<PAGE> 1
As filed with the Securities and Exchange Commission on April 17, 1998
Registration Statement No. 333-
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------
LINCOLN ELECTRIC HOLDINGS, INC.
(Exact name of registrant as specified in its charter)
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OHIO 3540 34-1860551
(State or other jurisdiction of (Primary Standard (I.R.S. employer
incorporation or organization) Industrial Code Number) identification number)
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22801 ST. CLAIR AVENUE
CLEVELAND, OHIO 44117
(216) 481-8100
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
------------------------
FREDERICK G. STUEBER, ESQ.
SENIOR VICE PRESIDENT, GENERAL COUNSEL AND SECRETARY
THE LINCOLN ELECTRIC COMPANY
22801 ST. CLAIR AVENUE
CLEVELAND, OHIO 44117
(216) 481-8100
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
------------------------
COPIES TO:
DAVID P. PORTER, ESQ.
JONES, DAY, REAVIS & POGUE
901 LAKESIDE AVENUE
CLEVELAND, OHIO 44114
(216) 586-3939
------------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after this Registration Statement has become effective and all other
conditions to the merger of Lincoln Electric Merger Co. with and into The
Lincoln Electric Company pursuant to the Agreement of Merger described in the
enclosed Proxy Statement/Prospectus (the "MERGER") have been satisfied or
waived.
------------------------
If the securities being registered on this Form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box. [ ]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ] ________
If this Form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ] ________
------------------------
CALCULATION OF REGISTRATION FEE
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=================================================================================================================================
PROPOSED PROPOSED
MAXIMUM MAXIMUM
TITLE OF EACH CLASS OF AMOUNT TO BE OFFERING PRICE AGGREGATE AMOUNT OF
SECURITIES TO BE REGISTERED REGISTERED PER SHARE OFFERING PRICE REGISTRATION FEE
<S> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------------------------------------
Common Shares, without par value... 49,512,614(2) $22.88(1) $1,132,970,177 $334,226.20(3)
=================================================================================================================================
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(1) Based upon the average high and low prices reported in the consolidated
trading system of the Common Shares and Class A Common Shares of The Lincoln
Electric Company, an Ohio corporation (the "COMPANY"), on the NASDAQ
National Market on April 14, 1998, in accordance with Rule 457(f)(l), and
estimated solely for the purpose of determining the amount of the
registration fee pursuant to such rule. Reflects two-for-one split effected
by the Merger.
(2) Represents the maximum number of shares of Common Shares of the Registrant
issuable (a) upon consummation of the Merger described in the Prospectus and
(b) upon exercise of all options and rights for Common Shares granted
pursuant to the settlement in April, 1996 of certain litigation against the
Company and to be outstanding upon consummation of the Merger.
(3) Part of the registration fee is offset as provided by Securities Act Rule
457(b). A fee of $186,569.84 was previously paid with the Schedule 14A,
preliminary proxy statement, filed by The Lincoln Electric Company on March
6, 1998. Accordingly, an additional fee of $147,656.36 was paid with this
filing.
------------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE SECURITIES AND EXCHANGE COMMISSION, ACTING
PURSUANT TO SAID SECTION 8(a), MAY DETERMINE.
================================================================================
<PAGE> 2
LINCOLN LOGO
Dear Shareholder:
You are cordially invited to attend the 1998 Annual Meeting of
Shareholders, which will be held on May 19, 1998 at 4:00 p.m. at the Wellington
Center, 777 Alpha Drive, Highland Heights, Ohio 44143. No admission tickets are
necessary.
Holders of Common and Class A Common Shares will find enclosed a proxy card
and a postage-paid envelope in which to return it. Whether or not you expect to
attend the meeting in person, please sign, date and return the proxy in the
postage-paid envelope. The signed card will let your shares be voted as you
direct even if you cannot attend the meeting. If you do attend the meeting, you
can, of course, vote in person. If you wish to vote in person and hold your
shares in broker name, please refer to the "Questions and Answers" section in
the Proxy Statement/Prospectus.
For participants in the Company's Employee Savings Plan, a separate voting
direction form is enclosed with materials being sent to you. You will need to
follow the instructions with the voting direction form in order to vote. The
direction form may be returned in the same return envelope mentioned above.
In addition to the election of Directors and the other matters set forth in
the accompanying Proxy Statement, you are being asked to approve a proposal that
will simplify the Company's capital and corporate structure (the
"Reorganization"). We are proposing the creation of Lincoln Electric Holdings,
Inc. as the publicly held parent of our businesses. Following the
Reorganization, you will own shares of Lincoln Electric Holdings, Inc. As part
of our proposal, all non-voting shares will be converted into voting shares,
creating one single class of stock. The Reorganization will also have the
economic effect of a two-for-one stock split since we propose that Lincoln
Electric Holdings, Inc. will issue two voting shares for every share, voting or
non-voting, of the Company. The Reorganization will increase the total number of
shares outstanding, reduce the cost of acquiring shares going forward and, we
believe, will encourage more employee stock ownership.
Creating a holding company structure will better reflect the way we run our
business both as to geographic regions and operations. Such a structure is also
prudent, providing us with the flexibility to protect our domestic assets from
various foreign risks, and protecting our foreign investments from various
domestic risks. As we grow internationally, we believe we should be positioned
legally to capture the benefits of growth while minimizing downside risks
associated with particular regions.
We believe that all of the elements of this proposal -- the formation of
the holding company, the two-for-one share conversion and the conversion to all
voting stock -- will enhance shareholder value. Your Board of Directors
recommends a vote "FOR" the Reorganization.
We look forward to the meeting and seek your support for the continued
growth of the enterprise.
Sincerely,
/s/ Anthony A. Massaro
ANTHONY A. MASSARO
Chairman, President and Chief
Executive Officer
The Lincoln Electric Company
April 20, 1998
<PAGE> 3
LINCOLN LOGO
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO SHAREHOLDERS OF THE LINCOLN ELECTRIC COMPANY
Notice is hereby given that the Annual Meeting of Shareholders of The
Lincoln Electric Company will be held at the Wellington Center, 777 Alpha Drive,
Highland Heights, Ohio 44143 on May 19, 1998 at 4:00 p.m. The principal business
of the meeting will be:
(a) To elect three directors, to serve for a term scheduled to expire in
2001; to elect one director to serve for a term scheduled to expire in
2000; and to elect one director to serve for a term scheduled to expire
in 1999.
(b) To approve changes to the Company's capital and corporate structure:
- Through a merger, the Company will become a wholly owned subsidiary of
Lincoln Electric Holdings, Inc., an Ohio corporation ("LINCOLN
ELECTRIC HOLDINGS").
- Common Shares and Class A Common Shares of the Company will be
converted automatically into Common Shares of Lincoln Electric
Holdings, resulting in one class of voting securities for the parent
entity in the Company's corporate structure. As a result, all
nonvoting shares will be converted into voting shares.
- The merger will have the economic effect of a two-for-one stock split
since Lincoln Electric Holdings will issue two voting shares of
Lincoln Electric Holdings for every share, voting and nonvoting, of
the Company.
(c) To approve the 1998 Stock Option Plan.
(d) To ratify the selection of Ernst & Young LLP as independent auditors of
the Company for the year 1998.
(e) To transact such other business as may properly come before the
meeting.
The close of business on April 6, 1998 has been fixed as the record date
for the determination of those holders of Common Shares and Class A Common
Shares entitled to notice of, and to vote at, the meeting or any adjournment
thereof. This means only holders of record as of April 6, 1998 will be able to
vote at the Annual Meeting. If you own shares through a broker, you must
instruct your broker to vote on your behalf if you want your vote counted (see
"Questions and Answers" in the Proxy Statement/Prospectus).
FREDERICK G. STUEBER
Senior Vice President,
General Counsel and Secretary
The Lincoln Electric Company
22801 St. Clair Avenue
Cleveland, Ohio 44117-1199
April 20, 1998
IMPORTANT -- THE PROXY FOR HOLDERS OF COMMON SHARES
AND/OR CLASS A COMMON SHARES IS ENCLOSED
PLEASE SIGN, DATE AND RETURN YOUR ENCLOSED PROXY IN THE ACCOMPANYING ENVELOPE.
<PAGE> 4
PROXY STATEMENT FOR
THE LINCOLN ELECTRIC COMPANY
Annual Meeting of Shareholders to be held
May 19, 1998
----------------------------------------------
PROSPECTUS FOR
LINCOLN ELECTRIC HOLDINGS, INC.
----------------------------------------------
Common Shares, without par value
Your Board of Directors is furnishing this Proxy Statement/Prospectus to
you in connection with the solicitation of proxies for use at our 1998 Annual
Meeting of Shareholders. Among other things, you will consider and vote upon a
proposal to reorganize the Company by approving the Reorganization, which
includes an Agreement of Merger pursuant to which Merger Co., a wholly owned
subsidiary of Lincoln Electric Holdings, will be merged with and into the
Company. Each Common Share and each Class A Common Share issued and outstanding
at the Effective Time of the Merger will be converted automatically into two
Holding Common Shares. Immediately following the Effective Time of the Merger,
the Company will be a wholly owned subsidiary of Lincoln Electric Holdings,
which will be publicly held. The shareholders of the Company will be the
shareholders of Lincoln Electric Holdings immediately following the Effective
Time of the Merger. All shareholders will hold voting shares after the Merger.
You will find a number of frequently used terms defined on page 3.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED THESE SECURITIES, OR DETERMINED IF THIS
PROXY STATEMENT/PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
The date of this Proxy Statement/Prospectus is April 20, 1998, and it was
first mailed to shareholders on or about April 20, 1998.
<PAGE> 5
WHERE YOU CAN GET MORE INFORMATION
Lincoln Electric Holdings has filed a Registration Statement on Form S-4
with the Securities and Exchange Commission covering 49,512,614 Holding Common
Shares, which includes the maximum number of Holding Common Shares issuable in
connection with the Merger described in this Proxy Statement/Prospectus and upon
exercise of all stock options and rights granted pursuant to a settlement in
April 1996 of certain litigation involving the Company. For purposes of this
Proxy Statement/Prospectus, the term Registration Statement means the original
Registration Statement and any and all amendments thereto, including the
schedules and exhibits to such Registration Statement or any such amendment.
This Proxy Statement/Prospectus, which forms a part of the Registration
Statement, does not contain all of the information set forth in the Registration
Statement, to which reference is hereby made. Each statement made in this Proxy
Statement/Prospectus concerning a document filed as an exhibit to the
Registration Statement is qualified in its entirety by reference to such exhibit
for a complete statement of its provisions.
We file annual, quarterly and current reports, proxy statements and other
information under the Exchange Act. You may read and copy any reports,
statements or other information we file at the Securities and Exchange
Commission's public reference room in Washington, D.C. You can request copies of
these documents, upon payment of a duplicating fee, by writing to the Securities
and Exchange Commission. Please call the Securities and Exchange Commission at
1-800-SEC-0330 for further information on the operation of the public reference
rooms. Our filings with the Securities and Exchange Commission are also
available to the public at the Securities and Exchange Commission's Internet
site at http://www.sec.gov. There is a time delay between our filing with the
Securities and Exchange Commission and the availability of the filing through
the Securities and Exchange Commission's Internet site. The filings may be
available earlier through a number of paid service bureaus.
The Securities and Exchange Commission permits us to make disclosures to
you by incorporating other documents by reference. By incorporating a document
by reference, the document is deemed to be a part of this Proxy
Statement/Prospectus except to the extent that any of the information in the
document is superseded by information contained in this Proxy
Statement/Prospectus. We are incorporating by reference into this Proxy
Statement/Prospectus our Annual Report on Form 10-K for the fiscal year ended
December 31, 1997, which contains information about our business and financial
results. We are also incorporating by reference all additional documents that we
file with the Securities and Exchange Commission between the date of this Proxy
Statement/Prospectus and the date of the Annual Meeting. The information
contained in those documents will supersede the information contained in this
Proxy Statement/Prospectus. You can obtain those documents from the same sources
described in the immediately preceding paragraph.
Our Common Shares and Class A Common Shares have traded on the NASDAQ
National Market since June 1995. Reports and other information concerning us
also can be inspected there. In addition, we will provide without charge, to
each person, including any beneficial owner, to whom this Proxy
Statement/Prospectus is delivered, upon written or oral request, a copy of any
and all of the documents incorporated by reference in this Proxy
Statement/Prospectus, except for the exhibits to the documents unless we
specifically incorporate the exhibit by reference into this Proxy
Statement/Prospectus. Please direct your requests in writing or by telephone to
our executive offices:
Roy L. Morrow
Director of Corporate Relations
The Lincoln Electric Company
22801 St. Clair Avenue
Cleveland, Ohio 44117
(216) 481-8100
2
<PAGE> 6
GLOSSARY OF DEFINED TERMS
For your convenience in reading this Proxy Statement/Prospectus, we have
included this Glossary of Defined Terms where you can find explanations of
frequently used terms.
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Agreement of Merger The Agreement of Merger among the Company, Merger Co. and
Lincoln Electric Holdings with respect to the Merger
Annual Meeting The 1998 Annual Meeting of the Company's Shareholders
Articles The Company's Second Restated Articles of Incorporation
Class A Common Share Class A Common Share, without par value, of the Company
Common Share Common Share, without par value, of the Company
Company The Lincoln Electric Company, an Ohio corporation
Effective Time The time when Merger Co. and the Company file the
appropriate certificate for the Merger with the Secretary
of State of Ohio
Exchange Act Securities Exchange Act of 1934, as amended
Holding Articles Restated Articles of Incorporation of Lincoln Electric
Holdings as they will be in effect immediately prior to
the Merger
Holding Common Share Common Share, without par value, of Lincoln Electric
Holdings
Holding Regulations Code of Regulations of Lincoln Electric Holdings
Internal Revenue Code Internal Revenue Code of 1986, as amended
Lincoln Electric Holdings Lincoln Electric Holdings, Inc., an Ohio corporation
Merger The merger of Merger Co. with and into the Company
pursuant to the Agreement of Merger
Merger Co. Lincoln Electric Merger Co., an Ohio corporation
NASDAQ National Market The NASDAQ Stock Market, Inc.'s National Market
1998 Stock Option Plan The stock option plan authorizing the granting of options
to key employees to purchase up to an aggregate of
1,250,000 Common Shares and 1,250,000 Class A Common
Shares
Ohio General Corporation Law Ohio General Corporation Law, Chapter 1701 of the Ohio
Revised Code
Preferred Shares Preferred Shares, without par value, of Lincoln Electric
Holdings
Principal Shareholder David C. Lincoln and his affiliates, collectively
Regulations The Company's Second Restated Code of Regulations
Reorganization The creation of a holding company structure for the
Company through the Merger and the resulting changes in
the Company's capital structure, including the conversion
of the Class A Common Shares into Holding Common Shares
and the authorization of Preferred Shares
Securities Act Securities Act of 1933, as amended
10-K Report The Company's Annual Report on Form 10-K for the Fiscal
Year ended December 31, 1997
We, us, or our The Lincoln Electric Company
You or your The shareholders of The Lincoln Electric Company
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3
<PAGE> 7
TABLE OF CONTENTS
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PAGE
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QUESTIONS AND ANSWERS ABOUT THE ANNUAL MEETING.............. 6
PROSPECTUS SUMMARY.......................................... 9
GENERAL INFORMATION......................................... 11
ELECTION OF DIRECTORS....................................... 11
Family Relationships................................... 14
Board Committees....................................... 15
Compensation of Directors.............................. 15
Security Ownership of Management and Certain Beneficial
Owners................................................ 16
Summary Compensation Table............................. 21
Option Grants In Last Fiscal Year...................... 22
Aggregated Option Exercises in Last Fiscal Year and
Fiscal Year End Option Values......................... 22
Compensation Committee Report on Executive
Compensation.......................................... 23
Section 16(a) Beneficial Ownership Reporting
Compliance............................................ 24
Pension Benefits....................................... 24
Cumulative Shareholder Return and Performance
Presentation.......................................... 27
Transactions with Affiliates........................... 28
REORGANIZATION.............................................. 28
Reasons for the Reorganization......................... 28
Description of the Merger.............................. 29
Exchange of Certificates............................... 30
Capitalization of Holding Company...................... 30
Employee Benefit Plans................................. 31
Conditions to Consummation of the Merger............... 31
Amendments, Deferral or Abandonment of Agreement of
Merger................................................ 31
Factors Affecting the Consummation of the
Reorganization........................................ 31
Post-Reorganization Board of Directors and Management
of Lincoln Electric Holdings.......................... 32
Initial Funding of Lincoln Electric Holdings........... 33
Federal and Ohio Income Tax Consequences of the
Merger................................................ 33
Financial Statements................................... 35
Price Range of Common Shares and Class A Common
Shares................................................ 35
Dividends.............................................. 36
Listing; Holding Common Shares Trading Market.......... 36
Dissenters' Rights..................................... 36
Description of Holding Common Shares................... 37
Description of the Preferred Shares.................... 38
Registrar and Transfer Agent........................... 39
Experts................................................ 39
Legal Matters.......................................... 39
1998 STOCK OPTION PLAN...................................... 39
General................................................ 39
Description of the Plan................................ 39
Federal Income Tax Consequences........................ 40
Required Vote.......................................... 41
APPOINTMENT OF INDEPENDENT AUDITORS......................... 41
OTHER MATTERS............................................... 42
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SHAREHOLDER PROPOSALS....................................... 42
Annex A -- Agreement of Merger.............................. A-1
Annex B -- Restated Articles of Incorporation of Lincoln
Electric Holdings, Inc.................................... B-1
Annex C -- Code of Regulations of Lincoln Electric Holdings,
Inc....................................................... C-1
Annex D -- Second Restated Articles of Incorporation of The
Lincoln Electric Company.................................. D-1
Annex E -- Second Restated Code of Regulations of The
Lincoln Electric Company.................................. E-1
Annex F -- 1998 Stock Option Plan........................... F-1
Annex G -- Sections 1701.84 and 1701.85 of the Ohio Revised
Code...................................................... G-1
Annex H -- Summary of Terms of Holding Common Shares........ H-1
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<PAGE> 9
QUESTIONS AND ANSWERS
ABOUT THE ANNUAL MEETING
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I. GENERAL
Q. WHAT AM I BEING ASKED TO VOTE ON?
A. You are being asked to vote on four matters:
(1) the election of directors;
(2) the Reorganization of the Company which includes:
- the creation of Lincoln Electric Holdings as the publicly
held parent of our businesses;
- the conversion of all Common Shares and Class A Common
Shares into Holding Common Shares with the result that you
will be a shareholder of the parent company, Lincoln
Electric Holdings, following the Merger;
- the conversion to voting stock of approximately 56.2% of
the Company's equity that is presently nonvoting stock; and
- a share conversion that has the economic effect of a
two-for-one stock split since each share of the Company,
voting and nonvoting, will be converted into two shares of
Lincoln Electric Holdings.
(3) the adoption of a new stock option plan; and
(4) the ratification of the appointment of our independent
auditors.
II. THE REORGANIZATION
Q. WHY SHOULD I VOTE IN FAVOR OF THE REORGANIZATION?
A. The Reorganization will simplify our capital structure and
corporate structure. We believe it will offer the following
benefits:
- the opportunity for enhanced shareholder value through
- the elimination of market confusion caused by our two
existing classes of common stock; and
- greater trading volume by combining shares into one class
for trading and reducing purchase prices;
- increased legal protection to our businesses, with risks
and benefits of domestic and foreign regions more clearly
contained below the level of Lincoln Electric Holdings.
Q. WHAT IS THE POSITION OF THE COMPANY'S BOARD OF DIRECTORS
REGARDING THE REORGANIZATION?
A. Your Board of Directors has unanimously approved the
Reorganization, including the Agreement of Merger, and
recommends that you vote in favor of the Reorganization.
Q. HOW MANY SHARES OF LINCOLN ELECTRIC HOLDINGS WILL I RECEIVE?
A. You will receive two Holding Common Shares for each Common
Share you own and two Holding Common Shares for each Class A
Common Share you own. For example, if you own 100 Common
Shares, you will receive 200 Holding Common Shares in the
Merger. If you own 100 Class A Common Shares, you will
receive 200 Holding Common Shares in the Merger.
Q. WILL THE SHARES I RECEIVE BE LISTED ON A STOCK EXCHANGE?
A. The Holding Common Shares will be designated for quotation
on the NASDAQ National Market. This is the same market as
currently exists for your shares.
Q. HOW MANY VOTES ARE NEEDED FOR THE REORGANIZATION TO BE
APPROVED?
A. At least two-thirds of the Common Shares, voting as a class,
and at least two-thirds of the Class A Common Shares, voting
as a class, must vote in favor of the Reorganization for it
to be approved.
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6
<PAGE> 10
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Q. WILL I HAVE ANY DISSENTER'S RIGHTS IF I DO NOT VOTE IN FAVOR
OF THE REORGANIZATION?
A. Except with respect to your shares held in the 401(k)
Savings Plan, you are entitled to statutory appraisal rights
if you do not vote in favor of the Reorganization. You must
follow certain procedures described in the Proxy
Statement/Prospectus to assert your appraisal rights.
Q. WHAT ARE THE FEDERAL AND STATE INCOME TAX CONSEQUENCES TO ME
RESULTING FROM THE REORGANIZATION?
A. We have been advised by outside tax counsel that the
conversion of Common Shares and Class A Common Shares into
Holding Common Shares will be a tax free event to you under
the federal income tax laws as well as the tax laws of the
State of Ohio. For other jurisdictions, you are urged to
consult your tax advisor concerning the tax consequences to
you based upon your particular circumstances.
III. THE STOCK OPTION PLAN
Q. WHAT IS THE 1998 STOCK OPTION PLAN?
A. The 1998 Stock Option Plan will allow us to make awards of
stock options for the purchase of up to an aggregate of
1,250,000 Common Shares and 1,250,000 Class A Common Shares.
Assuming the Reorganization is approved, the Plan will be
applicable to 5,000,000 Holding Common Shares. Stock options
may be granted from time to time under the plan to key
employees. The option price will not be less than the fair
market value at the time of grant.
Q. WHY HAVE WE PROPOSED THE ADOPTION OF THE 1998 STOCK OPTION
PLAN?
A. The 1998 Stock Option Plan will replace our 1988 Incentive
Equity Plan which expires this year. We believe that
long-term stock-based compensation is an essential part of
our compensation policy and we want to continue this policy
through the 1998 Stock Option Plan.
Q. WHY SHOULD I VOTE IN FAVOR OF THE 1998 STOCK OPTION PLAN?
A. The 1998 Stock Option Plan is essential to continuing our
policy of providing long-term stock based compensation. As
you know, the Company has a history of encouraging employee
ownership, including sponsorship of the 1995 Lincoln Stock
Purchase Plan and endorsement of Company stock investment
options in the 401(k) Savings Plan. The 1998 Stock Option
Plan will complement existing plans and will provide many
benefits to the Company and our shareholders including:
- enhancing our ability to attract, retain and motivate key
employees;
- providing a catalyst for long-term growth, profitability
and market leadership;
- aligning management and shareholder interests by providing
incentives and rewards which reflect increases in the value
of the Company; and
- providing an alternative to costly cash compensation.
Q. HOW WILL THE MERGER AFFECT THE 1998 STOCK OPTION PLAN?
A. Following the Merger, awards granted under the 1998 Stock
Option Plan will be for an aggregate of up to 5,000,000
Holding Common Shares.
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7
<PAGE> 11
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IV. PROCEDURES
Q. WHAT DO I NEED TO DO NOW?
A. You are urged to mail your signed, dated proxy card in the
enclosed envelope as soon as possible so that your shares
will be represented at the Annual Meeting.
Q. WHAT IF MY SHARES ARE HELD IN MY BROKER'S NAME?
A. Your broker will vote your shares with respect to the
Reorganization and the 1998 Stock Option Plan only if you
provide written instructions to your broker on how to vote.
If you do not provide your broker with instructions on those
two matters, your shares will not be voted but will be
counted for purposes of determining whether a quorum is
present at the Annual Meeting. We urge you to instruct your
broker in writing to vote your shares in favor of the
Reorganization and the 1998 Stock Option Plan. To ensure
that your broker receives your instructions, we suggest that
you send them by fax or by certified mail, return receipt
requested. If you wish to vote in person at the meeting, and
hold your shares in your broker's name, you must contact
your broker and request a document called a "legal proxy."
You must bring this legal proxy to the meeting in order to
vote in person.
Q. WHAT IF I DO NOT VOTE?
A. Abstentions and broker non-votes with respect to the
Reorganization and the 1998 Stock Option Plan will be
counted as votes against the Reorganization and the 1998
Stock Option Plan, respectively.
Q. SHOULD I SEND IN MY SHARE CERTIFICATES TO RECEIVE
CERTIFICATES FOR SHARES OF LINCOLN ELECTRIC HOLDINGS?
A. No. Your share certificates representing Common Shares or
Class A Common Shares will automatically represent Holding
Common Shares following the Merger. You will receive a
certificate representing the number of additional Holding
Common Shares you are entitled to receive as a result of the
Reorganization printed on new certificate paper. There is no
need to exchange your share certificates. You will, however,
be permitted to exchange your share certificates for a
certificate representing the same number of Holding Common
Shares printed on new certificate paper if you wish. You
will receive a letter of transmittal from our Shareholder
Services after the Effective Time of the Merger describing
the procedure for exchanging your share certificates. Please
contact our Transfer Agent, Harris Trust and Savings Bank,
Shareholder Services Dept., for further information
(1-800-942-5909).
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8
<PAGE> 12
PROSPECTUS SUMMARY
This summary highlights selected information contained elsewhere in this
Proxy Statement/Prospectus. It is not complete and may not contain all of the
information that is important to you. To understand the Reorganization and the
1998 Stock Option Plan fully, you should read the entire Proxy
Statement/Prospectus carefully.
THE COMPANIES
The Lincoln Electric Company (the "COMPANY") began operation in 1895 and
was incorporated under the laws of the State of Ohio in 1906. We are a full-line
manufacturer of welding and cutting products and integral horsepower industrial
electric motors. Welding products include arc welding power sources, wire
feeding systems, robotic welding packages, fume extraction equipment, consumable
electrodes and fluxes. Our welding product offering also includes regulators and
torches used in oxy-fuel welding and cutting. Sales of welding products
accounted for 93% of our net sales in 1997.
Lincoln Electric Holdings is a newly formed Ohio corporation and has not
conducted any business since its formation. Merger Co. is an Ohio corporation
newly formed for the sole purpose of implementing the Reorganization. At the
Effective Time of the Merger it will cease to exist.
ANNUAL MEETING
Our Annual Meeting will be held on May 19, 1998 at the Wellington Center,
777 Alpha Drive, Highland Heights, Ohio 44143. You will be asked to vote on the
election of Directors, the Reorganization, the adoption of the 1998 Stock Option
Plan, and the ratification of the appointment of our independent auditors.
PROPOSED REORGANIZATION
At our Annual Meeting, you will be asked to consider and vote upon an
Agreement of Merger among the Company, Lincoln Electric Holdings and Merger Co.
At the Effective Time of the Merger, each Common Share you own will be converted
automatically into two Holding Common Shares and each Class A Common Share you
own will be converted automatically into two Holding Common Shares.
After the Merger, Lincoln Electric Holdings will continue to be known as
"Lincoln Electric Holdings, Inc." and we will continue the domestic and export
business of the Company under our current name "The Lincoln Electric Company."
The Company will be a wholly owned subsidiary of Lincoln Electric Holdings.
If you vote in favor of the Reorganization, you will be voting in favor of
Lincoln Electric Holdings' capital structure as described in the Holding
Articles. Lincoln Electric Holdings will have only one class of common stock
authorized, the Holding Common Shares, and will have a class of preferred stock
authorized, the Preferred Shares.
We encourage you to read the Agreement of Merger, which is attached as
Exhibit A to this Proxy Statement/Prospectus, as it is the document that governs
the Merger.
REASONS FOR THE REORGANIZATION
The principal reason for the Reorganization is that we believe more value
can be created and preserved for shareholders over the longer term through a
holding company structure with a simplified capital structure. We expect our new
structure will provide, among others, the following benefits:
- the opportunity for enhanced shareholder value through
- the elimination of market confusion caused by our two existing classes
of common stock; and
- greater trading volume by combining our shares into one class for
trading and reducing purchase prices;
- increased legal protection, with risks and benefits of domestic and
foreign regions more clearly contained below the level of Lincoln
Electric Holdings.
9
<PAGE> 13
SHAREHOLDER APPROVAL AND DISSENTERS' RIGHTS
At least two-thirds of the Common Shares, voting as a class, and at least
two-thirds of the Class A Common Shares, voting as a class, must vote in favor
of the Reorganization for it to be approved. You are entitled to notice of and
to vote at the Annual Meeting if you held Common Shares or Class A Common Shares
at the close of business on April 6, 1998. You are entitled to statutory rights
of appraisal if you do not vote in favor of the Reorganization and if you follow
certain procedures.
The Principal Shareholder has or shares voting power for approximately
21.5% of the outstanding Common Shares and 6.58% of the outstanding Class A
Common Shares. We expect the Principal Shareholder will vote in favor of the
Reorganization. If the Principal Shareholder does vote in favor of the
Reorganization, an additional 45.17% of the outstanding Common Shares and 60.09%
of the outstanding Class A Common Shares must vote in favor of the
Reorganization for it to be approved.
FEDERAL AND OHIO INCOME TAX CONSEQUENCES
Outside tax counsel will provide an opinion that the conversion of each
Common Share into two Holding Common Shares and each Class A Common Share into
two Holding Common Shares will constitute a tax-free reorganization under the
Internal Revenue Code, and thus a tax free event under federal and Ohio law to
shareholders whose Common Shares and Class A Common Shares are converted in the
Merger into Holding Common Shares.
CONDITIONS TO THE MERGER
A number of conditions must be met or waived prior to the Merger before we
will make it effective. The most significant conditions are:
- receipt of the required shareholder approval;
- that no more than of 10% of the Common Shares and Class A Common Shares,
in the aggregate, are entitled to assert statutory dissenter's rights;
- receipt of satisfactory tax opinions with respect to the Merger; and
- approval of the Holding Common Shares for quotation on the NASDAQ
National Market.
We may also defer, terminate or abandon the Agreement of Merger if we
determine that deferral, termination or abandonment would be in the
shareholders' or the Company's best interests.
EMPLOYEE BENEFIT PLANS
Employee benefit and welfare plans will continue unchanged. The only
exception is that benefits that relate to investments in Common Shares or Class
A Common Shares, such as matching contributions to the 401(k) Savings Plan,
purchases under the 1995 Lincoln Stock Purchase Plan and rights under stock
option and other equity plans, will transfer to the stock of Lincoln Electric
Holdings.
POST REORGANIZATION MANAGEMENT OF LINCOLN ELECTRIC HOLDINGS
After the Reorganization, the members of your Board of Directors currently
serving their terms and those nominated in this Proxy Statement/Prospectus for
election will serve as Directors of Lincoln Electric Holdings. The Directors of
the Company, which will then be a wholly owned subsidiary of Lincoln Electric
Holdings, will be identified by management.
1998 STOCK OPTION PLAN
Your Board of Directors adopted the 1998 Stock Option Plan authorizing the
granting of options to purchase up to an aggregate of 1,250,000 Common Shares
and 1,250,000 Class A Common Shares. Options may be granted under the plan from
time to time to key employees. The 1998 Stock Option Plan is intended to replace
the 1988 Incentive Equity Plan. As described above, following the Merger, rights
granted under the 1998 Stock Option Plan will be for Holding Common Shares.
10
<PAGE> 14
GENERAL INFORMATION
Your Board of Directors is furnishing this Proxy Statement/Prospectus to
you in connection with our solicitation of proxies to be used at the Annual
Meeting of Shareholders of the Company to be held on May 19, 1998.
If you sign and return the enclosed proxy card, the shares represented by
the card will be voted as indicated thereon. Without affecting any vote
previously taken, you may revoke your proxy by delivery to us of a new, later
dated proxy with respect to the same shares, or by giving written notice to us
before or at the Annual Meeting. Your presence at the Annual Meeting will not in
and of itself revoke your proxy appointment.
At the close of business on April 6, 1998, the record date for the
determination of shareholders entitled to notice of, and to vote at, the Annual
Meeting, we had outstanding and entitled to vote 10,773,834 Common Shares and
13,858,190 Class A Common Shares. Each Common Share is entitled to one vote on
each matter brought before the meeting, and each Class A Common Share is
entitled to one vote on the approval of the Reorganization. Pursuant to the
Articles, holders of Class A Common Shares do not participate in the election of
directors and are not entitled to vote on the matters proposed for action at the
Annual Meeting other than the approval of the Reorganization.
In addition to the solicitation of proxies by the use of the mails, we may
solicit the return of proxies in person and by telephone and telecopy. Brokerage
houses, banks and other custodians, nominees and fiduciaries will be requested
to forward soliciting material to the beneficial owners of shares and will be
reimbursed for their expenses. The cost of the solicitation of proxies will be
borne by us.
At the Annual Meeting, the results of shareholder voting will be tabulated
by the inspector of elections appointed for the Annual Meeting. Under Ohio law,
the Articles and the Regulations, properly signed proxies that are marked
"abstain" or are held in "street name" by brokers and not voted on one or more
of the items before the meeting (if otherwise voted on at least one item) will
be counted for purposes of determining whether a quorum has been achieved at the
Annual Meeting. Votes withheld in respect of the election of Directors will not
be counted in determining the election of Directors. Abstentions and broker
non-votes in respect of Items 2, 3 and 4 will have the same effect as votes
against such item.
If you are receiving multiple copies of our Annual Report, you may call our
Shareholder Services at 1-800-942-5909 to request that one copy be sent to you
for all of your accounts. Shareholders owning shares beneficially may give
permission to their nominees to request the discontinuance of multiple mailings.
You may resume mailing of an Annual Report to an account by calling our
Shareholder Services. The elimination of duplicate mailings will not affect the
mailing of dividends, dividend reinvestment statements, proxy materials and
special notices.
ELECTION OF DIRECTORS
Item No. 1
Our Regulations provide for three classes of Directors whose terms expire
in different years:
Class of 2001. The class of Directors to be elected in 1998, who will hold
their positions for a term of three years and until the election of their
successors, has been fixed at three. Unless otherwise directed, proxies in the
accompanying form will be voted in favor of electing to that class: Kathryn Jo
Lincoln, Anthony A. Massaro, and G. Russell Lincoln, all of whom you have
previously elected as Directors. Mr. G. Russell Lincoln had been elected in 1997
for a term expiring in 2000. At the request of the Board he has agreed to stand
for reelection this year to a three year term expiring in 2001.
Class of 2000. The class of Directors whose terms end in 2000 has been
maintained at four, and the Board has nominated John M. Stropki, Jr. for
election to that class, filling the vacancy created by Mr. G. Russell Lincoln's
decision to move to the class of 2001. Mr. Stropki has not previously been
elected as a Director.
11
<PAGE> 15
Class of 1999. The class of Directors whose terms end in 1999 has been
increased to five persons from four, and Craig R. Smith has agreed to stand for
election to that class. Mr. Smith has been previously elected as a Director.
If any of the Director nominees should become unavailable, it is intended
that the proxies will be voted as the Board of Directors shall determine. We
have no reason to believe that any of the Director nominees will be unavailable.
The Ohio General Corporation Law provides that, a quorum being present, the
Director nominees for each class, up to three nominees for the Class of 2001,
receiving the greatest number of votes will be elected as Directors of the
Company.
The following table sets forth information concerning the Director nominees
and the Directors whose terms of office will continue after the meeting. Except
as otherwise indicated, each of the Directors and Director Nominees has had the
principal occupation indicated for more than five years.
NOMINEES
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NOMINEES FOR TERMS ENDING IN 2001 CURRENT OCCUPATION
- ----------------------------------------------------------------------------------------------
<S> <C>
Kathryn Jo Lincoln Chairman of The Lincoln Institute of Land
Director since 1995 Policy and Vice President of The Lincoln
Member -- Audit Committee and Foundation, Inc. (non-profit corporations for
Nominating Committee educational purposes)
Age -- 43
- ----------------------------------------------------------------------------------------------
Anthony A. Massaro Chairman, President and Chief Executive
Director since April 1, 1996 Officer of the Company
Member -- Finance Committee
Age -- 53
</TABLE>
Mr. Massaro was elected President and Chief Executive Officer on November 1,
1996 and was elected Chairman on May 28, 1997. From April 1 through October 31,
1996, Mr. Massaro served as President and Chief Operating Officer. From
September, 1995 through March 31, 1996, he served as Executive Vice President of
the Company directing international operations. Prior to that time he was
President and Chief Executive Officer of Lincoln Electric Europe. Mr. Massaro
joined the Company in August 1993. His previous business experience includes
service as a President and an Executive Vice President of Westinghouse Electric
Corporation. Mr. Massaro is also a Director of Thomas Industries, Inc.
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
G. Russell Lincoln President of N.A.S.T. Inc. (financial
Director since 1989 consultants); Former Chairman of the Board
Member -- Compensation Committee and and Chief Executive Officer of Algan, Inc.
Nominating Committee (manufacturer of industrial coatings and
chemicals for the printing industry)
Age -- 51
</TABLE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NOMINEE FOR TERMS ENDING IN 2000 CURRENT OCCUPATION
- ----------------------------------------------------------------------------------------------
<S> <C>
John M. Stropki, Jr. Executive Vice President and President North
America of the Company
Age -- 47
</TABLE>
Mr. Stropki was elected Executive Vice President and President North America in
May, 1996. From December 1, 1994 through May, 1996, Mr. Stropki served as Senior
Vice President, Sales. Prior to that time, he directed various sales functions
within the Company.
12
<PAGE> 16
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NOMINEE FOR TERMS ENDING IN 1999 CURRENT OCCUPATION
- ----------------------------------------------------------------------------------------------
<S> <C>
Craig R. Smith Former Chairman and Chief Executive Officer
Director since 1992 of Ameritrust Corporation (banking)
Member -- Audit Committee and Finance
Committee
Age -- 72
</TABLE>
Mr. Smith was Chairman and Chief Executive Officer of Ameritrust Corporation
from 1990 until his retirement in 1992; Retired Chairman and Chief Executive
Officer, The Warner & Swasey Company; Retired Chairman and prior thereto interim
Chief Executive Officer, Ransburg Corporation.
OTHER DIRECTORS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DIRECTORS WHOSE TERMS END IN 2000 CURRENT OCCUPATION
- ----------------------------------------------------------------------------------------------
<S> <C>
David C. Lincoln President, Arizona Oxides LLC (manufacturer
Director since 1958 of iron oxide pigments); Former Chairman of
Member -- Compensation Committee, Finance Lincoln Laser Company (laser scanning)
Committee, and Nominating
Committee
Age -- 72
- ----------------------------------------------------------------------------------------------
Henry L. Meyer, III President and Chief Operating Officer of
Director since 1994 KeyCorp (banking)
Member -- Compensation Committee and
Nominating Committee
Age -- 48
</TABLE>
Mr. Meyer was elected President of KeyCorp in May 1997. He had previously been
elected Vice Chairman of the Board and Chief Operating Officer of KeyCorp in
September, 1996. Prior to his election as Vice Chairman and Chief Operating
Officer of KeyCorp (formerly known as Society Corporation), Mr. Meyer served in
senior executive positions with KeyBank (formerly Society National Bank), a
subsidiary of KeyCorp, including most recently as Chairman of the Board and
Chief Executive Officer. Mr. Meyer is a Director of KeyCorp.
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
Frank L. Steingass Chairman of the Board and President of
Director since 1971 Buehler/Steingass, Inc. (commercial printers)
Member -- Audit Committee and Nominating
Committee
Age -- 58
</TABLE>
13
<PAGE> 17
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DIRECTORS WHOSE TERMS END IN 1999 CURRENT OCCUPATION
- ----------------------------------------------------------------------------------------------
<S> <C>
Harry Carlson Former Vice Chairman of the Company
Director since 1973
Member -- Finance Committee and
Audit Committee
Age -- 63
</TABLE>
Mr. Carlson retired on June 30, 1995. Prior to that time, he served as Vice
Chairman of the Company.
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
David H. Gunning Principal of Encinitos Ventures; Former
Director since 1987 Chairman, President and Chief Executive
Member -- Finance Committee and Officer of Capitol American Financial Corp.
Audit Committee (insurance company)
Age -- 55
</TABLE>
Mr. Gunning served as Chairman, President and Chief Executive Officer of Capitol
American Financial Corp. from 1993 until its sale in early 1997. Prior to that
time, he was a partner in the law firm of Jones, Day, Reavis & Pogue.
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
Edward E. Hood, Jr. Former Vice Chairman of the Board and
Director since 1993 Executive Officer of The General Electric
Member -- Compensation Committee and Company
Finance Committee
Age -- 67
</TABLE>
Mr. Hood retired from The General Electric Company in 1993. Mr. Hood is a
Director of Lockheed Martin Corporation and Gerber Scientific Inc.
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
Paul E. Lego President of Intelligent Enterprises, Inc.
Director since 1993 (consulting)
Member -- Compensation Committee and
Finance Committee
Age -- 67
</TABLE>
Mr. Lego has served as President of Intelligent Enterprises, Inc. since 1993.
Prior to that time, he was Chairman and Chief Executive Officer of Westinghouse
Electric Corporation. Mr. Lego is Chairman of Commonwealth Industries, Inc. and
is a Director of Consolidated Natural Gas Company, PNC Bank Realty Holding
Company and USX Corporation.
- --------------------------------------------------------------------------------
FAMILY RELATIONSHIPS
Our business was founded by John C. Lincoln, and managed for many years by
his brother, James F. Lincoln. Members of their family have maintained a strong
relationship with our Company through the years, and five members of the Lincoln
Family are directors. David C. Lincoln is the son of John C. Lincoln and the
father of Kathryn Jo Lincoln. G. Russell Lincoln and Frank L. Steingass are the
grandsons of James F. Lincoln, and first cousins; Harry Carlson is married to a
granddaughter of James F. Lincoln and is therefore related to Frank L. Steingass
and G. Russell Lincoln as a first cousin by marriage.
14
<PAGE> 18
BOARD COMMITTEES
Your Board of Directors maintains, among other committees, an Audit
Committee, a Finance Committee, a Nominating Committee and a Compensation
Committee, the members of which are identified on pages 12, 13 and 14 of this
Proxy Statement/Prospectus.
The Audit Committee met four times in 1997. The Audit Committee:
- recommends engagement of our independent auditors;
- reviews the arrangement and scope of the audit;
- reviews the financial statements and performance of our
independent auditors;
- reviews the activities and recommendations of our internal
auditors;
- considers comments made by the independent auditors with respect
to our system of internal accounting control;
- reviews internal accounting procedures and controls with our
financial and accounting staff; and
- reviews non-audit services provided by our independent auditors.
The Compensation Committee met six times in 1997. The Compensation
Committee:
- reviews the salary levels of the executive officers and
determines the compensation of the Chief Executive Officer and
other executives who are among the five highest paid executives;
- establishes and conducts succession planning for the Chief
Executive Officer; and
- reviews and makes recommendations to the Board of Directors
concerning all employee benefit plans.
The Nominating Committee met five times in 1997. The Committee:
- evaluates the composition of the Board of Directors and its
governance and compensation; and
- makes recommendations to the Board of Directors as to nominees
(including any nomination of qualified candidates submitted in
writing by shareholders to our Secretary) for Director to be
submitted to the shareholders.
The Finance Committee met six times in 1997. The Finance Committee
considers in more detail than is possible in full Board of Director meetings
matters relating to the financial operation of the Company. Deliberations of the
Finance Committee result in:
- a report to the Board of Directors accompanied by any
recommendations the Finance Committee deems appropriate;
- interaction with management on matters under the purview of the
Finance Committee; and
- discussions with management on changes in such matters, which if
appropriate are reported to the Board of Directors.
COMPENSATION OF DIRECTORS
We pay Directors who are not our employees an annual retainer of $20,000,
of which $10,000 is payable in restricted voting shares pursuant to the
Non-Employee Directors' Restricted Stock Plan. Such shares vest at the earlier
of three years, death or retirement from the Board of Directors. Pursuant to the
Plan, during January 1997 we issued 305 Common Shares to each of the thirteen
non-employee Directors serving at such time.
We pay non-employee Directors the following fees: Board meeting fee,
$1,000; annual retainer for each committee membership, $2,000; and committee
meeting fee, $800. Each committee chair is also paid an annual fee of $2,000.
Through the Non-Employee Directors' Deferred Compensation Plan, our
non-employee Directors have the opportunity to defer payment of all or a portion
of their annual cash compensation. Each Director may elect to defer a specified
dollar amount or percentage of the Director's fees. The deferral will be
credited to the Director's account and deemed invested in either an obligation
of the Company adjusted in accordance with the return of
15
<PAGE> 19
Standard & Poor's 500 Composite Stock Index, as calculated quarterly, and/or an
obligation of the Company earning interest at a rate equal to the Moody's
Corporate Average Bond Index, adjusted on a quarterly basis. Payment of fees
deferred under the Plan, with earnings, will commence as of the earlier of
termination of services as a Director, death or a date not less than 2 years
after such fees are deferred as elected by the Director. At December 31, 1997,
two Directors had elected to defer compensation pursuant to such Plan.
We have established a Directors' Charitable Award Program for non-employee
Directors, funded through insurance policies on the lives of the participating
Directors. In 1997 we paid $250,656 in premiums on such policies. Upon the death
of a participating Director, we will donate an aggregate of $500,000 (in ten
annual installments) to one or more qualified charitable organizations
recommended by such Director and approved by us. The Directors derive no
financial benefit from the Program since all charitable deductions and cash
surrender value of life insurance policies accrue solely to us. All non-employee
Directors, other than David C. Lincoln, Henry Meyer and Frank Steingass,
currently participate in the Program. Five years of service as a Director are
required to vest benefits under the Program.
Four Directors served on an advisory committee for the last four months of
1997 in order to assist the Chairman with respect to strategic decisions
regarding litigation in California. See "Item 3. Legal Proceedings" within our
10-K Report. These Directors each were paid an additional retainer of $2,000
monthly. In addition, Mr. Carlson was paid $5,577 for services under his
consulting agreement with us.
Eight meetings of the Board of Directors were held during 1997. Every
Director attended at least 75% of the aggregate number of meetings of the Board
of Directors and meetings of the committees of the Board of Directors on which
such Director served.
SECURITY OWNERSHIP OF MANAGEMENT
AND CERTAIN BENEFICIAL OWNERS
The following table sets forth certain information regarding ownership of
our equity securities as of February 27, 1998, by the Directors and Director
nominees, each of the Executive Officers named in the Summary Compensation Table
on page 21 and all Directors and Executive Officers as a group. Also set forth
on the next page is information with respect to any person (including any
"group" as that term is used in Section 13(d)(3) of the Exchange Act) known to
us as of February 27, 1998 to be an owner of more than 5% of any class of our
voting securities. Except as otherwise indicated, voting and investment power
with respect to shares reported in this table is not shared with others.
We currently have one class of voting securities, Common Shares. We also
have one class of equity securities, Class A Common Shares, that votes only in
certain specified situations. The rights of the two classes of common equity are
identical except as otherwise specified in our Articles. Percentages of equity
ownership are set forth in the following table, including percentage ownership
by class for each of the two classes.
16
<PAGE> 20
BENEFICIAL OWNERSHIP TABLE
<TABLE>
<CAPTION>
NON-VOTING SHARES
VOTING SHARES --------------------------
------------------------------ NUMBER OF
NON-OFFICER NUMBER OF NON-VOTING PERCENT
DIRECTORS AND VOTING SHARES PERCENT SHARES OF
DIRECTOR NOMINEES OWNED(1)(2) OF CLASS OWNED(1) CLASS
----------------- ------------- -------- ---------- -------
<S> <C> <C> <C> <C>
Harry Carlson........................... 141,504(3) 1.29% 58,680(4) *
David H. Gunning........................ 4,812 * 0 *
Edward E. Hood, Jr...................... 2,312 * 1,000 *
Paul E. Lego............................ 2,812 * 1,500 *
David C. Lincoln........................ 2,318,762(5) 21.53% 909,945(6) 6.58%
G. Russell Lincoln...................... 73,498(7) * 70,890(8) *
Kathryn Jo Lincoln...................... 14,603 * 5,112(9) *
Henry L. Meyer, III..................... 2,812(10) * 1,500(11) *
Lawrence O. Selhorst.................... 2,312 * 1,000 *
Craig R. Smith.......................... 4,862(12) * 3,550(13) *
Frank L. Steingass...................... 109,686(14) 1.02% 113,555(15) *
NAMED EXECUTIVE OFFICERS
- ----------------------
Anthony A. Massaro...................... 10,368(16) * 11,333(17) *
H. Jay Elliott.......................... 7,000(18)(19) * 7,000(20) *
John M. Stropki, Jr..................... 7,883(21) * 10,714(22) *
Frederick G. Stueber.................... 4,214(18)(23) * 4,166(24) *
Richard C. Ulstad....................... 2,533(25) * 10,602(26) *
All Directors and Executive Officers as
a group (30 persons).................... 2,746,110(27) 25.06% 1,289,288 9.10%(28)
OTHER PERSONS
- ------------
The Lincoln Electric Company
401(k) Savings Plan
22801 St. Clair Avenue
Cleveland, Ohio 44117-1199 280,414 2.60% 551,361 3.98%
</TABLE>
- ---------------
* indicates less than 1%.
(1) Reported in accordance with the beneficial ownership rules of the
Securities and Exchange Commission, under which a person is deemed to be
the beneficial owner of a security, for these purposes, if he or she has or
shares voting power or investment power in respect of such security or has
the right to acquire such security within 60 days.
(2) Includes Common Shares subject to forfeiture and restrictions on transfer
issued pursuant to our Non-Employee Directors' Restricted Stock Plan.
(3) Of the 141,504 shares, Mr. Carlson held of record 67,948 shares and the
remaining 73,556 shares were held of record by his spouse. Mr. Carlson
disclaims beneficial ownership of the shares held by his spouse.
(4) Of the 58,680 shares, Mr. Carlson held of record 32,982 shares and the
remaining 25,698 shares were held of record by his spouse. Mr. Carlson
disclaims beneficial ownership of the shares held by his spouse.
(5) Of the 2,318,762 shares, David C. Lincoln and his wife held of record an
aggregate of 369,062 shares. The remaining 1,949,700 shares were held of
record as follows: 998,550 shares by The Lincoln Foundation, Inc., of which
Mr. Lincoln is President and a member of the Board of Trustees, as to which
shares Mr. Lincoln disclaims beneficial ownership; 17 shares by the Estate
of Helen C. Lincoln, of which Mr. Lincoln is a co-administrator, as to
which shares Mr. Lincoln disclaims beneficial ownership; 191,741 shares by
a trust for which Mr. Lincoln serves as a co-trustee and in which he has a
lifetime pecuniary interest and as to which he otherwise disclaims
beneficial ownership; 191,741 shares by a trust for which Mr. Lincoln
serves as a co-trustee and in which his sister has a lifetime pecuniary
interest, as to which shares Mr. Lincoln disclaims
17
<PAGE> 21
beneficial ownership; 500,000 shares by LFM, Inc., a corporation of which
Mr. Lincoln is a Director, as to which shares Mr. Lincoln disclaims
beneficial ownership; 30,000 shares by The Lincoln Fund, a Lincoln family
partnership of which Mr. Lincoln is Managing Director; 20,000 shares by a
trust for which Mr. Lincoln is sole trustee, for the benefit of his nephew,
as to which shares Mr. Lincoln disclaims beneficial ownership; 14,120
shares by two trusts for which Mr. Lincoln is as a co-trustee for the
benefit of his nieces, as to which shares Mr. Lincoln disclaims beneficial
ownership; and 3,531 shares by a trust for which Mr. Lincoln is a
co-trustee for the benefit of his son, as to which shares Mr. Lincoln
disclaims beneficial ownership.
(6) Of the 909,945 shares, David C. Lincoln and/or his wife held of record an
aggregate of 369,619 shares. The remaining 540,326 shares were held of
record as follows: 109,572 shares by The Lincoln Foundation, Inc., of which
Mr. Lincoln is president and a member of the Board of Trustees, as to which
shares Mr. Lincoln disclaims beneficial ownership; 26,020 shares by the
Estate of Helen C. Lincoln, of which Mr. Lincoln is a co-administrator, as
to which shares Mr. Lincoln disclaims beneficial ownership; 50,982 shares
by a trust for which Mr. Lincoln serves as a co-trustee and in which he has
a lifetime pecuniary interest and as to which Mr. Lincoln otherwise
disclaims beneficial ownership; 50,982 shares by a trust for which Mr.
Lincoln serves as a co-trustee and in which his sister has a lifetime
pecuniary interest, as to which Mr. Lincoln disclaims beneficial ownership;
250,000 shares by LFM, Inc., a corporation of which Mr. Lincoln is a
Director, as to which shares Mr. Lincoln disclaims beneficial ownership;
30,000 shares by The Lincoln Fund, a Lincoln family partnership of which
Mr. Lincoln is Managing Director; 20,000 shares by a trust for which Mr.
Lincoln is a trustee, for the benefit of his nephew, as to which shares Mr.
Lincoln disclaims beneficial ownership; 2,216 shares by two trusts for
which Mr. Lincoln is a co-trustee for the benefit of his nieces, as to
which shares Mr. Lincoln disclaims beneficial ownership; and 554 shares by
a trust for which Mr. Lincoln is a co-trustee for the benefit of his son,
as to which shares Mr. Lincoln disclaims beneficial ownership.
(7) Of the 73,498 shares, G. Russell Lincoln held of record 58,812 shares,
5,996 shares were held of record by three trusts, as to each of which Mr.
Lincoln is a trustee, for the benefit of his minor children. Mr. Lincoln is
also a trustee of 8,690 shares for the Laura P. Heath Family Trust. Mr.
Lincoln disclaims beneficial ownership of the shares held by the trusts.
(8) Of the 70,890 shares, Mr. Lincoln held of record 57,500 shares. The balance
were held by four trusts, as set forth in footnote 7.
(9) Of the 5,112 shares, Ms. Lincoln held of record 4,362 shares. The remaining
750 shares were held of record by Ms. Lincoln's spouse, as to which shares
Ms. Lincoln disclaims beneficial ownership.
(10) Held of record by a trust established by Mr. Meyer and his spouse under
which Mr. Meyer may be deemed to share voting and investment power.
(11) Held of record by a trust established by Mr. Meyer and his spouse under
which Mr. Meyer may be deemed to share voting and investment power.
(12) Except for shares held of record by Mr. Smith under the Director's
Restricted Stock Plan, the shares shown were held of record by a trust
established by Mr. Smith, under which he has sole voting authority and
shared investment authority.
(13) Held of record by a trust established by Mr. Smith, under which he had sole
voting authority and shared investment authority.
(14) Of the 109,686 shares, Mr. Steingass held of record 102,987 shares. The
remaining 6,699 shares were held of record as follows: 1,200 shares by
Buehler/Steingass, Inc., a corporation of which Mr. Steingass is Chairman
of the Board and President, as to which shares Mr. Steingass disclaims
beneficial ownership; and 5,499 shares by Mr. Steingass' spouse, as to
which shares Mr. Steingass disclaims beneficial ownership.
(15) Of the 113,555 shares, Mr. Steingass held of record 102,556 shares. The
remaining 10,999 shares were held of record as follows: 200 shares by
Buehler/Steingass, Inc., a corporation of which Mr. Steingass is Chairman
of the Board and President, as to which shares Mr. Steingass disclaims
beneficial ownership; and 10,799 shares by Mr. Steingass' spouse, as to
which shares Mr. Steingass disclaims beneficial ownership.
18
<PAGE> 22
(16) Of the 10,368 shares, Mr. Massaro held of record 2,035 shares and has or
had the right to acquire 8,333 shares upon the exercise of stock options
within 60 days after December 31, 1997.
(17) Of the 11,333 shares, Mr. Massaro held of record 3,000 shares and has or
had the right to acquire 8,333 shares upon the exercise of stock options
within 60 days after December 31, 1997.
(18) The shares indicated for Messrs. Elliott and Stueber do not include the
280,414 Common Shares held or the 551,361 Class A Common Shares held of
record by the trustee of the 401(k) Savings Plan, KeyBank National
Association, for the benefit of participants and beneficiaries in the
401(k) Savings Plan. Generally, participants and beneficiaries are entitled
to direct the voting of Common Shares allocated to their respective
accounts. The 401(k) Savings Plan's investments are administered by an
Investment Committee appointed by the Board of Directors of the Company. In
certain limited circumstances, the Investment Committee votes on matters
concerning the exercise of appraisal or dissenters' rights and the choice
of consideration to be received by shareholders in any transaction
involving securities of the Company. Messrs. Elliott and Stueber have been
appointed by the Board of Directors as members of the Investment Committee
and disclaim beneficial ownership of such shares.
(19) Of the 7,000 shares, Mr. Elliott held of record 4,500 shares and has or had
the right to acquire 2,500 shares upon the exercise of stock options within
60 days after December 31, 1997.
(20) Of the 7,000 shares, Mr. Elliott held of record 4,500 shares and has or had
the right to acquire 2,500 shares upon the exercise of stock options within
60 days after December 31, 1997.
(21) Of the 7,883 shares, Mr. Stropki held of record 2,800 shares, 1,750 shares
were held of record jointly with his spouse and Mr. Stropki has or had the
right to acquire 3,333 shares upon the exercise of stock options within 60
days after December 31, 1997. Mr. Stropki disclaims beneficial ownership of
the shares held by his spouse.
(22) Of the 10,714 shares, Mr. Stropki held of record 2,800 shares, 1,750 shares
were held of record by his spouse and Mr. Stropki has or had the right to
acquire 6,164 shares upon the exercise of stock options within 60 days
after December 31, 1997. Mr. Stropki disclaims beneficial ownership of the
shares held by his spouse.
(23) Of the 4,214 shares, Mr. Stueber held of record 2,548 shares, 1,875 shares
of which are subject to forfeiture and restrictions on transfer pursuant to
the Company's Incentive Equity Plan and the employment agreement with Mr.
Stueber. Mr. Stueber also has or had the right to acquire 1,666 shares upon
the exercise of stock options within 60 days after December 31, 1997.
(24) Of the 4,166 shares, Mr. Stueber held of record 2,500 shares, 1,975 of
which are subject to forfeiture and restrictions on transfer pursuant to
the Company's Incentive Equity Plan and the employment agreement with Mr.
Stueber. Mr. Stueber also has or had the right to acquire 1,666 shares upon
the exercise of stock options within 60 days after December 31, 1997.
(25) Of the 2,533 shares, Mr. Ulstad held of record 1,200 shares and has or had
the right to acquire 1,333 shares upon the exercise of stock options within
60 days after December 31, 1997.
(26) Of the 10,602 shares, Mr. Ulstad held of record 1,200 shares and has or had
the right to acquire 9,402 shares upon the exercise of stock options within
60 days after December 31, 1997.
(27) Includes 27,611 shares which all executive officers and Directors, as a
group, have or had the right to acquire upon the exercise of stock options
within 60 days after December 31, 1997.
(28) Includes 77,990 shares which all executive officers and Directors, as a
group, have or had the right to acquire upon the exercise of stock options
within 60 days after December 31, 1997.
19
<PAGE> 23
(29) In the Reorganization, each Common Share and each Class A Common Share will
be converted into two Holding Common Shares. If the Reorganization is
consummated, the beneficial ownership of Holding Common Shares, with the
corresponding footnotes adjusted to reflect the conversion, immediately
thereafter would be as follows:
<TABLE>
<CAPTION>
NON-OFFICER
DIRECTOR AND NUMBER OF PERCENT
DIRECTOR NOMINEES VOTING SHARES OWNED OF CLASS
----------------- ------------------- --------
<S> <C> <C>
Harry Carlson............................................... 400,368 *
David H. Gunning............................................ 9,624 *
Edward E. Hood, Jr.......................................... 6,624 *
Paul E. Lego................................................ 8,624 *
David C. Lincoln............................................ 6,457,414 13.12%
G. Russell Lincoln.......................................... 288,776 *
Kathryn Jo Lincoln.......................................... 39,430 *
Henry L. Meyer, III......................................... 8,624 *
Lawrence O. Selhorst........................................ 6,624 *
Craig R. Smith.............................................. 16,824 *
Frank L. Steingass.......................................... 446,482 *
NAMED EXECUTIVE OFFICERS
Anthony A. Massaro.......................................... 43,402 *
H. Jay Elliott.............................................. 28,000 *
John M. Stopki, Jr.......................................... 37,194 *
Frederick G. Stueber........................................ 16,760 *
Richard C. Ulstad........................................... 26,270 *
All Directors and Executive Officers as a group (30
persons).................................................. 8,070,796 16.06%
OTHER PERSONS
The Lincoln Electric Company
401(k) Savings Plan
22801 St. Clair Avenue
Cleveland, OH 44117-1199.................................... 1,663,550 3.38%
</TABLE>
20
<PAGE> 24
SUMMARY COMPENSATION TABLE
The table below shows the before-tax compensation for the years shown for
Mr. Massaro and the four next highest paid executive officers at the end of
1997.
<TABLE>
<CAPTION>
LONG-TERM
ANNUAL COMPENSATION COMPENSATION
--------------------------------------- -------------------------
OTHER SECURITIES
NAME AND PRINCIPAL ANNUAL UNDERLYING ALL OTHER
POSITION YEAR SALARY BONUS COMPENSATION OPTIONS COMPENSATION
- ---------------------------------- ---- ------- ------- ------- ------ -----
<S> <C> <C> <C> <C> <C> <C>
Anthony A. Massaro................ 1997 532,917 560,000 25,000
Chairman, President and 1996 380,833 300,000 50,000
Chief Executive Officer(1) 1995 300,000 75,000 108,528(2) 9,749(3)
H. Jay Elliott.................... 1997 268,750 200,000 10,000
Senior Vice President, 1996 255,000 125,000 15,000
Chief Financial 1995 225,000 75,000
Officer and Treasurer
John M. Stropki, Jr............... 1997 220,833 240,000 12,000
Executive Vice President 1996 175,000 175,000 20,000
President, North America(4)
Frederick G. Stueber.............. 1997 209,167 140,000 5,000
Senior Vice President, 1996 200,000 75,000 10,000
General Counsel and Secretary(4)
Richard C. Ulstad................. 1997 167,916 134,000 4,000
Senior Vice President, 1996 145,000 120,000 8,000
Manufacturing(4)
</TABLE>
- ---------------
(1) Indicated amounts for 1996 include compensation as Chief Executive Officer
from November 1, 1996.
(2) Indicated amount is the aggregate, net of tax adjustments, of payments made
to Mr. Massaro under his expatriate agreement, including cost of living
adjustments and housing payments. The agreement ended in 1995.
(3) Indicated amount reflects moving expenses and payments related thereto.
(4) The individuals were not among the five most highly compensated executive
officers prior to 1996.
21
<PAGE> 25
OPTION GRANTS IN LAST FISCAL YEAR
The following table provides information relating to stock option grants
for the year 1997 for our named executive officers. No stock appreciation rights
were granted to the named executive officers or other optionees during 1997.
<TABLE>
<CAPTION>
NO. OF % OF TOTAL
SHARES OPTIONS GRANTED
UNDERLYING TO EMPLOYEES IN EXERCISE EXPIRATION GRANT DATE
NAME OPTIONS FISCAL YEAR PRICE ($/SH) DATE VALUE (1)
---- ------------- --------------- ------------ ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Anthony A. Massaro.... Common Shares 12,500 12.9% $38.375 11/13/07 $170,500
Class A Common Shares 12,500 12.9% 35.25 11/13/07 133,750
H. Jay Elliott........ Common Shares 5,000 5.1% 38.375 11/13/07 68,200
Class A Common Shares 5,000 5.1% 35.25 11/13/07 53,500
John M. Stropki, Common Shares 6,000 6.2% 38.375 11/13/07 81,840
Jr..................
Class A Common Shares 6,000 6.2% 35.25 11/13/07 64,200
Frederick G. Common Shares 2,500 2.5% 38.375 11/13/07 34,100
Stueber.............
Class A Common Shares 2,500 2.5% 35.25 11/13/07 26,750
Richard C. Ulstad..... Common Shares 2,000 2.0% 38.375 11/13/07 27,280
Class A Common Shares 2,000 2.0% 35.25 11/13/07 21,400
</TABLE>
- ---------------
(1) All options were granted at an exercise price equal to the fair market value
of the Common Shares ($38.375) and the Class A Common Shares ($35.25) at the
date of the grant. The value shown is based on the Black-Scholes option
pricing model. The model assumes (a) volatility calculated using the trading
information for the Common Shares and the Class A Common Shares during the
80 week period ended January 2, 1998 (25.4% for Common Shares and 19.7% for
Class A Common Shares); (b) a risk-free rate of return based on the 10-year
treasury bond rate at December 26, 1997 (5.74%); and a dividend yield for
the Common Shares of 2.05% and for the Class A Common Shares of 2.22%.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR END OPTION VALUES
The following table provides information relating to exercisable and
unexercisable stock options at December 31, 1997 for our named executive
officers. No named executive officers exercised stock options during 1997. No
stock appreciation rights were awarded to such individuals during the last
fiscal year, and no stock appreciation rights were exercised or remained
unexercised during the last fiscal year.
<TABLE>
<CAPTION>
NUMBER OF
SECURITIES UNDERLYING VALUE OF UNEXERCISED
UNEXERCISED OPTIONS IN-THE-MONEY
AT FY-END(#) OPTIONS AT FY-END($)
--------------------------- ---------------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- --------------------- ------ ------- ------- --------
<S> <C> <C> <C> <C> <C>
Anthony A. Massaro... Common Shares 8,333 29,167 $74,997 $157,816
Class A Common Shares 8,333 29,167 $76,080 $166,295
H. Jay Elliott....... Common Shares 2,500 10,000 $22,500 $ 48,125
Class A Common Shares 2,500 10,000 $22,825 $ 51,300
John M. Stropki, Common Shares
Jr................. 3,333 12,667 $29,997 $ 63,753
Class A Common Shares 6,164 12,667 $42,640 $ 67,650
Frederick G. Common Shares
Stueber............ 1,666 5,834 $14,994 $ 31,569
Class A Common Shares 1,666 5,834 $15,211 $ 33,264
Richard C. Ulstad.... Common Shares 1,333 4,667 $11,997 $ 25,253
Class A Common Shares 9,402 4,667 $46,971 $ 26,610
</TABLE>
22
<PAGE> 26
COMPENSATION COMMITTEE
REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee of your Board of Directors consists solely of
non-employee Directors. Its primary charge is to determine and report to the
Board of Directors on the compensation (or method of calculation thereof) for
the Chairman and Chief Executive Officer and each other executive who is among
the five highest paid executives. In addition, the Compensation Committee
establishes and conducts succession planning for the Chief Executive Officer and
reviews and makes recommendations to the Board of Directors concerning our
employee benefit programs. The Chief Executive Officer determines the
compensation of our other executive officers, subject to Compensation Committee
oversight.
EXECUTIVE COMPENSATION POLICY
Our executive compensation policy is based on our longstanding commitment
to incentive based compensation for all employees, including officers. This
commitment is exemplified by the cash bonus program. For many years we have
administered a discretionary employee bonus program featuring a cash
distribution determined on the basis of a formula that takes into account
individual earnings and the results of a merit review process. Virtually all
domestic employees participate in the program, and efforts have been made to
include employees of foreign subsidiaries, where appropriate. The costs of this
program, net of hospitalization costs but inclusive of payroll taxes, was $74.9
million in 1997, $66.7 million in 1996, and $66.4 million in 1995.
The Committee's approach to executive compensation is the same as our
Company's approach to employee compensation generally. The base salaries of
executives should as a norm be set at the 40th percentile of our peer group,
i.e. base salaries will be somewhat below average. The Committee believes,
however, that cash bonus opportunities should be above average, with the 75th
percentile of our peer group retained as the target for total cash compensation.
In making these determinations, the Committee uses a peer group consisting of
200-300 manufacturers based in the United States and with revenues comparable in
size to our revenues. The Committee also believes that individual circumstances
and performance should be a factor in incentive awards, both positively and
negatively -- notwithstanding our performance against financial targets. The
financial targets for 1997 were based on earnings before interest, taxes and the
cash bonus referred to above. Financial targets were set on the same basis for
1998. The compensation paid to executives in 1997, in addition to weighting for
personal performance, reflected our Company's superior performance and the fact
that financial targets for 1997 were exceeded.
The Committee's philosophy, after taking into account lower than average
base salaries and above average cash bonus opportunities, includes a third
principle, which is that long-term incentive opportunities should be in place
that place executives at the median of their peer group for such long-term
incentive programs. As a result, stock option grants were made in 1996 and 1997
and a long-term cash based plan based on earnings growth over a three year
period was also introduced in 1997, applicable to the 1998-2000 period.
1998 STOCK OPTION PLAN
Our 1988 Incentive Equity Plan (the "IEP"), which has been the Company's
principal vehicle for delivering long-term equity based incentives to the key
employees, will expire this year. Since the Committee has used the IEP primarily
for granting stock options in recent years, the Committee has recommended
replacing it with the 1998 Stock Option Plan in order to continue to provide
long-term incentive opportunities.
CEO COMPENSATION
Mr. Massaro's compensation in 1997 reflects the Compensation Committee's
three-part philosophy, emphasizing incentives and performance; base compensation
of approximately $533,000, below his peer group median; cash bonus of $560,000,
which is superior pay for superior performance against financial targets,
placing him in the upper quartile for his peer group; and stock option grants
for long-term incentive compensation placing Mr. Massaro at what we believe is
the median of his peer group for long-term incentive programs.
23
<PAGE> 27
OTHER EXECUTIVE OFFICERS
The base salaries of Messrs. Elliott, Stropki, Stueber and Ulstad were
established according to the principles discussed above. An aggregate of
$714,000 was paid in 1997 to Messrs. Elliott, Stropki, Stueber and Ulstad as the
target award; thus 45.2% of their total compensation was at risk. Aggregate
option grants for 31,000 shares were made to these individuals under the 1988
Incentive Equity Plan.
1993 TAX ACT
The Compensation Committee's general philosophy is to "qualify" future
long-term incentive plans for tax deductibility wherever appropriate,
recognizing that, under certain circumstances, the limitations imposed by the
Omnibus Budget Reconciliation Act of 1993 may be exceeded. All compensation paid
during 1997 was deductible.
The foregoing report has been furnished by the Compensation Committee.
Edward E. Hood, Jr., Chairman
Paul E. Lego
David C. Lincoln
G. Russell Lincoln
Henry L. Meyer, III
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires our Directors and Officers to
file reports of ownership and changes in ownership with respect to our
securities with the Securities and Exchange Commission and to furnish copies of
these reports to us. Based on a review of these reports, we believe that for
1997 all filing requirements were met on a timely basis.
PENSION BENEFITS
We provide pension benefits for our executive officers under two defined
benefit programs: the retirement annuity program (the "RETIREMENT ANNUITY
PROGRAM"), which has been in effect since 1936, and a supplemental executive
retirement plan (the "SERP"), which became effective January 1, 1994. We also
maintain a supplemental deferred compensation plan (the "DEFERRED COMPENSATION
PLAN") which became effective November 15, 1994. In 1997, we adopted The Lincoln
Electric Company Executive Benefit Plan (the "EXECUTIVE BENEFIT PLAN"), which is
triggered only in change of control situations and under which benefits paid
will reduce and offset benefits payable under the Deferred Compensation Plan
and, in certain circumstances, the SERP. Participation in the SERP, the Deferred
Compensation Plan and the Executive Benefit Plan is limited to individuals
chosen by the Compensation Committee.
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
The purpose of the SERP is, in part, to make up for limitations imposed by
the Internal Revenue Code on payments of retirement benefits under the Company's
tax qualified retirement plans, including the Retirement Annuity Program, and,
primarily, to provide an aggregate competitive retirement benefit for SERP
participants. The following table shows the estimated annual pension benefits
provided under the SERP (inclusive of benefits payable under our qualified plans
(including the employer provided benefit under the employee savings plan
("401(k) SAVINGS PLAN")) and, in certain cases, previous employer plans), which
would be payable to employees in various compensation classifications upon
retirement on December 31, 1997, at age 60, after selected periods of service.
The amounts reflected in the table will be reduced by the single life benefits
payable under the Retirement Annuity Program, the lifetime benefit equivalence
of any account balance for employer-paid benefits under our 401(k) Savings Plan
and (if additional service is granted) other qualified plan benefits paid by
previous employers. The benefits payable under the SERP are reduced by the
maximum Social Security benefit payable in the year of retirement and the table
reflects such reduction. Benefits under the SERP are also reduced if the covered
employee has participated in the plan for fewer than 8 years at the time of
retirement.
24
<PAGE> 28
<TABLE>
<CAPTION>
AVERAGE ANNUAL
COMPENSATION FOR
3 HIGHEST YEARS
IN 7-YEAR PERIOD YEARS OF SERVICE
PRECEDING ---------------------------------------------------
RETIREMENT 25 YRS. 30 YRS. 35 YRS. 40 YRS. 45 YRS.
- ---------------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
200,000 56,338 70,788 85,238 99,688 114,088
300,000 92,463 114,138 135,813 157,488 179,088
400,000 128,588 157,488 186,388 215,288 244,088
500,000 164,713 200,838 236,963 273,088 309,088
600,000 200,838 244,188 287,538 330,888 374,088
700,000 236,963 287,538 338,113 388,688 439,088
800,000 273,088 330,888 388,688 446,488 504,088
900,000 309,213 374,238 439,263 504,288 569,088
1,000,000 345,338 417,588 489,838 562,088 634,088
1,100,000 381,463 460,938 540,413 619,888 699,088
</TABLE>
Benefits under the SERP are based upon 1.445% of the average annual
compensation for the 3 highest years in the 7-year period preceding retirement,
multiplied by the covered employee's years of service until the end of the year
in which age 65 is attained. The maximum benefit may not exceed 65% of the
average annual compensation for the 3 highest years used in the calculation and
service after age 65 is not included. Unless a different factor is set by the
Board, participants are credited with only 20% of the net amount of the benefit
otherwise payable under the plan when they first become participants, and, in
each of the next eight years, an additional 10% of the net amount of the benefit
will become payable upon retirement. Years of service after the end of the year
in which age 67 is attained are disregarded for this purpose. The table reflects
the benefits payable on a single life basis without reduction for the
participation factor or offsets from our plans or previous employer plans. In
addition, at any time after an employee commences receiving benefits from the
SERP, the employee may request that ninety percent (90%) of the present value of
all remaining benefits payable to the employee under the SERP be paid to the
employee in a single lump sum cash payment. If an employee elects to receive
such a payment, the remaining ten percent (10%) of such present value would be
forfeited.
The compensation covered by the SERP is the same as the amounts shown in
the salary and bonus columns of the Summary Compensation Table on page 21.
Credited service for SERP purposes for Messrs. Massaro, Elliott, Stropki,
Stueber and Ulstad is 35, 36, 25, 24 and 27 years, respectively.
RETIREMENT ANNUITY PROGRAM
Under the Retirement Annuity Program, participants accumulate 2.5% of each
year's base compensation (up to Internal Revenue Code limitations) in the form
of an annuity payable at normal retirement age (age 60). In addition to the 2.5%
accumulation each year, we have granted, on a number of occasions, additional
supplemental retirement benefits. The Program also provides accumulated benefits
to eligible spouses of deceased employees or former employees and to eligible
employees who terminate employment. Benefits under the Retirement Annuity
Program are in addition to those payable under Social Security.
The anticipated retirement benefits under the Retirement Annuity Program
for the named executive officers with the highest compensation for 1997 are as
follows:
<TABLE>
<CAPTION>
ANNUAL RETIREMENT
NAME ANNUITY PROGRAM BENEFITS
---- ------------------------
<S> <C> <C>
1. Anthony A. Massaro................................... $42,479(1)
2. H. Jay Elliott....................................... 32,232(1)
3. John M. Stropki, Jr.................................. 87,964(1)
4. Frederick G. Stueber................................. 70,499(1)
5. Richard C. Ulstad.................................... 46,690(1)
</TABLE>
- ---------------
(1) Messrs. Massaro, Elliott, Stropki, Stueber and Ulstad are currently under
normal retirement age. The amounts shown represent those anticipated at
normal retirement age assuming current compensation continues unchanged to
that date and the benefits are payable on a single life basis.
25
<PAGE> 29
DEFERRED COMPENSATION PLAN
Under the Deferred Compensation Plan, certain of our employees, including
the named executive officers, may make an election each year to defer a portion
of their current salary. The amount deferred, when combined with the amounts
deferred under our 401(k) Savings Plan, may not exceed 75% of the employee's
base salary plus 100% of such employee's bonus for each year. The amounts
deferred are credited to accounts established in our accounting records. The
value of an employee's account is paid to the employee following termination of
the employee's employment. In addition, the employee may request at any time
that ninety percent (90%) of the balance of the employee's account be
distributed to the employee. The remaining ten percent (10%) would be forfeited.
FINANCIAL SECURITY PROGRAM
Effective November 1, 1997, the Financial Security Program ("FSP") was
established for employees. Employees hired prior to November 1, 1997 were able
to choose whether to participate in the FSP or to continue participation in the
Retirement Annuity Program under the provisions in effect prior to November 1,
1997. Employees hired on or after November 1, 1997 are eligible to participate
only in the FSP. Under the FSP, participants continue to accrue the same basic
2.5% pension benefit under the Retirement Annuity Program. However, for
Retirement Annuity Program benefits accrued on or after November 1, 1997, FSP
participants no longer have the right either to receive those benefits while
working (after normal retirement age of 60) or to receive increased benefits by
deferring commencement until actual retirement (but continuing to work past age
60). FSP participants also receive a Company-paid contribution to our 401(k)
Savings Plan of 2% of each year's base compensation.
EMPLOYMENT AND CHANGE IN CONTROL ARRANGEMENTS
Messrs. Massaro, Elliott and Stueber entered into employment agreements in
July 1993, June 1993 and February 1995, respectively. The agreements will be
amended to grant credited service as of such dates for purposes of the SERP of
29, 32 and 22 years, respectively, as of their respective dates of hire,
assuming a normal retirement age of 60 and service of 45 years at age 65 for
all. Messrs. Massaro and Elliott have a participation factor under the SERP of
100%. The agreements for Messrs. Massaro and Elliott also provide for severance
pay equal to one year's base salary if they are terminated without cause. The
agreement for Mr. Stueber provides that if he is terminated without cause, or a
change in control of the Company reduces his responsibilities, prior to his
sixth anniversary, he will be entitled to severance pay equal to three times his
total compensation (base and bonus) for the preceding year. Thereafter, through
his tenth anniversary, severance pay equals one year's total compensation.
We adopted the Executive Benefit Plan in 1997. The plan has a specific
limited scope. Benefits payable under the plan, if any, would offset benefits
payable under the Deferred Compensation Plan and, for certain individuals, the
SERP. Certain of our employees, including the named executive officers, are
entitled to receive a cash payment if there is a "change in control" of the
Company, as defined in the Executive Benefit Plan, and certain employment
conditions are satisfied. The Reorganization does not constitute a change of
control for purposes of the Executive Benefit Plan. The Company has established
a trust to hold the employees' accounts under the Executive Benefit Plan and has
funded the trust with amounts sufficient to pay benefits.
The term "change of control" is defined in the Executive Benefit Plan
described above to include certain changes in beneficial ownership of the
Company's outstanding voting shares, certain changes in the membership of the
Company's Board of Directors, certain events of bankruptcy or insolvency and
certain business combinations.
26
<PAGE> 30
CUMULATIVE SHAREHOLDER
RETURN AND PERFORMANCE PRESENTATION
Shown below is a line graph comparing the yearly percentage change in the
cumulative total shareholder return on our Common Shares against the cumulative
total return of the S&P Composite--500 Stock Index and The Russell 2000 Stock
Index for the five-year calendar period commencing January 1, 1993 and ending
December 31, 1997. A compatible peer-group index for the welding industry, in
general, was not readily available because the industry is comprised of a
relatively small number of competitors, many of which either are based overseas
and/or are divisions of larger companies, privately-held or not actively traded
in the United States. The Russell 2000 represents a developed index based on a
concentration of companies having relatively small market capitalization,
published by the Frank Russell Company. The return on our Common Shares does not
include payment of dividends with respect to the Class A Common Shares issued in
connection with the recapitalization in 1995.
Five Year Performance Comparison
LECO Common, S&P 500, Russell 2000
Composite Indices
<TABLE>
<CAPTION>
Measurement Period
(Fiscal Year Covered) 1992 1993 1994 1995 1996 1997
<S> <C> <C> <C> <C> <C> <C>
LINCOLN 100.00 84.35 189.91 262.11 349.61 419.88
S&P 500 100.00 110.02 111.52 153.31 188.70 251.65
RUSSELL 2000 100.00 118.90 116.76 149.97 174.70 213.76
</TABLE>
27
<PAGE> 31
TRANSACTIONS WITH AFFILIATES
Buehler/Steingass, Inc., of which Frank L. Steingass, one of our Directors,
is President and a principal shareholder, received approximately $143,938 for
printing catalogs and other materials for us during 1997. It is anticipated that
Buehler/Steingass, Inc. will continue to provide printing services to us in 1998
on miscellaneous matters. All of the transactions reported above were carried
out in the ordinary course of business upon terms no less favorable to us than
would apply to similar transactions with unrelated companies.
REORGANIZATION
Item No. 2
Your shares represented by the proxies in the enclosed form will be voted
FOR the Reorganization described in this Proxy Statement/Prospectus, unless you
instruct otherwise. Your Board of Directors has approved and adopted an
Agreement of Merger, a copy of which is attached hereto as Annex A and
incorporated in this Proxy Statement/Prospectus by reference. Consummation of
the Merger described below and the related transactions contemplated by the
Agreement of Merger will result in a new holding company structure in which
Lincoln Electric Holdings will become the publicly held parent company of the
Company. In the Merger, all nonvoting shares of the Company will be converted
into voting shares of Lincoln Electric Holdings. The consolidated financial
condition of Lincoln Electric Holdings immediately after the Merger will be
substantially the same as ours immediately prior to the Merger. See "Financial
Statements" below.
REASONS FOR THE REORGANIZATION
We manufacture three principal product lines -- welding products, cutting
products and integral horsepower industrial electric motors, and participate in
the welding market both domestically and globally. A holding company structure,
together with certain potential follow-on reorganizations of our various
corporate structures below the Lincoln Electric Holdings level, will better
reflect the way we currently conduct operations. We believe that our new
structure will provide benefits to us including:
- opportunities for enhanced shareholder value through the elimination of
market confusion caused by our two existing classes of common stock;
- Price differentials have arisen from time to time between the Common
Shares and Class A Common Shares. In addition, the market has
experienced confusion from time to time, with respect to our various
classes of securities on liquidity issues and with dividend
announcements. We believe that simplifying the capital structure will
lead to more market awareness and understanding of the Company and
ultimately to increased valuations.
- additional opportunities for enhanced shareholder value through greater
trading volume;
- We believe that increasing the number of outstanding shares, and
reducing their cost, will encourage more investment and trading,
including increased employee ownership. Over the longer term increased
numbers of outstanding shares should contribute to increased
liquidity, which in time will help increase the Company's overall
market value.
- increased legal protection, with risks and benefits of domestic and
foreign regions more clearly contained below the level of Lincoln
Electric Holdings.
- For example, risks associated with overseas borrowings and foreign
operations, such as the loss situations experienced by us in the early
nineties in Germany, Mexico, Venezuela, Brazil and Japan, are better
contained in a holding company structure in which the U.S. domestic
assets are not at risk. Similarly, contingent claims that at times can
arise in the United States, such as product liability actions for
bodily injury or property damage or environmental claims, need not
burden the growth of foreign operations.
We are currently assessing the final structure of our operations following
the Reorganization. Our analysis will be affected by a variety of tax,
accounting and legal factors that may shape the final structure. The following
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<PAGE> 32
diagram shows conceptually our corporate structure before the Reorganization and
the type of structure that may evolve after the Reorganization where, for
example, Operating Subsidiary A may be The Lincoln Electric Company, Operating
Subsidiaries B represent Asia-Pacific subsidiaries and Operating Subsidiaries C
represent one or more other subsidiaries of the Company:
CHART
Before the Reorganization After the Reorganization
------------------------- --------------------
Public Shareholders Public Shareholders
---------------------------- -----------------------------
| |
The Lincoln Electric Company Lincoln Electric Holdings, Inc.
| |
- ------------------------------------------- -------------------------------
| | | | | | |
- ---------- ---------- -------------- -------- --------- --------- ----------
Operating Operating Three Holding Operating Operating Operating
Subsidiary Subsidiary additional Company Subsidiary Subsidiary Subsidiary
A B Operating A B C
Subsidiaries
- ---------- --------- -------------- -------- --------- ---------- ---------
|
--------------
Ten additional
Operating
Subsidiares
--------------
YOUR BOARD OF DIRECTORS HAS APPROVED THE AGREEMENT OF MERGER AND RECOMMENDS
YOU VOTE FOR THIS PROPOSAL TO APPROVE THE REORGANIZATION. You are urged to
retain this Proxy Statement/Prospectus for future reference.
DESCRIPTION OF THE MERGER
The following discussion summarizes the material terms of the Agreement of
Merger set forth in Annex A hereto. The Agreement of Merger will be effected by
the merger of Merger Co. into the Company. The Company will be the surviving
corporation, will continue to do business under our present name and will have
the rights, benefits, obligations and liabilities that we had prior to the
Merger. As a result of the Merger, Lincoln Electric Holdings will be the sole
shareholder of the Company.
At the present time, 10 shares of Lincoln Electric Holdings are issued and
outstanding. Presently, 100 shares of Merger Co. are issued and outstanding, all
of which are held by Lincoln Electric Holdings. The Agreement of Merger provides
that, after satisfaction or waiver of all conditions under the Agreement of
Merger, the Company and Merger Co. will file the appropriate certificate with
the Secretary of State of Ohio and as a result thereof, Merger Co. will be
merged with and into the Company. In the Merger, each Common Share and each
Class A Common Share issued and outstanding at the Effective Time, other than
those held by persons entitled to exercise statutory dissenters' rights, will be
converted into two Holding Common Shares. The 10 shares of Lincoln Electric
Holdings outstanding prior to the Effective Time will be canceled and
extinguished at the Effective Time. As of April 6, 1998, there were 10,773,834
Common Shares and 13,858,190 Class A Common Shares issued and outstanding and no
Common Shares or Class A Common Shares held in treasury. After the Merger, there
will be 49,264,048 Holding Common Shares issued and outstanding if no holders of
Common Shares or Class A Common Shares exercise statutory dissenters' rights.
Pursuant to the Ohio General Corporation Law, the approval of the
Reorganization requires the affirmative vote of the holders of not less than
two-thirds of the outstanding Common Shares, voting as a class, and the
affirmative vote of the holders of not less than two-thirds of the outstanding
Class A Common Shares entitled to vote, voting as a class. The Principal
Shareholder has or shares voting power for Common Shares and Class A Common
Shares which, based on the number of Common Shares and Class A Common Shares
outstanding as of April 6, 1998 (the record date for the Annual Meeting),
constitute approximately 21.5% of the outstanding Common Shares and 6.58% of the
Class A Common Shares. We have been informed that the Principal Shareholder
presently intends to vote in favor of the Reorganization. If this shareholder
does so vote, it will be necessary for holders of an additional 45.17% of all
outstanding Common Shares and 60.09% of the outstanding Class A Common Shares to
vote for the Reorganization in order for the Reorganization to be approved.
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<PAGE> 33
Approval of the Reorganization by you will also constitute approval by you
of the Restated Articles of Incorporation and Code of Regulations of Lincoln
Electric Holdings which will be in effect upon consummation of the Merger.
Furthermore, it will constitute approval of the conversion of outstanding stock
options and rights for Common Shares and Class A Common Shares into options or
rights to purchase or receive Holding Common Shares, and approval of all
amendments to all of the foregoing deemed appropriate by our Board of Directors
and the Board of Directors of Lincoln Electric Holdings.
After the Merger, Lincoln Electric Holdings will consider other corporate
restructurings involving its subsidiaries. Although the exact nature of these
transactions requires further planning and may necessitate tax and other
governmental and third party approvals, the goal would be to eventually move to
the post-reorganization diagram referenced above, with welding subsidiaries for
various regions of the world positioned below Lincoln Electric Holdings, and
non-welding businesses separately identified.
EXCHANGE OF CERTIFICATES
If the Reorganization is approved, Common Shares and Class A Common Shares
would automatically be changed into Holding Common Shares. Upon such change, you
should retain your certificates for Common Shares and Class A Common Shares
because those certificates would then represent Holding Common Shares. While you
do not need to exchange your share certificates following the Merger, you will
be permitted to do so if you wish. You will receive a letter of transmittal from
our Shareholder Services after the Effective Time describing the procedures for
exchanging your share certificates. You will also receive a certificate
representing the number of additional Holding Common Shares you are entitled to
receive as a result of the Reorganization printed on new certificate paper.
Please contact our Shareholder Services for further information.
At the Effective Time, holders of certificates representing Common Shares
or Class A Common Shares will cease to have any rights, other than dissenters'
rights with respect to Common Shares or Class A Common Shares, with respect to
such shares and each such certificate will be deemed for all corporate purposes
to evidence the Holding Common Shares into which such shares have been
converted. Our stock transfer books will be closed at the close of business on
the business day immediately preceding the Effective Time, and the holders of
record of Common Shares and Class A Common Shares as of the Effective Time will
become holders of Holding Common Shares as provided in the Agreement of Merger.
CAPITALIZATION OF HOLDING COMPANY
At the present time, Lincoln Electric Holdings has 120,000,000 authorized
Holding Common Shares and Preferred Shares, 10 Holding Common Shares of which
have been issued and are outstanding. These outstanding Holding Common Shares
will be canceled and extinguished in the Merger, so that the only outstanding
Holding Common Shares will be those you and other Company shareholders receive
in the Merger.
The 120,000,000 Holding Common Shares authorized represent a number of
shares that is greater than that number required in order to effect the Merger,
but that is the same number as the Company's shareholders authorized in 1997 for
Common Shares and Class A Common Shares combined. The Board of Directors of the
Company believes that it is still desirable to have 120,000,000 authorized
Holding Common Shares so that shares in sufficient number may be issued in the
future without further action by shareholders (except as may be required by
applicable laws or regulatory rules) for purposes such as future stock
dividends, stock splits and similar transactions, as well as future financings
or acquisitions. Although there currently are no plans to issue such additional
Holding Common Shares, except under the IEP and the 1998 Stock Option Plan (if
the latter is approved by the shareholders) it is possible that, from time to
time, Lincoln Electric Holdings may consider transactions involving the issuance
or reservation of additional Holding Common Shares.
All Holding Common Shares issued pursuant to the Agreement of Merger will
be validly issued, fully paid and nonassessable. As of April 6, 1998, the number
of record holders of Common Shares and Class A Common Shares was 2,444, and
2,195, respectively.
The voting power of the holders of Common Shares will be reduced by the
Reorganization. The Common Shares currently hold 100% of the voting power in the
election of directors and many other matters since the
30
<PAGE> 34
Class A Common Shares vote only on the matters identified in the Articles and as
required by the Ohio General Corporation Law. After the Effective Time, the
Common Shares will hold approximately 43.8% of the voting power since the Common
Shares and Class A Common Shares are both being converted into Holding Common
Shares and will therefore have equal voting rights.
EMPLOYEE BENEFIT PLANS
Except as described below with respect to the stock benefits provided under
our plans, all of our employee benefit and welfare plans, such as our medical
plans and pension plans, will continue unchanged and benefits under these plans
will not be affected as a result of the Merger. All of our plans providing stock
benefits will continue in effect after the Merger adjusted to reflect Holding
Common Shares as the stock issuable instead of Common Shares or Class A Common
Shares.
CONDITIONS TO CONSUMMATION OF THE MERGER
Consummation of the Merger is subject to certain conditions which must be
satisfied or waived prior to the Merger. These conditions include:
<TABLE>
<S> <C>
(1) receipt of the requisite approval of our shareholders;
(ii) receipt of satisfactory opinions of counsel with respect to
certain federal and Ohio income tax matters (see "Federal
and Ohio Income Tax Consequences of the Merger" below);
(iii) entitlement of no more than 10% of the Common Shares and
Class A Common Shares, collectively, to assert statutory
dissenters' rights; and
(iv) approval of Holding Common Shares for quotation on the
NASDAQ National Market.
</TABLE>
Except for the filing of a Certificate of Merger with the Secretary of
State of Ohio, no federal or state regulatory requirements must be complied with
or approvals obtained for the consummation of the Merger. It is anticipated that
the Merger will be consummated as soon as practicable after the conditions to
the consummation of the Merger are satisfied, or at such later date as is, in
the judgment of your Board of Directors, in the best interests of the Company or
you.
AMENDMENTS, DEFERRAL OR ABANDONMENT OF AGREEMENT OF MERGER
The Agreement of Merger provides that Lincoln Electric Holdings, Merger Co.
and the Company, by mutual consent of their respective Boards of Directors, may
amend, modify or supplement the Agreement of Merger in writing, before or after
approval by you, provided that such amendment, modification or supplement does
not affect the rights of the respective shareholders of such companies in a
manner that is materially adverse to such shareholders in the judgment of the
respective Boards of Directors of such companies. In addition, the Agreement of
Merger provides that, notwithstanding adoption and approval of the Agreement of
Merger by you, your Board of Directors may defer consummation of the Merger or
terminate the Agreement of Merger or abandon the Merger if your Board of
Directors determines that such deferral, termination or abandonment would be in
the best interests of the Company or you.
FACTORS AFFECTING THE CONSUMMATION OF THE REORGANIZATION
Our plans to accomplish the Reorganization and the internal follow-on
reorganizations thereafter may be affected by a variety of factors. These
factors include our competitive position in domestic and international markets,
the strength of the domestic and international welding markets, our financial
position (including off balance sheet assets and liabilities) and operating
factors. As described above, we may defer, terminate or abandon the Merger if
your Board of Directors determines it would be in the best interests of the
Company or you in light of these and other factors.
31
<PAGE> 35
POST-REORGANIZATION BOARD OF DIRECTORS AND MANAGEMENT OF LINCOLN ELECTRIC
HOLDINGS
After the Reorganization, the Board of Directors of Lincoln Electric
Holdings will consist of the same persons who are identified as current
directors or have been nominated for election as directors of the Company in
this Proxy Statement/Prospectus and will continue to be a classified Board, with
the terms of the Directors of Lincoln Electric Holdings ending at such times as
they would have ended if they had continued to serve as Directors of the
Company. See "Election of Directors -- Item 1" above. The Board of Directors of
Lincoln Electric Holdings will have the same committees as the Board of
Directors of the Company. Following the Reorganization, Lincoln Electric
Holdings' executive offices will be located at the same address as the Company's
current executive offices. It is anticipated that members of the committees of
the Board of Directors of Lincoln Electric Holdings will be as follows:
<TABLE>
<S> <C>
(i) Audit Committee -- Harry Carlson, David H. Gunning, Kathryn
Jo Lincoln, Craig R. Smith, and Frank L. Steingass;
(ii) Compensation Committee -- Edward E. Hood, Jr., Paul E. Lego,
David C. Lincoln, G. Russell Lincoln and Henry L. Meyer,
III;
(iii) Finance Committee -- Harry Carlson, David H. Gunning, Edward
E. Hood, Jr., Paul E. Lego, David C. Lincoln, Anthony A.
Massaro, and Craig R. Smith; and
(iv) Nominating Committee -- David C. Lincoln, Kathryn Jo
Lincoln, G. Russell Lincoln, Henry L. Meyer, III, and Frank
L. Steingass.
</TABLE>
It is anticipated that, after the Merger, the executive officers of Lincoln
Electric Holdings will be as follows:
<TABLE>
<S> <C>
Anthony A. Massaro Chairman, President and Chief Executive Officer
John M. Stropki Executive Vice President
H. Jay Elliott Senior Vice President, Chief Financial Officer and
Treasurer
Frederick G. Stueber Senior Vice President, General Counsel and Secretary
William J. Twyble Senior Vice President, Engineering & Marketing
Raymond S. Vogt Vice President, Human Resources
</TABLE>
Other senior positions within the new holding company structure will
include:
<TABLE>
<S> <C>
Domestic Group
John M. Stropki President, North America
Richard C. Ulstad Senior Vice President, Manufacturing
Dennis D. Crockett Vice President, Consumable Research and Development
Paul F. Fantelli Vice President, Reliability & Quality
Charles H. Murray Vice President, Corporate Development
Ronald A. Nelson Vice President, Materials and Service
International Group
Richard J. Seif President and Chief Executive Officer, Lincoln Electric
Company of Canada
Ralph C. Fernandez President, Lincoln Electric Latin America
Michael Gillespie President Lincoln Electric Asia
Joseph G. Doria President, Lincoln Electric Europe
John H. Weaver President, Lincoln Electric Russia, Africa & Middle East
Non-Welding Group
Gary M. Schuster Vice President, Motor Division
S. Peter Ullman President and Chief Executive Officer, Harris Calorific
Division of The Lincoln Electric Company
</TABLE>
32
<PAGE> 36
These persons presently serve in such capacities as our officers.
Additional officers of Lincoln Electric Holdings will be elected or appointed
from time to time as may be deemed desirable.
INITIAL FUNDING OF LINCOLN ELECTRIC HOLDINGS
Lincoln Electric Holdings is not expected to have any significant direct
expenses. Future dividends will be paid by Lincoln Electric Holdings rather than
the Company. Lincoln Electric Holdings' ability to pay future dividends will be
dependent on the ability of its various subsidiaries to make cash distributions
to Lincoln Electric Holdings and initially will be substantially the same as the
current capacity of the Company to pay dividends.
FEDERAL AND OHIO INCOME TAX CONSEQUENCES OF THE MERGER
We have included the following federal and Ohio income tax discussion for
general information only. The material that follows is limited to a discussion
of the federal and Ohio income tax consequences to an individual shareholder
whose Common Shares and Class A Common Shares are converted in the Merger into
Holding Common Shares, or who elects, with respect to such Common Shares and/or
Class A Common Shares, to exercise his statutory dissenters' rights. This
discussion does not purport to consider all aspects of federal or Ohio income
taxation that may be relevant to a particular individual shareholder. Certain
shareholders, including shareholders who received their shares as compensation,
may be subject to special rules not discussed below. Moreover, this discussion
does not consider the effect of any applicable foreign, state (other than Ohio),
local, or other tax laws, or the tax consequences of the Merger to shareholders
who are not individuals.
The Company has not requested a ruling from the Internal Revenue Service in
connection with the Merger. It is a condition of the Merger that Jones, Day,
Reavis & Pogue, counsel to the Company, deliver its written opinion to the
Company as to certain of the federal and Ohio income tax consequences of the
Merger. Based on certain representations which the Company has agreed to provide
such counsel, such counsel has informed the Company that, in its opinion, the
Merger, when it is consummated, will qualify as a "reorganization" within the
meaning of Section 368(a)(1)(B) of the Internal Revenue Code. Such opinion of
counsel will be reflected in a written opinion letter which Jones, Day, Reavis &
Pogue will deliver to the Company on or before the date of the annual meeting.
(a) Conversion of Common Shares and Class A Common Shares into Holding
Common Shares. Based on the opinion expressed above, Jones, Day, Reavis & Pogue
has informed the Company that it is of the further opinion that, if the Merger
is carried out in accordance with the terms of the Merger Agreement and if, in
the Merger, all of the Common Shares and Class A Common Shares that an
individual shareholder owns are converted into Holding Common Shares, such
shareholder will not recognize any gain or loss as a result of the Merger. In
such case, such shareholder's aggregate tax basis in the Holding Common Shares
that he will own immediately after the Merger will be the same as the aggregate
tax basis of the Common Shares or Class A Common Shares that he previously owned
which were converted in the Merger into Holding Common Shares. The holding
period of the Holding Common Shares that such shareholder will own will include
the period for which the Common Shares or Class A Common Shares that such
shareholder previously owned were held, or were considered to be held, by such
shareholder, provided such Common Shares or Class A Common Shares were held by
such shareholder as a capital asset at the Effective Time of the Merger.
If all of the Common Shares and Class A Common Shares that an individual
shareholder owned prior to the Merger are converted into Holding Common Shares
in the Merger, Jones, Day, Reavis & Pogue has advised the Company that the Ohio
income tax consequences of the Merger to such an individual shareholder will be
the same as the federal income tax consequences described above.
Shareholders other than individual shareholders, shareholders who reside in
states other than Ohio, and shareholders who obtained their Common Shares or
Class A Common Shares other than by purchase or from the Company pursuant to the
June 12, 1995 stock dividend are urged to consult their own tax advisor as
regards the particular tax consequences of the Merger to them.
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<PAGE> 37
(b) Exercise of statutory dissenters' rights. For a summary of statutory
dissenters rights, see "Dissenter's Rights" on page 36. If instead of having
Common Shares or Class A Common Shares converted in the Merger into Holding
Common Shares, a shareholder dissents from the Merger with respect to some or
all of his Common Shares or Class A Common Shares, such action will be
considered a redemption, as defined in Section 317(b) of the Internal Revenue
Code, for federal income tax purposes, and any consideration that such
shareholder receives from the Company in exchange for such Shares will be
treated as either a "dividend" or as proceeds from the "sale or exchange" of
such Shares. Whether the consideration that a shareholder receives as a result
of exercising statutory dissenters' rights will be treated as dividend income,
resulting in ordinary income taxation on the full amount received, or as sale
proceeds, possibly resulting in capital gain or loss, to such shareholder will
depend on such shareholder's particular facts and whether the redemption results
in a material reduction of the shareholder's ownership interest in the Company,
taking into account the attribution of ownership rules of Section 318 of the
Internal Revenue Code. Any capital gain or loss that such shareholder realizes
as a result of exercising statutory dissenters' rights will be long-term capital
gain or loss if such shareholder held the Common Shares and the Class A Common
Shares with respect to which the shareholder exercised statutory dissenters'
rights for more than 12 months at the Effective Time of the Merger, or
short-term capital gain or loss if such shareholder held such Shares for one
year or less at the time of the Merger. For federal tax purposes, net long-term
capital gain of individuals currently is taxed at a maximum rate of 28% if such
gain is with respect to property held more than 12 months, but less than 18
months, as of the date of sale, and at a maximum rate of 20% with respect to
property held 18 months or more.
If a shareholder dissents with respect to all of the Common Shares and
Class A Common Shares that the shareholder owns, and any entity or person who is
related to such shareholder under the rules of Section 318 of the Internal
Revenue Code at the Effective Time of the Merger owns no Common Shares or Class
A Common Shares, or also dissents with respect to all of their Shares of such
stock, then the proceeds that such shareholder receives from the Company in
exchange for such Shares will result in capital gain or loss to the shareholder.
Such gain or loss, in such case, will be measured by the difference between the
amount of cash that such shareholder receives as a result of exercising
statutory dissenters' rights and the aggregate tax basis of such shareholder's
Common Shares and Class A Common Shares.
If, in the alternative, a shareholder dissents with respect to less than
all of such shareholder's Common Shares and Class A Common Shares, or if such
shareholder dissents with respect to all of such shareholder's Common Shares and
Class A Common Shares and any person or entity who is related to the shareholder
under the rules of Section 318 of the Internal Revenue Code dissents with
respect to less than all of their Common Shares and Class A Common Shares, any
consideration that such shareholder receives from the Company as a result of
exercising statutory dissenters' rights may result in such shareholder being
required to recognize ordinary dividend income upon the conversion of such
shareholder's Shares into cash. Such dividend income will be equal to the full
amount of the cash that such shareholder receives as a result of exercising
statutory dissenters' rights, provided that we have sufficient current or
accumulated earnings and profits (as we believe we do). In such case, such
shareholder's tax basis in the redeemed Shares will not reduce the amount of the
dividend that the shareholder will be treated as receiving; the entire amount of
the cash that such shareholder receives will be taxable as ordinary income; and
such shareholder's tax basis in the redeemed Shares will be added to the tax
basis of the Holding Common Shares that the shareholder actually or
constructively owns upon the effectiveness of the Merger.
If an individual shareholder who exercises statutory dissenters' rights is
a resident of Ohio, the Ohio income tax consequences to such shareholder of the
redemption of such shareholder's Common Shares and/or Class A Common Shares will
be the same as the federal income tax consequences discussed above. Certain
individual shareholders who are Ohio taxpayers, including part-year residents of
Ohio and non-residents of Ohio, may be subject to special rules not discussed
above.
Because the foregoing discussion of the federal and Ohio income tax
consequences of the exercise of statutory dissenters' rights is for general
information only, we urge shareholders who intend to exercise such dissenters'
rights, particularly shareholders who hold options to purchase Common Shares or
Class A Common Shares or who are related to any person who holds such an option,
to consult their own tax advisor regarding the
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<PAGE> 38
federal, state and local income tax consequences that will result to them from
exercising dissenters' rights in connection with the Merger.
(c) Backup withholding. If a shareholder exercises statutory dissenters'
rights, so that the Merger represents a taxable transaction with respect to such
shareholder, such shareholder may also be subject to backup withholding at the
rate of 31% on the amount of any cash that such shareholder receives as a result
of exercising dissenters' rights in the Merger. Generally, backup withholding
applies only when a taxpayer fails to furnish a proper taxpayer identification
number or certify, under penalties of perjury, that such shareholder is not
subject to backup withholding.
FINANCIAL STATEMENTS
Our 10-K Report contains the Consolidated Balance Sheets of us and our
subsidiaries at December 31, 1997 and 1996 and the Consolidated Statements of
Income, Consolidated Statement of Shareholders' Equity and Consolidated
Statements of Cash Flows of us and our subsidiaries for the fiscal years ended
December 31, 1997, 1996 and 1995, the financial statement schedule and the notes
thereto. Such financial statements, schedule and notes are incorporated herein
by reference.
No pro forma consolidated financial statements of Lincoln Electric Holdings
and its subsidiaries immediately following the consummation of the Merger are
included herein, since such financial statements would reflect no material
change from the consolidated financial statements of us and our subsidiaries
immediately prior to the consummation of the Merger.
PRICE RANGE OF COMMON SHARES AND CLASS A COMMON SHARES
The following tables set forth the high and low sales prices for Common
Shares and Class A Common Shares as reported on the NASDAQ National Market for
each calendar quarter during 1996 and 1997 and for a portion of 1998.
<TABLE>
<CAPTION>
CLASS A
COMMON SHARES COMMON SHARES
--------------- ---------------
1996 HIGH LOW HIGH LOW
---- ------ ------ ------ ------
<S> <C> <C> <C> <C>
First Quarter............................ $27.00 $23.25 $27.50 $22.25
Second Quarter........................... 35.75 26.00 30.50 26.75
Third Quarter............................ 35.25 29.25 31.25 24.50
Fourth Quarter........................... 33.50 27.50 31.25 26.25
1997
First Quarter............................ $37.25 $31.50 $33.00 $28.50
Second Quarter........................... 41.38 33.00 39.00 31.75
Third Quarter............................ 42.13 35.25 42.00 35.75
Fourth Quarter........................... 42.38 37.50 41.75 35.25
1998
First Quarter
(through April 16, 1998)............... $46.25 $45.75 $46.25 $45.75
</TABLE>
The last reported sale price of Common Shares and Class A Common Shares on
the NASDAQ National Market on March 5, 1998, the date of the public announcement
following the close of the market of the proposed Merger, was $39.50 per share
and $38.75 per share, respectively. The last reported sale price of Common
Shares and Class A Common Shares on the NASDAQ National Market on April 16, 1998
was $46.25 per share and $45.88 per share, respectively.
The differences between sale prices of the Common Shares and Class A Common
Shares, as shown by the chart above, vary throughout the year. The magnitude of
the differential between their sale prices can be significant at times, with
differentials as high as $6.88 occurring in 1997. The Reorganization would
eliminate these differentials by converting the Class A Common Shares into
Holding Common Shares in the
35
<PAGE> 39
Merger and by Lincoln Electric Holdings having only one class of common stock,
the Holding Common Shares, authorized.
DIVIDENDS
We declared and paid quarterly cash dividends at a rate of $0.12 per Common
Share and per Class A Common Share during each quarter of 1996. We declared and
paid quarterly dividends at a rate of $0.15 per Common Share and per Class A
Common Share during the first three quarters of 1997. In the last quarter of
1997, we declared a dividend of $0.20 per Common Share and Class A Common Share
payable in January 1998 to shareholders of record at the end of 1997. On March
5, 1998, we declared a dividend of $0.20 per Common Share and Class A Common
Share payable to shareholders of record on April 15, 1998.
We expect that Lincoln Electric Holdings will be able initially to at least
maintain dividends at the rate presently paid by us ($0.80 per share annual
rate). The foregoing is a forward-looking statement that is subject to a variety
of factors that may materially affect actual results. Lincoln Electric Holdings
has not declared any cash dividends and the payment of any such dividends will
be a business decision of the Board of Directors of Lincoln Electric Holdings
from time to time following the Merger based upon the results of operations and
financial condition of Lincoln Electric Holdings and its subsidiaries and such
other business considerations which the Board of Directors of Lincoln Electric
Holdings then considers relevant.
LISTING; HOLDING COMMON SHARES TRADING MARKET
The Holding Common Shares will be freely transferable, subject to the
existing IEP restrictions on shares issued pursuant to such plan. It is expected
that the Holding Common Shares will be designated for quotation on the NASDAQ
National Market. Although there can be no assurance that the NASDAQ National
Market will accept the Holding Common Shares for trading, it is a condition to
the Merger that they be so accepted.
DISSENTERS' RIGHTS
Holders of Common Shares and Class A Common Shares who so desire are
entitled to obtain relief as dissenting shareholders under Section 1701.85 of
the Ohio General Corporation Law by complying with the provisions of that
Section. The following summary does not purport to be a complete statement of
the method of compliance with Section 1701.85 and is qualified in its entirety
by referenced Section 1701.85 and Section 1701.84 (which is referenced in
Section 1701.85) of the Ohio General Corporation Law, which Sections are
attached hereto as Annex G.
If you wish to perfect your rights as a dissenting shareholder in the event
the Reorganization is approved you must:
<TABLE>
<S> <C>
(i) have been a record holder of the Common Shares and/or Class
A Common Shares as to which you seek relief as of April 6,
1998 (i.e., the date fixed for the determination of
shareholders entitled to notice of the shareholders' meeting
at which the Reorganization is to be acted upon);
(ii) not have voted such shares in favor of adoption of the
Reorganization;
(iii) deliver to the Company on a date not later than ten days
after the date on which the vote on the Reorganization was
taken (which deadline is currently estimated to be May 29,
1998, based on the scheduled date for the Annual Meeting of
May 19, 1998), a written demand for payment of the fair cash
value of the shares as to which you seek relief; and
(iv) upon demand by the Company, deliver the certificates
representing the shares as to which relief is sought to the
Company for endorsement of a legend thereon. Any written
demand pursuant to clause (iii) above must state your
address, the number and class of shares as to which you seek
relief and the amount claimed as the fair cash value
thereof. If you deliver a written demand for payment of the
fair cash value of your shares but do not complete the
additional procedures required to perfect your dissenters'
rights you may lose your rights as a dissenting shareholder.
</TABLE>
36
<PAGE> 40
Your failure to vote your shares against the Reorganization will not
constitute a waiver of any dissenters' rights under Ohio law. A vote against the
Reorganization will not, however, satisfy the requirement of a written demand
for payment as described in clause (iii) above. Any written demand for payment
should be mailed or delivered to The Lincoln Electric Company, 22801 St. Clair
Avenue, Cleveland, Ohio 44117, Attn: Secretary. Although one Ohio court has held
that demand is timely if mailed but not received within the time limit described
in clause (iii) above, there is no assurance that this view will be upheld.
Therefore, it is recommended that if you use the mails, use some reliable means
to insure and confirm that a timely delivery is made within the ten-day period
described in clause (iii) above. The results of the vote on the Reorganization
will be announced publicly following the Annual Meeting, but you will not
receive any special notice of the deadline for making the written demand
described in clause (iii) above.
Unless you and we agree on the fair cash value per share of the shares as
to which relief is sought, either of us may, within three months after the
service of your written demand, file a petition in the Court of Common Pleas of
Cuyahoga County, Ohio (which is the county in which our principal office is
located). If the Court finds that you are entitled to be paid the fair cash
value of any shares, the Court may appoint appraisers to receive evidence and to
recommend a decision on the amount of the fair cash value. Fair cash value,
determined as of the day prior to that on which the vote by the shareholders on
the Reorganization will be taken, will not exceed the amount specified in your
written demand and will exclude any appreciation or depreciation in market value
resulting from the Merger pursuant to the Agreement of Merger. The Court will
make a finding as to the fair cash value of a share and render judgment against
us for payment with interest at such rate and from such date as the Court
considers court equitable. The costs of the proceeding will be assessed or
apportioned as the court considers equitable.
Fair cash value is described as the amount which a willing seller, under no
compulsion to sell, would be willing to accept, and which a willing buyer, under
no compulsion to purchase, would be willing to pay. The court in Armstrong v.
Marathon Oil Company, 32 Ohio St.3d 397, 513 N.E.2d 776 (1987) held that in
determining fair cash value, substantial weight should be given to the market
price of the shares where the market for such stock is sufficiently active. The
Armstrong court further held that if the shares are traded in a sufficiently
active market, fair cash value is properly measured "as the stock market price
of the shares as of the day prior to that on which the shareholders' vote on the
corporate transaction was taken excluding any appreciation or depreciation in
that price resulting from the proposal submitted to the shareholders."
The rights of any dissenting shareholder terminate if:
<TABLE>
<S> <C>
(i) he or she has not complied with Section 1701.85 of the Ohio
General Corporation Law;
(ii) we abandon or are finally enjoined from carrying out the
Merger,
(iii) the dissenting shareholder withdraws the written demand,
with our consent by our directors; or
(iv) we and the dissenting shareholder have not agreed upon the
fair cash value per share and neither of us files or joins
in a petition in an appropriate court for a determination of
the fair cash value of the shares.
</TABLE>
Under the terms of the Company's 401(k) Savings Plan, participants do not
have the right to instruct the Trustee to exercise dissenters' rights with
respect to the shares allocated to their accounts.
DESCRIPTION OF HOLDING COMMON SHARES
Upon consummation of the Merger, the outstanding Common Shares (other than
shares with respect to which the holder has asserted statutory dissenters'
rights) and the outstanding Class A Common Shares (other than those shares with
respect to which the holder has asserted statutory dissenters' rights) will be
converted into outstanding Holding Common Shares. The rights of holders of
Common Shares and Class A Common Shares are governed by Ohio law, the Articles
and the Regulations. Following the Merger, the rights of the holders of Holding
Common Shares will be governed by Ohio law, the Holding Articles and the Holding
Regulations. Copies of the Holding Articles and Holding Regulations are attached
hereto as Annex B and Annex C, respectively.
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<PAGE> 41
The Holding Articles differ from the Articles as a result of the conversion
of the Class A Common Shares into Holding Common Shares in the Merger. In
particular,
- the Holding Articles do not authorize any "Class A" common equity like
the Class A Common Shares authorized by the Articles;
- the Holding Articles authorize 120,000,000 Holding Common Shares and
5,000,000 Preferred Shares whereas the Articles authorize 60,000,000
Common Shares and 60,000,000 Class A Common Shares; and
- the Holding Articles do not contain provisions similar to those in the
Articles particular to the Class A Common Shares such as:
- the Class A Common Share Protection provisions;
- conversion of the Class A Common Shares into Common Shares upon the
occurrence of certain events;
- required parity of consideration received by the Common Shares and
Class A Common Shares in the event of a merger, consolidation or
combination of the Company with another entity; and
- required parity in dividends paid on the Common Shares and Class A
Common Shares, subject to the qualifications stated in the Articles.
- the Holding Articles expand the purposes of Lincoln Electric Holdings
from those of the Company to include any lawful act or activity for which
corporations may be formed under the Ohio General Corporation Law.
Except as otherwise described above, the Holding Articles are identical in all
material respects to the Articles.
The Holding Regulations are identical in all material respects to the
Regulations. For your convenience, a summary of the rights of the Holding Common
Shares is contained in Annex H.
DESCRIPTION OF THE PREFERRED SHARES
The Holding Articles authorize 5,000,000 Preferred Shares. No Preferred
Shares are currently issued and outstanding. The Preferred Shares will have one
vote per share on all matters submitted to the shareholders for their vote,
consent, waiver, release or other action.
The Board of Directors of Lincoln Electric Holdings may issue one or more
series of Preferred Shares from time to time with such powers, preferences,
rights, qualifications, limitations and restrictions as permitted by the Holding
Articles and as the Board fixes by resolution, including:
- dividend rights;
- redemption prices and conditions;
- sinking fund provisions;
- liquidation preferences; and
- conversion rights.
You will have no preemptive rights to participate in any issuance of Preferred
Shares.
The Board of Directors of Lincoln Electric Holdings believes that the
Preferred Shares will provide flexibility for future financings and
acquisitions. Although there currently are no plans to issue Preferred Shares,
it is contemplated that from time to time Lincoln Electric Holdings may consider
transactions involving the issuance of Preferred Shares. Since the Holding
Articles give the Board flexibility in determining the terms of the Preferred
Shares, the Board will be able to issue Preferred Shares with terms suitable to
existing market conditions at the time of issuance or to meet the needs of a
particular transaction.
Although the Board of Directors of Lincoln Electric Holdings has no present
intention of issuing any Preferred Shares, the ability of the Board to issue the
Preferred Shares could enable the Board to render more
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difficult or discourage an attempt by another person or entity to obtain control
of Lincoln Electric Holdings. Such Preferred Shares could be issued by the Board
in a public or private sale, merger or similar transaction, increasing the
number of outstanding shares and thereby diluting the equity interest and voting
power, if the Preferred Shares were convertible into Holding Common Shares, of a
party attempting to obtain control of Lincoln Electric Holdings. The
authorization of Preferred Shares is not being proposed in response to any known
effort to acquire control of Lincoln Electric Holdings. As described in Annex H,
the Holding Articles contain the same provisions specifying special voting
requirements for certain business combinations as do the Articles, which
provisions also may have the effect of rendering more difficult or discouraging
an attempt by another person to obtain control of Lincoln Electric Holdings.
REGISTRAR AND TRANSFER AGENT
The Registrar and Transfer Agent for the Holding Common Shares will be
Harris Trust and Savings Bank which currently acts in such capacity for us.
EXPERTS
The consolidated financial statements and schedule of us and our
subsidiaries incorporated by reference into this Proxy Statement/Prospectus have
been audited by Ernst & Young LLP, independent auditors, as indicated in their
report accompanying such consolidated financial statements and schedule which
are incorporated in our 10-K Report.
LEGAL MATTERS
Certain legal matters in connection with the issuance of the Holding Common
Shares will be passed upon for us and Lincoln Electric Holdings by Jones, Day,
Reavis & Pogue, Cleveland, Ohio.
1998 STOCK OPTION PLAN
Item No. 3
GENERAL
On March 5, 1998, your Board of Directors adopted, subject to shareholder
approval, the 1998 Stock Option Plan authorizing the granting of options for the
purchase of up to an aggregate of 1,250,000 Common Shares and 1,250,000 Class A
Common Shares or, if the reorganization is approved by shareholders, 5,000,000
Holding Common Shares. The 1998 Stock Option Plan is intended to replace the IEP
which expires on May 24, 1998. A copy of the 1998 Stock Option Plan is attached
as Annex F.
Your Board of Directors believes that our stock option program has been of
material benefit to us and that it is in our best interests and your best
interests that we continue to foster the interest of present and future key
employees in our growth and development by encouraging stock ownership.
DESCRIPTION OF THE PLAN
The 1998 Stock Option Plan will permit us from time to time to grant to key
employees options to buy Common Shares and Class A Common Shares or if the
reorganization is approved by shareholders, Holding Common Shares. However the
aggregate number of shares actually transferred by the Company upon the exercise
of Incentive Stock Options may not exceed 1,250,000 Common Shares and 1,250,000
Class A Common Shares, or if the Reorganization is approved by shareholders,
5,000,000 Holding Common Shares by Lincoln Electric Holdings. No individual
participant may be granted options under the 1998 Stock Option Plan for more
than 250,000 Common Shares and 250,000 Class A Common Shares or, if the
Reorganization is approved by the shareholders, 1,000,000 Holding Common Shares
in any single calendar year. Such shares may be treasury shares or shares of
original issue. No determination has been made with respect to the granting of
additional options or as to the total number of shares which may be optioned
initially.
The purchase price of optioned stock may not be less than the fair market
value of the optioned shares at the time the option is granted. Options granted
under the 1998 Stock Option Plan may be (i) options which are
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<PAGE> 43
intended to qualify under particular provisions of the Internal Revenue Code,
(ii) options which are not intended so to qualify under the Internal Revenue
Code, or (iii) combinations thereof. Each grant will specify the period or
periods of continuous service by the optionee with the Company or any of its
affiliates that is necessary before the options or installments thereof will
become exercisable and may provide for earlier exercise of the option,
including, without limitation, in the event of a change in control of the
Company or a similar event. No option may run for more than ten years from the
date granted. To the extent required for "Incentive Stock Option" status under
the Code, the aggregate fair market value of the Shares with respect to which
incentive stock options are exercisable for the first time by the optionee
during any calendar year under the 1998 Stock Option Plan and/or any other stock
option plan as of the date of the grant shall not exceed $100,000.
The option price will be payable (i) in cash or by other consideration
acceptable to us, (ii) at the discretion of the Board of Directors, by the
transfer to us of Shares previously owned by the optionee for at least 6 months
having a value at the time of exercise equal to the total option price, or (iii)
by a combination of such methods of payment. Any grant may provide for deferred
payment of the option price from the proceeds of sale through a broker on a date
satisfactory to the Company of some or all of the Shares to which such exercise
relates.
Except as otherwise determined by the Board of Directors, no option will be
transferable by the optionee otherwise than by will or the laws of descent and
distribution. Except as otherwise determined by the Board of Directors, options
will be exercisable during the optionee's lifetime only by the optionee or, in
the event of the optionee's legal incompetency, by the optionee's guardian or
legal representative. The Board of Directors may make such adjustments in the
option price and in the number or kind of optioned shares as may be equitably
required as a result of stock splits or other changes affecting the Common
Shares and Class A Common Shares, or if the Reorganization is approved, the
Holding Common Shares. Further, the Board of Directors may permit or require
deferred issuance of Shares upon exercise of an option, and may provide for
crediting of dividend equivalents or interest on the deferred amounts.
The 1998 Stock Option Plan provides that the Board of Directors may, with
the concurrence of affected optionees, cancel any option granted thereunder and
authorize the granting of new options (covering the same or a different number
of shares) so long as the new options are not inconsistent with the 1998 Stock
Option Plan.
The 1998 Stock Option Plan will be administered by the Board of Directors
which may delegate all or a part of these responsibilities.
The 1998 Stock Option Plan may be amended from time to time by the Board of
Directors. However, any amendment which must be approved by you in order to
comply with the rules of the NASDAQ National Market or, if the Shares are not
traded on NASDAQ National Market, the principal national securities exchange
upon which the Shares are traded or quoted, will not be effective unless and
until such approval has been obtained. Presentation of the 1998 Stock Option
Plan or any amendment thereof for your approval shall not be construed to limit
our authority to offer similar or dissimilar benefits under other plans without
shareholder approval. Furthermore, no amendment, alteration, or discontinuation
of the 1998 Stock Option Plan shall be made which would impair the rights of an
optionee with respect to any outstanding option under the 1998 Stock Option Plan
without the optionee's consent, or which, without approval of you, would (a)
except as expressly provided in the 1998 Stock Option Plan, increase the total
number of Shares reserved for the 1998 Stock Option Plan or (b) extend the
maximum option period applicable under the 1998 Stock Option Plan.
No option shall be granted pursuant to the 1998 Stock Option Plan on or
after the tenth anniversary of the earlier of the date of shareholder approval
or the date the 1998 Stock Option Plan is adopted by the Board of Directors, but
awards granted prior to such tenth anniversary date may extend beyond that date.
The last reported sale price of Common Shares and Class A Common Shares on
the NASDAQ National Market on April 16, 1998 was $46.25 per share and $45.88 per
share, respectively.
FEDERAL INCOME TAX CONSEQUENCES
The following is a brief summary of certain of the federal income tax
consequences of certain transactions under the 1998 Stock Option Plan based on
federal income tax laws in effect on January 1, 1998. This summary is not
intended to be exhaustive and does not describe state or local tax consequences.
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<PAGE> 44
TAX CONSEQUENCES TO OPTIONEES
Non-Qualified Options. In general:
<TABLE>
<S> <C>
(i) no income will be recognized by an optionee at the time a
non-qualified option is granted;
(ii) at the time of exercise of a non-qualified option, ordinary
income will be recognized by the optionee in an amount equal
to the difference between the option price paid for the
Common Shares or Class A Common Shares and the fair market
value of the shares if they are unrestricted on the date of
exercise; and
(iii) at the time of sale of shares acquired pursuant to the
exercise of a non-qualified option, any appreciation (or
depreciation) in the value of the shares after the date of
exercise will be treated as either a capital gain (or loss).
</TABLE>
Incentive Stock Options. No income generally will be recognized by an
optionee upon the grant or exercise of an incentive stock option. If Common
Shares or Class A Common Shares, or if the Reorganization is approved, the
Holding Common Shares are issued to an optionee pursuant to the exercise of an
incentive stock option and no disqualifying disposition of the shares is made by
the optionee within two years after the date of grant or within one year after
the transfer of the shares to the optionee, then upon the sale of the shares any
amount realized in excess of the option price will be taxed to the optionee as a
capital gain and any loss sustained will be a capital loss.
If Common Shares or Class A Common Shares, or if the Reorganization is
approved, the Holding Common Shares acquired upon the exercise of an incentive
stock option are disposed of prior to the expiration of either holding period
described above, the optionee generally will recognize ordinary income in the
year of disposition in an amount equal to any excess of the fair market value of
the shares at the time of exercise (or, if less, the amount realized on the
disposition of the shares in a sale or exchange) over the option price paid for
the shares. Any further gain (or loss) realized by the optionee generally will
be taxed as capital gain (or loss).
TAX CONSEQUENCES TO THE COMPANY OR ANY SUBSIDIARY
To the extent that a participant recognizes ordinary income in the
circumstances described above, we or the subsidiary for which the participant
performs services will be entitled to a corresponding deduction provided that,
among other things, the income meets the test of reasonableness, is an ordinary
and necessary business expense and is not an "excess parachute payment" within
the meaning of Section 280G of the Internal Revenue Code and is not disallowed
by the $1 million limitation on certain executive compensation.
REQUIRED VOTE
Approval of the 1998 Stock Option Plan requires the affirmative vote of a
majority of the Common Shares present, or represented, and entitled to vote on
the matter at the Annual Meeting.
YOUR BOARD OF DIRECTORS RECOMMENDS YOU VOTE FOR THIS PROPOSAL TO APPROVE
THE 1998 STOCK OPTION PLAN.
APPOINTMENT OF INDEPENDENT AUDITORS
Item No. 4
A proposal will be presented at the Annual Meeting to ratify the
appointment of the firm of Ernst & Young LLP as independent auditors to examine
our books of account and other records for the fiscal year ending December 31,
1998. Representatives of Ernst & Young LLP are expected to be present at the
Annual Meeting. Such representatives will have an opportunity to make a
statement if they so desire and are expected to be available to respond to
appropriate questions. Although such ratification is not required by law, the
Board of Directors believes that you should be given this opportunity to express
your views on the subject. While not binding on the Board of Directors, your
failure to ratify the appointment of Ernst & Young LLP as our independent
auditors would be considered by the Board of Directors in determining whether or
not to continue
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the engagement of Ernst & Young LLP. Ratification requires the affirmative vote
of the majority of the Common Shares present or represented, and entitled to
vote on the matter at the Annual Meeting, taken together as a single class.
Unless otherwise directed, proxies in the accompanying form will be voted for
ratification of the appointment of Ernst & Young LLP.
YOUR BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE TO RATIFY THE APPOINTMENT
OF ERNST & YOUNG LLP AS OUR INDEPENDENT AUDITORS.
OTHER MATTERS
The Board of Directors knows of no other matters which are likely to be
brought before the meeting, but if any such matters properly come before the
meeting, the persons named in the enclosed proxy, or their substitutes, will
vote the proxy in accordance with their best judgment.
SHAREHOLDER PROPOSALS
Any proposal by shareholders intended to be presented at next year's Annual
Meeting of Shareholders must be received by us, addressed to our principal
executive offices at 22801 St. Clair Avenue, Cleveland, Ohio 44117-1199,
Attention: Secretary, for inclusion in our Proxy Statement relating to such
meeting on or before December 20, 1998.
You should rely only on the information contained or incorporated by
reference in this Proxy Statement/Prospectus as being information authorized by
us. We have not authorized anyone to provide you with information that is
different from what is contained in this Proxy Statement/Prospectus. This Proxy
Statement/Prospectus is dated April 20, 1998. You should not assume that the
information contained in this Proxy Statement/Prospectus is accurate as of any
date other than such date and neither the mailing of this Proxy
Statement/Prospectus to you nor the issuance of the Holding Common Shares in the
Merger shall create any implication to the contrary. This Proxy
Statement/Prospectus does not constitute an offer to sell or the solicitation of
an offer to buy to anyone in any jurisdiction where the solicitation or offer is
not authorized or the person making the offer or solicitation is not qualified
to do so. Further, this Proxy Statement/Prospectus does not constitute an offer
or solicitation to anyone to whom it is unlawful to make such offer or
solicitation.
THE LINCOLN ELECTRIC COMPANY
Frederick G. Stueber
Secretary
By Order of the Board of Directors
Cleveland, Ohio
April 20, 1998
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ANNEX A
AGREEMENT OF MERGER
THIS AGREEMENT OF MERGER (this "AGREEMENT"), dated as of ,
1998, is made by and among LINCOLN ELECTRIC MERGER CO., an Ohio corporation
("MERGER CO."), THE LINCOLN ELECTRIC COMPANY, an Ohio corporation ("LINCOLN"),
and LINCOLN ELECTRIC HOLDINGS, INC., an Ohio corporation ("HOLDING COMPANY").
RECITALS
WHEREAS, Merger Co. is a corporation duly organized and existing under the
laws of the State of Ohio, and the authorized capital stock of Merger Co.
consists of 100 common shares, without par value, 100 shares of which are issued
and outstanding and held by Holding Company, and no shares of which are held in
Merger Co.'s treasury;
WHEREAS, Lincoln is a corporation duly organized and existing under the
laws of the State of Ohio, and the authorized capital stock of Lincoln consists
of 60,000,000 common shares, without par value (the "COMMON SHARES"), and
60,000,000 class A common shares, without par value (the "CLASS A COMMON
SHARES"), and shares of which, respectively, are issued
and outstanding, and no shares of which are held in Lincoln's treasury.
WHEREAS, Holding Company is a corporation duly organized and existing under
the laws of the State of Ohio, and the authorized capital stock of Holding
Company consists of 120,000,000 common shares, without par value (the "HOLDING
COMMON SHARES"), and 5,000,000 preferred shares, without par value (the
"PREFERRED SHARES"), ten of which Holding Common Shares have been issued.
WHEREAS, Lincoln and Merger Co. desire to effect a merger whereby Merger
Co. will merge with and into Lincoln (the "MERGER"), with Lincoln to be the
surviving corporation;
WHEREAS, the respective boards of directors of Merger Co., Holding Company
and Lincoln have adopted resolutions approving this Agreement, the execution and
delivery of this Agreement and the transactions contemplated hereby, and have
determined that it is advisable that Merger Co. be merged with and into Lincoln,
pursuant to and in accordance with the applicable laws of the State of Ohio and
otherwise upon the terms and conditions set forth herein;
WHEREAS, the board of directors of Holding Company has adopted resolutions
approving the conversion of shares of Lincoln into Holding Common Shares;
NOW THEREFORE, in consideration of the foregoing and the respective
covenants, agreements and conditions hereinafter contained, the parties do
hereby covenant and agree as follows:
AGREEMENTS
ARTICLE I
THE MERGER
1.1 THE MERGER. Subject to the terms and conditions of this Agreement, at
the Effective Time (as defined in Section 1.2), and in accordance with the terms
and conditions of Ohio Revised Code sec. 1701.78, Merger Co. shall be merged
with and into Lincoln. At the Effective Time, the separate corporate existence
of Merger Co. shall cease, and Lincoln shall continue its existence as the
surviving corporation under the laws of the State of Ohio (the "SURVIVING
CORPORATION"). The name of the Surviving Corporation shall be The Lincoln
Electric Company.
1.2 EFFECTIVE TIME. Upon the satisfaction of the conditions set forth in
Article VI of this Agreement, a certificate of merger shall be duly executed by
each of Merger Co. and Lincoln and filed with the Secretary of
<PAGE> 47
State of Ohio pursuant to Ohio Revised Code sec. 1701.81. The Merger shall
become effective upon such filing in accordance with the provisions of Ohio
Revised Code sec. 1701.81 (the "EFFECTIVE TIME").
1.3 EFFECTS OF THE MERGER. At the Effective Time of the Merger, the
effects of the Merger shall occur as provided in Ohio Revised Code sec. 1701.82.
Without limiting the generality of the foregoing, and subject thereto, at the
Effective Time, the name, identity, existence, rights, privileges, powers,
franchises, properties and assets of Lincoln shall continue unaffected and
unimpaired, and the separate existence of Merger Co. shall cease and all of the
rights, privileges, powers, franchises, properties and assets of Merger Co.
shall be vested in Lincoln.
ARTICLE II
THE SURVIVING CORPORATION
2.1 ARTICLES OF INCORPORATION. The Articles of Incorporation of the
Surviving Corporation, effective as of the Effective Time, will be as set forth
as Exhibit A; and shall be the Articles of Incorporation of the Surviving
Corporation until altered, amended or repealed in accordance with the provisions
thereof and with the Ohio Revised Code.
2.2 CODE OF REGULATIONS. The Code of Regulations of the Surviving
Corporation, effective as of the Effective Time, will be as set forth as Exhibit
B; and shall be the Code of Regulations of the Surviving Corporation until
altered, amended or repealed in accordance with the provisions thereof and with
the Ohio Revised Code.
2.3 DIRECTORS OF SURVIVING CORPORATION. Each person who is a director of
Merger Co. immediately prior to the Effective Time shall continue to be a
director of the Surviving Corporation from and after the Effective Time until
his or her successor is duly elected or appointed, or until his or her death,
resignation or removal.
2.4 OFFICERS OF SURVIVING CORPORATION. The officers of Lincoln immediately
prior to the Effective Time shall be the officers of the Surviving Corporation
from and after the Effective Time until his or her successor is duly elected or
appointed, or until his or her death, resignation or removal.
2.5 DIVIDENDS. Holding Company and Merger Co. hereby consent to any
declaration by Lincoln prior to the Effective Time of any cash dividends payable
to shareholders of Lincoln who are such as of any date prior to the Effective
Time which is selected as the record date for such cash dividend. If the payment
date for such cash dividend is prior to the Effective Time, Holding Company and
Merger Co. hereby consent to the payment by Lincoln of such cash dividend. If
the payment date for such cash dividend is after the Effective Time, then
Lincoln, as the Surviving Corporation, shall be and remain responsible for the
payment of any such cash dividend, and Holding Company shall cause Lincoln, as
the Surviving Corporation, to pay such cash dividend to the record date
shareholders entitled thereto.
ARTICLE III
MANNER, BASIS AND EFFECT OF CONVERTING SHARES
3.1 CONVERSION OF SHARES. At the Effective Time:
(a) Each common share of Merger Co. issued and outstanding prior to
the Effective Time shall, by virtue of the Merger and without any action on
the part of the holder thereof, be converted into a common share of the
Surviving Corporation.
(b) Each Common Share of Lincoln issued and outstanding prior to the
Effective Time shall, by virtue of the Merger and without any action on the
part of the holder thereof, be converted into two Holding Common Shares.
(c) Each Class A Common Share of Lincoln issued and outstanding prior
to the Effective Time shall, by virtue of the Merger and without any action
on the part of the holder thereof, be converted into two Holding Common
Shares.
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(d) Each Holding Common Share issued and outstanding prior to the
Effective Time shall, by virtue of the Merger and without any action on the
part of the holder thereof, be canceled and the holder thereof shall become
entitled to receipt of an amount equal to the initial subscription price
paid therefor.
3.2 SHARE CERTIFICATES. Each share certificate which immediately prior to
the Effective Time represented an outstanding common share of Merger Co. shall
represent a common share of the Surviving Corporation. After the Effective Time,
each share certificate representing an outstanding Common Share or Class A
Common Share shall represent the same number of Holding Common Shares. From and
after the Effective Time, the holders of certificates for Common Shares and
Class A Common Shares shall cease to have any rights as shareholders of Lincoln
(except such rights, if any, as they may have as dissenting shareholders), and,
except as aforesaid, their sole rights shall pertain to the Holding Common
Shares into which their Common Shares and Class A Common Shares shall have been
converted by the Merger.
3.3 DISSENTING LINCOLN SHAREHOLDERS. Each holder of one or more Common
Shares or Class A Common Shares who shall have been a record holder of such
shares as of the date fixed for the determination of shareholders entitled to
notice of the Annual Meeting and who shall have delivered to Lincoln, not later
then ten days after the date on which the vote on this Agreement was taken at
the Annual Meeting, a written demand for payment to such holder of the fair cash
value of such shares in compliance with Ohio Revised Code sec. 1701.85, and
whose such shares shall not have been voted in favor of adoption of this
Agreement, shall cease to have any of the rights of a shareholder in respect of
such shares except the right to be paid the fair cash value of such shares and
any other rights bestowed under Ohio Revised Code Sections 1701.84 and 1701.85.
However, any such shareholder who shall validly withdraw such shareholder's
written demand for payment of the fair cash value of such shares pursuant to
Ohio Revised Code Sections 1701.84 and 1701.85 will thereupon be reinstated to
all such shareholder's rights as a shareholder in respect of such shares as of
the date of delivery of such shareholder's written demand to Lincoln, subject to
the provisions of Section 3.1 of this Agreement, and will be entitled to receive
the Holding Common Shares into which such shareholder's Common Shares and Class
A Common Shares were converted as of the Effective Time pursuant hereto.
3.4 TRANSFERS. The stock transfer books of Lincoln shall be closed at the
close of business on the business day immediately preceding the Effective Time
and the holders of record of Common Shares and Class A Common Shares as of the
Effective Time shall be the shareholders entitled to conversion of their Common
Shares and Class A Common Shares into Holding Common Shares as provided in this
Agreement. In the event of a transfer of ownership of any such Common Shares or
Class A Common Shares, which transfer is not registered in the stock transfer
records of Lincoln, the Holding Common Shares may be issued to a transferee if
the certificate representing such Common Shares or Class A Common Shares is
accompanied upon surrender by all documents required to evidence and effect such
transfer and payment of any applicable stock transfer taxes.
ARTICLE IV
CERTAIN AGREEMENTS
4.1 REGISTRATION OF HOLDING COMPANY SHARES. At or prior to the Effective
Time, Holding Company shall register under the Securities Act of 1933, as
amended, the maximum number of Holding Common Shares required to be exchanged
for Common Shares and Class A Common Shares, respectively, pursuant to this
Agreement.
4.2 STOCK PLANS. At or prior to the Effective Time, Holding Company shall
assume Lincoln's 1988 Incentive Equity Plan (the "IEP") and, if then
established, 1998 Stock Option Plan (together with the IEP, the "STOCK PLANS")
with amendments thereto as deemed appropriate by the respective Boards of
Directors of Lincoln and Holding Company, including all obligations associated
with any valid options ("OPTIONS") to purchase or right to receive under
restricted stock awards Common Shares or Class A Common Shares under the Stock
Plans. Thereafter, each such Option to purchase Common Shares shall be the valid
and enforceable option to purchase twice such number of Holding Common Shares
(instead of Common Shares) at a purchase price per Holding Common Share equal to
one-half the purchase price per Common Share. In addition, thereafter each such
Option to purchase Class A Common Shares shall be the valid and enforceable
option to purchase twice
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such number of Holding Common Shares (instead of Class A Common Shares) at a
purchase price per Holding Common Share equal to one-half the purchase price per
Class A Common Share. Except as set forth above, each such Option shall be on
the same terms and conditions and have the same provisions which are contained
therein immediately prior to the Effective Time.
4.3 RESTRICTED STOCK PLAN FOR NON-EMPLOYEE DIRECTORS AND THE 1995 LINCOLN
STOCK PURCHASE PLAN. At the Effective Time, Holding Company shall take or cause
to be taken all actions necessary or advisable to assume each of Lincoln's
Non-Employee Directors' Restricted Stock Plan and 1995 Lincoln Stock Purchase
Plan and all obligations of Lincoln with respect thereto, and all rights to
receive Common Shares or Class A Common Shares thereunder shall become rights to
receive Holding Common Shares.
4.4 ELECTION OF DIRECTORS. The sole shareholder of Holding Company, shall,
subsequent to the adoption and approval of this Agreement as provided in Section
6.1, but prior to the Effective Time, duly convene a meeting of the sole
shareholder of Holding Company (or act by written consent of such shareholder in
lieu of a meeting) and shall take or cause to be taken all action necessary, in
accordance with the Regulations of Holding Company and the Ohio Revised Code, to
install as Directors of Holding Company, who shall serve until the next annual
meeting of shareholders of Holding Company or until their respective successors
have been elected and qualified, all persons who are named as directors and as
nominees for director of Lincoln in the proxy statement used by the directors of
Lincoln to solicit proxies for use at the 1998 Annual Meeting of shareholders.
4.5 SETTLEMENT OPTIONS. At the Effective Time, Holding Company shall take
or cause to be taken all actions necessary or advisable to assume all
obligations of Lincoln to issue Class A Common Shares under that certain
settlement dated April, 1996 concerning awards under Lincoln's IEP and the
option agreements related to such settlement. Thereafter, each such option to
purchase Class A Common Shares shall be the valid and enforceable option to
purchase twice such number of Holding Common Shares (instead of Class A Common
Shares) at a purchase price per Holding Common Share equal to one-half the
purchase price per Class A Common Share.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
5.1 MERGER CO. Merger Co. represents and warrants to Lincoln and to
Holding Company as follows:
(a) Merger Co. is a corporation duly formed, validly existing and in
good standing under the laws of the State of Ohio. Merger Co. has the
corporate power and authority to execute, deliver and carry out the terms
and provisions of this Agreement and has taken all necessary corporate
action to authorize the execution, delivery and performance of this
Agreement. Merger Co. has duly authorized, executed and delivered this
Agreement and this Agreement constitutes the legal, valid and binding
agreement of Merger Co., enforceable in accordance with its terms.
(b) Merger Co. does not own any property or assets and does not
conduct any business.
(c) The entire authorized capital stock of Merger Co. consists of 100
shares of common stock, with no par value per share. As of the date of this
Agreement and as of the Effective Time, (i) 100 common shares of Merger Co.
are and will be issued and outstanding, all of which shares are owned of
record by Holding Company, and (ii) no common shares of Merger Co. are or
will be held in treasury.
5.2 HOLDING COMPANY. Holding Company represents and warrants to Lincoln
and to Merger Co. as follows:
(a) Holding Company is a corporation duly organized, validly existing
and in good standing under the laws of the State of Ohio. Holding Company
has the corporate power and authority to execute, deliver and carry out the
terms and provisions of this Agreement and has taken all necessary
corporate action to authorize the execution, delivery and performance of
this Agreement. Holding Company has duly authorized, executed and delivered
this Agreement and this Agreement constitutes the legal, valid and binding
agreement of Holding Company, enforceable in accordance with its terms.
(b) Holding Company does not own any property or assets other than the
common shares of Merger Co. and does not conduct any business.
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(c) Holding Company is the sole beneficial owner of 100 common shares
of Merger Co.
(d) The entire authorized capital stock of Holding Company is
120,000,000 Holding Common Shares and 5,000,000 Preferred Shares. As of the
date of this Agreement, and as of immediately prior to the Effective Time,
(i) ten Holding Common Shares and no Preferred Shares are or will be
outstanding and (ii) no Holding Common Shares and no Preferred Shares are
held in treasury.
5.3 LINCOLN. Lincoln represents and warrants to Holding Company and to
Merger Co. as follows:
Lincoln has the corporate power and authority to execute, deliver and carry
out the terms and provisions of this Agreement and has taken all necessary
corporate action to authorize the execution, delivery and performance of this
Agreement. Lincoln has duly authorized, executed and delivered this Agreement
and this Agreement constitutes the legal, valid and binding agreement of
Lincoln, enforceable in accordance with its terms.
ARTICLE VI
CONDITIONS TO MERGER
The consummation of the Merger is subject to the satisfaction, in the sole
judgment of the Board of Directors of Lincoln, of the following conditions prior
to the Effective Time:
6.1 SHAREHOLDER APPROVAL. This Agreement shall have received the approval
of two-thirds of the issued and outstanding Common Shares and two-thirds of the
issued and outstanding Class A Common Shares entitled to vote.
6.2 PERFORMANCE OF AGREEMENTS. Merger Co. and Holding Company shall have
performed all their respective obligations and agreements required by this
Agreement to be performed by them at or prior to the Effective Time.
6.3 TAX MATTERS. Lincoln shall have received an opinion of Jones, Day,
Reavis & Pogue, satisfactory in form and substance to Lincoln, as to such
matters relating to the tax consequences of the transactions contemplated by
this Agreement as the Board of Directors of Lincoln may deem advisable
including, without limitation, an opinion of such counsel to the effect that the
Merger constitutes a "reorganization" within the meaning of Section 368(a)(1)(B)
of the Internal Revenue Code.
6.4 OPINION OF COUNSEL. Lincoln shall have received an opinion of Jones,
Day, Reavis & Pogue, satisfactory in form and substance to Lincoln, to the
effect that:
(a) each of Merger Co. and Holding Company is a corporation duly
formed, validly existing and in good standing under the laws of the State
of Ohio;
(b) Lincoln is a corporation validly existing and in good standing
under the laws of the State of Ohio;
(c) this Agreement has been duly authorized, executed and delivered
by, and is a valid and binding agreement or obligation of, each of Lincoln,
Merger Co. and Holding Company;
(d) neither the execution and delivery of this Agreement nor the
performance by Lincoln, Merger Co., or Holding Company, respectively, of
any of its obligations hereunder will conflict with such company's articles
of incorporation or code of regulations;
(e) the Holding Common Shares required to be issued and delivered by
Holding Company upon the Merger are duly authorized and will, when issued
as contemplated in this Agreement, be validly issued, fully paid and
nonassessable.
6.5 DISSENTING SHARES. Lincoln shall not have received notice from the
holder or holders of more than 10% of the outstanding Common Shares and Class A
Common Shares, in the aggregate, that such holder or holders have exercised or
intend to exercise its or their dissenters' rights under Section 1701.85 of the
Ohio Revised Code and the time for the holders of Common Shares and Class A
Common Shares to give such notice shall have expired.
6.6 MISCELLANEOUS APPROVALS. Lincoln, Merger Co. and Holding Company, as
appropriate, shall have received all orders, consents and approvals,
governmental or otherwise, which in the opinion of Lincoln, are
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required by law or advisable to the consummation of the Merger, except for
filings in connection with the Merger and any other documents required to be
filed after the Effective Time.
6.7 NO PROHIBITION. None of Lincoln, Merger Co. or Holding Company shall
be subject to any order or injunction of a court of competent jurisdiction that
prohibits the consummation of the transactions contemplated by this Agreement or
that would make the consummation of the Merger by Lincoln, Merger Co. or Holding
Company illegal.
6.8 STEPS TO EFFECT MERGER. Upon the satisfaction or waiver by Lincoln of
each of the conditions set forth in this Article VI, the officers of each of
Lincoln, Merger Co. and Holding Company shall take all steps necessary in order
to make effective the Merger as provided herein.
ARTICLE VII
MISCELLANEOUS
7.1 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original, but all of which
together shall constitute one and the same instrument.
7.2 HEADINGS. The captions contained in this Agreement are for convenience
of reference only and do not form a part of this Agreement. When a reference is
made in this Agreement to a section, such reference shall be to a section of
this Agreement unless otherwise indicated.
7.3 COMPLETE AGREEMENT. This Agreement contains the complete agreement
among the parties hereto with respect to the Merger and supersedes all prior
agreements and understandings with respect to the Merger.
7.4 BINDING EFFECTS; BENEFITS. This Agreement shall inure to the benefit
of and be binding upon the parties hereto and their respective successors and
assigns; provided however, that nothing in this Agreement, expressed or implied,
is intended to confer on any person other than the parties hereto or their
respective successors and assigns any rights, remedies, obligations or
liabilities under or by reason of this Agreement.
7.5 GOVERNING LAW. This Agreement shall be construed and interpreted in
accordance with the laws of the State of Ohio, without giving effect to
principles of conflicts of laws.
7.6 AMENDMENT, DEFERRAL AND ABANDONMENT. (a) The parties hereto, by mutual
consent of their respective Boards of Directors, may amend, modify or supplement
this Agreement in writing at any time prior or subsequent to the adoption and
approval of the Agreement by the shareholders of Lincoln and prior to the
Effective Time; provided, however, that no such amendment, modification or
supplement shall affect the rights of the respective shareholders of the parties
hereto in a manner which is materially adverse to such shareholders in the
judgment of the respective Boards of Directors of the parties hereto.
(b) Notwithstanding the adoption and approval of this Agreement by the
shareholders of Lincoln, Holding Company or Merger Co., consummation of the
transactions provided for herein may be deferred by the Board of Directors of
Lincoln at any time prior to the Effective Time, if such Board of Directors
determines that such deferral would be in the best interests of Lincoln or its
shareholders.
(c) Notwithstanding the adoption and approval of this Agreement by the
shareholders of Lincoln, this Agreement may be terminated, and the Merger and
other transactions provided for herein may be abandoned, by the Board of
Directors of Lincoln at any time prior to the Effective Time if such Board of
Directors determines that such abandonment would be in the best interests of
Lincoln or its shareholders. In such event, this Agreement shall forthwith be
wholly void and of no effect and there shall be no liability with respect to
this Agreement on the part of any party hereto or any of their respective
directors, officers, employees or shareholders.
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IN WITNESS WHEREOF, each of Merger Co., Lincoln and Holding Company have
caused this Agreement to be duly executed by its duly authorized officer as of
the day and year first above written.
LINCOLN ELECTRIC MERGER CO.
By:
----------------------------------------
Name:
Title:
THE LINCOLN ELECTRIC COMPANY
By:
----------------------------------------
Name:
Title:
LINCOLN ELECTRIC HOLDINGS, INC.
By:
----------------------------------------
Name:
Title:
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EXHIBIT A
[THE FOLLOWING WOULD BE THE COMPANY'S ARTICLES OF INCORPORATION FOLLOWING THE
MERGER]
THE LINCOLN ELECTRIC COMPANY
THIRD RESTATED ARTICLES OF INCORPORATION
FIRST: The name of the Corporation shall be The Lincoln Electric Company.
SECOND: The principal office of the Corporation in the State of Ohio is to
be located in the City of Cleveland, County of Cuyahoga.
THIRD: The purpose for which the Corporation is formed is to engage in any
lawful act or activity for which corporations may be formed under Sections
1701.01 to 1701.98, inclusive, of the Ohio Revised Code.
FOURTH: The number of shares which the Corporation is authorized to have
outstanding is 100 shares of Common Stock, without par value.
FIFTH: The Corporation will commence business without any allocation to
stated capital.
SIXTH: No holders of any class of shares of the Corporation shall have any
pre-emptive right to purchase or have offered to them for purchase any shares or
other securities of the Corporation.
SEVENTH: The holders of shares of the Corporation shall not be entitled to
cumulative voting rights in the election of Directors.
EIGHTH: The Corporation may from time to time, pursuant to authorization by
the Directors and without action by the shareholders, purchase or otherwise
acquire shares of the Corporation of any class or classes in such manner, upon
such terms and in such amounts as the Directors shall determine; subject,
however, to such limitation or restriction, if any, as is contained in the
express terms of any class of shares of the Corporation outstanding at the time
of the purchase or acquisition in question.
NINTH: Any and every statute of the State of Ohio hereafter enacted,
whereby the rights, powers or privileges of corporations or of the shareholders
of corporations organized under the laws of the State of Ohio are increased or
diminished or in any way affected, or whereby effect is given to the action
taken by any number, less than all, of the shareholders of any such corporation,
shall apply to the Corporation and shall be binding not only upon the
Corporation but upon every shareholder of the Corporation to the same extent as
if such statute had been in force at the date of filing these Articles of
Incorporation of the Corporation in the office of the Secretary of State of
Ohio.
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EXHIBIT B
[THE FOLLOWING WOULD BE THE COMPANY'S CODE OF REGULATIONS FOLLOWING THE MERGER]
THE LINCOLN ELECTRIC COMPANY
THIRD RESTATED CODE OF REGULATIONS
ARTICLE I
SHAREHOLDERS' MEETINGS
Section 1. Annual Meeting.
The annual meeting of shareholders shall be held at such date, time and
place as may be designated from time to time by the Board of Directors for the
election of Directors and the consideration of reports to be laid before such
meeting. Upon due notice, there may also be considered and acted upon at an
annual meeting any matter which could 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 the annual meeting
is not held or Directors are not elected thereat, they may be elected at a
special meeting called for that purpose.
Section 2. Special Meetings.
Special meetings of shareholders may be called by (i) the Chairman of the
Board or the President or a Vice President, (ii) the Directors by action at a
meeting, or by a majority of the Directors acting without a meeting, or (iii)
the person or persons who hold not less than 50 percent of all shares
outstanding and entitled to be voted at said meeting.
Upon request in writing delivered either in person or by registered mail to
the President or Secretary by any person or persons entitled to call a meeting
of shareholders, such officer shall forthwith cause to be given, to the
shareholders entitled thereto, notice of a meeting to be held not less than
seven nor more than 60 days after the receipt of such request, as such officer
shall fix. If such notice is not given within 20 days after the delivery or
mailing of such request, the person or persons calling the meeting may fix the
time of the meeting and give, or cause to be given, notice in the manner
hereinafter provided.
Section 3. Place of Meetings.
Any meeting of shareholders may be held either at the principal office of
the Corporation or at such other place within or without the State of Ohio as
may be designated in the notice of said meeting.
Section 4. Notice of Meetings.
Not more than 60 days nor less than seven days before the date fixed for a
meeting of shareholders, whether annual or special, written notice of the time,
place and purposes of such meeting shall be given by or at the direction of the
President, a Vice President, the Secretary or an Assistant Secretary. Such
notice shall be given either by personal delivery or by mail to each shareholder
of record entitled to notice of such meeting. If such notice is mailed, it shall
be addressed to the shareholders at their respective addresses as they appear on
the records of the Corporation, and notice shall be deemed to have been given on
the day so mailed. Notice of adjournment of a meeting need not be given if the
time and place to which it is adjourned are fixed and announced at such meeting.
Section 5. Shareholders Entitled to Notice and to Vote.
If a record date shall not be fixed pursuant to statutory authority, the
record date for the determination of shareholders who are entitled to notice of,
or who are entitled to vote at, a meeting of shareholders, shall be the close of
business on the date next preceding the day on which notice is given, or the
close of business on the date next preceding the day on which the meeting is
held, as the case may be.
Section 6. Inspectors of Election; List of Shareholders.
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Inspectors of election may be appointed to act at any meeting of
shareholders in accordance with the Ohio General Corporation Law.
At any meeting of shareholders, an alphabetically arranged list, or
classified lists, of the shareholders of record as of the applicable record date
who are entitled to vote, showing their respective addresses and the number and
classes of shares held by each, shall be produced on the request of any
shareholder.
Section 7. Quorum.
To constitute a quorum at any meeting of shareholders, there shall be
present in person or by proxy shareholders of record entitled to exercise not
less than a majority of the voting power of the Corporation in respect of any
one of the purposes for which the meeting is called.
The holders of a majority of the voting power represented in person or by
proxy at a meeting of shareholders, whether or not a quorum be present, may
adjourn the meeting from time to time.
Section 8. Voting.
In all cases, except as otherwise expressly required by statute, the
Articles of Incorporation of the Corporation or these Regulations, a majority of
the votes cast at a meeting of shareholders shall control. An abstention shall
not represent a vote cast.
Section 9. Reports to Shareholders.
At the annual meeting, or the meeting held in lieu thereof, the officers of
the Corporation shall lay before the shareholders a financial statement as
required by the Ohio General Corporation Law.
Section 10. Action Without a Meeting.
Except as otherwise provided in these Regulations, any action which may be
authorized or taken at a meeting of the shareholders may be authorized or taken
without a meeting with the affirmative vote or approval of, and in a writing or
writings signed by, all of the shareholders who would be entitled to notice of a
meeting for such purpose, which writing or writings shall be filed with or
entered upon the records of the Corporation.
Section 11. Chairman of Meeting.
The chairman of any meeting of shareholders shall be the Chairman of the
Board or, if the Directors have not elected a Chairman of the Board, the
President of the Corporation. The Chairman of the Board or, if the Directors
have not elected a Chairman of the Board or the Chairman of the Board is
unavailable to do so, the President may appoint any other officer of the
Corporation to act as chairman of any shareholders' meeting. Notwithstanding the
foregoing, the Directors may appoint any individual to act as chairman of any
shareholders' meeting.
ARTICLE II
DIRECTORS
Section 1. Election, Number and Term of Office.
The Directors shall be elected at the annual meeting of shareholders, or if
not so elected, at a special meeting of shareholders called for that purpose,
and each Director shall hold office until the date fixed by these Regulations
for the next succeeding annual meeting of shareholders and until his successor
is elected, or until his earlier resignation, removal from office or death. At
any meeting of shareholders at which Directors are to be elected, only persons
nominated as candidates shall be eligible for election.
The number of Directors, which shall not be less than three (unless all of
the shares of the Corporation are owned of record by one or two shareholders, in
which case the number of Directors may be less than three but not less than the
number of shareholders), may be fixed or changed 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
represented at the meeting and entitled to vote on such proposal. In case the
shareholders at any
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meeting for the election of Directors shall fail to fix the number of Directors
to be elected, the number elected shall be deemed to be the number of Directors
so fixed.
Section 2. Meetings.
Regular meetings of the Directors shall be held immediately after the
annual meeting of shareholders and at such other times and places as may be
fixed by the Directors, and such meetings may be held without further notice.
Special meetings of the Directors may be called by the Chairman of the
Board or by the President or by a Vice President or by the Secretary of the
Corporation, or by not less than one-third of the Directors. Notice of the time
and place of a special meeting shall be served upon or telephoned to each
Director at least 24 hours, or mailed, telegraphed or cabled to each Director at
least 48 hours, prior to the time of the meeting.
Section 3. Quorum and Voting.
A majority of the number of Directors then in office (but in no event more
than a majority of Directors then in office) shall be necessary to constitute a
quorum for the transaction of business, but if at any meeting of the Directors
there shall be less than a quorum present, a majority of those present may
adjourn the meeting from time to time without notice other than announcement at
the meeting until a quorum shall attend. In all cases, except as otherwise
expressly required by statute, the Articles of Incorporation of the Corporation
or these Regulations, the act of a majority of the Directors present at a
meeting at which a quorum is present is the act of the Directors.
Section 4. Action Without a Meeting.
Any action which may be authorized or taken at a meeting of the Directors
may be authorized or taken without a meeting with the affirmative vote or
approval of, and in a writing or writings signed by, all of the Directors, which
writing or writings shall be filed with or entered upon the records of the
Corporation.
Section 5. Committees.
The Directors may from time to time create a committee or committees of
Directors to act in the intervals between meetings of the Directors and may
delegate to such committee or committees any of the authority of the Directors
other than that of filling vacancies among the Directors or in any committee of
the Directors. No committee shall consist of less than three Directors. The
Directors may appoint one or more Directors as alternate members of any such
committee, who may take the place of any absent member or members at any meeting
of such committee.
In particular, the Directors may create and define the powers and duties of
an Executive Committee. Except as above provided and except to the extent that
its powers are limited by the Directors, the Executive Committee during the
intervals between meetings of the Directors shall possess and may exercise,
subject to the control and direction of the Directors, all of the powers of the
Directors in the management and control of the business of the Corporation,
regardless of whether such powers are specifically conferred by these
Regulations. All action taken by the Executive Committee shall be reported to
the Directors at their first meeting thereafter.
Unless otherwise ordered by the Directors, a majority of the members of any
committee appointed by the Directors pursuant to this section shall constitute a
quorum at any meeting thereof, and the act of a majority of the members present
at a meeting at which a quorum is present shall be the act of such committee.
Action may be taken by any such committee without a meeting by a writing or
writings signed by all of its members. Any such committee shall prescribe its
own rules for calling and holding meetings and its method of procedure, subject
to any rules prescribed by the Directors, and shall keep a written record of all
action taken by it.
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ARTICLE III
OFFICERS
Section 1. Officers.
The Corporation may have a Chairman of the Board (who shall be a Director)
and shall have a President, a Secretary and a Treasurer. The Corporation may
also have one or more Vice Presidents and such other officers and assistant
officers as the Directors may deem necessary. All of the officers and assistant
officers shall be elected by the Directors.
Section 2. Authority and Duties of Officers.
The officers of the Corporation shall have such authority and shall perform
such duties as are customarily incident to their respective offices, or as may
be specified from time to time by the Directors, regardless of whether such
authority and duties are customarily incident to such office.
ARTICLE IV
INDEMNIFICATION AND INSURANCE
Section 1. Indemnification.
The Corporation shall indemnify, to the full extent then permitted by law,
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 member of the Board of Directors or an 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,
partnership, joint venture, trust or other enterprise. The Corporation shall
pay, to the full extent then required by law, expenses, including attorney's
fees, incurred by a member of the Board of Directors in defending any such
action, suit or proceeding as they are incurred, in advance of the final
disposition thereof, and may pay, in the same manner and to the full extent then
permitted by law, such expenses incurred by any other person. The
indemnification and payment of expenses provided hereby shall not be exclusive
of, and shall be in addition to, any other rights granted to those seeking
indemnification under any law, the Articles of Incorporation, any agreement,
vote of shareholders or disinterested members of the Board of Directors, or
otherwise, both as to action in official capacities and as to action in another
capacity while he is a member of the Board of Directors, officer, employee or
agent of the Corporation, and shall continue as to a person who has ceased to be
a member of the Board of Directors, trustee, officer, employee or agent and
shall inure to the benefit of the heirs, executors, and administrators of such a
person.
Section 2. Insurance.
The Corporation may, to the full extent then permitted by law and
authorized by the Directors, 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 persons described in Section 1 against any
liability asserted against and incurred by any such person in any such capacity,
or arising out of his status as such, whether or not the Corporation would have
the power to indemnify such person against such liability. Insurance may be
purchased from or maintained with a person in which the Corporation has a
financial interest.
Section 3. Agreements.
The Corporation, upon approval by the Board of Directors, may enter into
agreements with any persons whom the Corporation may indemnify under these
Regulations or under law and undertake thereby to indemnify such persons and to
pay the expenses incurred by them in defending any action, suit or proceeding
against them, whether or not the Corporation would have the power under these
Regulations or law to indemnify any such person.
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ARTICLE V
MISCELLANEOUS
Section 1. Transfer and Registration of Certificates.
The Directors shall have authority to make such rules and regulations as
they deem expedient concerning the issuance, transfer and registration of
certificates for shares and the shares represented thereby and may appoint
transfer agents and registrars thereof.
Section 2. Substituted Certificates.
Any person claiming a certificate for shares to have been lost, stolen or
destroyed shall make an affidavit or affirmation of that fact, shall give the
Corporation and its registrar or registrars and its transfer agent or agents a
bond of indemnity satisfactory to the Directors or to the Executive Committee or
to the President or a Vice President and the Secretary or the Treasurer, and, if
required by the Directors or the Executive Committee or such officers, shall
advertise the same in such manner as may be required, whereupon a new
certificate may be executed and delivered of the same tenor and for the same
number of shares as the one alleged to have been lost, stolen or destroyed.
Section 3. Voting of Shares Held by the Corporation.
Unless otherwise ordered by the Directors, any officer or assistant officer
of the Corporation, in person or by proxy or proxies appointed by him, shall
have full power and authority on behalf of the Corporation to vote, act and
consent with respect to any shares issued by other corporations which the
Corporation may own.
Section 4. Amendments.
These Regulations may be amended by the affirmative vote or the written
consent of the shareholders of record entitled to exercise a majority of the
voting power on such proposal; provided, however, that if an amendment is
adopted by written consent without a meeting of the shareholders, the Secretary
shall mail a copy of such amendment to each shareholder of record who would have
been entitled to vote thereon and did not participate in the adoption thereof.
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ANNEX B
[THE FOLLOWING ARE THE ARTICLES OF INCORPORATION OF LINCOLN ELECTRIC HOLDINGS
THAT WILL BE IN EFFECT IMMEDIATELY FOLLOWING THE MERGER]
LINCOLN ELECTRIC HOLDINGS, INC.
RESTATED ARTICLES OF INCORPORATION
ARTICLE FIRST: The name of the Corporation shall be LINCOLN ELECTRIC
HOLDINGS, INC.
ARTICLE SECOND: The place in the State of Ohio where its principal office
is located is the City of Cleveland, Cuyahoga County.
ARTICLE THIRD: The purpose for which the Corporation is formed is to
engage in any lawful act or activity for which corporations may be formed under
Sections 1701.01 to 1701.98, inclusive, of the Ohio Revised Code.
ARTICLE FOURTH: Section 1. The maximum number of shares which the
Corporation is authorized to have outstanding is one hundred twenty-five million
(125,000,000), consisting of one hundred twenty million (120,000,000) Common
Shares, without par value ("Common Shares"), and 5,000,000 Preferred Shares,
without par value ("Preferred Shares"). The Common Shares and the Preferred
Shares shall have the express terms set forth in this Article Fourth.
Section 2. Voting. Each shareholder of the Corporation shall be entitled to
one vote for each Common Share and each Preferred Share standing in such
shareholder's name on the books of the Corporation.
Section 3. Dividends. Dividends may be declared and paid to the holders of
Common Shares and Preferred Shares in cash, property, or other securities of the
Corporation (including shares of any class whether or not shares of such class
are already outstanding) out of funds legally available therefor.
Section 4. No Preemptive Rights. No shareholder of the Corporation shall
have any preemptive right as such shareholder to subscribe for or purchase
shares of the Corporation.
Section 5. Preferred Shares. The Preferred Shares may be issued from time
to time in series. Each Preferred Share of any one series shall be identical
with each other share of the same series in all respects, except as to the date
from which dividends thereon shall be cumulative. All Preferred Shares of all
series shall rank equally and shall be identical, except that there may be
variations in respect of the dividend rate, the dates of payment of dividends
and the dates from which they are cumulative, redemption rights and price,
sinking fund requirements, conversion rights, liquidation price, and
restrictions on the issuance of shares of the same series or of any other class
or series. Subject to the requirements that all Preferred Shares shall be
identical in respect of rights of alteration of express terms, the Board of
Directors, without any further action by the shareholders, may, at any time and
from time to time, adopt an amendment or amendments to these Restated Articles
of Incorporation, or adopt further Restated Articles of Incorporation, in
respect of any Preferred Shares that constitute unissued or treasury shares at
the time of such adoption for the purpose of dividing any or all of such
Preferred Shares into such series as the Board of Directors shall determine and
fix the express terms of any such series of Preferred Shares, which may include
statements specifying:
A. dividend rights, which may be cumulative or non-cumulative, at a
specified rate, amount or proportion, with or without further
participation rights, and in preference to, junior to, or on a parity in
whole or in part with dividend rights of shares of any other class or
series;
B. redemption rights and price;
C. sinking fund requirements, which may require the Corporation to provide
a sinking fund out of earnings or otherwise for the purchase or
redemption of such shares or for dividends thereon;
D. conversion rights;
<PAGE> 60
E. liquidation rights, preferences and price; and
F. restrictions on the issuance of shares of any class or series of the
Corporation.
ARTICLE FIFTH: The Board of Directors of the Corporation is hereby
authorized to fix at any time and from time to time the amount of consideration
for which the Corporation may from time to time issue its shares without par
value, whether now or hereafter authorized and whether or not greater
consideration could be received upon the issue or sale of the same number of
shares of another class.
ARTICLE SIXTH: The Corporation may from time to time pursuant to
authorization by the Board of Directors and without action by the shareholders,
purchase or otherwise acquire shares of the Corporation of any class or classes
in such manner, upon such terms and in such amounts as the Board of Directors
shall determine without regard to whether less consideration could be paid upon
the purchase of the same number of shares of another class, subject, however, to
such limitation or restriction, if any, as is contained in the express terms of
any class of shares of the Corporation outstanding at the time of the purchase
or acquisition in question.
ARTICLE SEVENTH: The holders of shares of the Corporation shall not be
entitled to cumulative voting rights in elections of Directors.
ARTICLE EIGHTH: Section 1. A higher than majority shareholder vote for
certain Business Combinations (as defined below) shall be required as follows:
A. In addition to any affirmative vote required by law or these Articles or
the terms of any series of Preferred Shares or any other securities of
the Corporation and except as otherwise expressly provided in Section 2
of this Article Eighth:
(1) any merger or consolidation of the Corporation or any Subsidiary
with (i) any Interested Shareholder or with (ii) any other
corporation (whether or not itself an Interested Shareholder) which
is, or after such merger or consolidation would be, an Affiliate or
Associate of an Interested Shareholder;
(2) any sale, lease, exchange, mortgage, pledge, transfer or other
disposition (in one transaction or a series of transactions whether
or not related) to an Interested Shareholder (or an Affiliate or
Associate of an Interested Shareholder) of any assets of the
Corporation or a Subsidiary having an aggregate Fair Market Value of
$1,000,000 or more;
(3) any sale, lease, exchange, mortgage, pledge, transfer or other
disposition (in one transaction or a series of transactions whether
or not related) to or with the Corporation or a Subsidiary of any
assets of an Interested Shareholder (or an Affiliate or Associate of
an Interested Shareholder) having an aggregate Fair Market Value of
$1,000,000 or more;
(4) the issuance or sale by the Corporation or any Subsidiary (in one
transaction or a series of transactions whether or not related) of
any securities of the Corporation or of any Subsidiary to an
Interested Shareholder or any Affiliate or Associate of an
Interested Shareholder in exchange for cash, securities or other
consideration (or a combination thereof) having an aggregate Fair
Market Value of $1,000,000 or more except an issuance of securities
upon conversion of convertible securities of the Corporation or of a
Subsidiary which were not acquired by such Interested Shareholder
(or such Affiliate or Associate) from the Corporation or a
Subsidiary;
(5) the adoption of any plan or proposal for the liquidation or
dissolution of the Corporation proposed by or on behalf of an
Interested Shareholder or an Affiliate or Associate of an Interested
Shareholder; or
(6) any reclassification of securities (including any reverse stock
split) or recapitalization of the Corporation or a Subsidiary or any
other transaction (whether or not with or into or otherwise
involving an Interested Shareholder) which has the effect, directly
or indirectly, of increasing the proportionate share of the
outstanding shares of any class of equity securities or securities
convertible into equity securities of the Corporation or a
Subsidiary which is directly or indirectly owned by any Interested
Shareholder or an Affiliate or Associate of an Interested
Shareholder;
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shall require the affirmative vote of (i) the holders of at least
two-thirds of the combined voting power of the then outstanding shares
of capital stock of the Corporation entitled to vote generally in an
annual election of Directors or entitled by law or by the terms of the
capital stock to vote on the transaction in question (the "Voting
Shares") and (ii) the holders of at least two-thirds of the combined
voting power of the then outstanding Voting Shares held by Disinterested
Shareholders, in each case voting together as a single class. Such
affirmative vote shall be required notwithstanding the fact that no vote
may be required, or that a lesser percentage may be specified, by law,
by any other provisions of these Articles or by the terms of any series
of Preferred Shares or any other securities of the Corporation.
B. The term "Business Combination" as used in this Article Eighth shall
mean any transaction which is referred to in any one or more of clauses
(1) through (6) of paragraph A of Section 1 of this Article Eighth.
Section 2. The provisions of Section 1 of this Article Eighth shall not be
applicable to any Business Combination, and such Business Combination shall
require only such affirmative vote (if any) as is required by law, any other
provisions of these Articles, the terms of the Common Shares of the Corporation
or of any of the classes or series of capital stock of the Corporation entitled
to a preference over the Common Shares as to dividends or upon liquidation, or
the terms of any other securities of the Corporation, if all of the conditions
specified in either of the following paragraphs A or B are met:
A. The Business Combination shall have been approved by a majority of the
Disinterested Directors; or
B. All the following six conditions shall have been met:
(1) The transaction constituting the Business Combination shall provide
for a consideration to be received by holders of Common Shares in
exchange for their Common Shares, and the aggregate amount of the
cash and the Fair Market Value as of the date of the consummation of
the Business Combination of consideration other than cash to be
received per share by holders of Common Shares in such Business
Combination shall be at least equal to the highest of the following:
(a) (if applicable) the highest per share price (including any
brokerage commissions, transfer taxes and soliciting dealers'
fees) paid in order to acquire any shares of Common Shares
beneficially owned by the Interested Shareholder which were
acquired (x) within the two-year period immediately prior to the
first public announcement of the proposed Business Combination
(the "Announcement Date") or (y) in the transaction in which it
became an Interested Shareholder, whichever is higher;
(b) the Fair Market Value per Common Share on the Announcement Date
or on the date on which the Interested Shareholder became an
Interested Shareholder (the "Determination Date"), whichever is
higher; and
(c) (if applicable) the price per share equal to the Fair Market
Value per Common Share determined pursuant to clause (b)
immediately preceding, multiplied by the ratio of (x) the highest
per share price (including any brokerage commissions, transfer
taxes and soliciting dealers' fees) paid in order to acquire any
Common Shares beneficially owned by the Interested Shareholder
which were acquired within the two-year period immediately prior
to the Announcement Date to (y) the Fair Market Value per Common
Share on the first day in such two-year period on which the
Interested Shareholder beneficially owned any Common Shares,
whether or not such Shareholder was an Interested Shareholder on
that day.
(2) If the transaction constituting the Business Combination shall
provide for a consideration to be received by holders of any class
of outstanding Voting Shares other than Common Shares, the aggregate
amount of the cash and the Fair Market Value as of the date of the
consummation of the Business Combination of consideration other than
cash to be received per share by holders of such Voting Shares shall
be at least equal to the highest of the following (it being intended
that the requirements of this clause B(2) shall be required to be
met with respect to every class of
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outstanding Voting Shares, whether or not the Interested Shareholder
beneficially owns any shares of a particular class of Voting Shares):
(a) (if applicable) the highest per share price (including any
brokerage commissions, transfer taxes and soliciting dealers'
fees) paid in order to acquire any shares of such class of Voting
Shares beneficially owned by the Interested Shareholder which
were acquired (x) within the two-year period immediately prior to
the Announcement Date or (y) in the transaction in which it
became an Interested Shareholder, whichever is higher;
(b) (if applicable) the highest preferential amount per share to
which the holders of shares of such class of Voting Shares are
entitled in the event of any voluntary or involuntary
liquidation, dissolution or winding up of the Corporation;
(c) the Fair Market Value per share of such class of Voting Shares on
the Announcement Date or on the Determination Date, whichever is
higher; and
(d) (if applicable) the price per share equal to the Fair Market
Value per share of such class of Voting Shares determined
pursuant to clause (c) immediately preceding, multiplied by the
ratio of (x) the highest per share price (including any brokerage
commissions, transfer taxes and soliciting dealers' fees) paid in
order to acquire any shares of such class of Voting Shares
beneficially owned by the Interested Shareholder which were
acquired within the two-year period immediately prior to the
Announcement Date to (y) the Fair Market Value per share of such
class of Voting Shares on the first day in such two-year period
on which the Interested Shareholder beneficially owned any shares
of such class of Voting Shares, whether or not such Shareholder
was an Interested Shareholder on that day.
(3) The consideration to be received by holders of a particular class of
Voting Shares or Common Shares shall be in cash or in the same form
as was previously paid in order to acquire shares of such class of
shares which are beneficially owned by the Interested Shareholder
and, if the Interested Shareholder beneficially owns shares of any
class of shares which were acquired with varying forms of
consideration, the form of consideration to be received by the
holders of such class of shares shall be either cash or the form
used to acquire the largest number of shares of such class of Voting
Shares beneficially owned by it. The prices determined in accordance
with clauses (1) and (2) of paragraph B of this Section 2 shall be
subject to an appropriate adjustment in the event of any stock
dividend, stock split, subdivision, combination of shares or similar
event.
(4) After such Interested Shareholder has become an Interested
Shareholder and prior to the consummation of such Business
Combination:
(a) except as approved by a majority of the Disinterested Directors,
there shall have been no failure to declare and pay at the
regular date therefor any full quarterly dividends (whether or
not cumulative) on any outstanding Preferred Shares or other
capital stock entitled to a preference over the Common Shares as
to dividends or upon liquidation;
(b) except as approved by a majority of the Disinterested Directors,
there shall have been (x) no reduction in the annual amount of
dividends paid on the Common Shares (except as necessary to
reflect any subdivision of the Common Shares) and (y) no failure
to increase the annual amount of dividends as necessary to
prevent any such reduction in the event of any reclassification
(including any reverse stock split), recapitalization,
reorganization or similar transaction which has the effect of
reducing the number of outstanding Common Shares;
(c) such Interested Shareholder shall not have become the beneficial
owner of any additional Voting Shares except as part of the
transaction in which it became an Interested Shareholder; and
(d) there shall have always been at least four (4) Disinterested
Directors on the Board of Directors.
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(5) After such Interested Shareholder has become an Interested
Shareholder, such Interested Shareholder shall not have received the
benefit, directly or indirectly (except proportionately as a
shareholder), of any loans, advances, guarantees, pledges or other
financial assistance or any tax credits or other tax advantages
provided by the Corporation, whether in anticipation of or in
connection with such Business Combination or otherwise.
(6) A proxy or information statement describing the proposed Business
Combination and complying with the requirements of the Securities
Exchange Act of 1934 and the rules and regulations thereunder (or
any subsequent provisions replacing such Act, rules or regulations)
shall be mailed to shareholders at least thirty (30) days prior to
the consummation of such Business Combination (whether or not such
proxy or information statement is required to be mailed pursuant to
such Act, rules, regulations or subsequent provisions).
Section 3. For purposes of this Article Eighth:
A. A "person" shall mean any individual, a partnership, a corporation, an
association, a trust or other entity.
B. "Interested Shareholder" at any particular time shall mean any person
(other than the Corporation or any Subsidiary or any employee benefit
plan or trust of the Corporation or any Subsidiary) who or which:
(1) is at such time the beneficial owner, directly or indirectly, of
five percent (5%) or more of the voting power of the Voting Shares;
(2) is an Affiliate of the Corporation and at any time within the
two-year period immediately prior to the date in question was the
beneficial owner, directly or indirectly, of five percent (5%) or
more of the voting power of the Voting Shares; or
(3) is at such time an assignee of or has otherwise succeeded to the
beneficial ownership of any Voting Shares which were at any time
within the two-year period immediately prior to the date in question
beneficially owned by an Interested Shareholder (as defined in (1)
and (2) above), if such assignment or succession shall have occurred
in the course of a transaction or series of transactions not
involving a public offering within the meaning of the Securities Act
of 1933.
C. "Disinterested Shareholder" shall mean a shareholder of the Corporation
who is not an Interested Shareholder (or an Affiliate or an Associate of
an Interested Shareholder) who is involved, directly or indirectly, in
the proposed Business Combination in question, except that as used in
Section 6 of this Article Eighth, the term "Disinterested Shareholder"
shall mean a shareholder of the Company who is not an Interested
Shareholder.
D. A person shall be a "beneficial owner" of any Voting Shares:
(1) which such person or any of its Affiliates or Associates
beneficially owns, directly or indirectly;
(2) which such person or any of its Affiliates or Associates has (i) the
right to acquire (whether or not such right is exercisable
immediately) pursuant to any agreement, arrangement or understanding
or upon the exercise of conversion rights, exchange rights, warrants
or options or otherwise or (ii) the right to vote pursuant to any
agreement, arrangement or understanding; or
(3) which are beneficially owned, directly or indirectly, by any other
person with which such person or any of its Affiliates or Associates
has any agreement, arrangement or understanding for the purpose of
acquiring, holding, voting or disposing of any Voting Shares.
E. For the purpose of determining whether a person is an Interested
Shareholder pursuant to paragraph B of this Section 3, the number of
Voting Shares deemed to be outstanding shall include shares deemed owned
by an Interested Shareholder through application of paragraph D of this
Section 3 but shall not include any other Voting Shares which may be
issuable pursuant to any agreement, arrangement or understanding, or
upon the exercise of conversion rights, exchange rights, warrants or
options or otherwise.
F. "Affiliate" means a person that directly, or indirectly through one or
more intermediaries, controls, or is controlled by, or is under common
control with, the person specified. "Associate", which is used to
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<PAGE> 64
indicate a relationship with any person, means (1) any corporation or
organization (other than the Corporation or a majority-owned subsidiary
of the Corporation) of which such person is an officer or partner or is,
directly or indirectly, the beneficial owner of ten percent (10%) or
more of any class of equity securities, (2) any trust or other estate in
which such person has a substantial beneficial interest or as to which
such person serves as trustee or in a similar fiduciary capacity, and
(3) any relative or spouse of such person, or any relative of such
spouse, who has the same home as such person or who is a director or
officer of the Corporation or any of its parents or subsidiaries.
G. "Subsidiary" means any corporation of which a majority of any class of
equity security is owned, directly or indirectly, by the Corporation;
provided, however, that for the purposes of the definition of Interested
Shareholder set forth in paragraph B of this Section 3, the term
"Subsidiary" shall mean only a corporation of which a majority of each
class of equity security is owned, directly or indirectly, by the
Corporation.
H. "Disinterested Director" means any member of the Board of Directors who
is unaffiliated with, and not a representative or nominee of, the
Interested Shareholder who is involved, directly or indirectly, in the
proposed Business Combination in question, and was (a) a member of the
Board prior to the time that such Interested Shareholder became an
Interested Shareholder or (b) recommended to succeed a Disinterested
Director by a majority of the Disinterested Directors then on the Board.
I. "Fair Market Value" means: (a) in the case of stock, the highest closing
sale price (or closing bid price for any day on which a closing sale
price is not available) during the 30-day period immediately preceding
the date in question of a share of such stock on the Composite Tape for
New York Stock Exchange Listed Stocks, or, if such stock is not quoted
on the Composite Tape, on the New York Stock Exchange, or if such stock
is not listed on such Exchange, on the principal United States
securities exchange registered under the Securities Exchange Act of 1934
on which such stock is listed, or if such stock is not listed on any
such exchange, the highest closing bid quotation with respect to a share
of such stock during the 30-day period preceding the date in question on
the NASDAQ or any other system then in use, or if no such quotations are
available, the fair market value on the date in question of a share of
such stock as determined by a majority of the Disinterested Directors in
good faith; and (b) in the case of property other than cash or stock,
the fair market value of such property on the date in question as
determined by a majority of the Disinterested Directors in good faith.
J. In the event of any Business Combination in which the Corporation
survives, the phrase "consideration other than cash to be received" as
used in paragraph B of Section 2 of this Article Eighth shall include
the Common Shares and the shares of any other class of outstanding
Voting Shares retained by the holders of such shares.
Section 4. A majority of the Disinterested Directors of the Corporation
shall have the power and duty to determine for the purpose of this Article
Eighth, on the basis of information known to them after reasonable inquiry, (1)
whether a person is an Interested Shareholder, (2) the number of Voting Shares
beneficially owned by any person, (3) whether a person is an Affiliate or
Associate of another, (4) whether the requirements of Section 2 of this Article
Eighth have been met with respect to any Business Combination, and (5) whether
the assets which are subject to any Business Combination have, or the
consideration to be received for the issuance or transfer of securities by this
Corporation or any Subsidiary in any Business Combination has, an aggregate Fair
Market Value of $1,000,000 or more. Any such determination made in good faith
shall be binding and conclusive on all parties.
Section 5. Nothing contained in this Article Eighth shall be construed to
relieve any Interested Shareholder from any fiduciary obligation imposed by law.
Section 6. In addition to any requirements of law and any other provisions
of these Articles or the terms of any class or series of capital stock of the
Corporation entitled to a preference over the Common Shares as to dividends or
upon liquidation, or the terms of any other securities of the Corporation (and
notwithstanding the fact that a lesser percentage may be specified by law, these
Articles or any such terms), the affirmative vote of
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A. the holders of two-thirds or more of the combined voting power of the
Voting Shares, voting together as a single class, and
B. two-thirds of the combined voting power of the Voting Shares held by the
Disinterested Shareholders, voting together as a single class,
shall be required to amend, alter or repeal or adopt any provision inconsistent
with, this Article Eighth.
ARTICLE NINTH: The foregoing Restated Articles of Incorporation hereby
supersede the existing Articles of Incorporation.
B-7
<PAGE> 66
ANNEX C
[THE FOLLOWING ARE THE CODE OF REGULATIONS OF LINCOLN ELECTRIC HOLDINGS, INC.
THAT WILL BE IN EFFECT IMMEDIATELY FOLLOWING THE MERGER]
LINCOLN ELECTRIC HOLDINGS, INC.
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.
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 at
such date, time and place as may be designated from time to time by the Board of
Directors, 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.
2. SPECIAL MEETINGS. Special meetings of the shareholders may be called by
the President, or an Executive or Senior 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)
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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
or entered upon the records of the meeting, either before or after the holding
thereof.
5. 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.
6. 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.
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 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 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. Special meetings of the Board
of Directors may be called by the Chairman of the Board of
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Directors or the President on one day's notice to each Director by whom such
notice is not waived, given either personally or by mail, telephone, telegram,
telex, facsimile or similar medium of communication, and will be called by the
Chairman of the Board of Directors or the President, in like manner and on like
notice, on the written request of not less than one-third of the Board of
Directors. 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
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.
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 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
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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 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 1 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.
ARTICLE VI
COMMITTEES
1. CREATION AND ELECTION. The Board of Directors may create, from time to
time and from its own number, an Executive Committee or any other committee or
committees of the Board of Directors to act in the intervals between meetings of
the Board of Directors and may delegate to such committee or committees any of
the authority of the Board of Directors other than that of filling vacancies
among the Board of Directors or in any committee of the Board of Directors. No
committee shall consist of less than three Directors. The Board of Directors may
appoint one or more Directors as alternate members of any such committee, who
may take the place of any absent member or members at a meeting of such
committee. Except as above provided and except to the extent that its powers are
limited by the Directors, the Executive Committee during the intervals between
meetings of the Directors shall possess and may exercise, subject to the control
and direction of the Directors, all of the powers of the Directors in the
management and control of the business of the Corporation, regardless of whether
such powers are specifically conferred by these Regulations. All action taken by
the Executive Committee shall be reported to the Directors at their first
meeting thereafter.
2. QUORUM AND ACTION. Unless otherwise ordered by the Board of Directors,
a majority of the members of any committee appointed by the Board of Directors
pursuant to this Article VI shall constitute a quorum at any meeting thereof,
and the act of a majority of the members present at a meeting at which a quorum
is present shall be the act of such committee. Action may be taken by any such
committee without a meeting by a writing or writings signed by all of its
members. Any such committee shall prescribe its own rules for calling and
holding meetings and its method of procedure, subject to any rules prescribed by
the Board of Directors, and shall keep a written record of all action taken by
it.
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ARTICLE VII
OFFICERS
1. OFFICERS. The Corporation may have a Chairman of the Board and shall
have a President (both of whom shall be Directors), a Secretary and a Chief
Financial Officer (who shall serve as Treasurer under Ohio law). The Corporation
may also have one or more Vice-Presidents and such other officers and assistant
officers as the Board of Directors may deem necessary. All of the officers and
assistant officers shall be elected by the Board of Directors.
2. AUTHORITY AND DUTIES OF OFFICERS. The officers of the Corporation shall
have such authority and shall perform such duties as are customarily incident to
their respective offices, or as may be specified from time to time by the Board
of Directors regardless of whether such authority and duties are customarily
incident to such office.
ARTICLE VIII
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 IX
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
voting power of the Corporation; provided, however, that paragraphs 1 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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ANNEX D
[THE FOLLOWING ARE THE COMPANY'S CURRENT ARTICLES OF INCORPORATION]
THE LINCOLN ELECTRIC COMPANY
SECOND RESTATED ARTICLES OF INCORPORATION
ARTICLE FIRST: The name of the Corporation shall be THE LINCOLN ELECTRIC
COMPANY.
ARTICLE SECOND: The place in the State of Ohio where its principal office
is located is the City of Cleveland, Cuyahoga County.
ARTICLE THIRD: The Corporation is formed for the purpose of manufacturing,
repairing, buying, selling and dealing in all varieties and kinds of electrical
machinery, tools and appliances, and doing all things necessary and incident
thereto.
ARTICLE FOURTH: Section 1. The maximum number of shares which the
Corporation is authorized to have outstanding is one hundred twenty million
(120,000,000), consisting of sixty million (60,000,000) Common Shares, without
par value ("Common Shares"), and sixty million (60,000,000) Class A Common
Shares, without par value ("Class A Common Shares"). The shares of each class
shall have the express terms set forth in this Article Fourth.
Upon the Certificate of Adoption of Amendment to Restated Articles of
Incorporation setting forth these amendments becoming effective pursuant to
Section 1701.73 of the Ohio Revised Code (the "Reclassification Effective
Time"), and without any further action on the part of the Corporation or its
shareholders, (i) each whole Class B Common Share, without par value ("Class B
Common Shares"), then issued shall automatically be changed and converted into
0.5809 fully paid and nonassessable Common Share and (ii) certificates
representing Class B Common Shares outstanding prior to the Reclassification
Effective Time shall be deemed to represent the same number of Common Shares
multiplied by 0.5809. No fractional shares shall be issued; instead any
fractional share shall become a right to receive cash in an amount equal to such
fraction multiplied by $37.875.
The powers, preferences and rights of the Common Shares and Class A Common
Shares (collectively, the "Common Equity") and the qualifications, limitations
and restrictions thereof, shall in all respects be identical, except as
otherwise required by law or as expressly provided in these Restated Articles of
Incorporation. The "Effective Time" means June 7, 1995.
Section 2. Voting.
Section 2.1. Each shareholder of the Corporation shall be entitled to one
vote for each Common Share standing in such shareholder's name on the books of
the Corporation.
Section 2.2. The holders of Class A Common Shares shall not be entitled to
vote on any matter submitted to shareholders for their vote, consent, waiver,
release or other action except as required by statute.
Section 3. Dividends. Dividends may be declared and paid to the holders of
Common Shares and Class A Common Shares in cash, property, or other securities
of the Corporation (including shares of any class whether or not shares of such
class are already outstanding) out of funds legally available therefor. No
dividend shall be paid on the outstanding Common Shares or Class A Common Shares
unless an equal dividend per share is paid on each of the outstanding Common
Shares and Class A Common Shares subject to the following:
(a) no cash dividend shall be declared or paid on one class of Common
Equity unless a cash dividend of the same amount per share is
simultaneously declared and paid on the other class of Common Equity;
(b) dividends payable on the Common Equity in capital stock shall be made
to all holders of Common Equity provided that: (i) such a dividend on
Class A Common Shares shall be paid or made only in Class A Common
Shares and (ii) a dividend on Class A Common Shares paid or made in
Class A Common Shares and a dividend on Common Shares paid or made in
either Common Shares or Class A Common Shares shall be deemed an equal
dividend per share within the meaning of this Section 3 if
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paid in the same proportion regardless of the fair market value of such
shares received in payment of such dividend.
Section 4. Merger, Consolidation, Combination or Dissolution of the
Corporation. In the event of merger, consolidation or combination of the
Corporation with another entity (whether or not the Corporation is the surviving
entity) or in the event of dissolution of the Corporation, holders of Class A
Common Shares shall be entitled to receive in respect of each Class A Common
Share the same indebtedness, other securities, cash, rights, or any other
property, or any combination of shares, evidences of indebtedness, securities,
cash, rights or any other property, as holders of Common Shares shall be
entitled to receive in respect to each share.
Section 5. Splits or Combinations of Shares. If the Corporation shall in
any manner split, subdivide or combine the outstanding Common Shares or Class A
Common Shares, the outstanding shares of the other such class shall be
proportionately split, subdivided or combined in the same manner and on the same
basis as the outstanding shares of the other class that have been split,
subdivided or combined.
Section 6. Change in Number of Authorized Class A Common Shares. The number
of authorized Class A Common Shares may be increased or decreased (but not below
the number then outstanding) by the affirmative vote of the holders of a
majority of the aggregate number of outstanding Common Shares entitled to vote
in the election of directors.
Section 7. No Preemptive Rights. No shareholder of the Corporation shall
have any preemptive right as such shareholder to subscribe for or purchase
shares of the Corporation.
Section 8. Class A Common Shares Protection Provisions.
Section 8.1. If, after the Effective Time, a Person or group, as defined in
Section 8.11, acquires beneficial ownership of shares representing 15% or more
of the number of then outstanding Common Shares and such Person or group (a
"Significant Shareholder") does not then beneficially own an equal or greater
percentage of all then outstanding Class A Common Shares, all of which Class A
Common Shares must have been acquired by such Significant Shareholder after the
first issuance by the Corporation of Class A Common Shares (the "Distribution
Date"), such Significant Shareholder must, within a ninety (90) day period
beginning the day after becoming a Significant Shareholder, make a public cash
tender offer in compliance with all applicable laws and regulations to acquire
additional Class A Common Shares as provided in this Section 8 of Article Fourth
(a "Class A Protection Transaction").
Section 8.2. In each Class A Protection Transaction, the Significant
Shareholder must make a public tender offer to acquire that number of additional
Class A Common Shares determined by (i) multiplying the percentage of the number
of outstanding Common Shares beneficially owned and acquired after the Effective
Time by such Significant Shareholder by the total number of Class A Common
Shares outstanding on the date such Person or group became a Significant
Shareholder, and (ii) subtracting therefrom the excess (if any) of the number of
Class A Common Shares beneficially owned by such Significant Shareholder on the
date such Person or group became a Significant Shareholder (including shares
acquired at or prior to the time such Person or group became a Significant
Shareholder) over the number of Class A Common Shares beneficially owned on the
Distribution Date (as adjusted for stock splits, stock dividends and similar
recapitalization). The Significant Shareholder must acquire all shares validly
tendered; or if the number of Class A Common Shares tendered to the Significant
Shareholder exceeds the number of shares required to be acquired pursuant to
this Section 8.2, the number of Class A Common Shares acquired from each
tendering holder shall be pro rata based on the percentage that the number of
shares tendered by such shareholder bears to the total number of shares tendered
by all tendering holders.
Section 8.3. The offer price for any Class A Common Shares required to be
purchased by the Significant Shareholder pursuant to this Section 8 shall be the
greatest of (i) the highest price per share paid by the Significant Shareholder
for any Common Shares or Class A Common Shares during the six-month period
ending on the date such Person or group became a Significant Shareholder, (ii)
the highest reported sale price of a Common Share or Class A Common Share on the
National Association of Securities Dealers, Inc. Automated Quotation System
("NASDAQ") National Market System (or such other securities exchange or
quotation system as is then the principal trading market for such shares) during
the 30 day period preceding such Person or group
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becoming a Significant Shareholder, and (iii) the highest reported sale price of
a Common Share or Class A Common Share on the NASDAQ National Market System (or
such other securities exchange or quotation system as is then the principal
trading market for such shares) on the business day preceding the date the
Significant Shareholder makes the tender offer required by this Section 8. For
purposes of Section 8.4, the applicable date for each calculation required by
clauses (i) and (ii) of the preceding sentence shall be the date on which the
Significant Shareholder becomes required to engage in the subsequent Class A
Protection Transaction for which such calculation is required. In the event that
the Significant Shareholder has acquired Common Shares or Class A Common Shares
in the six month period ending on the date such Person or group becomes a
Significant Shareholder for consideration other than cash, the value of such
consideration per Common Share or Class A Common Share shall be as determined in
good faith by the Board of Directors.
Section 8.4. A Class A Protection Transaction shall also be required to be
effected by any Significant Shareholder each time that the Significant
Shareholder acquires after the Effective Time beneficial ownership of additional
Common Shares equal to or greater than the next higher integral multiple of 5%
in excess of 15% (e.g., 20%, 25%, 30%, etc.) of the number of outstanding Common
Shares if such Significant Shareholder does not then own an equal or greater
percentage of the Class A Common Shares (all of which Class A Common Shares must
have been acquired by such Significant Shareholder after the Distribution Date).
Such Significant Shareholder shall be required to make a public cash tender
offer to acquire that number of Class A Common Shares prescribed by the formula
set forth in Section 8.2, and must acquire all shares validly tendered or a pro
rata portion thereof, as specified in Section 8.2, at the price determined
pursuant to Section 8.3, even if a previous Class A Protection Transaction
resulted in fewer Class A Common Shares being tendered than required in the
previous offer.
Section 8.5. If any Significant Shareholder fails to make an offer required
by this Section 8, or to purchase shares validly tendered and not withdrawn
(after proration, if any), such Significant Shareholder shall not be entitled to
vote any Common Shares beneficially owned by such Significant Shareholder unless
and until such requirements are complied with or unless and until all Common
Shares causing such offer requirement to be effective are no longer beneficially
owned by such Significant Shareholder. The requirement to engage in a Class A
Protection Transaction is satisfied by the making of the requisite offer and
purchasing validly tendered shares pursuant to this Section 8, even if the
number of shares tendered is less than the number of shares included in the
required offer.
Section 8.6. The Class A Protection Transaction requirement shall not apply
to any increase in percentage beneficial ownership of Common Shares resulting
solely from a change in the aggregate number of Common Shares outstanding,
provided that any acquisition after such change which results in any Person or
group beneficially owning fifteen percent (15%) or more of the number of
outstanding Common Shares (or an additional 5% or more of the number of Common
Shares after the last acquisition which triggered the requirement for a Class A
Protection Transaction) shall be subject to any Class A Protection Transaction
requirement that would be imposed pursuant to this Section 8.
Section 8.7. In connection with Sections 8.1 through 8.4 of this Section 8,
the following Common Shares shall be excluded for the purpose of determining the
shares beneficially owned by such Person or group but not for the purpose of
determining shares outstanding:
(a) shares beneficially owned by such Person or group at the Effective
Time;
(b) shares acquired by will or by the laws of descent and distribution, or
by gift that is made in good faith and not for the purpose of
circumventing this Section 8 or by foreclosure of a bona fide loan;
(c) shares acquired upon issuance or sale by the Corporation;
(d) shares acquired by operation of law (including a merger or
consolidation effected for the purpose of recapitalizing such Person or
reincorporating such Person in another jurisdiction but excluding a
merger or consolidation effected for the purpose of acquiring another
Person);
(e) shares acquired in exchange for Class A Common Shares by a holder of
Class A Common Shares (or by a parent, lineal descendant or donee of
such holder of Class A Common Shares who received such
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Class A Common Shares from such holder) if the Class A Common Shares so
exchanged were acquired by such holder directly from the Corporation as
a dividend on Common Shares; and
(f) shares acquired by a plan of the Corporation qualified under Section
401(a) of the Internal Revenue Code of 1986, as amended, or any
successor provision thereto, or acquired by reason of a distribution
from such a plan.
Section 8.8. In connection with Sections 8.1 through 8.4 of this Section 8,
for purposes of calculating the number of Class A Common Shares beneficially
owned by any Persons or group:
(a) Class A Common Shares acquired by gift shall be deemed to be
beneficially owned by such Person or member of a group if such gift was
made in good faith and not for the purpose of circumventing the
operations of this Section 8; and
(b) only Class A Common Shares owned of record by such Person or member of
a group or held by others as nominees of such Person or member of a
group and identified as such to the Corporation shall be deemed to be
beneficially owned by such Person or group (provided that Class A
Common Shares with respect to which such Person or member of a group
has sole investment and voting power shall be deemed to be beneficially
owned thereby).
Section 8.9. To the extent that the voting power of any Common Share cannot
be exercised pursuant to this Section 8, that Common Share shall not be included
in the determination of the voting power of the Corporation for any purpose
under these Restated Articles of Incorporation or the Ohio Revised Code.
Section 8.10. All calculations with respect to percentage beneficial
ownership of issued and outstanding shares of either Common Shares or Class A
Common Shares will be based upon the numbers of issued and outstanding shares
reflected in either the records of or a certificate from the Corporation's stock
transfer agent or reported by the Corporation on the last to be filed of (i) the
Corporation's most recent Annual Report on Form 10-K, (ii) its most recent
Quarterly Report on Form 10-Q, (iii) its most recent Current Report on Form 8-K,
(iv) its most recent report on Form 10-C, and (v) its most recent definitive
proxy statement filed with the Securities and Exchange Commission.
Section 8.11. For purposes of this Section 8, the term "Person" means any
individual, partnership, corporation, association, trust, or other entity (other
than the Corporation). Subject to Sections 8.7 and 8.8, "beneficial ownership"
shall be determined pursuant to Rule 13d-3 promulgated under the Securities
Exchange Act of 1934, as amended (the "1934 Act"), or any successor regulation
and the formation or existence of a "group" shall be determined pursuant to Rule
13d-5(b) under the 1934 Act or any successor regulation, subject to the
following qualifications:
(a) relationships by blood or marriage between or among any Persons will
not constitute any of such Persons as a member of a group with such
other Person, absent affirmative attributes of concerted action; and
(b) any Person acting in his official capacity as a director or officer of
the Corporation shall not be deemed to beneficially own shares where
such ownership exists solely by virtue of such Person's status as a
trustee (or similar position) with respect to shares held by plans or
trusts for the general benefit of employees or former employees of the
Corporation, and actions taken or agreed to be taken by a Person in
such Person's official capacity as an officer or director of the
Corporation will not cause such Person to become a member of a group
with any other Person.
Section 9. Conversion of Class A Common Shares. Each Class A Common Share
(whether or not then issued) shall convert automatically into one Common Share
upon the earliest to occur of:
(a) any time the aggregate number of the outstanding Common Shares as
reflected on the stock transfer records of the Corporation is less than
20% of the aggregate number of outstanding Common Shares and Class A
Common Shares. For purposes of the immediately preceding sentence, any
Common Shares or Class A Common Shares repurchased by the Corporation
and held as treasury shares or canceled by the Corporation shall not be
deemed "outstanding" from and after the date of repurchase;
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(b) the date ("Conversion Date") which shall be ten years from the
Distribution Date of the Class A Common Shares as defined in Section
8.1; provided, however, that the Board of Directors by resolution
adopted by two-thirds of the entire number of Directors then in office
no earlier than thirty months and no later than twenty-four months
prior to the initial or any subsequently established Conversion Date
may extend the Conversion Date for an additional five years. Any such
new Conversion Date and all subsequently extended Conversion Dates may
be extended in like manner and for a like period; and
(c) upon resolution by the Board of Directors if, as a result of the
existence of the Class A Common Shares, either the Common Shares or
Class A Common Shares is, or both are, excluded from quotation on the
NASDAQ National Market System, and all other national quotation systems
then in existence and are excluded from trading on all the principal
national securities exchanges then in existence.
Upon such conversion, the total number of Common Shares the Corporation shall
have authority to issue shall be 120,000,000 shares, and the total number of
Class A Common Shares shall be zero (0) shares and all references to Class A
Common Shares shall be of no further force or effect. In making the
determination referred to in (a) or (c) of this Section 9, the Board of
Directors may conclusively rely on any information or documentation available to
it, including but not limited to filings made with the United States Securities
and Exchange Commission, any stock exchange, the National Association of
Securities Dealers, Inc. or any national quotation system or any other
government or regulatory agency, or the records of or certification from the
Corporation's stock transfer agent. At such time as set forth in (a), (b) or (c)
of this Section 9, the Class A Common Shares shall be deemed to be automatically
converted into Common Shares and stock certificates formerly representing Class
A Common Shares shall thereupon and thereafter be deemed to represent a like
number of Common Shares. The determination of the Board of Directors that either
(a) or (c) of this Section 9 has occurred shall be conclusive and binding and
the conversion of each Class A Common Share into one Common Share shall remain
effective regardless of whether either (a) or (c) has occurred in fact.
ARTICLE FIFTH: The Board of Directors of the Corporation is hereby
authorized to fix at any time and from time to time the amount of consideration
for which the Corporation may from time to time issue its shares without par
value, whether now or hereafter authorized and whether or not greater
consideration could be received upon the issue or sale of the same number of
shares of another class.
ARTICLE SIXTH: The Corporation may from time to time pursuant to
authorization by the Board of Directors and without action by the shareholders,
purchase or otherwise acquire shares of the Corporation of any class or classes
in such manner, upon such terms and in such amounts as the Board of Directors
shall determine without regard to whether less consideration could be paid upon
the purchase of the same number of shares of another class, subject, however, to
such limitation or restriction, if any, as is contained in the express terms of
any class of shares of the Corporation outstanding at the time of the purchase
or acquisition in question.
ARTICLE SEVENTH: The holders of shares of the Corporation shall not be
entitled to cumulative voting rights in elections of Directors.
ARTICLE EIGHTH: Section 1. A higher than majority shareholder vote for
certain Business Combinations (as defined below) shall be required as follows:
A. In addition to any affirmative vote required by law or these Articles or
the terms of any series of Preferred Stock or any other securities of
the Corporation and except as otherwise expressly provided in Section 2
of this Article Eighth:
(1) any merger or consolidation of the Corporation or any Subsidiary
with (i) any Interested Shareholder or with (ii) any other
corporation (whether or not itself an Interested Shareholder) which
is, or after such merger or consolidation would be, an Affiliate or
Associate of an Interested Shareholder;
(2) any sale, lease, exchange, mortgage, pledge, transfer or other
disposition (in one transaction or a series of transactions whether
or not related) to an Interested Shareholder (or an Affiliate or
Associate of an Interested Shareholder) of any assets of the
Corporation or a Subsidiary having an aggregate Fair Market Value of
$1,000,000 or more;
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(3) any sale, lease, exchange, mortgage, pledge, transfer or other
disposition (in one transaction or a series of transactions whether
or not related) to or with the Corporation or a Subsidiary of any
assets of an Interested Shareholder (or an Affiliate or Associate of
an Interested Shareholder) having an aggregate Fair Market Value of
$1,000,000 or more;
(4) the issuance or sale by the Corporation or any Subsidiary (in one
transaction or a series of transactions whether or not related) of
any securities of the Corporation or of any Subsidiary to an
Interested Shareholder or any Affiliate or Associate of an
Interested Shareholder in exchange for cash, securities or other
consideration (or a combination thereof) having an aggregate Fair
Market Value of $1,000,000 or more except an issuance of securities
upon conversion of convertible securities of the Corporation or of a
Subsidiary which were not acquired by such Interested Shareholder
(or such Affiliate or Associate) from the Corporation or a
Subsidiary;
(5) the adoption of any plan or proposal for the liquidation or
dissolution of the Corporation proposed by or on behalf of an
Interested Shareholder or an Affiliate or Associate of an Interested
Shareholder; or
(6) any reclassification of securities (including any reverse stock
split) or recapitalization of the Corporation or a Subsidiary or any
other transaction (whether or not with or into or otherwise
involving an Interested Shareholder) which has the effect, directly
or indirectly, of increasing the proportionate share of the
outstanding shares of any class of equity securities or securities
convertible into equity securities of the Corporation or a
Subsidiary which is directly or indirectly owned by any Interested
Shareholder or an Affiliate or Associate of an Interested
Shareholder;
shall require the affirmative vote of (i) the holders of at least
two-thirds of the combined voting power of the then outstanding shares of
capital stock of the Corporation entitled to vote generally in an annual
election of Directors or entitled by law or by the terms of the capital
stock to vote on the transaction in question (the "Voting Shares") and (ii)
the holders of at least two-thirds of the combined voting power of the then
outstanding Voting Shares held by Disinterested Shareholders, in each case
voting together as a single class. Such affirmative vote shall be required
notwithstanding the fact that no vote may be required, or that a lesser
percentage may be specified, by law, by any other provisions of these
Articles or by the terms of any series of Preferred Stock or any other
securities of the Corporation.
B. The term "Business Combination" as used in this Article Eighth shall
mean any transaction which is referred to in any one or more of clauses
(1) through (6) of paragraph A of Section 1 of this Article Eighth.
Section 2. The provisions of Section 1 of this Article Eighth shall not be
applicable to any Business Combination, and such Business Combination shall
require only such affirmative vote (if any) as is required by law, any other
provisions of these Articles, the terms of any of the classes or series of
Common Equity of the Corporation or of any of the classes or series of capital
stock of the Corporation entitled to a preference over the Common Equity as to
dividends or upon liquidation, or the terms of any other securities of the
Corporation, if all of the conditions specified in either of the following
paragraphs A or B are met:
A. The Business Combination shall have been approved by a majority of the
Disinterested Directors; or
B. All the following six conditions shall have been met:
(1) The transaction constituting the Business Combination shall provide
for a consideration to be received by holders of Common Equity in
exchange for their Common Equity, and the aggregate amount of the
cash and the Fair Market Value as of the date of the consummation of
the Business Combination of consideration other than cash to be
received per share by holders of Common Equity in such Business
Combination shall be at least equal to the highest of the following:
(a) (if applicable) the highest per share price (including any
brokerage commissions, transfer taxes and soliciting dealers'
fees) paid in order to acquire any shares of Common Equity
beneficially owned by the Interested Shareholder which were
acquired (x) within the two-year period immediately prior to the
first public announcement of the proposed Business Combination
(the
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"Announcement Date") or (y) in the transaction in which it became
an Interested Shareholder, whichever is higher;
(b) the Fair Market Value per share of Common Equity on the
Announcement Date or on the date on which the Interested
Shareholder became an Interested Shareholder (the "Determination
Date"), whichever is higher; and
(c) (if applicable) the price per share equal to the Fair Market
Value per share of Common Equity determined pursuant to clause
(b) immediately preceding, multiplied by the ratio of (x) the
highest per share price (including any brokerage commissions,
transfer taxes and soliciting dealers' fees) paid in order to
acquire any shares of Common Equity beneficially owned by the
Interested Shareholder which were acquired within the two-year
period immediately prior to the Announcement Date to (y) the Fair
Market Value per share of Common Equity on the first day in such
two-year period on which the Interested Shareholder beneficially
owned any shares of Common Equity, whether or not such
Shareholder was an Interested Shareholder on that day.
(2) If the transaction constituting the Business Combination shall provide
for a consideration to be received by holders of any class of
outstanding Voting Shares other than Common Equity, the aggregate
amount of the cash and the Fair Market Value as of the date of the
consummation of the Business Combination of consideration other than
cash to be received per share by holders of such Voting Shares shall be
at least equal to the highest of the following (it being intended that
the requirements of this clause B(2) shall be required to be met with
respect to every class of outstanding Voting Shares, whether or not the
Interested Shareholder beneficially owns any shares of a particular
class of Voting Shares):
(a) (if applicable) the highest per share price (including any
brokerage commissions, transfer taxes and soliciting dealers'
fees) paid in order to acquire any shares of such class of Voting
Shares beneficially owned by the Interested Shareholder which
were acquired (x) within the two-year period immediately prior to
the Announcement Date or (y) in the transaction in which it
became an Interested Shareholder, whichever is higher;
(b) (if applicable) the highest preferential amount per share to
which the holders of shares of such class of Voting Shares are
entitled in the event of any voluntary or involuntary
liquidation, dissolution or winding up of the Corporation;
(c) the Fair Market Value per share of such class of Voting Shares on
the Announcement Date or on the Determination Date, whichever is
higher; and
(d) (if applicable) the price per share equal to the Fair Market
Value per share of such class of Voting Shares determined
pursuant to clause (c) immediately preceding, multiplied by the
ratio of (x) the highest per share price (including any brokerage
commissions, transfer taxes and soliciting dealers' fees) paid in
order to acquire any shares of such class of Voting Shares
beneficially owned by the Interested Shareholder which were
acquired within the two-year period immediately prior to the
Announcement Date to (y) the Fair Market Value per share of such
class of Voting Shares on the first day in such two-year period
on which the Interested Shareholder beneficially owned any shares
of such class of Voting Shares, whether or not such Shareholder
was an Interested Shareholder on that day.
(3) The consideration to be received by holders of a particular class of
Voting Shares or Common Equity shall be in cash or in the same form as
was previously paid in order to acquire shares of such class of shares
which are beneficially owned by the Interested Shareholder and, if the
Interested Shareholder beneficially owns shares of any class of shares
which were acquired with varying forms of consideration, the form of
consideration to be received by the holders of such class of shares
shall be either cash or the form used to acquire the largest number of
shares of such class of Voting Shares beneficially owned by it. The
prices determined in accordance with clauses (1) and (2) of paragraph B
of this Section 2 shall be subject to an appropriate adjustment in the
event of any stock dividend, stock split, subdivision, combination of
shares or similar event.
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(4) After such Interested Shareholder has become an Interested Shareholder
and prior to the consummation of such Business Combination:
(a) except as approved by a majority of the Disinterested Directors,
there shall have been no failure to declare and pay at the
regular date therefor any full quarterly dividends (whether or
not cumulative) on any outstanding Preferred Stock or other
capital stock entitled to a preference over the Common Equity as
to dividends or upon liquidation;
(b) except as approved by a majority of the Disinterested Directors,
there shall have been (x) no reduction in the annual amount of
dividends paid on the Common Equity (except as necessary to
reflect any subdivision of the Common Equity) and (y) no failure
to increase the annual amount of dividends as necessary to
prevent any such reduction in the event of any reclassification
(including any reverse stock split), recapitalization,
reorganization or similar transaction which has the effect of
reducing the number of outstanding shares of the Common Equity;
(c) such Interested Shareholder shall not have become the beneficial
owner of any additional Voting Shares except as part of the
transaction in which it became an Interested Shareholder; and
(d) there shall have always been at least four (4) Disinterested
Directors on the Board of Directors.
(5) After such Interested Shareholder has become an Interested Shareholder,
such Interested Shareholder shall not have received the benefit,
directly or indirectly (except proportionately as a shareholder), of
any loans, advances, guarantees, pledges or other financial assistance
or any tax credits or other tax advantages provided by the Corporation,
whether in anticipation of or in connection with such Business
Combination or otherwise.
(6) A proxy or information statement describing the proposed Business
Combination and complying with the requirements of the Securities
Exchange Act of 1934 and the rules and regulations thereunder (or any
subsequent provisions replacing such Act, rules or regulations) shall
be mailed to shareholders at least thirty (30) days prior to the
consummation of such Business Combination (whether or not such proxy or
information statement is required to be mailed pursuant to such Act,
rules, regulations or subsequent provisions).
Section 3. For purposes of this Article Eighth:
A. A "person" shall mean any individual, a partnership, a corporation, an
association, a trust or other entity.
B. "Interested Shareholder" at any particular time shall mean any person
(other than the Corporation or any Subsidiary or any employee benefit
plan or trust of the Corporation or any Subsidiary) who or which:
(1) is at such time the beneficial owner, directly or indirectly, of
five percent (5%) or more of the voting power of the Voting Shares;
(2) is an Affiliate of the Corporation and at any time within the
two-year period immediately prior to the date in question was the
beneficial owner, directly or indirectly, of five percent (5%) or
more of the voting power of the Voting Shares; or
(3) is at such time an assignee of or has otherwise succeeded to the
beneficial ownership of any Voting Shares which were at any time
within the two-year period immediately prior to the date in question
beneficially owned by an Interested Shareholder (as defined in (1)
and (2) above), if such assignment or succession shall have occurred
in the course of a transaction or series of transactions not
involving a public offering within the meaning of the Securities Act
of 1933.
C. "Disinterested Shareholder" shall mean a shareholder of the Corporation
who is not an Interested Shareholder (or an Affiliate or an Associate of
an Interested Shareholder) who is involved, directly or indirectly, in
the proposed Business Combination in question, except that as used in
Section 6 of this
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Article Eighth, the term "Disinterested Shareholder" shall mean a
shareholder of the Company who is not an Interested Shareholder.
D. A person shall be a "beneficial owner" of any Voting Shares:
(1) which such person or any of its Affiliates or Associates
beneficially owns, directly or indirectly;
(2) which such person or any of its Affiliates or Associates has (i) the
right to acquire (whether or not such right is exercisable
immediately) pursuant to any agreement, arrangement or understanding
or upon the exercise of conversion rights, exchange rights, warrants
or options or otherwise or (ii) the right to vote pursuant to any
agreement, arrangement or understanding; or
(3) which are beneficially owned, directly or indirectly, by any other
person with which such person or any of its Affiliates or Associates
has any agreement, arrangement or understanding for the purpose of
acquiring, holding, voting or disposing of any Voting Shares.
E. For the purpose of determining whether a person is an Interested
Shareholder pursuant to paragraph B of this Section 3, the number of
Voting Shares deemed to be outstanding shall include shares deemed owned
by an Interested Shareholder through application of paragraph D of this
Section 3 but shall not include any other Voting Shares which may be
issuable pursuant to any agreement, arrangement or understanding, or
upon the exercise of conversion rights, exchange rights, warrants or
options or otherwise.
F. "Affiliate" means a person that directly, or indirectly through one or
more intermediaries, controls, or is controlled by, or is under common
control with, the person specified. "Associate", which is used to
indicate a relationship with any person, means (1) any corporation or
organization (other than the Corporation or a majority-owned subsidiary
of the Corporation) of which such person is an officer or partner or is,
directly or indirectly, the beneficial owner of ten percent (10%) or
more of any class of equity securities, (2) any trust or other estate in
which such person has a substantial beneficial interest or as to which
such person serves as trustee or in a similar fiduciary capacity, and
(3) any relative or spouse of such person, or any relative of such
spouse, who has the same home as such person or who is a director or
officer of the Corporation or any of its parents or subsidiaries.
G. "Subsidiary" means any corporation of which a majority of any class of
equity security is owned, directly or indirectly, by the Corporation;
provided, however, that for the purposes of the definition of Interested
Shareholder set forth in paragraph B of this Section 3, the term
"Subsidiary" shall mean only a corporation of which a majority of each
class of equity security is owned, directly or indirectly, by the
Corporation.
H. "Disinterested Director" means any member of the Board of Directors who
is unaffiliated with, and not a representative or nominee of, the
Interested Shareholder who is involved, directly or indirectly, in the
proposed Business Combination in question, and was (a) a member of the
Board prior to the time that such Interested Shareholder became an
Interested Shareholder or (b) recommended to succeed a Disinterested
Director by a majority of the Disinterested Directors then on the Board.
I. "Fair Market Value" means: (a) in the case of stock, the highest closing
sale price (or closing bid price for any day on which a closing sale
price is not available) during the 30-day period immediately preceding
the date in question of a share of such stock on the Composite Tape for
New York Stock Exchange Listed Stocks, or, if such stock is not quoted
on the Composite Tape, on the New York Stock Exchange, or if such stock
is not listed on such Exchange, on the principal United States
securities exchange registered under the Securities Exchange Act of 1934
on which such stock is listed, or if such stock is not listed on any
such exchange, the highest closing bid quotation with respect to a share
of such stock during the 30-day period preceding the date in question on
the NASDAQ or any other system then in use, or if no such quotations are
available, the fair market value on the date in question of a share of
such stock as determined by a majority of the Disinterested Directors in
good faith; and (b) in the case of property other than cash or stock,
the fair market value of such property on the date in question as
determined by a majority of the Disinterested Directors in good faith.
If different classes of Common Equity of the Corporation have different
Fair Market Values based on the determinations to be made
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under subsection (a), then the term "Fair Market Value" of Common Equity
shall mean the highest value then ascribed to a share of any of the
various classes of Common Equity.
J. In the event of any Business Combination in which the Corporation
survives, the phrase "consideration other than cash to be received" as
used in paragraph B of Section 2 of this Article Eighth shall include
the shares of Common Equity and the shares of any other class of
outstanding Voting Shares retained by the holders of such shares.
Section 4. A majority of the Disinterested Directors of the Corporation
shall have the power and duty to determine for the purpose of this Article
Eighth, on the basis of information known to them after reasonable inquiry, (1)
whether a person is an Interested Shareholder, (2) the number of Voting Shares
beneficially owned by any person, (3) whether a person is an Affiliate or
Associate of another, (4) whether the requirements of Section 2 of this Article
Eighth have been met with respect to any Business Combination, and (5) whether
the assets which are subject to any Business Combination have, or the
consideration to be received for the issuance or transfer of securities by this
Corporation or any Subsidiary in any Business Combination has, an aggregate Fair
Market Value of $1,000,000 or more. Any such determination made in good faith
shall be binding and conclusive on all parties.
Section 5. Nothing contained in this Article Eighth shall be construed to
relieve any Interested Shareholder from any fiduciary obligation imposed by law.
Section 6. In addition to any requirements of law and any other provisions
of these Articles or the terms of any class or series of capital stock of the
Corporation entitled to a preference over the Common Equity as to dividends or
upon liquidation, or the terms of any other securities of the Corporation (and
notwithstanding the fact that a lesser percentage may be specified by law, these
Articles or any such terms), the affirmative vote of
A. the holders of two-thirds or more of the combined voting power of the
Voting Shares, voting together as a single class, and
B. two-thirds of the combined voting power of the Voting Shares held by the
Disinterested Shareholders, voting together as a single class,
shall be required to amend, alter or repeal or adopt any provision inconsistent
with, this Article Eighth.
ARTICLE NINTH: The foregoing Second Restated Articles of Incorporation
hereby supersede existing Restated Articles of Incorporation as heretofore
amended.
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ANNEX E
[THE FOLLOWING IS THE COMPANY'S CURRENT CODE OF REGULATIONS]
THE LINCOLN ELECTRIC COMPANY
SECOND 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.
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 at
such date, time and place as may be designated from time to time by the Board of
Directors, 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.
2. SPECIAL MEETINGS. Special meetings of the shareholders may be called by
the President, or an Executive or Senior 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
<PAGE> 82
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 or entered upon the
records of the meeting, either before or after the holding thereof.
5. 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.
6. 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.
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 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 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. Special meetings of the Board
of Directors may be called by the Chairman of the Board of Directors or the
President on one day's notice to each Director by whom such notice is not
waived, given either
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personally or by mail, telephone, telegram, telex, facsimile or similar medium
of communication, and will be called by the Chairman of the Board of Directors
or the President, in like manner and on like notice, on the written request of
not less than one-third of the Board of Directors. 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
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.
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 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
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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 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 1 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.
ARTICLE VI
COMMITTEES
1. CREATION AND ELECTION. The Board of Directors may create, from time to
time and from its own number, an Executive Committee or any other committee or
committees of the Board of Directors to act in the intervals between meetings of
the Board of Directors and may delegate to such committee or committees any of
the authority of the Board of Directors other than that of filling vacancies
among the Board of Directors or in any committee of the Board of Directors. No
committee shall consist of less than three Directors. The Board of Directors may
appoint one or more Directors as alternate members of any such committee, who
may take the place of any absent member or members at a meeting of such
committee. Except as above provided and except to the extent that its powers are
limited by the Directors, the Executive Committee during the intervals between
meetings of the Directors shall possess and may exercise, subject to the control
and direction of the Directors, all of the powers of the Directors in the
management and control of the business of the Corporation, regardless of whether
such powers are specifically conferred by these Regulations. All action taken by
the Executive Committee shall be reported to the Directors at their first
meeting thereafter.
2. QUORUM AND ACTION. Unless otherwise ordered by the Board of Directors,
a majority of the members of any committee appointed by the Board of Directors
pursuant to this Article VI shall constitute a quorum at any meeting thereof,
and the act of a majority of the members present at a meeting at which a quorum
is present shall be the act of such committee. Action may be taken by any such
committee without a meeting by a writing or writings signed by all of its
members. Any such committee shall prescribe its own rules for calling and
holding meetings and its method of procedure, subject to any rules prescribed by
the Board of Directors, and shall keep a written record of all action taken by
it.
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ARTICLE VII
OFFICERS
1. OFFICERS. The Corporation may have a Chairman of the Board and shall
have a President (both of whom shall be Directors), a Secretary and a Chief
Financial Officer (who shall serve as Treasurer under Ohio law). The Corporation
may also have one or more Vice-Presidents and such other officers and assistant
officers as the Board of Directors may deem necessary. All of the officers and
assistant officers shall be elected by the Board of Directors.
2. AUTHORITY AND DUTIES OF OFFICERS. The officers of the Corporation shall
have such authority and shall perform such duties as are customarily incident to
their respective offices, or as may be specified from time to time by the Board
of Directors regardless of whether such authority and duties are customarily
incident to such office.
ARTICLE VIII
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 IX
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
voting power of the Corporation; provided, however, that paragraphs 1 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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ANNEX F
THE LINCOLN ELECTRIC COMPANY
1998 STOCK OPTION PLAN
1. PURPOSE. The purpose of this Plan is to promote share ownership by key
employees of The Lincoln Electric Company, thereby reinforcing a mutuality of
interest with other shareholders, and to enable The Lincoln Electric Company to
attract, retain and motivate key employees by permitting them to share in its
growth. If the Reorganization (as hereinafter defined) is approved by the
shareholders of The Lincoln Electric Company, upon adoption of this Plan by the
Board of Directors of Lincoln Electric Holdings, Inc., this Plan will be renamed
the "Lincoln Electric Holdings, Inc. 1998 Stock Option Plan", and its purpose
will be to promote share ownership by key employees of Lincoln Electric
Holdings, Inc. and its Affiliates (as hereinafter defined).
2. DEFINITIONS. As used in this Plan,
"Affiliate" means (a) a corporation which, for purposes of Section 422 of
the Code, is a parent or subsidiary of the Company, and (b) any other entity in
which the Company has a substantial equity investment, as designated by the
Board.
"Board" means the Board of Directors of the Company and, to the extent of
any delegation by the Board to a committee (or subcommittee thereof) pursuant to
Section 12 of this Plan, such committee (or subcommittee).
"Class A Shares" means the Class A Common Shares, without par value, of The
Lincoln Electric Company.
"Code" means the Internal Revenue Code of 1986, as amended from time to
time, and any successor thereto.
"Common Shares" means the Common Shares, without par value, of The Lincoln
Electric Company.
"Company" means The Lincoln Electric Company, an Ohio corporation, or if
the Reorganization is approved by the shareholders of The Lincoln Electric
Company and this Plan is adopted by the Board of Directors of Lincoln Electric
Holdings, Inc., Lincoln Electric Holdings, Inc., an Ohio corporation.
"Director" means a member of the Board of Directors of the Company.
"Exchange Act" means the Securities Exchange Act of 1934, as amended, and
the rules and regulations thereunder, as such law, rules and regulations may be
amended from time to time.
"Fair Market Value" means, as of any given day, the per share closing price
of a Share on NASDAQ on the day preceding the day such determination is being
made or, if there was no closing price reported on such day, on the most
recently preceding day on which such a closing price was reported; or if the
Shares are not listed or admitted to trading on NASDAQ on the day as of which
the determination is being made, the amount determined by the Board to be the
fair market value of a Share on such day.
"Holding Common Shares" means the Common Shares, without par value, of
Lincoln Electric Holdings, Inc., an Ohio corporation.
"Incentive Stock Options" means Options that are intended to qualify as
"incentive stock options" under Section 422 of the Code or any successor
provision.
"NASDAQ" means the National Association of Securities Dealers Automated
Quotation System.
"Option" means the right to purchase Shares upon exercise of an option
granted pursuant to Section 4 of this Plan.
"Plan" means this 1998 Stock Option Plan of the Company, as amended from
time to time.
"Reorganization" means the reorganization of The Lincoln Electric Company,
as presented to its shareholders at its 1998 annual meeting of shareholders.
<PAGE> 87
"Shares" means the Common Shares and/or the Class A Shares, or if the
Reorganization is approved by the shareholders of The Lincoln Electric Company
and this Plan is adopted by the Board of Directors of Lincoln Electric Holdings,
Inc., the Holding Common Shares, or securities into which any of the foregoing
may be changed by any transaction or event of the type referred to in Section 5
of this Plan.
3. SHARES AVAILABLE.
(a) Subject to adjustment as provided in Section 5 of this Plan, the
total number of Shares which may be issued and sold under Options granted
pursuant to this Plan shall not exceed 1,250,000 Common Shares and
1,250,000 Class A Shares, or if the Reorganization is approved by
shareholders, 5,000,000 Holding Common Shares. Such shares may be treasury
shares or shares of original issue or a combination of the foregoing. All
of such shares may be Incentive Stock Options.
(b) Notwithstanding anything in this Plan to the contrary, but subject
to adjustment as provided in Section 5 of this Plan, (i) the aggregate
number of Shares actually issued or transferred by the Company upon the
exercise of Incentive Stock Options shall not exceed 1,250,000 Common
Shares and 1,250,000 Class A Shares, or if the Reorganization is approved
by shareholders, 5,000,000 Holding Common Shares; and (ii) no individual
participant shall be granted Options under this Plan for more than 250,000
Common Shares and 250,000 Class A Shares, or if the Reorganization is
approved by shareholders, 1,000,000 Holding Common Shares during any single
calendar year.
4. OPTIONS. The Board may, from time to time and upon such terms and
conditions as it may determine, authorize the granting of Options to officers
(including officers who are members of the Board) and other key employees of the
Company or any of its Affiliates. Each such grant may utilize any or all of the
authorizations, and shall be subject to all of the requirements contained in the
following provisions:
(a) Each grant shall specify the number of Shares to which it
pertains, subject to the limitations set forth in Section 3 of this Plan,
and shall specify an option price per share, which may not be less than the
Fair Market Value on the date of grant.
(b) Successive grants may be made to the same optionee whether or not
any Options previously granted to such optionee remains unexercised.
(c) Options granted under this Plan may be (i) options that are
intended to qualify under particular provisions of the Code, including,
without limitation, Incentive Stock Options, (ii) options that are not
intended so to qualify under the Code, or (iii) combinations of the
foregoing. To the extent any Option does not qualify as an Incentive Stock
Option, it shall constitute a separate non-qualified stock option.
(d) Each grant shall specify the period or periods of continuous
service by the optionee with the Company or any of its Affiliates that is
necessary before the Options or installments thereof will become
exercisable and may provide for earlier exercise of the Option, including,
without limitation, in the event of a change in control of the Company or
similar event.
(e) No Option shall be exercisable more than 10 years from the date of
grant.
(f) To the extent required for "Incentive Stock Option" status under
Section 422 of the Code, the aggregate Fair Market Value (determined as of
the date of grant) of the Shares with respect to which Incentive Stock
Options are exercisable for the first time by the optionee during any
calendar year under the Plan and/or any other stock option plan of the
Company (within the meaning of Section 424 of the Code) shall not exceed
$100,000.
(g) An optionee may exercise an Option in whole or in part at any time
and from time to time during the period within which an Option may be
exercised. To exercise an Option, an optionee shall give written notice to
the Company specifying the number of Shares to be purchased and provide
payment of the option price and any other documentation that may be
required by the Company.
(h) The option price shall be payable (i) in cash or by other
consideration acceptable to the Company, (ii) at the discretion of the
Board, by the actual constructive transfer to the Company of Shares owned
by the
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optionee for at least 6 months having a value at the time of exercise equal
to the total option price, or (iii) by a combination of such methods of
payment.
(i) Any grant may provide for deferred payment of the option price
from the proceeds of sale through a broker on a date satisfactory to the
Company of some or all of the Shares to which such exercise relates.
(j) An optionee shall be treated for all purposes as the owner of
record of the number of Shares purchased pursuant to exercise of the Option
(in whole or in part) as of the date the conditions set forth in Section
4(g) are satisfied. Upon the effective exercise of an Option (in whole or
in part), the Board shall deliver to the optionee the number of Shares for
which the Option is exercised, adjusted for any Shares sold or withheld in
connection with such exercise.
(k) Except as otherwise determined by the Board, no Option shall be
transferable by the optionee except by will or the laws of descent and
distribution. Except as otherwise determined by the Board, Options shall be
exercisable during the optionee's lifetime only by the optionee or, in the
event of the optionee's legal incapacity to do so, the optionee's guardian
or legal representative acting on behalf of the optionee in a fiduciary
capacity under state law and court supervision.
(l) The Board may permit optionees to elect, or may require optionees,
to defer the issuance of Shares under this Plan pursuant to such rules,
procedures or programs as it may establish for purposes of this Plan. The
Board also may provide that deferred issuances and settlements include the
payment or crediting of dividend equivalents or interest on the deferral
amounts.
(m) On receipt of written notice to exercise, the Board may, in its
sole discretion, elect to cash out all or part of the portion of the
Option(s) to be exercised by paying the optionee an amount, in cash or
Shares, equal to the excess of the Fair Market Value of the Shares over the
option price on the effective date of such cash-out.
5. ADJUSTMENTS. The Board may make or provide for such adjustments in the
option price and in the number or kind of shares or other securities covered by
outstanding options as the Board in its sole discretion may in good faith
determine to be equitably required in order to prevent dilution or enlargement
of the rights of optionees that would otherwise result from any (a) stock
dividend, stock split, combination of shares, recapitalization or other change
in the capital structure of the Company, (b) merger, consolidation, separation,
reorganization, partial or complete liquidation, issuance of rights or warrants
to purchase stock or (c) other corporate transaction or event having an effect
similar to any of the foregoing. Moreover, in the event of any such transaction
or event, the Board, in its discretion, may provide in substitution for any or
all outstanding options under this Plan such alternative consideration as it, in
good faith, may determine to be equitable in the circumstances and may require
in connection therewith the surrender of all options so replaced. The Board may
also make or provide for such adjustments in the number of shares specified in
Section 3 of this Plan as the Board in its sole discretion, exercised in good
faith, may determine is appropriate to reflect any transaction or event
described in this Section 5; provided, however, that any such adjustment to the
number specified in Section 3(b)(i) shall be made only if and to the extent that
such adjustment would not cause any Option intended to qualify as an Incentive
Stock Option to fail so to qualify.
6. STOCK OPTION AGREEMENT. The form of each Stock Option Agreement shall
be prescribed, and any Stock Option Agreement evidencing an outstanding Option
may with the concurrence of the affected optionee be amended, by the Board,
provided that the terms and conditions of each Stock Option Agreement and
amendment are not inconsistent with this Plan and that no amendment shall
adversely affect the rights of the optionee with respect to any outstanding
Option without the optionee's consent.
7. CANCELLATION OF OPTIONS. The Board may, with the concurrence of the
affected optionee, cancel any option granted under this Plan. In the event of
any such cancellation, the Board may authorize the granting of new options
(which may or may not cover the same number of Shares that had been the subject
of any prior option) in such manner, at such option price and subject to the
same terms, conditions and discretion as would have been applicable under this
Plan had the cancelled options not been granted.
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8. WITHHOLDING. No later than the date as of which an amount first becomes
includible in the gross income of the optionee for applicable income tax
purposes with respect to any Option under the Plan, the optionee shall pay to
the Company, or make arrangements satisfactory to the Board regarding the
payment of, any Federal, state or local taxes of any kind required by law to be
withheld with respect to such amount. Unless otherwise determined by the Board,
the minimum required withholding obligations may be settled with Shares,
including Shares that are part of the award that gives rise to the withholding
requirement. The obligations of the Company under this Plan shall be conditional
on such payment or arrangements and the Company shall, to the extent permitted
by law, have the right to deduct any such taxes from any payment of any kind
otherwise due to the optionee.
9. GOVERNING LAW. The Plan and all Options granted and actions taken
thereunder shall be governed by and construed in accordance with the laws of the
State of Ohio.
10. FRACTIONAL SHARES. The Company shall not be required to issue any
fractional Shares pursuant to this Plan. The Board may provide for the
elimination of fractions or for the settlement of fractions for cash.
11. FOREIGN EMPLOYEES. In order to facilitate the making of any grant
under this Plan, the Board may provide for such special terms for Options to
optionees who are foreign nationals or who are employed by the Company or any
Affiliate outside of the United States of America as the Board may consider
necessary or appropriate to accommodate differences in local law, tax policy or
custom. Moreover, the Board may approve such supplements to or amendments,
restatements or alternative versions of this Plan as it may consider necessary
or appropriate for such purposes, without thereby affecting the terms of this
Plan as in effect for any other purpose, and the Secretary or other appropriate
officer of the Company may certify any such document as having been approved and
adopted in the same manner as this Plan. No such special terms,
supplements,amendments or restatements, however, shall include any provisions
that are inconsistent with the terms of this Plan as then in effect unless this
Plan could have been amended to eliminate such inconsistency without further
approval by the shareholders of the Company.
12. ADMINISTRATION. This Plan shall be administered by the Board, which
may from time to time delegate all or any part of its authority under this Plan
to a committee of not less than three Directors appointed by the Board. The
members of the committee shall be "non-employee directors" within the meaning of
Rule 16b-3 under the Exchange Act (or any successor rule to the same effect) as
in effect from time to time and "outside directors" within the meaning of
Section 162(m) of the Code. To the extent of any such delegation, references in
this Plan to the Board shall also refer to the committee. A majority of the
members of the committee shall constitute a quorum, and any action taken by a
majority of the members of the committee who are present at any meeting of the
committee at which a quorum is present, or any actions of the committee that are
unanimously approved by the members of the committee in writing, shall be the
acts of the committee. The Board shall have the authority to delegate
responsibility and authority for the operation and administration of this Plan,
appoint employees and officers of the Company and Affiliates to act on its
behalf, and employ persons to assist in fulfilling its responsibilities under
this Plan.
13. AMENDMENT. This Plan may be amended from time to time by the Board;
provided, however, that any amendment which must be approved by the shareholders
of the Company in order to comply with the rules of NASDAQ, or if the Shares are
not quoted on NASDAQ, the principal national securities exchange upon which the
Shares are traded or quoted, shall not be effective unless and until such
approval has been obtained. Presentation of this Plan or any amendment hereof
for shareholder approval shall not be construed to limit the Company's authority
to offer similar or dissimilar benefits under other plans without shareholder
approval. Furthermore, no amendment, alteration or discontinuation of this Plan
shall be made which would impair the rights of an optionee with respect to any
outstanding Option under this Plan without the optionee's consent, or which,
without approval of the Company's shareholders, would (a) except as expressly
provided in this Plan, increase the total number of Shares reserved for this
Plan or (b) extend the maximum option period applicable under this Plan.
14. EFFECTIVE DATE. This Plan shall be effective immediately; provided,
however, that the effectiveness of this Plan is conditioned on its approval by
the shareholders of the Company at a meeting duly held in accordance with Ohio
law within 12 months after the date this Plan is adopted by the Board. All
awards under this Plan shall be null and void if the Plan is not approved by the
shareholders within such 12-month period.
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15. TERM. No Option shall be granted pursuant to this Plan on or after the
tenth anniversary of the earlier of the date of shareholder approval or the date
this Plan is adopted by the Board, but awards granted prior to such tenth
anniversary may extend beyond that.
16. AWARDS IN SUBSTITUTION FOR AWARDS GRANTED BY OTHER COMPANIES. To the
extent not otherwise provided in the Plan, Options may be granted under this
Plan in substitution for awards held by employees of a company who become
employees of the Company or an Affiliate as a result of the acquisition, merger
or consolidation of the employer company by or with the Company or an Affiliate.
The terms, provisions and benefits of the substitute awards so granted may vary
from those set forth in or authorized by this Plan to such extent as the Board
at the time of the grant may deem appropriate to conform, in whole or in part,
to the terms, provisions and benefits of awards in substitution for which they
are granted.
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ANNEX G
Section 1701.84 Persons Entitled to Relief as Dissenting Shareholders.
The following are entitled to relief as dissenting shareholders under
section 1701.85 of the Revised Code:
(A) Shareholders of a domestic corporation that is being merged or
consolidated into a surviving or new entity, domestic or foreign, pursuant
to section 1701.78, 1701.781 [1701.78.1], 1701.79, 1701.791 [1701.79.1], or
1701.801 [1701.80.1] of the Revised Code;
(B) In the case of a merger into a domestic corporation, shareholders
of the surviving corporation who under section 1701.78 or 1701.781
[1701.78.1] of the Revised Code are entitled to vote on the adoption of an
agreement of merger, but only as to the shares so entitling them to vote;
(C) Shareholders, other than the parent corporation, of a domestic
subsidiary corporation that is being merged into the domestic or foreign
parent corporation pursuant to section 1701.80 of the Revised Code;
(D) In the case of a combination or a majority share acquisition,
shareholders of the acquiring corporation who under section 1701.83 of the
Revised Code are entitled to vote on such transaction, but only as to the
shares so entitling them to vote;
(E) Shareholders of a domestic subsidiary corporation into which one
or more domestic or foreign corporations are being merged pursuant to
section 1701.801 [1701.80.1] of the Revised Code.
Section 1701.85 Dissenting, Shareholders' Demand for Fair Cash Value of
Shares.
(A)(1) A shareholder of a domestic corporation is entitled to relief as a
dissenting shareholder in respect of the proposals described in sections
1701.74, 1701.76, and 1701.84 of the Revised Code, only in compliance with this
section.
(2) If the proposal must be submitted to the shareholders of the
corporation involved, the dissenting shareholder shall be a record holder of the
shares of the corporation as to which he seeks relief as of the date fixed for
the determination of the shareholders entitled to notice of a meeting of the
shareholders at which the proposal is to be submitted, and such shares shall not
have been voted in favor of the proposal. Not later than ten days after the date
on which the vote on the proposal was taken at the meeting of the shareholders,
the dissenting shareholder shall deliver to the corporation a written demand for
payment to him of the fair cash value of the shares to which he seeks relief,
which demand shall state his address, the number and class of such shares, and
the amount claimed by him as the fair cash value of the shares.
(3) The dissenting shareholder entitled to relief under division (C) of
section 1701.84 of the Revised Code in the case of a merger pursuant to section
1701.80 of the Revised Code and a dissenting shareholder entitled to relief
under division (E) of section 1701.84 of the Revised Code in the case of a
merger pursuant to section 1701.801 [1701.80.1] of the Revised Code shall be a
record holder of the shares of the corporation as to which he seeks relief as of
the date on which the agreement of merger was adopted by the directors of that
corporation. Within twenty days after he has been sent the notice provided in
section 1701.80 or 1701.801 [1701.80.1] of the Revised Code, the dissenting
shareholder shall deliver to the corporation a written demand for payment with
the same information as that provided for in division (A)(2) of this section.
(4) In the case of a merger or consolidation, a demand served on the
constituent corporation involved constitutes service on the surviving or the new
entity, whether the demand is served before, on, or after the effective date of
the merger or consolidation.
(5) If the corporation sends to the dissenting shareholder, at the address
specified in his demand, a request for the certificates representing the shares
as to which he seeks relief, the dissenting shareholder, within fifteen days
from the date of the sending of such request, shall deliver to the corporation
the certificates requested so that the corporation may forthwith endorse on them
a legend to the effect that demand for the fair cash value of such shares had
been made. The corporation promptly shall return such endorsed certificates to
the dissenting shareholder. A dissenting shareholder's failure to deliver such
certificates terminates his rights as a dissenting shareholder, at the option of
the corporation, exercised by written notice sent to the dissenting shareholder
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twenty days after the lapse of the fifteen-day period, unless a court for good
cause shown otherwise directs. If shares represented by a certificate on which
such a legend has been endorsed are transferred, each new certificate issued for
them shall bear a similar legend, together with the name of the original
dissenting holder of such shares. Upon receiving a demand for payment from a
dissenting shareholder who is the record holder of uncertificated securities,
the corporation shall make an appropriate notation of the demand on its records.
If uncertificated securities for which payment has been demanded are to be
transferred, any new certificate issued for the shares shall bear the legend
required for certificated securities as provided in this paragraph. A transferee
of the shares so endorsed, or of uncertificated securities where such notation
has been made, acquires only such rights in the corporation as the original
dissenting holder of such shares had immediately after the service of a demand
for payment of the fair cash value of the shares. A request under this paragraph
by the corporation is not an admission by the corporation that the shareholder
is entitled to relief under this section.
(B) Unless the corporation and the dissenting shareholder have come to an
agreement on the fair cash value per share of the shares as to which the
dissenting shareholder seeks relief, the dissenting shareholder or the
corporation, which in case of a merger or consolidation may be the surviving or
new entity, within three months after the service of the demand by the
dissenting shareholder, may file a complaint in the court of common pleas of the
county in which the principal office of the corporation that issued the shares
is located or was located when the proposal was adopted by the shareholders of
the corporation, or, if the proposal was not required to be submitted to the
shareholders, was approved by the directors. Other dissenting shareholders,
within that three-month period, may join as plaintiffs or may be joined as
defendants in any such proceeding, and any two or more such proceedings may be
consolidated. The complaint shall contain a brief statement of the facts,
including the vote and the facts entitling the dissenting shareholder to the
relief demanded. No answer to such a complaint is required. Upon the filing of
such a complaint, the court, on motion of the petitioner, shall enter an order
fixing a date for a hearing on the complaint and requiring that a copy of the
complaint and a notice of the filing and of the date for hearing be given to the
respondent or defendant in the manner in which summons is required to be served
or substituted service is required to be made in other cases. On the day fixed
for the hearing on the complaint or any adjournment of it, the court shall
determine from the complaint and from such evidence as is submitted by either
party whether the dissenting shareholder is entitled to be paid the fair cash
value of any shares and, if so, the number and class of such shares. If the
court finds that the dissenting shareholder is so entitled, the court may
appoint one or more persons as appraisers to receive evidence and to recommend a
decision on the amount of the fair cash value. The appraisers have such power
and authority as is specified in the order of their appointment. The court
thereupon shall make a finding as to the fair cash value of a share and shall
render judgment against the corporation for the payment of it, with interest at
such rate and from such date as the court considers equitable. The costs of the
proceeding, including reasonable compensation to the appraisers to be fixed by
the court, shall be assessed or apportioned as the court considers equitable.
The proceeding is a special proceeding and final orders in it may be vacated,
modified, or reversed on appeal pursuant to the Rules of Appellate Procedure
and, to the extent not in conflict with those rules, Chapter 2505 of the Revised
Code. If, during the pendency of any proceeding instituted under this section, a
suit or proceeding is or has been instituted to enjoin or otherwise to prevent
the carrying out of the action as to which the shareholder has dissented, the
proceeding instituted under this section shall be stayed until the final
determination of the other suit or proceeding. Unless any provision in division
(D) of this section is applicable, the fair cash value of the shares that is
agreed upon by the parties or fixed under this section shall be paid within
thirty days after the date of final determination of such value under this
division, the effective date of the amendment to the articles, or the
consummation of the other action involved, whichever occurs last. Upon the
occurrence of the last such event, payment shall be made immediately to a holder
of uncertificated securities entitled to such payment. In the case of holders of
shares represented by certificates, payment shall be made only upon and
simultaneously with the surrender to the corporation of the certificates
representing the shares for which the payment is made.
(C) If the proposal was required to be submitted to the shareholders of the
corporation, fair cash value as to those shareholders shall be determined as of
the day prior to the day on which the vote by the shareholders was taken and, in
the case of a merger pursuant to section 1701.80 or 1701.801 [1701.80.1] of the
Revised Code, fair cash value as to shareholders of a constituent subsidiary
corporation shall be determined as of the day before the adoption of the
agreement of merger by the directors of the particular subsidiary corporation.
The fair cash value of a share for the purposes of this section is the amount
that a willing seller who is under no compulsion to sell
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would be willing to accept and that a willing buyer who is under no compulsion
to purchase would be wiling to pay, but in no event shall the fair cash value of
a share exceed the amount specified in the demand of the particular shareholder.
In computing such fair cash value, any appreciation or depreciation in market
value resulting form the proposal submitted to the directors or to the
shareholders shall be excluded.
(D)(1) The right and obligation of a dissenting shareholder to receive such
fair cash value and to sell such shares as to which he seeks relief, and the
right and obligation of the corporation to purchase such shares and to pay the
fair cash value of them terminates if any of the following applies:
(a) the dissenting shareholder has not complied with this section,
unless the corporation by its directors waives such failure;
(b) The corporation abandons the action involved or is finally
enjoined or prevented from carrying it out, or the shareholders rescind
their adoption of the action involved;
(c) The dissenting shareholder withdraws his demand, with the consent
of the corporation by its directors;
(d) The corporation and the dissenting shareholder have not come to an
agreement as to the fair cash value per share, and neither the shareholder
nor the corporation has filed or joined in a complaint under division (B)
of this section within the period provided in that division.
(2) For purposes of division (D)(1) of this section, if the merger or
consolidation has become effective and the surviving or new entity is not a
corporation, action required to be taken by the directors of the corporation
shall be taken by the general partners of a surviving or new partnership or the
comparable representatives of any other surviving or new entity.
(E) From the time of the dissenting shareholder's giving of the demand
until either the termination of the rights and obligations arising from it or
the purchase of the shares by the corporation, all other rights accruing from
such shares, including voting and dividend or distribution rights, are
suspended. If during the suspension, any dividend or distribution is paid in
money upon shares of such class or any dividend, distribution, or interest is
paid in money upon any securities issued in extinguishment of or in substitution
for such shares, an amount equal to the dividend, distribution, or interest
which, except for the suspension, would have been payable upon such shares or
securities, shall be paid to the holder of record as a credit upon the fair cash
value of the shares. If the right to receive fair cash value is terminated other
than by the purchase of the shares by the corporation, all rights of the holder
shall be restored and all distributions which, except for the suspension, would
have been made shall be made to the holder of record of the shares at the time
of termination.
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ANNEX H
SUMMARY OF TERMS OF HOLDING COMMON SHARES
Voting Power
Each Holding Common Share is entitled to one vote on any matter submitted
to the shareholders for their vote, consent, waiver, release or other action.
Cumulative Voting
Cumulative voting rights in the election of directors are eliminated in the
Holding Articles.
Preemptive Rights
The Holding Articles provide that no shareholder shall have any preemptive
right as such shareholder to subscribe for or purchase shares of Lincoln
Electric Holdings.
Dividends
The Holding Articles permit dividends to be declared and paid to the
holders of Holding Common Shares out of funds legally available therefor.
Business Combinations
Under Article Eighth of the Holding Articles, business combinations
involving Lincoln Electric Holdings and the owner of 5% or more of Lincoln
Electric Holdings' Voting Stock (as defined below), must be approved by the
disinterested members of the Board of Directors or by an increased vote of the
disinterested shareholders, or must meet certain minimum price, form of
consideration and procedural requirements designed to ensure fairness to all
shareholders. Specifically, under Article Eighth, unless one of the exceptions
described below applies, any of the transactions described in the following
paragraphs (a) through (f) involving an Interested Shareholder (as defined
below) must be approved by (i) the holders of two-thirds of the voting power of
the outstanding stock of all classes and series of the Company entitled to vote
generally in the election of Directors (the "VOTING STOCK") and (ii) by the
holders of two-thirds of the voting power of the Voting Stock held by
Disinterested Shareholders (as defined below) (the "SPECIAL VOTE REQUIREMENTS"):
(a) a merger or consolidation of Lincoln Electric Holdings or any
subsidiary with an Interested Shareholder or with certain affiliates or
associates of an Interested Shareholder;
(b) a sale, lease, exchange, mortgage, pledge, transfer or other
disposition (in one transaction or a series of transactions whether or not
related) to an Interested Shareholder (or affiliates or associates of an
Interested Shareholder) of any assets of Lincoln Electric Holdings or a
subsidiary having an aggregate fair market value of $1,000,000 or more;
(c) a sale, lease, exchange, mortgage, pledge, transfer or other
disposition (in one transaction or a series of transactions whether or not
related) to or with Lincoln Electric Holdings or a subsidiary of any assets
of an Interested Shareholder (or affiliates or associates of an Interested
Shareholder) having an aggregate fair market value of $1,000,000 or more;
(d) the issuance or sale of securities of Lincoln Electric Holdings or
of a subsidiary to an Interested Shareholder (or affiliates or associates
of an Interested Shareholder) in exchange for cash, securities or other
property (or a combination thereof) having a fair market value of
$1,000,000 or more (except an issuance of securities upon conversion of
convertible securities of Lincoln Electric Holdings or of a subsidiary
which were not acquired by the Interested Shareholder, or such affiliates
or associates, from Lincoln Electric Holdings or from a subsidiary);
<PAGE> 95
(e) the adoption of any plan or proposal for the liquidation or
dissolution of Lincoln Electric Holdings proposed by or on behalf of an
Interested Shareholder (or affiliates or associates of an Interested
Shareholder); or
(f) any reclassification of securities, recapitalization of Lincoln
Electric Holdings or any other transaction which has the effect, directly
or indirectly, of increasing the proportionate share of the outstanding
shares of any class or series of equity securities of Lincoln Electric
Holdings or of a subsidiary beneficially owned by an Interested Shareholder
(or affiliates or associates of an Interested Shareholder).
An "Interested Shareholder" is defined as any person (other than Lincoln
Electric Holdings or any subsidiary or any employee benefit plan or trust of
Lincoln Electric Holdings or any subsidiary) at any particular time who or which
(i) is at such time the beneficial owner, directly or indirectly, of 5% or more
of the voting power of the Voting Stock; (ii) is an affiliate of Lincoln
Electric Holdings and at any time within the two-year period immediately prior
to the date in question was the beneficial owner, directly or indirectly, of 5%
or more of the voting power of the Voting Stock; or (iii) is at such time an
assignee of or has otherwise succeeded to the beneficial ownership of any shares
of Voting Stock which were at any time within the two-year period immediately
prior to the date in question beneficially owned by any Interested Shareholder
(as defined in (i) or (ii) above), if such assignment or succession shall have
occurred in the course of a transaction or series of transactions not involving
a public offering within the meaning of the Securities Act.
A "Disinterested Shareholder" is defined as a shareholder of Lincoln
Electric Holdings who is not an Interested Shareholder (or an affiliate or
associate of an Interested Shareholder) who is involved, directly or indirectly,
in the proposed business combination transaction; provided, however, that with
respect to the vote required for the amendment, alteration, repeal or adoption
of any provision inconsistent with any of the terms of Article Eighth, the term
"Disinterested Shareholder" is defined as a shareholder of Lincoln Electric
Holdings who is not an Interested Shareholder.
The Special Vote Requirements will not be applicable if (i) the proposed
business combination transaction is approved by a majority of the Directors who
are not affiliated with and were not nominated by the Interested Shareholder or
(ii) certain minimum price, form of consideration and procedural requirements
are satisfied.
In the event the Special Vote Requirements do not apply, under Ohio law, a
vote of two-thirds of the voting power of the then Voting Stock would be
required to authorize certain business combinations, such as merger,
consolidation or sale of substantially all the assets of Lincoln Electric
Holdings. In the case of certain other business combinations, no vote of the
shareholders would be required.
Convertibility
None of the Holding Common Shares are convertible into another class of
common equity or any other security of Lincoln Electric Holdings.
H-2
<PAGE> 96
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Article IV of the Registrant's Code of Regulations, which relates to
indemnification of certain persons, including directors and officers of the
Registrant, is set forth in full as part of, and is incorporated herein by
reference to Annex B-2 of the Proxy Statement/Prospectus constituting a part of
this Registration Statement.
Section 1701.13(E) of the Ohio General Corporation Law provides in regard
to indemnification of directors and officers as follows:
Section 1701.13. Authority of Corporation.
* * *
(E)(1) A corporation may indemnify or agree to 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, other than an action by
or in the right of the corporation, 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, member, manager, or agent of another corporation, domestic or
foreign, nonprofit or for profit, a limited liability company, or a
partnership, joint venture, trust, or other enterprise, against expenses,
including attorney's fees, judgments, fines, and amounts paid in settlement
actually and reasonably incurred by him in connection with such action,
suit, or proceeding, if he acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of the
corporation, and, with respect to any criminal action or proceeding, if he
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 person did
not act in good faith and in a manner he reasonably believed to be in or
not opposed to the best interests of the corporation, and, with respect to
any criminal action or proceeding, he had reasonable cause to believe that
his conduct was unlawful.
(2) A corporation may indemnify or agree to indemnify any person who
was or is a party, or is threatened to be made a party, to any threatened,
pending, or completed action or suit by or in the right of the corporation
to procure a judgment in its favor, 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, member, manager, or agent of another corporation, domestic or
foreign, nonprofit or for profit, a limited liability company, or a
partnership, joint venture, trust, or other enterprise, against expenses,
including attorney's fees, actually and reasonably incurred by him in
connection with the defense or settlement of such action or suit, if he
acted in good faith and in a manner he reasonably believed to be in or not
opposed to the best interests of the corporation, except that no
indemnification shall be made in respect of any of the following:
(a) Any claim, issue, or matter as to which such person is adjudged
to be liable for negligence or misconduct in the performance of his duty
to the corporation unless, and only to the extent that, the court of
common pleas or the court in which such action or suit was brought
determines, upon application, that, despite the adjudication of
liability, but in view of all the circumstances of the case, such person
is fairly and reasonably entitled to indemnity for such expenses as the
court of common pleas or such other court shall deem proper;
(b) Any action or suit in which the only liability asserted against
a director is pursuant to section 1701.95 of the Revised Code.
(3) To the extent that a director, trustee, officer, employee, member,
manager, or agent has been successful on the merits or otherwise in defense
of any action, suit, or proceeding referred to in division (E)(1) or (2) of
this section, or in defense of any claim, issue, or matter therein, he
shall be indemnified against expenses, including attorney's fees, actually
and reasonably incurred by him in connection with the action, suit, or
proceeding.
II-1
<PAGE> 97
(4) Any indemnification under division (E)(1) or (2) of this section,
unless ordered by a court, shall be made by the corporation only as
authorized in the specific case, upon a determination that indemnification
of the director, trustee, officer, employee, member, manager, or agent is
proper in the circumstances because he has met the applicable standard of
conduct set forth in division (E)(1) of this section. Such determination
shall be made as follows:
(a) By a majority vote of a quorum consisting of directors of the
indemnifying corporation who were not and are not parties to or
threatened with the action, suit, or proceeding referred to in division
(E)(1) or (2) of this section;
(b) If the quorum described in division (E)(4)(a) of this section
is not obtainable or if a majority vote of a quorum of disinterested
directors so directs, in a written opinion by independent legal counsel
other than an attorney, or a firm having associated with it an attorney,
who has been retained by or who has performed services for the
corporation or any person to be indemnified within the past five years;
(c) By the shareholders;
(d) By the court of common pleas or the court in which the action,
suit, or proceeding referred to in division (E)(1) or (2) of this
section was brought.
Any determination made by the disinterested directors under division
(E)(4)(a) or by independent legal counsel under division (E)(4)(b) of this
section shall be promptly communicated to the person who threatened or
brought the action or suit by or in the right of the corporation under
division (E)(2) of this section, and, within ten days after receipt of such
notification, such person shall have the right to petition the court of
common pleas or the court in which such action or suit was brought to
review the reasonableness of such determination.
(5)(a) Unless at the time of a director's act or omission that is the
subject of an action, suit, or proceeding referred to in division (E)(1) or
(2) of this section, the articles or the regulations of a corporation
state, by specific reference to this division, that the provisions of this
division do not apply to the corporation and unless the only liability
asserted against a director in an action, suit, or proceeding referred to
in division (E)(1) or (2) of this section is pursuant to section 1701.95 of
the Revised Code, expenses, including attorney's fees, incurred by a
director in defending the action, suit, or proceeding shall be paid by the
corporation as they are incurred, in advance of the final disposition of
the action, suit, or proceeding, upon receipt of an undertaking by or on
behalf of the director in which he agrees to do both of the following:
(i) Repay such amount if it is proved by clear and convincing
evidence in a court of competent jurisdiction that his action or failure to
act involved an act or omission undertaken with deliberate intent to cause
injury to the corporation or undertaken with reckless disregard for the
best interest of the corporation;
(ii) Reasonably cooperate with the corporation concerning the
action, suit, or proceeding.
(b) Expenses, including attorney's fees, incurred by a director,
trustee, officer, employee, member, manager, or agent in defending any
action, suit, or proceeding referred to in division (E)(1) or (2) of
this section, may be paid by the corporation as they are incurred, in
advance of the final disposition of the action, suit, or proceeding, as
authorized by the directors in the specific case, upon receipt of an
undertaking by or on behalf of the director, trustee, officer, employee,
member, manager, or agent to repay such amount, if it ultimately is
determined that he is not entitled to be indemnified by the corporation.
(6) The indemnification authorized by this section shall not be
exclusive of, and shall be in addition to, any other rights granted to
those seeking indemnification under the articles, the regulations, any
agreement, a vote of shareholders or disinterested directors, or otherwise,
both as to action in their official capacities and as to action in another
capacity while holding their offices or positions, and shall continue as to
a person who has ceased to be a director, trustee, officer, employee,
member, manager, or agent and shall inure to the benefit of the heirs,
executors, and administrators of such a person.
(7) A 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
II-2
<PAGE> 98
as a director, trustee, officer, employee, member, manager, or agent of
another corporation, domestic or foreign, nonprofit or for profit, a
limited liability company, or a 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 section. Insurance may be purchased from or maintained
with a person in which the corporation has a financial interest.
(8) The authority of a corporation to indemnify persons pursuant to
division (E)(1) or (2) of this section does not limit the payment of
expenses as they are incurred, indemnification, insurance, or other
protection that may be provided pursuant to divisions (E)(5), (6), and (7)
of this section. Divisions (E)(1) and (2) of this section do not create any
obligation to repay or return payments made by the corporation pursuant to
division (E)(5), (6), or (7).
(9) As used in division (E) of this section, "corporation" includes
all constituent entities in a consolidation or merger and the new or
surviving corporation, so that any person who is or was a director,
officer, employee, trustee, member, manager, or agent of such a constituent
entity, or is or was serving at the request of such constituent entity as a
director, trustee, officer, employee, member, manager, or agent of another
corporation, domestic or foreign, nonprofit or for profit, a limited
liability company, or a partnership, joint venture, trust, or other
enterprise, shall stand in the same position under this section with
respect to the new or surviving corporation as he would if he had served
the new or surviving corporation in the same capacity.
* * *
It is anticipated that the Registrant will obtain a directors' and
officers' liability insurance policy, pursuant to which the directors and
officers of the Registrant will be insured against certain liabilities,
including certain liabilities under the Securities Act of 1933, as amended.
<TABLE>
<CAPTION>
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
-------- -------------------------------------------
<S> <C>
1 Inapplicable
2 Agreement of Merger dated as of , 1998 made by
and among Lincoln Electric Merger Co., The Lincoln Electric
Company and Lincoln Electric Holdings, Inc. (filed as Annex
A to this Proxy Statement/Prospectus constituting a part of
this Registration Statement)
3(a) Restated Articles of Incorporation of Lincoln Electric
Holdings, Inc. (filed as Annex B to this Proxy
Statement/Prospectus constituting a part of this
Registration Statement).
3(b) Code of Regulations of Lincoln Electric Holdings, Inc.
(filed as Annex C to this Proxy Statement/Prospectus
constituting a part of this Registration Statement).
3(c) Second Restated Articles of Incorporation of The Lincoln
Electric Company (filed as Annex D to this Proxy
Statement/Prospectus constituting a part of this
Registration Statement).
3(d) Second Restated Code of Regulations of The Lincoln Electric
Company (filed as Annex E to this Proxy Statement/Prospectus
constituting a part of this Registration Statement).
4(a) Form of Certificate of a Common Share of Lincoln Electric
Holdings, Inc.
</TABLE>
II-3
<PAGE> 99
<TABLE>
<CAPTION>
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
-------- -------------------------------------------
<S> <C>
4(b) Note Agreement dated November 20, 1991 between The
Prudential Insurance Company of America and The Lincoln
Electric Company (filed as Exhibit 4 to Form 10-K of The
Lincoln Electric Company for the year ended December 31,
1991, SEC File No. 0-1402 and incorporated by reference and
made a part hereof), as amended by letter dated March 18,
1993; 8.98% Senior Note Due November 26, 2003 (filed as
Exhibit 4(a) to Form 10-K of The Lincoln Electric Company
for the year ended December 31, 1992, SEC File No. 0-1402
and incorporated herein by reference and made a part
hereof); as further amended by letter dated as of November
19, 1993; 8.98% Senior Note Due November 26, 2003 (filed as
Exhibit 4(a) to Form 10-K of The Lincoln Electric Company
for the year ended December 31, 1993, SEC File No. 0-1402
and incorporated herein by reference and made a part
hereof); as further amended by letter dated October 31, 1994
(filed as Exhibit 4(a) to Form 10-Q of The Lincoln Electric
Company for the period ended September 30, 1994, SEC File
No. 0-1402 and incorporated herein by reference and made a
part hereof); and as further amended by letter dated
December 20, 1995 (filed as Exhibit 4(a) to Form 10-K of The
Lincoln Electric Company for the year ended December 31,
1995, SEC File No. 0-1402 and incorporated herein by
reference and made a part hereof).
4(c) Credit Agreement dated December 20, 1995 among the Company,
the Banks listed on the signature page thereof, and Society
National Bank, as Agent (filed as Exhibit 4(b) to Form 10-K
of The Lincoln Electric Company for the year ended December
31, 1995, SEC File No. 0-1402 and incorporated herein by
reference and made a part hereof).
5 Form of opinion and consent of Jones, Day, Reavis & Pogue.
10(a) The Lincoln Electric Company 1988 Incentive Equity Plan
(filed as Exhibit 28 to the Form S-8 Registration Statement
of The Lincoln Electric Company, SEC File No. 33-25209 and
incorporated herein by reference and made a part hereof).
10(b) Form of Indemnification Agreement (filed as Exhibit 10(b) to
Annual Report on Form 10-K of The Lincoln Electric Company
for the fiscal year ended December 31, 1994, SEC File No.
0-1402 and incorporated herein by reference).
10(c) The Lincoln Electric Company Supplemental Executive
Retirement Plan, as amended (filed as Exhibit 10(c) to
Annual Report on Form 10-K of The Lincoln Electric Company
for the fiscal year ended December 31, 1995, SEC File No.
0-1402 and incorporated herein by reference and made a part
hereof).
10(d) The Lincoln Electric Company Deferred Compensation Plan, as
amended (filed as Exhibit 10(d) to Annual Report on Form
10-K of The Lincoln Electric Company for the fiscal year
ended December 31, 1995, SEC File No. 0-1402 and
incorporated herein by reference and made a part hereof).
10(e) Description of Management Incentive Plan (filed as Exhibit
10(e) to Annual Report on Form 10-K of The Lincoln Electric
Company for the fiscal year ended December 31, 1995, SEC
File No. 0-1402 and incorporated herein by reference and
made a part hereof).
10(f) Description of Non-Employee Directors' Restricted Stock Plan
(filed as Exhibit 10(f) to Annual Report on Form 10-K of The
Lincoln Electric Company for the fiscal year ended December
31, 1995, SEC File No. 0-1402 and incorporated herein by
reference and made a part hereof).
10(g) The Lincoln Electric Company Non-Employee Directors'
Deferred Compensation Plan (filed as Exhibit 10(g) to Annual
Report on Form 10-K of The Lincoln Electric Company for the
fiscal year ended December 31, 1995, SEC File No. 0-1402 and
incorporated herein by reference and made a part hereof).
10(h) Description of Long Term Performance Plan of The Lincoln
Electric Company (filed as Exhibit 10(f) to Annual Report on
Form 10-K of The Lincoln Electric Company for the fiscal
year ended December 31, 1997, SEC File No. 0-1402, and
incorporated herein by reference).
10(i) Employment Agreement between The Lincoln Electric Company
and Anthony A. Massaro dated July 14, 1993, as amended on
January 1, 1994 (filed as Exhibit 10(e) to Annual Report on
Form 10-K of The Lincoln Electric Company for the fiscal
year ended December 31, 1994, SEC File No. 0-1402, and
incorporated herein by reference).
</TABLE>
II-4
<PAGE> 100
<TABLE>
<CAPTION>
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
-------- -------------------------------------------
<S> <C>
10(j) Employment Agreement between The Lincoln Electric Company
and H. Jay Elliott dated June 22, 1993 (filed as Exhibit
10(f) to Annual Report on Form 10-K of The Lincoln Electric
Company for the fiscal year ended December 31, 1994, SEC
File No. 0-1402, and incorporated herein by reference).
10(k) Employment Agreement between The Lincoln Electric Company
and Frederick G. Stueber dated February 22, 1995 (filed as
Exhibit 10(g) to Annual Report on Form 10-K of The Lincoln
Electric Company for the fiscal year ended December 31,
1994, SEC File No. 0-1402, and incorporated herein by
reference).
10(l) Employment Agreement between The Lincoln Electric Company
and Raymond S. Vogt (filed as Exhibit 10(m) to Annual Report
on Form 10-K of The Lincoln Electric Company for the fiscal
year ended December 31, 1997, SEC File No. 0-1402, and
incorporated herein by reference).
10(m) The Lincoln Electric Company 1998 Stock Option Plan (filed
as Annex F to this Proxy Statement/Prospectus constituting
part of this Registration Statement).
10(n) The Lincoln Electric Company Executive Benefit Plan (filed
as Exhibit 10(l) to Annual Report on Form 10-K of The
Lincoln Electric Company for the fiscal year ended December
31, 1997, SEC File No. 0-1402, and incorporated herein by
reference).
13 Annual Report on Form 10-K of The Lincoln Electric Company
for the fiscal year ended December 31, 1997 (incorporated
herein by reference to such report as filed with the
Securities and Exchange Commission by The Lincoln Electric
Company, Securities and Exchange Commission File No.
0-1402).
21 Subsidiaries.
23(a) Consent of Ernst & Young LLP, independent public
accountants.
23(b) Consent of Jones, Day, Reavis & Pogue (incorporated herein
by reference to Exhibit 5 hereto).
24(a) Power of attorney for each director and officer of Lincoln
Electric Holdings, Inc. signing this Registration Statement.
</TABLE>
ITEM 22. UNDERTAKINGS.
(a) The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
Registrant's annual report pursuant to section'13(a) or section 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
(b) The undersigned Registrant hereby undertakes to respond to requests for
information that is incorporated by reference into the prospectus pursuant to
Items 4, 10(b), 11, or 13 of this Form, within one business day of receipt of
such request, and to send the incorporated documents by first class mail or
other equally prompt means. This includes information contained in documents
filed subsequent to the effective date of the Registration Statement through the
date of responding to the request.
(c) The undersigned Registrant hereby undertakes to supply by means of
post-effective amendment all information concerning a transaction, and the
company being acquired involved therein, that was not the subject of and
included in the Registration Statement when it became effective.
(d) The undersigned Registrant hereby undertakes to deliver or cause to be
delivered with the prospectus, to each person to whom the prospectus is sent or
given, the latest annual report to security holders that is incorporated by
reference in the prospectus and furnished pursuant to and meeting the
requirements of Rule 14a-3 or Rule 14c-3 under the Securities Exchange Act of
1934; and, where interim financial information required to be presented by
Article 3 of Regulation S-X are not set forth in the prospectus, to deliver, or
cause to be delivered to each person to whom the prospectus is sent or given,
the latest quarterly report that is specifically incorporated by reference in
the prospectus to provide such interim financial information.
II-5
<PAGE> 101
(e) The undersigned Registrant hereby undertakes as follows: that prior to
any public reoffering of the securities registered hereunder through use of a
prospectus which is a part of this Registration Statement, by any person or
party who is deemed to be an underwriter within the meaning of Rule 145(c), the
issuer undertakes that such reoffering prospectus will contain the information
called for by the applicable registration form with respect to reofferings by
persons who may be deemed underwriters, in addition to the information called
for by the other Items of the applicable form.
(f) The Registrant undertakes that every prospectus (i) that is filed
pursuant to paragraph (e) immediately preceding, or (ii) that purports to meet
the requirements of section 10(a)(3) of the Securities Act of 1933 and is used
in connection with an offering of securities subject to Rule 415, will be filed
as a part of an amendment to the registration statement and will not be used
until such amendment is effective, and that, for purposes of determining any
liability under the Securities Act of 1933, each such post-effective amendment
shall be deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
(g) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the Registrant pursuant to the foregoing provisions, or otherwise, the
Registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Registrant of expenses
incurred or paid by a director, officer or controlling person of the Registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
II-6
<PAGE> 102
SIGNATURES
Pursuant to the requirements of the Securities Act, the Registrant has duly
caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Cleveland, State of Ohio,
on April 17, 1998.
LINCOLN ELECTRIC HOLDINGS, INC.
By /s/ H. JAY ELLIOTT
------------------------------------
H. Jay Elliott
Chief Financial Officer and
Treasurer
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<C> <S>
* April 17, 1998
- --------------------------------------------
Anthony A. Massaro
Director, Chairman, President and Chief
Executive
Officer
(principal executive officer)
/s/ H. JAY ELLIOTT April 17, 1998
- --------------------------------------------
H. Jay Elliott
Chief Financial Officer and Treasurer
(principal financial and accounting officer)
* April 17, 1998
- --------------------------------------------
John M. Stropki, Jr.
Director
</TABLE>
* The undersigned by signing his name hereto, does sign and execute this
Registration Statement pursuant to the Powers of Attorney executed by the
above-named officers and directors of the Registrant and which are being filed
herewith with the Securities and Exchange Commission on behalf of such
officers and directors.
<TABLE>
<C> <S>
/s/ H. JAY ELLIOTT April 17, 1998
- --------------------------------------------
H. Jay Elliott, Attorney-in-Fact
</TABLE>
II-7
<PAGE> 1
Exhibit 4(a)
CUSIP
INCORPORATED UNDER THE LAWS OF THE STATE OF OHIO
LINCOLN ELECTRIC HOLDINGS, INC.
CLEVELAND, OHIO
THIS CERTIFIES THAT
is the owner of Common Shares
without par value, fully paid and non-assessable, of
LINCOLN ELECTRIC HOLDINGS, INC.
transferable on the books of said Company in person or by duly
authorized attorney upon surrender of this Certificate duly
endorsed.
This certificate shall not be valid until countersigned by
the Transfer Agent and registered by the registrar.
WITNESS the seal of the Company and the signatures of its
duly authorized officers.
Dated:
<TABLE>
<CAPTION>
<S> /s/ Frederick G. Stueber <C> /s/ Anthony A. Massaro
- ------------------------------------------------ ------------------------------------------------
Secretary Chairman of the Board
</TABLE>
(linseal.eps LOGO)
Countersigned and Registered
HARRIS TRUST AND SAVINGS BANK
(Chicago, IL)
Transfer Agent and Registrar
By
Authorized Signature
<PAGE> 2
Lincoln Electric Holdings, Inc. will furnish without charge to each shareholder
who so requests, within five days after receipt of such request, a statement of
the express terms of shares which Lincoln Electric Holdings, Inc. is authorized
to issue. Any such request is to be in writing and addressed to the Secretary of
Lincoln Electric Holdings, Inc., 22801 St. Clair Avenue, Cleveland, Ohio
44117-1199, or to the Transfer Agent named on the face of this certificate.
For value received ___________________ hereby sell, assign, and transfer unto
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
of the Shares represented by the within Certificate
and do hereby irrevocably constitute and appoint
_____________________________________________________________________ Attorney
to transfer the said Shares on the Books of the within named Company with full
power of substitution in the premises
Dated ________________________
In Presence of ________________________________________________________
______________________________
NOTICE THE SIGNATURE OF THIS ASSIGNMENT MUST
CORRESPOND WITH THE NAME AS WRITTEN UPON THE FACE OF
THIS CERTIFICATE IN EVERY PARTICULAR WITHOUT
ALTERATION OR ENLARGEMENT OR ANY CHANGE WHATEVER
<PAGE> 1
Exhibit 5
April 17, 1998
Lincoln Electric Holdings, Inc.
22801 St. Clair Avenue
Cleveland, OH 44117
Re: Registration of 49,512,614 Common Shares, no par value per
share, of Lincoln Electric Holdings, Inc. under the
Securities Act of 1933 in connection with the Agreement of
Merger referred to below
-----------------------------------------------------------
Ladies and Gentlemen:
We have acted as counsel for Lincoln Electric Holdings, Inc.,
an Ohio corporation ("HOLDING COMPANY"), in connection with the Agreement of
Merger (the "AGREEMENT OF MERGER") to be entered into by and among Lincoln
Electric Merger Co., an Ohio corporation ("MERGER CO."), The Lincoln Electric
Company, an Ohio corporation ("LINCOLN"), and Holding Company. The Agreement of
Merger, among other things, provides for (a) the merger of Merger Co. with and
into Lincoln (the "MERGER") and, incident thereto, the conversion of each of
the Common Shares, without par value, and Class A Common Shares, without par
value, of Lincoln outstanding immediately prior to the Merger into two Common
Shares, without par value, of Holding Company ("HOLDING COMMON SHARES"), and
(b) the assumption by Holding Company of the obligations of Lincoln under
grants of options for Class A Common Shares of Lincoln in connection with the
settlement in April, 1996 of a class action litigation arising from an
incentive plan of Lincoln (the "SETTLEMENT") pursuant to which Holding Company
may issue or sell Holding Common Shares (the "LITIGATION SHARES") after the
effective time of the Merger.
We have examined such documents, records and matters of law as
we have deemed necessary for purposes of this opinion, and based thereon, but
subject to the assumptions and qualifications set forth below, we are of the
opinion that:
1. The Holding Common Shares to be issued upon consummation of
the Merger will be duly authorized and, upon the filings
intended to effect the Merger in
<PAGE> 2
Lincoln Electric Holdings, Inc.
April 17, 1998
Page 2
accordance with the Agreement of Merger and the laws of the
State of Ohio, will be validly issued, fully paid and
nonassessable.
2. The Litigation Shares will be, when issued or sold in
accordance with the Agreement of Merger, the Settlement and
the option agreements relating to the Settlement, duly
authorized, validly issued, fully paid and nonassessable.
This opinion is subject to the following assumptions: (a) we
have assumed that the Merger has been approved by the board of directors and
shareholders of each of Holding Company, Merger Co. and Lincoln, (b) we have
assumed that, as of the Effective Time (as defined in the Agreement of Merger),
the articles of incorporation of Holding Company will be as set forth in the
Restated Articles of Incorporation of Holding Company that appear as Annex B to
the Prospectus (the "RESTATED ARTICLES OF INCORPORATION"), (c) we have assumed
that the obligations of Lincoln under the Settlement and the Agreement of
Merger to issue the Litigation Shares have been duly assumed by Holding
Company, and (d) we have assumed that Holding Company will not authorize, issue
or reserve for issuance a number of Holding Common Shares which, when added to
the number of Holding Common Shares which are subject to this opinion, would
exceed the maximum number of Holding Common Shares authorized pursuant to the
Restated Articles of Incorporation.
We hereby consent to the filing of this opinion as Exhibit 5
to the Registration Statement on Form S-4 filed by you to effect registration
of the Holding Common Shares under the Securities Act of 1933, as amended, and
to the references to us under the caption "Item No. 2 - Reorganization --
Federal and Ohio Income Tax Consequences of the Merger, and -- Legal Matters"
in the Prospectus constituting a part of such Registration Statement.
Very truly yours,
Jones, Day, Reavis & Pogue
<PAGE> 1
EXHIBIT 21
LINCOLN ELECTRIC HOLDINGS, INC.
SUBSIDIARIES OF THE REGISTRANT
The Registrant has only the following subsidiary, which is wholly owned by the
Registrant:
Lincoln Electric Merger Co. - Ohio corporation
<PAGE> 1
Exhibit 23(a)
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Experts" in the
Registration Statement (Form S-4) of Lincoln Electric Holdings, Inc. and
related Proxy Statement-Prospectus of The Lincoln Electric Company and Lincoln
Electric Holdings, Inc. for the registration of 49,512,614 shares of its common
stock and to the incorporation by reference therein of our report dated
February 9, 1998, with respect to the consolidated financial statements and
schedule of The Lincoln Electric Company included in its Annual Report (Form
10-K) for the year ended December 31, 1997, filed with the Securities and
Exchange Commission.
April 17, 1998
Cleveland, Ohio
<PAGE> 1
Exhibit 24(a)
DIRECTOR AND OFFICER OF
LINCOLN ELECTRIC HOLDINGS, INC.
REGISTRATION STATEMENT ON FORM S-4
POWER OF ATTORNEY
The undersigned director and officer of Lincoln Electric Holdings, Inc., an
Ohio corporation (the "Corporation"), hereby constitutes and appoints H. Jay
Elliott and Frederick G. Stueber, or any of them, with full power of
substitution and resubstitution, as attorneys or attorney of the undersigned,
for him or her and in his or her name, place and stead, to sign and file under
the Securities Act of 1933 one or more Registration Statement(s) on Form S-4
relating to the registration for sale of the Corporation's common shares,
without par value, and any and all amendments, supplements and exhibits thereto,
including pre-effective and post-effective amendments or supplements, and any
and all applications or other documents to be filed with the Securities and
Exchange Commission pertaining to such registration(s), with full power and
authority to do and perform any and all acts and things whatsoever required and
necessary to be done in the premises, hereby ratifying and approving the act of
said attorneys and any of them and any such substitute.
EXECUTED as of April 6, 1998.
/s/ Anthony A. Massaro
------------------------------
Anthony A. Massaro
Director, Chairman, President
and Chief Executive Officer
<PAGE> 2
Exhibit 24(a)
OFFICER OF
LINCOLN ELECTRIC HOLDINGS, INC.
REGISTRATION STATEMENT ON FORM S-4
POWER OF ATTORNEY
The undersigned officer of Lincoln Electric Holdings, Inc., an Ohio
corporation (the "Corporation"), hereby constitutes and appoints Frederick G.
Stueber with full power of substitution and resubstitution, as attorney of the
undersigned, for him or her and in his or her name, place and stead, to sign
and file under the Securities Act of 1933 one or more Registration Statement(s)
on Form S-4 relating to the registration for sale of the Corporation's common
shares, without par value, and any and all amendments, supplements and exhibits
thereto, including pre-effective and post-effective amendments or supplements,
and any and all applications or other documents to be filed with the Securities
and Exchange Commission pertaining to such registration(s), with full power and
authority to do and perform any and all acts and things whatsoever required and
necessary to be done in the premises, hereby ratifying and approving the act
of said attorneys and any of them and any such substitute.
EXECUTED as of April 3rd, 1998
/s/ H. Jay Elliott
------------------
H. Jay Elliott, Chief Financial Officer
and Treasurer
<PAGE> 3
Exhibit 24(a)
DIRECTOR OF
LINCOLN ELECTRIC HOLDINGS, INC.
REGISTRATION STATEMENT ON FORM S-4
POWER OF ATTORNEY
The undersigned director of Lincoln Electric Holdings, Inc., an Ohio
corporation (the "Corporation"), hereby constitutes and appoints H. Jay Elliott
and Frederick G. Stueber, or any of them, with full power of substitution and
resubstitution, as attorneys or attorney of the undersigned, for him or her and
in his or her name, place and stead, to sign and file under the Securities Act
of 1933 one or more Registration Statement(s) on Form S-4 relating to the
registration for sale of the Corporation's common shares, without par value, and
any and all amendments, supplements and exhibits thereto, including
pre-effective and post-effective amendments or supplements, and any and all
applications or other documents to be filed with the Securities and Exchange
Commission pertaining to such registration(s), with full power and authority to
do and perform any and all acts and things whatsoever required and necessary to
be done in the premises, hereby ratifying and approving the act of said
attorneys and any of them and any such substitute.
EXECUTED as of April 6, 1998.
/s/ John M. Stropki
----------------------------------
John M. Stropki, Jr., Director
<PAGE> 1
PROXY PROXY
THE LINCOLN ELECTRIC COMPANY
PROXY FOR 1998 ANNUAL MEETING OF SHAREHOLDERS
(SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS)
CLASS A COMMON SHARES
The undersigned hereby appoints Anthony A. Massaro, H. Jay Elliott and Frederick
G. Stueber, and each of them, as Proxies, with full power of substitution, to
vote and act on behalf of the undersigned at the Annual Meeting of Shareholders
of The Lincoln Electric Company to be held at the Wellington Center, 777 Alpha
Drive, Highland Heights, Ohio 44143, on May 19, 1998, at 4:00 p.m., or at any
adjournment thereof, on all matters properly coming before the meeting and on
which holders of Class A Common Shares are entitled to vote.
(change of address)
_________________________________
_________________________________
_________________________________
_________________________________
(If you have written in the above
space, please mark the
corresponding box on the reverse
side of this card.)
[SEE REVERSE SIDE]
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED HEREIN
BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE
VOTED FOR THE REORGANIZATION (ITEM 2).
................................................................................
FOLD AND DETACH HERE
YOUR VOTE IS IMPORTANT
PLEASE VOTE, SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY
USING THE ENCLOSED ENVELOPE.
<PAGE> 2
THE LINCOLN ELECTRIC COMPANY
PLEASE MARK DIRECTIONS IN BOXES IN THE FOLLOWING MANNER USING DARK
INK ONLY.
[ ]
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" ITEM 2
FOR AGAINST ABSTAIN
Item 2. REORGANIZATION [ ] [ ] [ ]
In their discretion, the Proxies
are authorized to vote upon such
other business as may properly
come before this meeting and on
which holders of Class A Common
Shares are entitled to vote.
Change of Address [ ]
Dated: ___________________, 1998
Signature(s)____________________
________________________________
NOTE: Please sign exactly as
name appears hereon. Joint owners
should each sign. When signing as
attorney, executor, administrator,
trustee or guardian, please give
full title as such.
................................................................................
FOLD AND DETACH HERE
YOUR VOTE IS IMPORTANT
PLEASE VOTE, SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY
USING THE ENCLOSED ENVELOPE.
<PAGE> 3
THE LINCOLN ELECTRIC COMPANY EMPLOYEE SAVINGS PLAN
VOTING DIRECTION FORM FOR 1998 ANNUAL MEETING OF
SHAREHOLDERS OF THE LINCOLN ELECTRIC COMPANY
CLASS A COMMON SHARES
THIS VOTING DIRECTION FORM, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER
DIRECTED HEREIN BY THE UNDERSIGNED PARTICIPANT OR BENEFICIARY.
[SEE REVERSE SIDE]
................................................................................
FOLD AND DETACH HERE
YOUR VOTE IS IMPORTANT
PLEASE VOTE, SIGN, DATE AND RETURN THIS PROXY CARD
PROMPTLY USING THE ENCLOSED ENVELOPE.
<PAGE> 4
THE LINCOLN ELECTRIC COMPANY
PLEASE MARK DIRECTIONS IN BOXES IN THE FOLLOWING MANNER USING DARK
INK ONLY.
[ ]
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" ITEM 2
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
Item 2. REORGANIZATION
In their discretion, the
Proxies are authorized to
vote upon such other
business as may properly
come before this meeting.
Dated:_______________, 1998
Signature(s)_______________
___________________________
NOTE: Please return this
voting direction form in the
enclosed envelope for receipt
by 5:00 P.M., Eastern Standard
Time, May 12, 1998. No postage
is required if mailed in the
United States.
................................................................................
FOLD AND DETACH HERE
YOUR VOTE IS IMPORTANT
PLEASE VOTE, SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY
USING THE ENCLOSED ENVELOPE.
<PAGE> 5
PROXY PROXY
THE LINCOLN ELECTRIC COMPANY
PROXY FOR 1998 ANNUAL MEETING OF SHAREHOLDERS
(SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS)
COMMON SHARES
The undersigned hereby appoints Anthony A. Massaro, H. Jay Elliott and Frederick
G. Stueber, and each of them, as Proxies, with full power of substitution, to
vote and act on behalf of the undersigned at the Annual Meeting of Shareholders
of The Lincoln Electric Company to be held at the Wellington Center, 777 Alpha
Drive, Highland Heights, Ohio 44143, on May 19, 1998, at 4:00 p.m., or at any
adjournment thereof, on all matters properly coming before the meeting.
<TABLE>
<S> <C>
ELECTION OF DIRECTORS FOR TERM ENDING 2001: (change of address)
Nominees: Kathryn Jo Lincoln ____________________________________________________________
Anthony A. Massaro
G. Russell Lincoln ____________________________________________________________
ELECTION OF DIRECTOR FOR TERM ENDING 2000: ____________________________________________________________
Nominee: John M. Stropki, Jr. ____________________________________________________________
ELECTION OF DIRECTOR FOR TERM ENDING 1999: (If you have written in the above space, please mark the
corresponding box on the reverse side of this card.)
Nominee: Craig R. Smith
</TABLE>
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED HEREIN
BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE
VOTED FOR THE ELECTION OF THE DIRECTOR NOMINEES LISTED ABOVE, FOR THE
REORGANIZATION (Item 2), FOR THE 1998 STOCK OPTION PLAN (Item 3), AND FOR
RATIFICATION OF THE INDEPENDENT AUDITORS (Item 4).
[SEE REVERSE SIDE]
................................................................................
FOLD AND DETACH HERE
YOUR VOTE IS IMPORTANT
PLEASE VOTE, SIGN, DATE AND RETURN THIS PROXY CARD
PROMPTLY USING THE ENCLOSED ENVELOPE.
<PAGE> 6
Exhibit 5
April 17, 1998
Lincoln Electric Holdings, Inc.
22801 St. Clair Avenue
Cleveland, OH 44117
Re: Registration of 49,512,614 Common Shares, no par value per
share, of Lincoln Electric Holdings, Inc. under the
Securities Act of 1933 in connection with the Agreement of
Merger referred to below
-----------------------------------------------------------
Ladies and Gentlemen:
We have acted as counsel for Lincoln Electric Holdings, Inc.,
an Ohio corporation ("HOLDING COMPANY"), in connection with the Agreement of
Merger (the "AGREEMENT OF MERGER") to be entered into by and among Lincoln
Electric Merger Co., an Ohio corporation ("MERGER CO."), The Lincoln Electric
Company, an Ohio corporation ("LINCOLN"), and Holding Company. The Agreement of
Merger, among other things, provides for (a) the merger of Merger Co. with and
into Lincoln (the "MERGER") and, incident thereto, the conversion of each of
the Common Shares, without par value, and Class A Common Shares, without par
value, of Lincoln outstanding immediately prior to the Merger into two Common
Shares, without par value, of Holding Company ("HOLDING COMMON SHARES"), and
(b) the assumption by Holding Company of the obligations of Lincoln under
grants of options for Class A Common Shares of Lincoln in connection with the
settlement in April, 1996 of a class action litigation arising from an
incentive plan of Lincoln (the "SETTLEMENT") pursuant to which Holding Company
may issue or sell Holding Common Shares (the "LITIGATION SHARES") after the
effective time of the Merger.
We have examined such documents, records and matters of law as
we have deemed necessary for purposes of this opinion, and based thereon, but
subject to the assumptions and qualifications set forth below, we are of the
opinion that:
1. The Holding Common Shares to be issued upon consummation of
the Merger will be duly authorized and, upon the filings
intended to effect the Merger in
<PAGE> 7
Lincoln Electric Holdings, Inc.
April 17, 1998
Page 2
accordance with the Agreement of Merger and the laws of the
State of Ohio, will be validly issued, fully paid and
nonassessable.
2. The Litigation Shares will be, when issued or sold in
accordance with the Agreement of Merger, the Settlement and
the option agreements relating to the Settlement, duly
authorized, validly issued, fully paid and nonassessable.
This opinion is subject to the following assumptions: (a) we
have assumed that the Merger has been approved by the board of directors and
shareholders of each of Holding Company, Merger Co. and Lincoln, (b) we have
assumed that, as of the Effective Time (as defined in the Agreement of Merger),
the articles of incorporation of Holding Company will be as set forth in the
Restated Articles of Incorporation of Holding Company that appear as Annex B to
the Prospectus (the "RESTATED ARTICLES OF INCORPORATION"), (c) we have assumed
that the obligations of Lincoln under the Settlement and the Agreement of
Merger to issue the Litigation Shares have been duly assumed by Holding
Company, and (d) we have assumed that Holding Company will not authorize, issue
or reserve for issuance a number of Holding Common Shares which, when added to
the number of Holding Common Shares which are subject to this opinion, would
exceed the maximum number of Holding Common Shares authorized pursuant to the
Restated Articles of Incorporation.
We hereby consent to the filing of this opinion as Exhibit 5
to the Registration Statement on Form S-4 filed by you to effect registration
of the Holding Common Shares under the Securities Act of 1933, as amended, and
to the references to us under the caption "Item No. 2 - Reorganization --
Federal and Ohio Income Tax Consequences of the Merger, and -- Legal Matters"
in the Prospectus constituting a part of such Registration Statement.
Very truly yours,
Jones, Day, Reavis & Pogue
<PAGE> 8
THE LINCOLN ELECTRIC COMPANY
PLEASE MARK DIRECTIONS IN BOXES IN THE FOLLOWING MANNER USING DARK INK
ONLY.
[ ]
FOR
FOR WITHHELD ALL
ALL ALL EXCEPT
1. ELECTION OF DIRECTORS -- [ ] [ ] [ ]
See Reverse Side.
For, except vote withheld from the following
nominee(s):
______________________________________________
FOR AGAINST ABSTAIN
2. REORGANIZATION [ ] [ ] [ ]
FOR AGAINST ABSTAIN
3. 1998 STOCK OPTION PLAN [ ] [ ] [ ]
4. RATIFICATION OF INDEPENDENT AUDITORS [ ] [ ] [ ]
THE BOARD OF DIRECTORS
RECOMMENDS A VOTE "FOR" ITEMS
1, 2, 3 AND 4
In their discretion, the
Proxies are authorized to
vote upon such other business
as may properly come before
this meeting.
Change of Address []
Dated:________________, 1998
Signature(s)________________
____________________________
NOTE: Please sign exactly as
name appears hereon. Joint
owners should each sign. When
signing as attorney,
executor, administrator,
trustee or guardian, please
................................................................................
FOLD AND DETACH HERE
YOUR VOTE IS IMPORTANT
PLEASE VOTE, SIGN, DATE AND RETURN THIS PROXY CARD
PROMPTLY USING THE ENCLOSED ENVELOPE.
<PAGE> 9
THE LINCOLN ELECTRIC COMPANY
EMPLOYEE SAVINGS PLAN
VOTING DIRECTION FORM FOR 1998 ANNUAL MEETING OF
SHAREHOLDERS OF THE LINCOLN ELECTRIC COMPANY
COMMON SHARES
ELECTION OF DIRECTORS FOR TERM ENDING 2001:
NOMINEES: Kathryn Jo Lincoln, Anthony A. Massaro and G. Russell Lincoln
ELECTION OF DIRECTOR FOR TERM ENDING 2000:
NOMINEE: John M. Stropki, Jr.
ELECTION OF DIRECTOR FOR TERM ENDING 1999:
NOMINEE: Craig R. Smith
THIS VOTING DIRECTION FORM, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER
DIRECTED HEREIN BY THE UNDERSIGNED PARTICIPANT OR BENEFICIARY.
[SEE REVERSE SIDE]
................................................................................
FOLD AND DETACH HERE (SEE REVERSE SIDE)
<PAGE> 10
THE LINCOLN ELECTRIC COMPANY
PLEASE MARK DIRECTIONS IN BOXES IN THE FOLLOWING MANNER USING DARK INK
ONLY.
[ ]
FOR
FOR WITHHELD ALL
ALL ALL EXCEPT
1. ELECTION OF DIRECTORS -- [ ] [ ] [ ]
See Reverse Side.
For, except vote withheld from the following
nominee(s):
______________________________________________
FOR AGAINST ABSTAIN
2. REORGANIZATION [ ] [ ] [ ]
FOR AGAINST ABSTAIN
3. 1998 STOCK OPTION PLAN [ ] [ ] [ ]
4. RATIFICATION OF INDEPENDENT AUDITORS [ ] [ ] [ ]
THE BOARD OF DIRECTORS
RECOMMENDS A VOTE "FOR" ITEMS
1, 2, 3 AND 4
In its discretion, the
Trustee of the Employee
Savings Plan is authorized
to vote upon such other
business as may properly
come before this meeting.
Dated:_________________, 1998
Signature(s)_________________
_____________________________
NOTE: Please return this
voting direction form in the
enclosed envelope for receipt
by 5:00 p.m., Eastern
Standard Time, May 12, 1998.
No postage is required if
mailed in the United States.
................................................................................
FOLD AND DETACH HERE
YOUR VOTE IS IMPORTANT
PLEASE VOTE, SIGN, DATE AND RETURN THIS PROXY CARD
PROMPTLY USING THE ENCLOSED ENVELOPE.
