorizes the Indemnitee from time to time to
retain counsel of his choice, at the expense of the Company as
hereafter provided, to represent the Indemnitee in connection
with the initiation or defense of any litigation or other
legal action, whether by or against the Company or any
director, officer, shareholder or other person affiliated with
the Company, in any jurisdiction. Regardless of the outcome
thereof, the Company shall pay and be solely responsible for
any and all costs, charges and expenses, including without
limitation fees and expenses of attorneys and others,
reasonably incurred by the Indemnitee pursuant to this Section
7.
8. MERGER OR CONSOLIDATION. In the event that the Company shall
be a constituent corporation in a consolidation, merger or
other reorganization, the Company, if it shall not be the
surviving, resulting or acquiring corporation therein, shall
require as a condition thereto that the surviving, resulting
or acquiring corporation agree to assume all of the
obligations of the Company hereunder and to indemnify the
Indemnitee to the full extent provided herein. Whether or not
the Company is the resulting, surviving or acquiring
corporation in any such transaction, the Indemnitee shall also
stand in the same position under this Agreement with respect
to the resulting, surviving or
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acquiring corporation as he would have with respect to the
Company if its separate existence had continued.
9. NONEXCLUSIVITY AND SEVERABILITY. (a) The rights to
indemnification provided by this Agreement shall not be
exclusive of any other rights of indemnification to which the
Indemnitee may be entitled under the Articles, the
Regulations, the ORC or any other statute, any insurance
policy, agreement or vote of shareholders or directors or
otherwise, as to any actions or failures to act by the
Indemnitee, and shall continue after he has ceased to be a
Director, officer, employee or agent of the Company or other
entity for which his service gives rise to a right hereunder,
and shall inure to the benefit of his heirs, executors and
administrators.
(b) If any provision of this Agreement or the application of any
provision hereof to any person or circumstances is held
invalid, unenforceable or otherwise illegal, the remainder of
this Agreement and the application of such provision to other
persons or circumstances shall not be affected, and the
provision so held to be invalid, unenforceable or otherwise
illegal shall be reformed to the extent (and only to the
extent) necessary to make it enforceable, valid and legal.
10. GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of Ohio,
without giving effect to the principles of conflict of laws
thereof.
11. MODIFICATION. This Agreement and the rights and duties of the
Indemnitee and the Company hereunder may be modified only by
an instrument in writing signed by both parties hereto.
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as of
the date first above written.
THE LINCOLN ELECTRIC COMPANY
By______________________________________
Title
________________________________________
(Signature of Indemnitee)
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EXHIBIT 1
INDEMNIFICATION STATEMENT
STATE OF___________________________)
) SS
COUNTY OF__________________________)
I, _____________________________________________________, being first duly
sworn, do depose and say as follows:
1. This Indemnification Statement is submitted pursuant to the Indemnification
Agreement, dated ___________________, 19__, between The Lincoln Electric
Company (the "Company"), an Ohio corporation, and the undersigned.
2. I am requesting indemnification against costs, charges, expenses (which may
include fees and expenses of attorneys and/or others), judgments, fines and
amounts paid in settlement (collectively, "Liabilities"), which have been
actually and reasonably incurred by me in connection with a claim referred to
in Section 3 of the aforesaid Indemnification Agreement.
3. With respect to all matters related to any such claim, I am entitled to be
indemnified as herein contemplated pursuant to the aforesaid Indemnification
Agreement.
4. Without limiting any other rights which I have or may have, I am requesting
indemnification against Liabilities which have or may arise out of
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
_______________________________
(Signature of Indemnitee)
Subscribed and sworn to before me, a Notary Public in and for
said County and State, this ________________ day of _____________
_________________________________, 19___.
[SEAL} ___________________________________
My commission expires the __________day of ______________, 19___.
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EXHIBIT 2
UNDERTAKING
STATE OF___________________________ )
) SS
COUNTY OF__________________________ )
I, _____________________________________________________, being first duly
sworn, do depose and say as follows:
1. This Undertaking is submitted pursuant to the Indemnification Agreement,
dated ___________________, 19__, between The Lincoln Electric Company (the
"Company"), an Ohio corporation, and the undersigned.
2. I am requesting payment of costs, charges and expenses which I have
reasonably incurred or will reasonably incur in defending an action, suit or
proceeding, referred to in Section 2(a) or 2(b) or any claim referred to in
Section 3, or pursuant to Section 7, of the aforesaid Indemnification
Agreement.
3. The costs, charges, and expenses for which payment is requested are, in
general, all expenses related to ______________________________________________
_______________________________________________________________________________
_______________________________________________________________________________.
4. PART A
I hereby undertake to (a) repay all amounts paid pursuant hereto if it is
proved by clear and convincing evidence in a court of competent jurisdiction
that my action or failure to act which is the subject of the matter described
herein involved an act or omission undertaken with deliberate intent to cause
injury to the Company or undertaken with reckless disregard for the best
interests of the Company and (b) reasonably cooperate with the Company
concerning the action, suit, proceeding or claim.
______________________________
(Signature ofIndemnitee)
PART B
I hereby undertake to repay all amounts paid pursuant hereto if it ultimately
is determined that I am not entitled to be indemnified by the Company under the
aforesaid Indemnification Agreement or otherwise.
______________________________
(Signature ofIndemnitee)
Subscribed and sworn to before me, a Notary Public in and for said County and
State, this __________ day of __________________, 19___.
[SEAL] _________________________________________
My commission expires the __________day of ______________, 19___.
VOL402CL Doc: 94942.1
