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Exhibit 10(i)
EMPLOYMENT, RETIREMENT AND CONSULTING AGREEMENT
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THIS EMPLOYMENT, RETIREMENT AND CONSULTING AGREEMENT (this "Agreement")
is made and entered into this 14th day of February, 1997, by and between THE
LINCOLN ELECTRIC COMPANY (the "Company," a term which in this Agreement shall
include its predecessors, parents, subsidiaries, divisions, related or
affiliated companies, officers, directors, stockholders, members, employees,
heirs, successors, assigns, representatives, agents and counsel, unless the
context otherwise clearly requires), and XXXXXX X. XXXXXXXX ("Executive"),
WITNESSETH:
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WHEREAS, Executive is an employee and director of the Company and
currently serves as Chairman of the Board of Directors of the Company;
WHEREAS, the Executive ceased serving as Chief Executive Officer of the
Company, effective October 31, 1996, and the Company and Executive have
determined that Executive shall resign and retire as a director and as an
officer and employee of the Company effective May 27, 1997, and its subsidiaries
and related or affiliated companies effective on the date hereof, and that
Executive will become Chairman Emeritus on May 27, 1997;
WHEREAS, the Company and Executive desire to provide for a consulting
arrangement whereby the Company may continue to benefit from the services of
Executive following his retirement from the Company;
WHEREAS, the Company and Executive desire to make provision for the
payments and benefits that Executive will be entitled to receive from the
Company in consideration for Executive's obligations and actions under this
Agreement and in connection with such resignations and retirement and the
cessation of his employment with the Company; and
WHEREAS, the Company and Executive wish to resolve, settle and/or
compromise any and all matters, claims and issues between them arising from or
relating to Executive's service and employment with the Company, including the
termination thereof;
NOW THEREFORE, in consideration of the promises and agreements contained
herein and other good and valuable consideration, the sufficiency and receipt of
which are hereby acknowledged, and intending to be legally bound, the Company
and Executive agree as follows:
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1. EFFECTIVE DATE OF AGREEMENT. This Agreement is effective on the date
hereof and shall continue in effect as provided herein.
2. EMPLOYMENT. Commencing on the date hereof, Executive's employment
shall continue through May 27, 1997 (the "Employment Term"), subject to the
provisions hereof.
3. DUTIES DURING EMPLOYMENT TERM. Executive's principal duties and
authority after the date hereof during the Employment Term will be to serve as
Chairman of the Board of Directors of the Company and as an advisor to the Chief
Executive Officer of the Company.
4. COMPENSATION DURING EMPLOYMENT TERM. In consideration of the services
of the Executive during the Employment Term, and of the promises of Executive in
this Agreement and subject to the conditions hereof, including without
limitation Paragraph 10 of this Agreement, the Company shall:
(a) During the Employment Term, and thereafter until July 2, 1997 as if
Executive remained an employee, continue to pay Executive an annualized base
salary of FIVE HUNDRED FIFTY THOUSAND DOLLARS ($550,000) in accordance with the
Company's regular payroll practices; PROVIDED that (i) no such payment shall be
made unless and until the conditions in Paragraph 10 below have been satisfied,
(ii) the continuance of such payments is contingent upon Executive's compliance
with each and every requirement of this Agreement applicable to him and (iii) if
Executive dies before the completion of the payments described in this
subparagraph 4(a), the remaining payments described in this subparagraph 4(a)
following his death shall be made to his estate.
(b) During the Employment Term continue Executive's eligibility for a
prorated 1997 bonus calculated as if Executive continued his employment with the
Company until July 2, 1997, to be determined by the Board of Directors of the
Company, but in any event, said 1997 prorated bonus shall not be less than
$200,000 if management goals for 1997 are achieved; provided that in each case
(A) no such payment shall be made unless and until each of the conditions in
Paragraph 10 below have been satisfied, (B) the payment of any bonus is
contingent upon Executive's compliance with each and every requirement of this
Agreement applicable to him and (C) if Executive dies before any payment
described in this subparagraph 4(b) is made, such payment described in this
subparagraph 4(b) following his death shall be made to his estate.
(c) Continue to permit Executive to participate in the Company's medical
and life insurance programs, and other plans, programs and perquisites
appropriate for his position and status as a senior officer of the Company, on
the same basis that Executive has participated in such plans, programs and
perquisites, until the end of the Employment Term; provided, however, that
effective on the date hereof, the Company shall neither have any obligation to
maintain the special term life insurance policy in the amount of $3 million on
the life of Executive, nor any obligation to pay any premiums thereon, including
but not limited to premiums that are overdue or delinquent on the date hereof.
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5. RESIGNATION AND RETIREMENT.
(a) Executive hereby (i) confirms his resignation as Chief Executive
Officer of the Company effective October 31, 1996, (ii) effective the date
hereof (A) resigns from all boards and offices of any entity that is a
subsidiary of or is otherwise related to or affiliated with the Company, and (B)
resigns from all administrative, fiduciary or other positions he may hold or
have held with respect to arrangements or plans for, of or relating to the
Company, and (iii) agrees to resign from any nonprofit organizations other than
those identified on Exhibit E attached hereto and agrees not to join any other
industry related nonprofit organization without the prior approval of the Chief
Executive Officer of the Company. The costs and expenses associated with the
Executive's memberships in organizations set forth on Exhibit E are the sole
responsibility of the Executive and service for such organizations by Executive
is for and on behalf of Executive. The Company hereby consents to and accepts
said resignations, and the Company records shall so reflect.
(b) Effective May 27, 1997, Executive shall resign and retire from his
employment with the Company, and resign from his position as Chairman of the
Board of Directors of the Company. Effective with the Company's annual meeting
of stockholders on May 27, 1997, Executive shall retire from the Board of
Directors of the Company.
(c) For purposes of Company recognition awards, Executive shall,
notwithstanding his actual retirement date of May 27, 1997 as provided in
subparagraph 5(b), be deemed to have retired on July 2, 1997, the 44th
anniversary of Executive's employment with the Company.
6. SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN, ETC. In consideration of the
promises of the Executive in this Agreement and subject to the conditions
hereof, including without limitation Paragraph 10 of this Agreement, the Company
shall:
(a) Pay Executive a supplemental pension (the "Pension") at Executive's
option, which option shall be exercised in writing and delivered to the Company
on or before May 27, 1997: either (i) in a lump sum in an amount calculated in
accordance with the letter dated October 2, 1996 issued by Xxxxxx Xxxxx &
Company, payable on August 1, 1997, or (ii) TWO HUNDRED EIGHTY-NINE THOUSAND
FOUR HUNDRED FOURTEEN DOLLARS ($289,414) per year, in equal monthly
installments, payable in the form of a single life annuity, commencing with a
payment on August 1, 1997 and ending with a payment on the first day of the
month in which Executive dies;; PROVIDED that (x) no such payment shall be made
unless each of the conditions in the Option Agreements provided for in Paragraph
8(a) and the conditions in Paragraphs 8(b) and 10 below have been satisfied, and
(y) such payment is contingent upon Executive's compliance with each and every
requirement of this Agreement applicable to him; and PROVIDED FURTHER that the
Pension shall be paid through the Company's Supplemental Executive Retirement
Plan (but no other benefit shall be payable to or with respect to Executive
under such plan); and PROVIDED FURTHER that in the event Executive elects to
receive the Pension pursuant to paragraph 6(a)(ii), that Executive may elect to
receive the Pension in the form of an
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actuarially equivalent joint and survivor annuity in lieu of a single life
annuity (such actuarial equivalence being determined in accordance with the
terms of the Company's Supplemental Executive Retirement Plan).
(b) Permit Executive to participate in the Company's medical program
through which retirees, at their cost (as determined by the Company), may elect
to have coverage under the Company's medical program that is secondary to
Medicare.
7. CONSULTING SERVICES. Commencing at the expiration of the Employment
Term:
(a) The Company shall retain the Executive's services, and he shall serve
the Company, as a consultant for the period May 28, 1997 through May 31, 2004
("the Consulting Period").
(b) During the Consulting Period, Executive will render to the Company
such services of a consultative nature as the Company reasonably may request, so
that the Company may continue to have the benefit of his experience and
knowledge of the affairs of the Company and of his business reputation and
contacts. Executive will be an advisor to the Chief Executive Officer and will
perform such tasks as the Chief Executive shall designate. The Company
understands and agrees that Executive may relocate his residence elsewhere.
Executive will be available for advice and counsel to the officers and directors
of the Company at all reasonable times by telephone, letter or in person for up
to the equivalent of twenty (20) eight hour days per calendar quarter through
May 31, 1999, and five (5) eight hour days per calendar quarter commencing June
1, 1999 through the end of the Consulting Period, in each case during normal
business hours.
(c) The Company shall pay Executive a consulting fee of FIVE HUNDRED
THOUSAND DOLLARS ($500,000) per annum during the period commencing June 1, 1997
through May 31, 1999, and a consulting fee of ONE HUNDRED THOUSAND DOLLARS
($100,000) per annum during the period commencing June 1, 1999 through the end
of the Consulting Period, in each case payable monthly in arrears.
(d) During the Consulting Period the Company shall reimburse Executive
monthly for travel and other expenses in connection with his services as a
consultant, such reimbursement to be in accordance with the Company's standard
reimbursement practices. The Company hereby agrees to indemnify Executive and
hold Executive harmless from any and all claims, losses, costs and expenses
(including reasonable attorneys fees) incurred, suffered or paid by Executive
arising out of or in connection with Executive's performance of consulting
services to the Company during the Consulting Period unless caused by the
negligence or intentional misconduct of Executive and/or Executive's material
breach of this Agreement. This provision is not intended to limit or eliminate
any indemnification obligations the Company may have to Executive as a result of
Executive's position as an officer and director of the Company.
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(e) During the Employment Term and the period May 28, 1997 through
December 31, 1999, the Company will provide Executive with up to 1,250 square
feet of usable office space at a location to be selected by the Company and
acceptable to Executive, including rent, utilities and escalations, but not in
the Company's home office building. The office space shall be furnished with
office furniture and shall be equipped with other reasonable furnishings,
including computer, telephone and photocopy equipment and shall be staffed by a
full-time salaried qualified executive secretary with appropriate fringe
benefits. Ownership of the furnishings and equipment furnished by the Company
shall be retained by the Company and at December 31, 1999 possession thereof
shall be delivered to Company. Reasonable operating expenses of the office shall
be paid by the Company. The Executive may at any time deliver possession of this
office space and the furnishings to the Company, at which time the Company's
obligations to Executive under this subparagraph 7(e) shall cease.
8. Option; Trading of Company Common Shares.
(a) The Company confirms that Executive received conditional grants on
September 24, 1996 of an option to purchase 50,000 Common Shares of the Company
at a price of $30.00 per share (the closing price on October 1, 1996) and an
option to purchase 50,000 Class A Common Shares of the Company at a price of
$27.25 per share (the closing price on October 1, 1996), in accordance with the
terms of the Option Agreements attached hereto as Exhibits A-1 and A-2 and made
a part hereof. Such grants were conditioned on Executive's execution and
delivery of this Agreement. Executive hereby delivers to the Company originals
of the Option Agreements duly executed by Executive.
(b) Executive agrees that, from the date hereof through May 31, 1999, the
Executive shall not dispose of shares of the Company's equity securities except
during a period in which the Company's general counsel confirms that the
Company's then directors and officers are permitted to trade such securities;
provided, however, that from the date hereof through May 31, 1997, Executive may
transfer such equity securities to a private foundation, as such term is defined
in Section 509(a) of the Internal Revenue Code of 1986 (as amended) (the
"Code"), established solely by the Executive (the "Private Foundation").
Executive shall cause his spouse, and any donee or transferee of Executive or
his spouse of such securities, including, but not limited to the Private
Foundation, not to dispose of shares of the Company's equity securities except
for dispositions of such equity securities by the Private Foundation in order to
avoid excise taxes which may be imposed under Section 4942 or 4943 of the Code
or except during a period in which the Company's general counsel confirms that
the Company's then directors and officers are permitted to trade such
securities; provided, however, that the restrictions of this sentence shall not
apply to any transferee that acquires such securities in an open market
transaction that is permitted hereunder. Nothing in this subparagraph 8(b) shall
restrict Executive's right to exercise any exercisable portion of the options
described in subparagraph 8(a).
9. CONSIDERATION FOR RELEASES. Executive acknowledges and agrees that the
consideration provided by the Company to Executive under this Agreement,
including, without limitation, the payments and benefits to be made or provided
by the Company to Executive pursuant to this Agreement and the Option
Agreements, is greater than and in addition to anything
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of value to which he otherwise would be entitled from the Company and that the
releases by Executive set forth in Paragraph 10 of this Agreement and the
obligations of and actions taken by Executive under this Agreement are given and
undertaken in consideration of, and adequately supported by, the payments and
benefits to be made or provided to Executive by the Company under and pursuant
to this Agreement and the Option Agreements.
10. RELEASES BY EXECUTIVE.
(a) In consideration of the payments made and to be made and the benefits
to be received by Executive pursuant to Paragraphs 6, 7 and 8(a) of this
Agreement, Executive, for himself and his dependents, successors, assigns,
heirs, executors and administrators (and his and their legal representatives of
every kind), hereby releases, dismisses, remises and forever discharges the
Company from any and all arbitrations, claims, including claims for attorney's
fees, demands, damages, suits, proceedings, actions and/or causes of action of
any kind and every description, whether known or unknown, which Executive now
has or may have had for, upon, or by reason of any cause whatsoever (except that
this release shall not apply to the obligations of the Company arising under
this Agreement) ("claims"), against the Company, including but not limited to:
(i) any and all claims arising out of or relating to Executive's
employment by or service with the Company through the date hereof;
(ii) any and all claims arising out of or relating to the matter
of XXXXX X. XXXXXX VS. THE LINCOLN ELECTRIC COMPANY, Case No. 288514 in
the Common Pleas Court of Cuyahoga County, Ohio;
(iii) any and all claims of discrimination, including but not
limited to claims of discrimination on the basis of sex, race, age,
national origin, marital status, religion or handicap, including,
specifically, but without limiting the generality of the foregoing, any
claims under the Age Discrimination in Employment Act, as amended, Title
VII of the Civil Rights Act of 1964, as amended, the Americans with
Disabilities Act, Ohio Revised Code Section 4101.17 and Ohio Revised Code
Chapter 4112, including Sections 4112.02 and 4112.99 thereof; and
(iv) any and all claims of breach of any contract or promise,
express or implied.
(b) Executive understands and acknowledges that the Company does not
admit any violation of law, liability or invasion of any of his rights and that
any such violation, liability or invasion is expressly denied. The consideration
provided under this Agreement is made for the purpose of settling and
extinguishing all claims and rights (and every other similar or dissimilar
matter) that Executive ever had or now may have against the Company to the
extent provided in this Paragraph 10. Executive further agrees and acknowledges
that no representations, promises or inducements have been made by the Company
other than as appear in this Agreement.
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(c) Executive further agrees and acknowledges that:
(i) The release provided for in this Paragraph 10 releases claims
to and including the date of this Agreement;
(ii) He has been advised by the Company to consult with legal
counsel prior to executing this Agreement and the release provided for in
this Paragraph 10, has had an opportunity to consult with and to be
advised by legal counsel of his choice, fully understands the terms of
this Agreement, and enters into this Agreement freely, voluntarily and
intending to be bound;
(iii) He has been given a period of twenty-one (21) days to review
and consider the terms of this Agreement, and the release contained
herein, prior to its execution and that he may use as much of the
twenty-one (21) day period as he desires; and
(iv) He may, within seven (7) days after execution, revoke this
Agreement. Revocation shall be made by delivering a written notice of
revocation to the Vice President of Human Resources at the Company. For
such revocation to be effective, written notice must be actually received
by the Vice President of Human Resources at the Company no later than the
close of business on the seventh (7th) day after Executive executes this
Agreement. If Executive does exercise his right to revoke this Agreement,
all of the terms and conditions of the Agreement shall be of no force and
effect and the Company shall not have any obligation to make payments or
provide benefits or option to Executive as set forth in Paragraphs 6, 7
and 8 of this Agreement, except as may be required under COBRA.
(d) Executive agrees that he will never file a lawsuit or other complaint
asserting any claim that is released in this Paragraph 10.
(e) It is understood and agreed that Executive's resignation and
retirement are by mutual agreement between the Company and Executive, and that
Executive waives and releases any claim that he has or may have to reemployment
after May 27, 1997.
(f) As a condition of the Company's obligation to make payments or
provide benefits to Executive as set forth in Paragraphs 6 and 7 of this
Agreement, and as a condition to any exercise of the options granted pursuant to
the Option Agreements provided for in Paragraph 8(a) of this Agreement,
Executive shall, at the time of his retirement as an employee of the Company
pursuant to Paragraph 5 of this Agreement, execute and deliver the Release
attached hereto as Exhibit B and made a part hereof.
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11. CONFIDENTIAL INFORMATION; STATEMENTS TO THIRD PARTIES.
(a) Executive acknowledges and agrees that in the performance of his
duties as an officer and employee of the Company, and as a consultant to the
Company pursuant to Paragraph 7 hereof, he was and may be brought into frequent
contact with, had or may have had access to, and/or became or may become
informed of confidential and proprietary information of the Company and/or
information which is a trade secret of the Company (collectively, "Confidential
Information"), as more fully described in subparagraph (b) of this Paragraph 11.
Executive acknowledges and agrees that the Confidential Information of the
Company gained by Executive during his association with the Company was or will
be developed by and/or for the Company through substantial expenditure of time,
effort and money and constitutes valuable and unique property of the Company.
(b) Executive will keep in strict confidence, and will not, directly or
indirectly, at any time, disclose, furnish, disseminate, make available, use or
suffer to be used in any manner any Confidential Information of the Company
(except as may be necessary in connection with the discharge of Executive's
obligations pursuant to Paragraphs 3, 7 and 15 of this Agreement) without
limitation as to when or how Executive may have acquired such Confidential
Information. Executive specifically acknowledges that Confidential Information
includes any and all information, whether reduced to writing (or in a form from
which information can be obtained, translated, or derived into reasonably usable
form), or maintained in the mind or memory of Executive and whether compiled or
created by the Company, which derives independent economic value from not being
readily known to or ascertainable by proper means by others who can obtain
economic value from the disclosure or use of such information, that reasonable
efforts have been put forth by the Company to maintain the secrecy of
Confidential Information, that such Confidential Information is and will remain
the sole property of the Company, and that any retention or use by Executive of
Confidential Information after the termination of Executive's employment with
and services for the Company shall constitute a misappropriation of the
Company's Confidential Information.
(c) Executive further agrees that he shall return (to the extent he has
not already returned), within ten (10) days of the effective date of his
retirement as an employee of the Company, in good condition, all property of the
Company, including, without limitation, (i) property, documents and/or all other
materials (including copies, reproductions, summaries and/or analyses) which
constitute, refer or relate to Confidential Information of the Company, (ii)
keys to Company property, (iii) files and (iv) blueprints or other drawings.
(d) Executive further acknowledges and agrees that his obligation of
confidentiality shall survive, regardless of any other breach of this Agreement
or any other agreement, by any party hereto, until and unless such Confidential
Information of the Company shall have become, through no fault of Executive,
generally known to the public or Executive is required by law (after providing
the Company with notice and opportunity to contest such requirement) to make
disclosure. Executive's obligations under this Paragraph 11 are in addition to,
and not in limitation or preemption of, all other obligations of confidentiality
which Executive may have to the Company under general legal or equitable
principles or statutes.
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(e) Because the purpose of this Agreement is to settle amicably any and
all potential disputes or claims among the parties, neither Executive nor the
Company shall, directly or indirectly, make or cause to be made any statements
to any third parties criticizing or disparaging the other or commenting on the
character or business reputation of the other. Executive further hereby agrees
that, without the prior written consent of the Chief Executive Officer of the
Company, unless otherwise required by law, he will not (1) comment to others
concerning the status, plans or prospects of the business of the Company, (2)
comment to others concerning the status, plans or prospects of any existing,
threatened or potential claims or litigation involving the Company, or (3)
engage in any act or omission that would be detrimental, financially or
otherwise, to the Company, or that would subject the Company to public
disrespect, scandal or ridicule.
12. NON-COMPETITION; CERTAIN ACTIONS.
(a) Executive agrees that for a period commencing on the date of this
Agreement through the end of the Consulting Period, within the Territory (as
described in subparagraph (b)(i) of this Paragraph 12) (and, as to subparagraph
(a)(iii) of this Paragraph 12, any place), he shall not, directly or indirectly,
do or suffer any of the following:
(i) Own, manage, control or participate in the ownership,
management, or control of, or be employed or engaged by or otherwise
affiliated or associated as a consultant, independent contractor or
otherwise with, any other corporation, partnership, proprietorship, firm,
association, or other business entity, or otherwise engage in any
business, which is in competition with the Company's business (as
described in subparagraph (b)(ii) of this Paragraph 12); provided,
however, that the ownership of not more than five percent (5%) of any
class of publicly-traded securities of any entity shall not be deemed a
violation of this Agreement.
(ii) Employ, assist in employing, or otherwise associate in
business with any person who presently or at the end of the Employment
Term is an employee, officer or agent of the Company, or any of its
affiliated, related or subsidiary entities.
(iii) Induce any person who is an employee, officer or agent of
the Company, or any of its affiliated, related, or subsidiary entities to
terminate such relationship.
(b) For purposes of this Agreement:
(i) "Territory" shall mean the countries identified in Exhibit C
hereto.
(ii) The Company's business shall mean the design, manufacture,
distribution and sale of the products identified in Exhibit D hereto.
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(c) Executive agrees that for a period commencing on the date of this
Agreement through the end of the Consulting Period, except within the terms of a
specific request from the Company, Executive shall not as a principal, or agent
of another person, propose or publicly announce or otherwise disclose an intent
to propose, or enter into or agree to enter into, singly or with any other
person or directly or indirectly, (i) any form of business combination,
acquisition, or other transaction relating to the Company or any majority-owned
affiliate thereof, (ii) any form of restructuring, recapitalization or similar
transaction with respect to the Company or any such affiliate, or (iii) any
demand, request or proposal to amend, waive or terminate any provision of this
subparagraph 12(c) of this Agreement, nor except as aforesaid during such period
will Executive, except with respect to the exercise of options granted pursuant
to the Option Agreements provided for in Paragraph 8 of this Agreement, as a
principal, or agent of another person, (1) acquire, or offer, propose or agree
to acquire, by purchase or otherwise, any securities entitled to vote generally
in the election of directors of the Company or any direct or indirect options or
other rights to acquire any such securities ("Voting Securities"), (2) make, or
in any way participate in, any solicitation of proxies with respect to any
Voting Securities (including by the execution of action by written consent),
become a participant in any election contest with respect to the Company, seek
to influence any person with respect to any Voting Securities or demand a copy
of the Company's list of its stockholders or other books and records, (3)
participate in or encourage the formation of any partnership, syndicate, or
other group which owns or seeks or offers to acquire beneficial ownership of any
Voting Securities or which seeks to affect control of the Company or for the
purpose of circumventing any provision of this Agreement, or (4) except in
connection with Executive's duties as Chairman of the Board of the Company,
otherwise act, alone or in concert with others (including by providing financing
for another person), to seek or to offer to control or influence, in any manner,
the management, Board of Directors, or policies of the Company.
(d) In the event Executive shall violate any provision of this Paragraph
12 as to which there is a specific time period during which he is prohibited
from taking certain actions or from engaging in certain activities, as set forth
in such provision, then, in such event, such violation shall toll the running of
such time period from the date of such violation until such violation shall
cease.
(e) Executive has carefully considered the nature and extent of the
restrictions upon him and the rights and remedies conferred upon the Company
under this Paragraph 12 and this Agreement, and hereby acknowledges and agrees
that the same are reasonable in time and territory, are designed to eliminate
competition which otherwise would be unfair to the Company, do not stifle the
inherent skill and experience of Executive, would not operate as a bar to
Executive's sole means of support, are fully required to protect the legitimate
interests of the Company and do not confer a benefit upon the Company
disproportionate to the detriment to Executive.
13. DISCLOSURE. Executive, for a period commencing on the date of this
Agreement through the end of the Consulting Period, agrees to communicate the
contents of Paragraphs 11, 12, 14(b), 15 and 17 of this Agreement to any person,
firm, association, or corporation which he intends to be employed by, associated
in business with, or represent.
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14. BREACH.
(a) If Executive breaches in any material way any of the provisions of
this Agreement, then the Company may, at its sole option, (1) immediately
terminate all remaining payments and benefits described in Paragraphs 4 and 7 of
this Agreement, and Paragraph 6 of this Agreement to the extent not vested in
Executive on the date hereof, (2) cancel the outstanding options granted
pursuant to the Option Agreements provided for in Paragraph 8(a) of this
Agreement, and (3) obtain reimbursement from Executive of all payments and
benefits, options and related Common Shares and Class A Common Shares of the
Company already provided pursuant to Paragraphs 4, 7 and 8(a) of this Agreement,
and Paragraph 6 of this Agreement to the extent not vested in Executive on the
date hereof, plus any expenses and damages incurred as a result of the breach,
with the remainder of this Agreement, and all promises and covenants herein,
remaining in full force and effect.
(b) Executive acknowledges and agrees that the remedy at law available to
the Company for breach by Executive of any of his obligations under Paragraphs
11 and 12 of this Agreement would be inadequate and that damages flowing from
such a breach would not readily be susceptible to being measured in monetary
terms. Accordingly, Executive acknowledges, consents and agrees that, in
addition to any other rights or remedies which the Company may have at law, in
equity or under this Agreement, upon adequate proof of Executive's violation of
any provision of Paragraph 11 or 12 of this Agreement, the Company shall be
entitled to immediate injunctive relief and may obtain a temporary order
restraining any threatened or further breach, without the necessity of proof of
actual damage.
(c) The Company acknowledges and agrees that the remedy at law available
to the Executive for breach by the Company of its obligations under Paragraph
11(e) of this Agreement would be inadequate and that damages flowing from such a
breach would not be readily susceptible to being measured in monetary terms.
Accordingly, the Company acknowledges, consents and agrees that, in addition to
any other rights or remedies which Executive may have at law, in equity or under
this Agreement, upon adequate proof of the Company's violation of Paragraph
11(e) of this Agreement, Executive shall be entitled to immediate injunctive
relief and may obtain a temporary order restraining any threatened or further
breach, without the necessity of proof of actual damages.
(d) In the event of the nonpayment by Company after receipt of thirty
(30) days written notice of non-payment from Executive of all or any part of the
compensation or consideration required to be paid to Executive pursuant to the
terms of this Agreement (other than by reason of Executive's breach of the terms
of this Agreement) or in the event this Agreement is not ratified by any
receiver, trustee or similar officer appointed in connection with a bankruptcy
proceeding involving the Company, then in either event, the restrictions on
Executive set forth in paragraph 12 of this Agreement shall immediately
terminate and be of no further force and effect without further action by
Executive.
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15. CONTINUED AVAILABILITY AND COOPERATION.
(a) Executive shall cooperate fully with the Company and with the
Company's counsel in connection with any present and future actual or threatened
litigation or administrative proceeding involving the Company that relates to
events, occurrences or conduct occurring (or claimed to have occurred) during
the period of Executive's employment by the Company. This cooperation by
Executive shall include, but not be limited to:
(i) making himself reasonably available for interviews and
discussions with the Company's counsel as well as for depositions and
trial testimony;
(ii) if depositions or trial testimony are to occur, making
himself reasonably available and cooperating in the preparation therefor
as and to the extent that the Company or the Company's counsel reasonably
requests;
(iii) refraining from impeding in any way the Company's
prosecution or defense of such litigation or administrative proceeding;
and
(iv) cooperating fully in the development and presentation of the
Company's prosecution or defense of such litigation or administrative
proceeding.
(b) After the end of the Consulting Period, Executive shall be reimbursed
by the Company for reasonable travel, lodging, telephone and similar expenses
incurred in connection with such cooperation, which the Company shall reasonably
endeavor to schedule at times not conflicting with the reasonable requirements
of any future employer of Executive, or with the requirements of any third party
with whom Executive has a business relationship that provides remuneration to
Executive. Executive shall not unreasonably withhold his availability for such
cooperation. The Company will give appropriate consideration to reimbursement of
Executive at a per diem rate if significant involvement and/or cooperation in
excess of five (5) days in any given year is required of Executive by Company.
16. SUCCESSORS AND BINDING AGREEMENT. (a) This Agreement shall be binding
upon and inure to the benefit of the Company and any successor of or to the
Company, including, without limitation, any persons acquiring directly or
indirectly all or substantially all of the business and/or assets of the Company
whether by purchase, merger, consolidation, reorganization or otherwise (and
such successor shall thereafter be deemed included in the definition of "the
Company" for purposes of this Agreement), but shall not otherwise be assignable
or delegable by the Company.
(b) This Agreement shall inure to the benefit of and be enforceable by
Executive's personal or legal representatives, executors, administrators,
successors, heirs, distributees and/or legatees.
13
(c) This Agreement is personal in nature and none of the parties hereto
shall, without the consent of the other parties, assign, transfer or delegate
this Agreement or any rights or obligations hereunder except as expressly
provided in subparagraphs (a) and (b) of this Paragraph 16.
(d) This Agreement is intended to be for the exclusive benefit of the
parties hereto, and except as provided in subparagraphs (a) and (b) of this
Paragraph 16, no third party shall have any rights hereunder.
(e) The Company will require any successor (whether direct or indirect,
by purchase, merger, consolidation, operation of law or otherwise) to all or
substantially all of the business and/or assets of the Company to assume
expressly and agree to perform this Agreement in the same manner and to the same
extent that the Company would be required to perform this Agreement.
17. NON-DISCLOSURE. Except to the extent that this Agreement or the terms
hereof become publicly known or available because of legally mandated disclosure
and filing requirements of the Securities and Exchange Commission, or because of
any other legal requirement that this Agreement or the terms hereof be disclosed
or filed with a governmental instrumentality or agency, all provisions of this
Agreement and the circumstances giving rise hereto are and shall remain
confidential and shall not be disclosed to any person not a party hereto (other
than (i) Executive's spouse and children, (ii) each party's attorney, financial
advisor and/or tax advisor to the extent necessary for such advisor to render
appropriate legal, financial and tax advice, and (iii) persons or entities that
fall within the scope of Paragraph 13 of this Agreement, but only to the extent
required thereby), except as necessary to carry out the provisions of this
Agreement, and except as may be required by law; PROVIDED, HOWEVER, that
Executive may disclose to prospective employers the circumstances of his
retirement from the Company so long as all such disclosures are made in a manner
not injurious to the reputation or business of the Company.
18. NOTICES. For all purposes of this Agreement, all communications
provided for herein shall be in writing and shall be deemed to have been duly
given when delivered, addressed to the Company (to the attention of the Vice
President of Human Resources) at its principal executive offices and to
Executive at his principal residence, _________________, or to such other
address as any party may have furnished to the other in writing and in
accordance herewith. Notices of change of address shall be effective only upon
receipt.
19. PROFESSIONAL FEES. The Company and Executive acknowledge and agree
that each shall be responsible for the payment of their respective professional
fees and costs (and related disbursements) incurred in connection with
Executive's termination and resignation and all matters relating to the
negotiation and execution of this Agreement; provided that the Company shall
reimburse Executive his reasonable professional fees and costs (and related
disbursements) in connection herewith in an amount not to exceed SIXTY THOUSAND
DOLLARS ($60,000).
14
20. TAXES, PAYMENTS, ETC.
(a) Executive acknowledges and agrees that he shall be responsible for
his share of any and all Federal, State and/or local taxes applicable to the
payments made, and benefits provided or made available, to Executive pursuant to
this Agreement and further agrees to indemnify the Company against any liability
as a result of those taxes.
(b) The payments to Executive pursuant to Paragraphs 4, 6 and 7 of this
Agreement shall be made by check or direct deposit to an account designated by
Executive, and shall be reduced by any applicable Federal, State and local tax
or other required withholding. The payments to Executive pursuant to
subparagraph 4(b) of this Agreement shall be reduced by any applicable
deductions resulting from Executive's election to participate in the Company's
medical and/or life insurance programs as described in subparagraph 4(c) of this
Agreement.
21. MISCELLANEOUS. The death or disability of Executive following the
execution of this Agreement shall not affect or revoke this Agreement or any of
the obligations of the parties hereto. No provision of this Agreement may be
modified, waived or discharged unless such waiver, modification or discharge is
agreed to in writing signed by Executive and the Company. No waiver by either
party hereto at any time of any breach by the other party hereto or compliance
with any condition or provision of this Agreement to be performed by such other
party shall be deemed a waiver of similar or dissimilar provisions or conditions
at the same or at any prior or subsequent time. No agreements or
representations, oral or otherwise, expressed or implied with respect to the
subject matter hereof have been made by any of the parties that are not set
forth expressly in this Agreement and every one of them (if, in fact, there have
been any) is hereby terminated without liability or any other legal effect
whatsoever.
22. ENTIRE AGREEMENT. This Agreement shall constitute the entire
agreement among the parties hereto with respect to the subject matter hereof and
shall supersede all prior verbal or written agreements, covenants,
communications, understandings, commitments, representations or warranties,
whether oral or written, by any party hereto or any of its representatives
pertaining to such subject matter.
23. GOVERNING LAW. The validity, interpretation, construction and
performance of this Agreement shall be governed by the substantive laws of the
State of Ohio, without giving effect to the principles of conflict of laws of
such state.
24. VALIDITY. The invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of any other provision
of this Agreement which shall nevertheless remain in full force and effect.
25. 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 Agreement.
15
26. CAPTIONS AND PARAGRAPH HEADINGS. Captions and paragraph headings used
herein are for convenience and are not part of this Agreement and shall not be
used in construing it.
27. FURTHER ASSURANCES. Each party hereto shall execute such additional
documents, and do such additional things, as may reasonably be requested by the
other party to effectuate the purposes and provisions of this Agreement.
IN WITNESS WHEREOF, the parties have executed and delivered this
Agreement on the date set forth above.
THE LINCOLN ELECTRIC COMPANY
By: /s/ XXXXXXX X. XXXX
---------------------------------
Its: Vice President, Human Resources
---------------------------------
Witness: /s/ L.O. XXXXXXXX /s/ XXXXXX X. XXXXXXXX
---------------------- --------------------------------------
Xxxxxxxx X. Xxxxxxxx Xxxxxx X. Xxxxxxxx
Date: February 14, 1997
16
[Common Shares]
EXHIBIT A-1
THE LINCOLN ELECTRIC COMPANY
Non-Qualified Stock Option Agreement
------------------------------------
WHEREAS, Xxxxxx X. Xxxxxxxx (the "Optionee") is an employee of The
Lincoln Electric Company (the "Company");
WHEREAS, the execution of a stock option agreement in the form hereof has
been authorized by a resolution of the Compensation Committee (the "Committee")
of the Board of Directors (the "Board") of the Company that was duly adopted on
September 24, 1996, with an effective date of October 1, 1996 (the "Date of
Grant"), and is incorporated herein by this reference; and
WHEREAS, the option granted hereby is intended to be a non-qualified
stock option and shall not be treated as an "incentive stock option" within the
meaning of that term under Section 422 of the Internal Revenue Code of 1986;
NOW, THEREFORE, pursuant to the Company's 1988 Incentive Equity Plan (the
"Plan") and subject to the terms and conditions thereof and the terms and
conditions hereinafter set forth, the Company hereby grants to the Optionee a
non-qualified stock option (the "Option") to purchase 50,000 Common Shares,
without par value, of the Company (the "Common Shares"), at the exercise price
of thirty dollars ($30.00) per Common Share (the "Exercise Price").
1. VESTING OF OPTION. (a) Unless terminated as hereinafter provided, the
Option shall be exercisable after the Optionee shall have been in the continuous
employ of the Company or a Subsidiary (as defined in the Plan) from the Date of
Grant to May 27, 1997.
(b) Notwithstanding the provisions of Section 1(a) hereof, the Option
shall become immediately exercisable in full upon any change in control of the
Company that shall
17
occur while the Optionee is an employee of the Company or a Subsidiary.
For the purposes of this agreement, the term "change in control" shall mean the
occurrence of any of the following events:
(i) all or substantially all of the assets of the Company are sold
or transferred to another corporation or entity, or the Company is
merged, consolidated or reorganized into or with another corporation or
entity, with the result that upon conclusion of the transaction less than
51 percent of the outstanding securities entitled to vote generally in
the election of directors or other capital interests of the acquiring
corporation or entity is owned, directly or indirectly, by the
shareholders of the Company generally prior to the transaction; or
(ii) there is a report filed on Schedule 13D or Schedule 14D-1 (or
any successor schedule, form or report thereto), as promulgated pursuant
to the Securities Exchange Act of 1934 (the "Exchange Act"), disclosing
that any person (as the term "person" is used in Section 13(d)(3) or
Section 14(d)(2) of the Exchange Act) has become the beneficial owner (as
the term "beneficial owner" is defined under Rule 13d-3 or any successor
rule or regulation thereto under the Exchange Act) of securities
representing 30 percent or more of the combined voting power of the
then-outstanding voting securities of the Company, excluding (A) any
person or group of persons who are officers, directors or employees of
the Company or any Subsidiary as of the date hereof or are related by
blood or marriage to the descendants of Xxxxx X. or Xxxx X. Xxxxxxx,
including any trusts or similar arrangements for any of the foregoing and
any foundations established by any of the foregoing and (B) any
underwriter or syndicate of underwriters acting on behalf of the Company
in a public offering of the Company's securities and any of their
transferees; or
(iii) the Company shall file a report or proxy statement with the
Securities and Exchange Commission (the "SEC") pursuant to the Exchange
Act disclosing in response to Item 1 of Form 8-K thereunder or Item 5(f)
of Schedule 14A thereunder (or any successor schedule, form, report or
item thereto) that a change in control of the
18
Company has or may have occurred, or will or may occur in the future,
pursuant to any then-existing contract or transaction; or
(iv) the individuals who constituted the Board at the beginning of
any period of two consecutive calendar years cease for any reason to
constitute at least a majority thereof unless the nomination for election
by the Company's shareholders of each new member of the Board was
approved by a vote of at least two-thirds of the members of the Board
still in office who were members of the Board at the beginning of any
such period.
In the event that any person described in Section 1(b)(ii) hereof files an
amendment to any report referred to in Section 1(b)(ii) hereof that shows the
beneficial ownership described in Section 1(b)(ii) hereof to have decreased to
less than 30 percent, or in the event that any anticipated change in control
referred to in Section 1(b)(iii) hereof does not occur following the filing with
the SEC of any report or proxy statement described in Section 1(b)(iii) hereof
because any contract or transaction referred to in Section 1(b)(iii) hereof is
cancelled or abandoned, the Committee may nullify the effect of Section 1(b)(ii)
or 1(b)(iii) hereof, as the case may be, and reinstate the provisions of Section
1(a) hereof by giving notice thereof to the Optionee; PROVIDED, HOWEVER, that
any such action by the Committee shall not prejudice any exercise of the Option
that may have occurred prior to the nullification and reinstatement. The
provisions of Section 1(b)(ii) hereof shall again become automatically effective
following any such nullification of the provisions thereof and reinstatement of
the provisions of Section 1(a) hereof in the event that any person described in
Section 1(b)(ii) hereof files a further amendment to any report referred to in
Section 1(b)(ii) hereof that shows the beneficial ownership described in Section
1(b)(ii) hereof to have again increased to 30 percent or more.
(c) Notwithstanding the provisions of Section 1(a) hereof, the Option
shall become immediately exercisable in full upon the death or disability (as
defined in the Plan) of the Optionee while in the employment of the Company or
any Subsidiary, or the Retirement (as defined in the Plan) of the Optionee with
the consent of the Board of Directors.
19
(d) To the extent that the Option shall have become exercisable in
accordance with the terms of this agreement, it may be exercised in whole or in
part from time to time thereafter.
2. TERMINATION OF OPTION. The Option shall terminate automatically and
without further notice on the earliest of the following dates:
(a) Three months after the date upon which the Optionee ceases to be an
employee of the Company or a Subsidiary, unless the cessation of his employment
(i) is a result of his or her death, Disability (as defined in the Plan) or
Retirement or (ii) occurs in a manner described in (d) or (e) below;
(b) Three years after the date of the death or Disability of the Optionee
while an employee of the Company or a Subsidiary or three years after the date
of Retirement of the Optionee;
(c) One year after the date of the death of the Optionee, if the Optionee
dies after the termination of his employment with the Company or a Subsidiary
and prior to the termination of the Option; (d) Automatically and without
further notice upon the termination of Optionee's employment for Cause;
(e) If the Optionee, either during employment by the Company or after
termination of such employment, does not comply with each and every provision of
the Employment, Retirement and Consulting Agreement dated February 14, 1997
between the Optionee and the Company (the "ERC Agreement") applicable to the
Optionee, including, without limitation Paragraphs 10, 11, 12, 13 and 15 of the
ERC Agreement and the Board of Directors or the Compensation Committee shall so
find, the Optionee shall, forthwith upon notice of such finding, (i) return to
the Company, in exchange for payment by the Company of the option price paid
therefor, all the Common Shares that the Optionee has not disposed of that were
purchased pursuant to this Agreement prior to the date of such noncompliance or
the commencement of such noncompliance with the ERC Agreement, and (ii) with
respect to any shares so purchased that the
20
Optionee has disposed of, pay to the Company in cash the difference between (A)
the option price paid therefor by the Optionee pursuant to this Agreement, and
(B) the closing price of the Common Shares on the NASDAQ National Market on the
date of such purchase (or on the last trading day prior to such purchase, if
there was no trading on the purchase date). To the extent that such amounts are
not paid to the Company, the Company may set off the amounts so payable to it
against any amounts that may be owing from time to time by the Company or a
Subsidiary to the Optionee, whether as wages, deferred compensation or vacation
pay or in the form of any other benefit under the ERC Agreement or for any other
reason.
(f) ten years after the Date of Grant.
For purposes of this agreement, the following term shall be defined as
set forth below:
(i) "Cause" means a felony conviction of the Optionee or the
failure of the Optionee to contest prosecution for a felony,
or Optionee's willful misconduct or dishonesty, any of which
is directly and materially harmful to the business or
reputation of the Company or any Subsidiary.
3. PAYMENT OF EXERCISE PRICE. The Exercise Price shall be payable upon
exercise (a) in cash in the form of certified or bank check or other cash
equivalent acceptable to the Company, (b) by transfer to the Company of
nonforfeitable, unrestricted Common Shares or Class A Common Shares, without par
value, of the Company ("Class A Shares") that have been owned by the Optionee
for at least six months prior to the date of exercise, or (c) by any combination
of the methods of payment described in Sections 3(a) and 3(b) hereof.
Nonforfeitable, unrestricted Common Shares or Class A Shares that are
transferred by the Optionee in payment of all or any part of the Exercise Price
shall be valued on the basis of their fair market value as determined by the
Committee from time to time.
4. COMPLIANCE WITH LAW. Notwithstanding any other provision of this
agreement, the Option shall not be exercisable if the exercise or issuance
thereof would result in a violation of any law. To the extent that the Ohio
Securities Act shall be applicable to the Option, the Option
21
shall not be exercisable unless the Common Shares or other securities covered by
the Option are (a) exempt from registration thereunder, (b) the subject of a
transaction that is exempt from compliance therewith, (c) registered by
description or qualification thereunder, or (d) the subject of a transaction
that shall have been registered by description thereunder.
5. TRANSFERABILITY AND EXERCISABILITY. The Option, including any interest
therein, shall not be transferable by the Optionee except by will or the laws of
descent and distribution, and the Option shall be exercisable during the
lifetime of the Optionee only by him or, in the event of his legal incapacity to
do so, by his guardian or legal representative acting on behalf of the Optionee
in a fiduciary capacity under state law and court supervision.
6. ADJUSTMENTS. The Committee shall make any adjustments in the Exercise
Price and the number or kind of shares of stock or other securities covered by
the Option that the Committee may determine to be equitably required to prevent
any dilution or expansion of the Optionee's rights under this agreement that
otherwise would 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 or partial or
complete liquidation involving the Company, or (c) other transaction or event
having an effect similar to any of those referred to in Section 6(a) or 6(b)
hereof. Furthermore, in the event that any transaction or event described or
referred to in the immediately preceding sentence shall occur, the Committee may
provide in substitution of any or all of the Optionee's rights under this
agreement such alternative consideration as the Committee may determine in good
faith to be equitable under the circumstances.
7. WITHHOLDING TAXES. If the Company shall be required to withhold any
federal, state, local or foreign tax in connection with any exercise of the
Option, the Optionee shall pay the tax or make provisions that are satisfactory
to the Company for the payment thereof.
8. CONTINUOUS EMPLOYMENT. For purposes of this Agreement, the continuous
employ of the Optionee with the Company or a Subsidiary shall not be deemed
interrupted, and
22
the Optionee shall not be deemed to have ceased to be an employee of the Company
or any Subsidiary, by reason of the transfer of his employment among the Company
and its Subsidiaries.
9. RIGHT TO TERMINATE EMPLOYMENT. No provision of this agreement shall
limit in any way whatsoever any right that the Company or a subsidiary may
otherwise have to terminate the employment of the Optionee at any time.
10. RELATION TO OTHER BENEFITS. Any economic or other benefit to the
Optionee under this agreement or the Plan shall not be taken into account in
determining any benefits to which the Optionee may be entitled under any
profit-sharing, retirement or other benefit or compensation plan maintained by
the Company or a subsidiary and shall not affect the amount of any life
insurance coverage available to any beneficiary under any life insurance plan
covering employees of the Company or a subsidiary.
11. AMENDMENTS. Any amendment to the Plan shall be deemed to be an
amendment to this agreement to the extent that the amendment is applicable
hereto; PROVIDED, HOWEVER, that no amendment shall adversely affect the rights
of the Optionee with respect to the Option without the Optionee's consent.
12. SEVERABILITY. In the event that one or more of the provisions of this
agreement shall be invalidated for any reason by a court of competent
jurisdiction, any provision so invalidated shall be deemed to be separable from
the other provisions hereof, and the remaining provisions hereof shall continue
to be valid and fully enforceable.
13. GOVERNING LAW. This agreement is made under, and shall be construed
in accordance with, the internal substantive laws of the State of Ohio.
This agreement is executed by the Company on this 14th day of February,
1997.
THE LINCOLN ELECTRIC COMPANY
By /s/ XXXXXXX X. XXXX
---------------------------------
Xxxxxxx X. Xxxx
Vice President, Human Resources
23
The undersigned Optionee hereby acknowledges receipt of an executed
original of this agreement and accepts the Option granted hereunder, subject to
the terms and conditions of the Plan and the terms and conditions hereinabove
set forth.
/s/ XXXXXX X. XXXXXXXX
---------------------------------
Xxxxxx X. Xxxxxxxx
Date: February 14, 1997
24
[Class A Shares]
EXHIBIT A-2
THE LINCOLN ELECTRIC COMPANY
Non-Qualified Stock Option Agreement
------------------------------------
WHEREAS, Xxxxxx X. Xxxxxxxx (the "Optionee") is an employee of The
Lincoln Electric Company (the "Company");
WHEREAS, the execution of a stock option agreement in the form hereof has
been authorized by a resolution of the Compensation Committee (the "Committee")
of the Board of Directors (the "Board") of the Company that was duly adopted on
September 24, 1996, with an effective date of October 1, 1996 (the "Date of
Grant"), and is incorporated herein by this reference; and
WHEREAS, the option granted hereby is intended to be a non-qualified
stock option and shall not be treated as an "incentive stock option" within the
meaning of that term under Section 422 of the Internal Revenue Code of 1986;
NOW, THEREFORE, pursuant to the Company's 1988 Incentive Equity Plan (the
"Plan") and subject to the terms and conditions thereof and the terms and
conditions hereinafter set forth, the Company hereby grants to the Optionee a
non-qualified stock option (the "Option") to purchase 50,000 Class A Common
Shares, without par value, of the Company (the "Class A Shares"), at the
exercise price of twenty-seven dollars and twenty-five cents ($27.25) per Class
A Share (the "Exercise Price").
1. VESTING OF OPTION. (a) Unless terminated as hereinafter provided, the
Option shall be exercisable after the Optionee shall have been in the continuous
employ of the Company or a Subsidiary (as defined in the Plan) from the Date of
Grant to May 27, 1997.
(b) Notwithstanding the provisions of Section 1(a) hereof, the Option
shall become immediately exercisable in full upon any change in control of the
Company that shall
25
occur while the Optionee is an employee of the Company or a Subsidiary. For the
purposes of this agreement, the term "change in control" shall mean the
occurrence of any of the following events:
(i) all or substantially all of the assets of the Company are sold
or transferred to another corporation or entity, or the Company is
merged, consolidated or reorganized into or with another corporation or
entity, with the result that upon conclusion of the transaction less than
51 percent of the outstanding securities entitled to vote generally in
the election of directors or other capital interests of the acquiring
corporation or entity is owned, directly or indirectly, by the
shareholders of the Company generally prior to the transaction; or
(ii) there is a report filed on Schedule 13D or Schedule 14D-1 (or
any successor schedule, form or report thereto), as promulgated pursuant
to the Securities Exchange Act of 1934 (the "Exchange Act"), disclosing
that any person (as the term "person" is used in Section 13(d)(3) or
Section 14(d)(2) of the Exchange Act) has become the beneficial owner (as
the term "beneficial owner" is defined under Rule 13d-3 or any successor
rule or regulation thereto under the Exchange Act) of securities
representing 30 percent or more of the combined voting power of the
then-outstanding voting securities of the Company, excluding (A) any
person or group of persons who are officers, directors or employees of
the Company or any Subsidiary as of the date hereof or are related by
blood or marriage to the descendants of Xxxxx X. or Xxxx X. Xxxxxxx,
including any trusts or similar arrangements for any of the foregoing and
any foundations established by any of the foregoing and (B) any
underwriter or syndicate of underwriters acting on behalf of the Company
in a public offering of the Company's securities and any of their
transferees; or
(iii) the Company shall file a report or proxy statement with the
Securities and Exchange Commission (the "SEC") pursuant to the Exchange
Act disclosing in response to Item 1 of Form 8-K thereunder or Item 5(f)
of Schedule 14A thereunder (or any successor schedule, form, report or
item thereto) that a change in control of the
26
Company has or may have occurred, or will or may occur in the future,
pursuant to any then-existing contract or transaction; or
(iv) the individuals who constituted the Board at the beginning of
any period of two consecutive calendar years cease for any reason to
constitute at least a majority thereof unless the nomination for election
by the Company's shareholders of each new member of the Board was
approved by a vote of at least two-thirds of the members of the Board
still in office who were members of the Board at the beginning of any
such period.
In the event that any person described in Section 1(b)(ii) hereof files an
amendment to any report referred to in Section 1(b)(ii) hereof that shows the
beneficial ownership described in Section 1(b)(ii) hereof to have decreased to
less than 30 percent, or in the event that any anticipated change in control
referred to in Section 1(b)(iii) hereof does not occur following the filing with
the SEC of any report or proxy statement described in Section 1(b)(iii) hereof
because any contract or transaction referred to in Section 1(b)(iii) hereof is
cancelled or abandoned, the Committee may nullify the effect of Section 1(b)(ii)
or 1(b)(iii) hereof, as the case may be, and reinstate the provisions of Section
1(a) hereof by giving notice thereof to the Optionee; PROVIDED, HOWEVER, that
any such action by the Committee shall not prejudice any exercise of the Option
that may have occurred prior to the nullification and reinstatement. The
provisions of Section 1(b)(ii) hereof shall again become automatically effective
following any such nullification of the provisions thereof and reinstatement of
the provisions of Section 1(a) hereof in the event that any person described in
Section 1(b)(ii) hereof files a further amendment to any report referred to in
Section 1(b)(ii) hereof that shows the beneficial ownership described in Section
1(b)(ii) hereof to have again increased to 30 percent or more.
(c) Notwithstanding the provisions of Section 1(a) hereof, the Option
shall become immediately exercisable in full upon the death or disability (as
defined in the Plan) of the Optionee while in the employment of the Company or
any Subsidiary, or the Retirement (as defined in the Plan) of the Optionee with
the consent of the Board of Directors.
27
(d) To the extent that the Option shall have become exercisable in
accordance with the terms of this agreement, it may be exercised in whole or in
part from time to time thereafter.
2. TERMINATION OF OPTION. The Option shall terminate automatically and
without further notice on the earliest of the following dates:
(a) Three months after the date upon which the Optionee ceases to be an
employee of the Company or a Subsidiary, unless the cessation of his employment
(i) is a result of his or her death, Disability (as defined in the Plan) or
Retirement or (ii) occurs in a manner described in (d) or (e) below;
(b) Three years after the date of the death or Disability of the Optionee
while an employee of the Company or a Subsidiary or three years after the date
of Retirement of the Optionee;
(c) One year after the date of the death of the Optionee, if the Optionee
dies after the termination of his employment with the Company or a Subsidiary
and prior to the termination of the Option;
(d) Automatically and without further notice upon the termination of
Optionee's employment for Cause;
(e) If the Optionee, either during employment by the Company or after
termination of such employment, does not comply with each and every provision of
the Employment, Retirement and Consulting Agreement dated February 14, 1997
between the Optionee and the Company (the "ERC Agreement") applicable to the
Optionee, including, without limitation Paragraphs 10, 11, 12, 13 and 15 of the
ERC Agreement and the Board of Directors or the Compensation Committee shall so
find, the Optionee shall, forthwith upon notice of such finding, (i) return to
the Company, in exchange for payment by the Company of the option price paid
therefor, all the Class A Shares that the Optionee has not disposed of that were
purchased pursuant to this Agreement prior to the date of such noncompliance or
the commencement of such noncompliance with the ERC Agreement, and (ii) with
respect to any shares so purchased that the
28
Optionee has disposed of, pay to the Company in cash the difference between (A)
the option price paid therefor by the Optionee pursuant to this Agreement, and
(B) the closing price of the Class A Shares on the NASDAQ National Market on the
date of such purchase (or on the last trading day prior to such purchase, if
there was no trading on the purchase date). To the extent that such amounts are
not paid to the Company, the Company may set off the amounts so payable to it
against any amounts that may be owing from time to time by the Company or a
Subsidiary to the Optionee, whether as wages, deferred compensation or vacation
pay or in the form of any other benefit under the ERC Agreement or for any other
reason.
(f) ten years after the Date of Grant.
For purposes of this agreement, the following term shall be defined as
set forth below:
(i) "Cause" means a felony conviction of the Optionee or the
failure of the Optionee to contest prosecution for a felony, or
Optionee's willful misconduct or dishonesty, any of which is directly and
materially harmful to the business or reputation of the Company or any
Subsidiary.
3. PAYMENT OF EXERCISE PRICE. The Exercise Price shall be payable upon
exercise (a) in cash in the form of certified or bank check or other cash
equivalent acceptable to the Company, (b) by transfer to the Company of
nonforfeitable, unrestricted Common Shares, without par value, of the Company
("Common Shares") or Class A Shares that have been owned by the Optionee for at
least six months prior to the date of exercise, or (c) by any combination of the
methods of payment described in Sections 3(a) and 3(b) hereof. Nonforfeitable,
unrestricted Common Shares or Class A Shares that are transferred by the
Optionee in payment of all or any part of the Exercise Price shall be valued on
the basis of their fair market value as determined by the Committee from time to
time.
4. COMPLIANCE WITH LAW. Notwithstanding any other provision of this
agreement, the Option shall not be exercisable if the exercise or issuance
thereof would result in a violation of any law. To the extent that the Ohio
Securities Act shall be applicable to the Option, the Option
29
shall not be exercisable unless the Class A Shares or other securities covered
by the Option are (a) exempt from registration thereunder, (b) the subject of a
transaction that is exempt from compliance therewith, (c) registered by
description or qualification thereunder, or (d) the subject of a transaction
that shall have been registered by description thereunder.
5. TRANSFERABILITY AND EXERCISABILITY. The Option, including any interest
therein, shall not be transferable by the Optionee except by will or the laws of
descent and distribution, and the Option shall be exercisable during the
lifetime of the Optionee only by him or, in the event of his legal incapacity to
do so, by his guardian or legal representative acting on behalf of the Optionee
in a fiduciary capacity under state law and court supervision.
6. ADJUSTMENTS. The Committee shall make any adjustments in the Exercise
Price and the number or kind of shares of stock or other securities covered by
the Option that the Committee may determine to be equitably required to prevent
any dilution or expansion of the Optionee's rights under this agreement that
otherwise would 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 or partial or
complete liquidation involving the Company, or (c) other transaction or event
having an effect similar to any of those referred to in Section 6(a) or 6(b)
hereof. Furthermore, in the event that any transaction or event described or
referred to in the immediately preceding sentence shall occur, the Committee may
provide in substitution of any or all of the Optionee's rights under this
agreement such alternative consideration as the Committee may determine in good
faith to be equitable under the circumstances.
7. WITHHOLDING TAXES. If the Company shall be required to withhold any
federal, state, local or foreign tax in connection with any exercise of the
Option, the Optionee shall pay the tax or make provisions that are satisfactory
to the Company for the payment thereof.
8. CONTINUOUS EMPLOYMENT. For purposes of this Agreement, the continuous
employ of the Optionee with the Company or a Subsidiary shall not be deemed
interrupted, and
30
the Optionee shall not be deemed to have ceased to be an employee of the Company
or any Subsidiary, by reason of the transfer of his employment among the Company
and its Subsidiaries.
9. RIGHT TO TERMINATE EMPLOYMENT. No provision of this agreement shall
limit in any way whatsoever any right that the Company or a subsidiary may
otherwise have to terminate the employment of the Optionee at any time.
10. RELATION TO OTHER BENEFITS. Any economic or other benefit to the
Optionee under this agreement or the Plan shall not be taken into account in
determining any benefits to which the Optionee may be entitled under any
profit-sharing, retirement or other benefit or compensation plan maintained by
the Company or a subsidiary and shall not affect the amount of any life
insurance coverage available to any beneficiary under any life insurance plan
covering employees of the Company or a subsidiary.
11. AMENDMENTS. Any amendment to the Plan shall be deemed to be an
amendment to this agreement to the extent that the amendment is applicable
hereto; provided, however, that no amendment shall adversely affect the rights
of the Optionee with respect to the Option without the Optionee's consent.
12. SEVERABILITY. In the event that one or more of the provisions of this
agreement shall be invalidated for any reason by a court of competent
jurisdiction, any provision so invalidated shall be deemed to be separable from
the other provisions hereof, and the remaining provisions hereof shall continue
to be valid and fully enforceable.
13. GOVERNING LAW. This agreement is made under, and shall be construed
in accordance with, the internal substantive laws of the State of Ohio.
This agreement is executed by the Company on this 14th day of February,
1997.
THE LINCOLN ELECTRIC COMPANY
By /s/ XXXXXXX X. XXXX
----------------------------------
Xxxxxxx X. Xxxx
Vice President, Human Resources
31
The undersigned Optionee hereby acknowledges receipt of an executed
original of this agreement and accepts the Option granted hereunder, subject to
the terms and conditions of the Plan and the terms and conditions hereinabove
set forth.
/s/ XXXXXX X. XXXXXXXX
----------------------------------
Xxxxxx X. Xxxxxxxx
Date: February 14, 1997
32
EXHIBIT B
---------
RELEASE
-------
(a) In consideration of the payments made and to be made and the benefits
to be received by the undersigned (the "Executive") pursuant to Paragraphs 6, 7
and 8(a) of the Employment, Retirement and Consulting Agreement between The
Lincoln Electric Company and the Executive made the 14th day of February, 1997,
the Executive, for himself and his dependents, successors, assigns, heirs,
executors and administrators (and his and their legal representatives of every
kind), hereby releases, dismisses, remises and forever discharges The Lincoln
Electric Company, its predecessors, parents, subsidiaries, divisions, related or
affiliated companies, officers, directors, stockholders, members, employees,
heirs, successors, assigns, representatives, agents and counsel (the "Company")
from any and all arbitrations, claims, including claims for attorney's fees,
demands, damages, suits, proceedings, actions and/or causes of action of any
kind and every description, whether known or unknown, which Executive now has or
may have had for, upon, or by reason of any cause whatsoever (except that this
release shall not apply to the obligations of the Company arising under this
Agreement) ("claims"), against the Company, including but not limited to:
(i) any and all claims arising out of or relating to Executive's
employment by or service with the Company and his termination from the
Company;
(ii) any and all claims of discrimination, including but not limited
to claims of discrimination on the basis of sex, race, age, national
origin, marital status, religion or handicap, including, specifically, but
without limiting the generality of the foregoing, any claims under the Age
Discrimination in Employment Act, as amended, Title VII of the Civil Rights
Act of 1964, as amended, the Americans with Disabilities Act, Ohio Revised
Code Section 4101.17 and Ohio Revised Code Chapter 4112, including Sections
4112.02 and 4112.99 thereof; and
(iii) any and all claims of wrongful or unjust discharge or breach of
any contract or promise, express or implied.
(b) Executive understands and acknowledges that the Company does not admit
any violation of law, liability or invasion of any of his rights and that any
such violation, liability or invasion is expressly denied. The consideration
provided for this Release is made for the purpose of settling and extinguishing
all claims and rights (and every other similar or dissimilar matter) that
Executive ever had or now may have against the Company to the extent provided in
this Release. Executive further agrees and acknowledges that no representations,
promises or inducements have been made by the Company other than as appear in
this Agreement.
(c) Executive further agrees and acknowledges that:
33
(i) The release provided for herein releases claims to and including
the date of this Release;
(ii) He has been advised by the Company to consult with legal counsel
prior to executing this Release, has had an opportunity to consult with and
to be advised by legal counsel of his choice, fully understands the terms
of this Release, and enters into this Release freely, voluntarily and
intending to be bound;
(iii) He has been given a period of twenty-one (21) days to review and
consider the terms of this Release, prior to its execution and that he may
use as much of the twenty-one (21) day period as he desires; and
(iv) He may, within seven (7) days after execution, revoke this
Release. Revocation shall be made by delivering a written notice of
revocation to the Vice President of Human Resources at the Company. For
such revocation to be effective, written notice must be actually received
by the Vice President of Human Resources at the Company no later than the
close of business on the seventh (7th) day after Executive executes this
Release. If Executive does exercise his right to revoke this Release, all
of the terms and conditions of the Release shall be of no force and effect
and the Company shall not have any obligation to make payments or provide
benefits to Executive as set forth in Paragraphs 6 (to the extent not
vested in Executive on the 14th day of February, 1997) and 7 of the
Employment, Retirement and Consulting Agreement between the Company and the
Executive made the 14th day of February, 1997.
(d) Executive agrees that he will never file a lawsuit or other complaint
asserting any claim that is released in this Release.
(e) It is understood and agreed that Executive's resignation and retirement
are by mutual agreement between the Company and Executive, and that Executive
waives and releases any claim that he has or may have to reemployment after May
27, 1997.
34
IN WITNESS WHEREOF, the Executive has executed and delivered this Release
on the date set forth below.
XXXXXX X. XXXXXXXX
Witness: _____________________ __________________________________
Date: ________________________ Date: ____________________________
35
EXHIBIT C
---------
Argentina
Australia
Austria
Brazil
Canada
Chile
China
Columbia
Czech Republic
Denmark
England
Finland
France
Germany
Greece
Hungary
India
Indonesia
Ireland
Italy
Japan
Korea
Malaysia
Mexico
Netherlands
Northern Ireland
Norway
Peru
Phillipines
Poland
Portugal
Russia
Scotland
South Africa
Spain
Sweden
Taiwan
Thailand
United States
Venezuela
Vietnam
Wales
36
EXHIBIT D
---------
I. All Arc Welding Machines ranging from light duty models for light
industrial and farm use to heavy duty models for commercial and
industrial use in manual, semi-automatic, automatic and robotic welding.
II. All Arc Welding Consumables: Welding rods, fluxes and wires used in light
to heavy manufacturing of mild steel, alloy and hard surface
applications; coated manual or stick electrodes; solid electrodes
produced in coil form for continuous feeding in mechanized welding; cored
electrodes produced in coil form for continuous feeding in mechanized
welding; submerged arc electrodes and fluxes; self-shielded cored
electrodes; gas-shielded solid and cored electrodes.
III. All Arc Welding Power Sources and Automated Wire Feeding Systems.
IV. All Integral horsepower electric motors ranging principally from 1/3 to
250 horsepower, but including cast iron motors of up to 1,250 horsepower.
37
EXHIBIT E
---------
Xx. Xxxxxxxx may serve on the below-mentioned Boards and with such organizations
only in his individual capacity.
American Welding Society (on Foundation Board)
Case Western Reserve (on Visiting Committee)
Xxxxxxxxxxx School of Management
Cleveland Council on World Affairs (Chairman)
00 Xxxxxx Xxxxxx
Xxxxxxxxx, XX 00000-0000
Ohio Law Enforcement Agency (Fund Raising Captain)
Hope Lodge, American Cancer Society (on Board of Trustees - Chairman of Capital
Campaign)
Lake Erie College (on Board of Trustees)
50 Club (Member)
Cleveland Committee on Foreign Relations (Chairman)
French American Chamber of Commerce (Chairman on Advisory Committee)
Greater Cleveland Growth Association (Executive Committee)
World Trade Center, Chairman
International Trade Alliance (Chairman)
Cleveland World Trade Association (Member)
