Exhibit 10(q)
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LINCOLN ELECTRIC HOLDINGS, INC.
THE LINCOLN ELECTRIC COMPANY
$40,000,000 5.58% Senior Notes, Series A, due March 12, 2007
$30,000,000 5.89% Senior Notes, Series B, due March 12, 2009
and
$80,000,000 6.36% Senior Notes, Series C, due March 12, 2012
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NOTE PURCHASE AGREEMENT
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Dated as of March 12, 2002
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TABLE OF CONTENTS
SECTION HEADING PAGE
SECTION 1. AUTHORIZATION OF NOTES..............................................1
SECTION 2. SALE AND PURCHASE OF NOTES..........................................2
SECTION 3. CLOSING.............................................................2
SECTION 4. CONDITIONS TO CLOSING...............................................2
Section 4.1. Representations and Warranties......................................2
Section 4.2. Performance; No Default.............................................3
Section 4.3. Compliance Certificates.............................................3
Section 4.4. Opinions of Counsel.................................................3
Section 4.5. Purchase Permitted by Applicable Law, etc...........................3
Section 4.6. Sale of Other Notes.................................................3
Section 4.7. Payment of Special Counsel Fees.....................................4
Section 4.8. Private Placement Number............................................4
Section 4.9. Changes in Corporate Structure......................................4
Section 4.10. Proceedings and Documents...........................................4
Section 4.11. Funding Instructions................................................4
SECTION 5. REPRESENTATIONS AND WARRANTIES OF THE OBLIGORS......................4
Section 5.1. Organization; Power and Authority...................................4
Section 5.2. Authorization, etc..................................................5
Section 5.3. Disclosure..........................................................5
Section 5.4. Organization and Ownership of Shares of Subsidiaries................5
Section 5.5. Financial Statements................................................6
Section 5.6. Compliance with Laws, Other Instruments, etc........................6
Section 5.7. Governmental Authorizations, etc....................................6
Section 5.8. Litigation; Observance of Statutes and Orders.......................6
Section 5.9. Taxes...............................................................7
Section 5.10. Title to Property; Leases...........................................7
Section 5.11. Licenses, Permits, etc..............................................7
Section 5.12. Compliance with ERISA...............................................7
Section 5.13. Private Offering by the Obligors....................................8
Section 5.14. Use of Proceeds; Margin Regulations.................................9
Section 5.15. Existing Indebtedness...............................................9
Section 5.16. Foreign Assets Control Regulations, etc.............................9
Section 5.17. Status under Certain Statutes.......................................9
Section 5.18. Existing Investments...............................................10
SECTION 6. REPRESENTATIONS OF THE PURCHASER...................................10
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Section 6.1. Purchase for Investment............................................10
Section 6.2. Source of Funds....................................................10
SECTION 7. INFORMATION AS TO OBLIGORS.........................................11
Section 7.1. Financial and Business Information.................................11
Section 7.2. Officer's Certificate..............................................15
Section 7.3. Inspection.........................................................15
SECTION 8. PREPAYMENT OF THE NOTES............................................16
Section 8.1. Required Prepayments...............................................16
Section 8.2. Optional Prepayments with Make-Whole Amount........................16
Section 8.3. Prepayment of Notes upon Change of Control.........................16
Section 8.4. Allocation of Partial Prepayments..................................18
Section 8.5. Maturity; Surrender, etc...........................................18
Section 8.6. Purchase of Notes..................................................18
Section 8.7. Make-Whole Amount..................................................18
SECTION 9. AFFIRMATIVE COVENANTS..............................................20
Section 9.1. Compliance with Law................................................20
Section 9.2. Insurance..........................................................20
Section 9.3. Maintenance of Properties..........................................20
Section 9.4. Payment of Taxes...................................................21
Section 9.5. Corporate Existence, etc...........................................21
Section 9.6. Notes to Rank Pari Passu...........................................21
Section 9.7. Ownership of the Company...........................................21
Section 9.8. Changes in Status of Subsidiaries..................................21
SECTION 10. NEGATIVE COVENANTS.................................................22
Section 10.1. Transactions with Affiliates.......................................22
Section 10.2. Fixed Charges Coverage Ratio.......................................22
Section 10.3. Leverage Ratio.....................................................22
Section 10.4. Priority Debt......................................................23
Section 10.5. Investments........................................................23
Section 10.6. Mergers, Consolidations and Sales of Assets........................24
Section 10.7. Limitation on Liens................................................28
Section 10.8. Sale-and-Leaseback Transactions....................................30
SECTION 11. EVENTS OF DEFAULT..................................................30
SECTION 12. REMEDIES ON DEFAULT, ETC...........................................32
Section 12.1. Acceleration.......................................................32
Section 12.2. Other Remedies.....................................................33
Section 12.3. Rescission.........................................................33
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Section 12.4. No Waivers or Election of Remedies, Expenses, etc..................34
SECTION 13. REGISTRATION; EXCHANGE; SUBSTITUTION OF NOTES......................34
Section 13.1. Registration of Notes..............................................34
Section 13.2. No Transfers of Notes to Competitors; Transfer and
Exchange of Notes.............................................34
Section 13.3. Replacement of Notes...............................................35
SECTION 14. PAYMENTS ON NOTES..................................................35
Section 14.1. Place of Payment...................................................35
Section 14.2. Home Office Payment................................................35
SECTION 15. EXPENSES, ETC......................................................36
Section 15.1. Transaction Expenses...............................................36
Section 15.2. Survival...........................................................36
SECTION 16. SURVIVAL OF REPRESENTATIONS AND WARRANTIES; ENTIRE AGREEMENT.......36
SECTION 17. AMENDMENT AND WAIVER...............................................37
Section 17.1. Requirements.......................................................37
Section 17.2. Solicitation of Holders of Notes...................................37
Section 17.3. Binding Effect, etc................................................38
Section 17.4. Notes Held by the Obligors, etc....................................38
SECTION 18. NOTICES............................................................38
SECTION 19. REPRODUCTION OF DOCUMENTS..........................................39
SECTION 20. CONFIDENTIAL INFORMATION...........................................39
SECTION 21. SUBSTITUTION OF PURCHASER..........................................40
SECTION 22. MISCELLANEOUS......................................................40
Section 22.1. Successors and Assigns.............................................40
Section 22.2. Payments Due on Non-Business Days..................................40
Section 22.3. Severability.......................................................41
Section 22.4. Construction.......................................................41
Section 22.5. Counterparts.......................................................41
Section 22.6. Governing Law......................................................41
Section 22.7. Consent to Jurisdiction and Service of Process.....................41
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SCHEDULE A -- INFORMATION RELATING TO PURCHASERS
SCHEDULE B -- DEFINED TERMS
SCHEDULE 5.3 -- Disclosure Materials
SCHEDULE 5.4 -- Subsidiaries of the Obligors and Ownership of
Subsidiary Stock
SCHEDULE 5.5 -- Financial Statements
SCHEDULE 5.8 -- Certain Litigation
SCHEDULE 5.11 -- Patents, etc.
SCHEDULE 5.14 -- Use of Proceeds
SCHEDULE 5.15 -- Existing Indebtedness
SCHEDULE 5.18 -- Existing Investments
EXHIBIT 1-A -- Form of 5.58% Senior Note, Series A, due
March 12, 2007
EXHIBIT 1-B -- Form of 5.89% Senior Note, Series B, due
March 12, 2009
EXHIBIT 1-C -- Form of 6.36% Senior Note, Series C, due
March 12, 2012
EXHIBIT 4.4(a) -- Description of Opinion of Counsel to the
Obligors
EXHIBIT 4.4(b) -- Description of Opinion of Special Counsel to
the Purchasers
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LINCOLN ELECTRIC HOLDINGS, INC.
THE LINCOLN ELECTRIC COMPANY
22801 SAINT CLAIR AVENUE
CLEVELAND, OH 44117-1199
$40,000,000 5.58% Senior Notes, Series A, due March 12, 2007
$30,000,000 5.89% Senior Notes, Series B, due March 12, 2009
and
$80,000,000 6.36% Senior Notes, Series C, due March 12, 2012
Dated as of
March 12, 2002
TO EACH OF THE PURCHASERS LISTED IN
THE ATTACHED SCHEDULE A:
Ladies and Gentlemen:
LINCOLN ELECTRIC HOLDINGS, INC., an Ohio corporation ("Holdings") and
THE LINCOLN ELECTRIC COMPANY, an Ohio corporation (the "Company", and together
with Holdings are each hereinafter referred to as an "Obligor" and collectively
as the "Obligors"), jointly and severally agree with the Purchasers named on
Schedule A hereto as follows:
SECTION 1. AUTHORIZATION OF NOTES.
The Obligors will authorize the issue and sale of (i) $40,000,000
aggregate principal amount of their 5.58% Senior Notes, Series A, due March 12,
2007, (ii) $30,000,000 aggregate principal amount of their 5.89% Senior Notes,
Series B, due March 12, 2009, and (iii) $80,000,000 aggregate principal amount
of their 6.36% Senior Notes, Series C, due March 12, 2012 (respectively, the
"Series A Notes", "Series B Notes" and the "Series C Notes", each being a
"Series" of Notes and collectively the "Notes", such term to include any such
notes issued in substitution therefor pursuant to Section 13 of this Agreement).
The Series A Notes shall be substantially in the form set out in Exhibit 1-A,
the Series B Notes shall be substantially in the form set out in Exhibit 1-B and
the Series C Notes shall be substantially in the form set out in Exhibit 1-C, in
each case, with such changes therefrom, if any, as may be approved by each of
the Purchasers and the Obligors.
Certain capitalized terms used in this Agreement are defined in
Schedule B; references to a "Schedule" or an "Exhibit" are, unless otherwise
specified, to a Schedule or an Exhibit attached to this Agreement.
Lincoln Electric Holdings, Inc. Note Purchase Agreement
The Lincoln Electric Company
SECTION 2. SALE AND PURCHASE OF NOTES.
Subject to the terms and conditions of this Agreement, the Obligors
will issue and sell to each Purchaser and such Purchaser will purchase from the
Obligors, at the Closing provided for in Section 3, Notes in the principal
amount and of the Series specified opposite such Purchaser's name in Schedule A
at the purchase price of 100% of the principal amount thereof. The obligations
of each of the Purchasers under this Agreement are several and not joint
obligations and no Purchaser shall have any obligation under this Agreement nor
any liability to any Person for the performance or nonperformance by any other
Purchaser hereunder.
SECTION 3. CLOSING.
The sale and purchase of the Notes to be purchased by the Purchasers
shall occur at the offices of Chapman and Cutler, 111 West Monroe Street,
Chicago, Illinois 60603, at 10:00 A.M. Chicago time, at a closing (the
"Closing") on March 12, 2002 or on such other Business Day thereafter on or
prior to March 29, 2002 as may be agreed upon by the Obligors and each of the
Purchasers. At the Closing the Obligors will deliver to each Purchaser the Notes
of each Series to be purchased by such Purchaser in the form of a single Note of
such Series (or such greater number of Notes in denominations of at least
$100,000 as such Purchaser may request) dated the date of the Closing and
registered in such Purchaser's name (or in the name of its nominee), against
delivery by such Purchaser to the Obligors or their order of immediately
available funds in the amount of the purchase price therefor by wire transfer of
immediately available funds for the account of the Obligors. If at the Closing
the Obligors shall fail to tender such Notes to any Purchaser as provided above
in this Section 3, or any of the conditions specified in Section 4 shall not
have been fulfilled to any Purchaser's satisfaction, such Purchaser shall, at
its election, be relieved of all further obligations under this Agreement,
without thereby waiving any rights it may have by reason of such failure or such
nonfulfillment.
SECTION 4. CONDITIONS TO CLOSING.
Each Purchaser's obligation to purchase and pay for the Notes to be
sold to such Purchaser at the Closing is subject to the fulfillment to such
Purchaser's reasonable satisfaction, prior to or at the Closing, of the
following conditions:
Section 4.1. Representations and Warranties. The representations and
warranties of the Obligors in this Agreement shall be correct when made and at
the time of the Closing (or if such representation or warranty is expressly
stated to have been made as of a specific date, at such specific date).
Section 4.2. Performance; No Default. Each of the Obligors shall have
performed and complied with all agreements and conditions contained in this
Agreement required to be performed or complied with by it prior to or at the
Closing, and after giving effect to the issue and sale of the Notes (and the
application of the proceeds thereof as contemplated by Schedule 5.14), no
Default or Event of Default shall have occurred and be continuing.
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Lincoln Electric Holdings, Inc. Note Purchase Agreement
The Lincoln Electric Company
Section 4.3. Compliance Certificates.
(a) Officer's Certificate. Each of the Obligors shall have
delivered to such Purchaser an Officer's Certificate, dated the date of
the Closing, certifying that the conditions specified in Sections 4.1,
4.2 and 4.9 have been fulfilled.
(b) Secretary's Certificate. Each of the Obligors shall have
delivered to such Purchaser a certificate certifying as to the
resolutions attached thereto and other corporate proceedings relating
to the authorization, execution and delivery of the Notes and this
Agreement.
Section 4.4. Opinions of Counsel. Such Purchaser shall have received
opinions in form and substance reasonably satisfactory to such Purchaser, dated
the date of the Closing (a) from Jones, Day, Reavis & Pogue, special counsel for
the Obligors, and from Frederick G. Stueber, Esq., Senior Vice President,
General Counsel and Secretary of each of the Obligors, collectively covering the
matters set forth in Exhibit 4.4(a) (and the Obligors hereby instruct their
counsel to deliver such opinions to such Purchaser) and (b) from Chapman and
Cutler, the Purchasers' special counsel in connection with such transactions,
substantially in the form set forth in Exhibit 4.4(b) and covering such other
matters incident to such transactions as such Purchaser may reasonably request.
Section 4.5. Purchase Permitted by Applicable Law, etc. On the date of
the Closing such Purchaser's purchase of Notes shall (i) be permitted by the
laws and regulations of each jurisdiction to which such Purchaser is subject,
without recourse to provisions (such as Section 1405(a)(8) of the New York
Insurance Law) permitting limited investments by insurance companies without
restriction as to the character of the particular investment, (ii) not violate
any applicable law or regulation (including, without limitation, Regulation T, U
or X of the Board of Governors of the Federal Reserve System) and (iii) not
subject such Purchaser to any tax, penalty or liability under or pursuant to any
applicable law or regulation, which law or regulation was not in effect on the
date hereof.
Section 4.6. Sale of Other Notes. Contemporaneously with the Closing,
the Obligors shall sell to each of the Purchasers, and each of the Purchasers
shall purchase, the Notes to be purchased by it at the Closing as specified in
Schedule A.
Section 4.7. Payment of Special Counsel Fees. Without limiting the
provisions of Section 15.1, the Obligors shall have paid on or before the
Closing the fees, charges and disbursements of Purchasers' special counsel
referred to in Section 4.4 to the extent reflected in a statement of such
counsel rendered to the Obligors at least one Business Day prior to the Closing.
Section 4.8. Private Placement Number. A Private Placement number
issued by Standard & Poor's CUSIP Service Bureau (in cooperation with the
Securities Valuation Office of the National Association of Insurance
Commissioners) shall have been obtained for each Series of Notes.
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Lincoln Electric Holdings, Inc. Note Purchase Agreement
The Lincoln Electric Company
Section 4.9. Changes in Corporate Structure. No Obligor shall have
changed its jurisdiction of incorporation or been a party to any merger or
consolidation and no Obligor shall have succeeded to all or any substantial part
of the liabilities of any other entity, at any time following the date of the
most recent financial statements referred to in Schedule 5.5.
Section 4.10. Proceedings and Documents. All corporate and other
proceedings in connection with the transactions contemplated by this Agreement
and all documents and instruments incident to such transactions shall be
satisfactory to such Purchaser and Purchasers' special counsel, and such
Purchaser and Purchasers' special counsel shall have received all such
counterpart originals or certified or other copies of such documents as such
Purchaser or such Purchaser's special counsel may reasonably request.
Section 4.11. Funding Instructions. At least three Business Days prior
to the date of such Closing, such Purchaser shall have received written
instructions executed by a Responsible Officer of each of the Obligors directing
the manner of the payment of funds and setting forth (a) the name and address of
the transferee bank, (b) such transferee bank's ABA number, (c) the account name
and number into which the purchase price for the Notes is to be deposited, and
(d) the name and telephone number of the account representative responsible for
verifying receipt of such funds.
SECTION 5. REPRESENTATIONS AND WARRANTIES OF THE OBLIGORS.
Each Obligor, jointly and severally, represents and warrants to each of
the Purchasers that:
Section 5.1. Organization; Power and Authority. Each Obligor is a
corporation duly organized, validly existing and in good standing under the laws
of its jurisdiction of incorporation, and is duly qualified as a foreign
corporation and is in good standing in each jurisdiction in which such
qualification is required by law, other than those jurisdictions as to which the
failure to be so qualified or in good standing would not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect. Each
Obligor has the corporate power and authority to own or hold under lease the
properties it purports to own or hold under lease, to transact the business it
transacts and proposes to transact, to execute and deliver this Agreement and
the Notes and to perform the provisions hereof and thereof.
Section 5.2. Authorization, etc. This Agreement and the Notes have been
duly authorized by all necessary corporate action on the part of each Obligor,
and this Agreement constitutes, and upon execution and delivery thereof each
Note will constitute, a legal, valid and binding obligation of each Obligor
enforceable against such Obligor in accordance with its terms, except as such
enforceability may be limited by (i) applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting the enforcement of
creditors' rights generally and (ii) general principles of equity (regardless of
whether such enforceability is considered in a proceeding in equity or at law).
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Lincoln Electric Holdings, Inc. Note Purchase Agreement
The Lincoln Electric Company
Section 5.3. Disclosure. The Obligors, through their agent, PNC Capital
Markets, Inc., have delivered to each of the Purchasers a copy of a Confidential
Offering Memorandum, dated January, 2002 (the "Memorandum"), relating to the
transactions contemplated hereby. Except as disclosed in Schedule 5.3, this
Agreement, the Memorandum, the documents, certificates or other writings
identified in Schedule 5.3 and the financial statements listed in Schedule 5.5,
taken as a whole, do not contain any untrue statement of a material fact or omit
to state any material fact necessary to make the statements therein not
misleading in light of the circumstances under which they were made. Except as
disclosed in the Memorandum or as expressly described in Schedule 5.3, or in the
financial statements listed in Schedule 5.5, since December 31, 2001, there has
been no change in the financial condition, operations, business or properties of
Holdings or any of its Restricted Subsidiaries except changes that individually
or in the aggregate would not reasonably be expected to have a Material Adverse
Effect.
Section 5.4. Organization and Ownership of Shares of Subsidiaries. (a)
Schedule 5.4 is (except as noted therein) a complete and correct list of each
Obligor's Subsidiaries, showing, as to each Subsidiary (i) the correct name
thereof, (ii) the jurisdiction of its organization and (iii) the percentage of
shares of each class of its capital stock or similar equity interests
outstanding owned by each Obligor and each other Subsidiary. All Subsidiaries of
the Obligors on the date of the Closing are Restricted Subsidiaries.
(b) All of the outstanding shares of capital stock or similar equity
interests of each Subsidiary shown in Schedule 5.4 as being owned by the
Obligors and their Subsidiaries have been validly issued, are fully paid and
nonassessable and are owned by the Obligors or another Subsidiary free and clear
of any Lien (except as otherwise disclosed in Schedule 5.4).
(c) Each Subsidiary identified in Schedule 5.4 is a corporation or
other legal entity duly organized, validly existing and in good standing under
the laws of its jurisdiction of organization, and is duly qualified as a foreign
corporation or other legal entity and is in good standing in each jurisdiction
in which such qualification is required by law, other than those jurisdictions
as to which the failure to be so qualified or in good standing would not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect. Each such Subsidiary has the corporate or other power and
authority to own or hold under lease the properties it purports to own or hold
under lease and to transact the business it transacts and proposes to transact.
Section 5.5. Financial Statements. The Obligors have delivered to each
Purchaser copies of the financial statements listed on Schedule 5.5 of Holdings
and its Restricted Subsidiaries on a consolidated basis. The financial
statements (including in each case the related schedules and notes) fairly
present in all material respects the consolidated financial position of Holdings
and its Restricted Subsidiaries as of the respective dates specified in such
Schedule and the consolidated results of their operations and cash flows for the
respective periods so specified and have been prepared in accordance with GAAP
consistently applied throughout the periods involved except as set forth in the
notes thereto (subject, in the case of any interim financial statements, to
normal year-end adjustments).
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Lincoln Electric Holdings, Inc. Note Purchase Agreement
The Lincoln Electric Company
Section 5.6. Compliance with Laws, Other Instruments, etc. The
execution, delivery and performance by the Obligors of this Agreement and the
Notes will not (i) contravene, result in any breach of, or constitute a default
under, or result in the creation of any Lien in respect of any property of
either Obligor or any Restricted Subsidiary under, any indenture, mortgage, deed
of trust, loan, purchase or credit agreement, lease, corporate charter or
by-laws, or any other Material agreement or instrument to which either Obligor
or any Restricted Subsidiary is bound or by which either Obligor or any
Restricted Subsidiary or any of their respective properties may be bound or
affected, (ii) conflict with or result in a breach of any of the terms,
conditions or provisions of any order, judgment, decree, or ruling of any court,
arbitrator or Governmental Authority applicable to either Obligor or any
Restricted Subsidiary or (iii) violate any provision of any statute or other
rule or regulation of any Governmental Authority applicable to either Obligor or
any Restricted Subsidiary which violation or violations under this clause (iii),
individually or in the aggregate, would reasonably be expected to have a
Material Adverse Effect.
Section 5.7. Governmental Authorizations, etc. No consent, approval or
authorization of, or registration, filing or declaration with, any Governmental
Authority is required in connection with the execution, delivery or performance
by either Obligor of this Agreement or the Notes.
Section 5.8. Litigation; Observance of Statutes and Orders. (a) Except
as disclosed in Schedule 5.8, there are no actions, suits or proceedings pending
or, to the knowledge of either Obligor, threatened against or affecting either
Obligor or any Restricted Subsidiary or any property of either Obligor or any
Restricted Subsidiary in any court or before any arbitrator of any kind or
before or by any Governmental Authority that, individually or in the aggregate,
would reasonably be expected to have a Material Adverse Effect.
(b) Neither Obligor nor any Restricted Subsidiary is in default under
any order, judgment, decree or ruling of any court, arbitrator or Governmental
Authority or is in violation of any applicable law, ordinance, rule or
regulation (including without limitation Environmental Laws) of any Governmental
Authority, which default or violation, individually or in the aggregate, would
reasonably be expected to have a Material Adverse Effect.
Section 5.9. Taxes. The Obligors and all Restricted Subsidiaries have
filed all income tax returns that are required to have been filed in any
jurisdiction, and have paid all taxes shown to be due and payable on such
returns and all other taxes and assessments payable by them, to the extent such
taxes and assessments have become due and payable and before they have become
delinquent, except for any taxes and assessments (i) the amount of which is not
individually or in the aggregate Material or (ii) the amount, applicability or
validity of which is currently being contested in good faith by appropriate
proceedings and with respect to which an Obligor or a Restricted Subsidiary, as
the case may be, has established adequate reserves in accordance with GAAP. The
Federal income tax liabilities of the Obligors and their Restricted Subsidiaries
have been determined by the Internal Revenue Service and paid for all fiscal
years up to and including the fiscal year ended December 31, 1996.
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Lincoln Electric Holdings, Inc. Note Purchase Agreement
The Lincoln Electric Company
Section 5.10. Title to Property; Leases. The Obligors and the Restricted
Subsidiaries have good and sufficient title to their respective Material
properties, including all such properties reflected in the most recent audited
balance sheet referred to in Section 5.5 or purported to have been acquired by
an Obligor or any Restricted Subsidiary after said date (except as sold or
otherwise disposed of in the ordinary course of business), in each case free and
clear of Liens prohibited by this Agreement, except for those defects in title
and Liens that, individually or in the aggregate, would not reasonably be
expected to have a Material Adverse Effect. All Material leases are valid and
subsisting and are in full force and effect in all material respects.
Section 5.11. Licenses, Permits, etc. Except as disclosed in Schedule
5.11, the Obligors and the Restricted Subsidiaries own or possess all licenses,
permits, franchises, authorizations, patents, copyrights, service marks,
trademarks and trade names, or rights thereto, that are Material, without known
conflict with the rights of others, except for those conflicts that,
individually or in the aggregate, would not reasonably be expected to have a
Material Adverse Effect.
Section 5.12. Compliance with ERISA. (a) Holdings and each ERISA
Affiliate have operated and administered each Plan in compliance with all
applicable laws except for such instances of noncompliance as have not resulted
in and could not reasonably be expected to result in a Material Adverse Effect.
Neither Holdings nor any ERISA Affiliate has incurred any liability pursuant to
Title I or IV of ERISA or the penalty or excise tax provisions of the Code
relating to employee benefit plans (as defined in Section 3 of ERISA), and no
event, transaction or condition has occurred or exists that would reasonably be
expected to result in the incurrence of any such liability by Holdings or any
ERISA Affiliate, or in the imposition of any Lien on any of the rights,
properties or assets of Holdings or any ERISA Affiliate, in either case pursuant
to Title I or IV of ERISA or to such penalty or excise tax provisions or to
Section 401(a)(29) or 412 of the Code, other than such liabilities or Liens as
would not be individually or in the aggregate Material.
(b) The present value of the aggregate benefit liabilities under each
of the Plans (other than Multiemployer Plans), determined as of January 1, 2001
on the basis of the actuarial assumptions specified for funding purposes in such
Plan's most recent actuarial valuation report, did not exceed the aggregate
current value of the assets of such Plan allocable to such benefit liabilities
by more than $60,000 in the case of any single Plan and by more than $0 in the
aggregate for all Plans, provided that Holdings' Annual Report on Form 10-K for
the Fiscal Year ended December 31, 2001 indicated that, as of December 31, 2001,
the projected benefit obligation under all such Plans exceeds the plan assets of
such Plan by not more than $47,000,000. The term "benefit liabilities" has the
meaning specified in Section 4001 of ERISA and the terms "current value" and
"present value" have the meanings specified in Section 3 of ERISA.
(c) Holdings and its ERISA Affiliates have not incurred withdrawal
liabilities (and are not subject to contingent withdrawal liabilities) under
section 4201 or 4204 of ERISA in respect of Multiemployer Plans that
individually or in the aggregate are Material.
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Lincoln Electric Holdings, Inc. Note Purchase Agreement
The Lincoln Electric Company
(d) The expected post-retirement benefit obligation (determined as of
the last day of Holdings' most recently ended Fiscal Year in accordance with
Financial Accounting Standards Board Statement No. 106, without regard to
liabilities attributable to continuation coverage mandated by section 4980B of
the Code) of Holdings and its Restricted Subsidiaries is not Material.
(e) The execution and delivery of this Agreement and the issuance and
sale of the Notes hereunder will not involve any transaction that is subject to
the prohibitions of section 406 of ERISA or in connection with which a tax could
be imposed pursuant to section 4975(c)(1)(A)-(D) of the Code. The representation
by each Obligor in the first sentence of this Section 5.12(e) is made in
reliance upon and subject to the accuracy of each Purchaser's representation in
Section 6.2 as to the sources of the funds to be used to pay the purchase price
of the Notes to be purchased by such Purchaser.
Section 5.13. Private Offering by the Obligors. Neither Obligor nor PNC
Capital Markets, Inc. (the only Person authorized or employed by either Obligor
to act on its behalf in connection with the offer of the Notes or any similar
securities) has offered the Notes or any similar securities for sale to, or
solicited any offer to buy any of the same from, or otherwise approached or
negotiated in respect thereof with, any person other than the Purchasers and not
more than 35 other Institutional Investors, each of which has been offered the
Notes at a private sale for investment. Neither Obligor nor PNC Capital Markets,
Inc. (the only Person authorized or employed by either Obligor to act on its
behalf in connection with the offer of the Notes or any similar securities) has
taken, or will take, any action that would subject the issuance or sale of the
Notes to the registration requirements of Section 5 of the Securities Act.
Section 5.14. Use of Proceeds; Margin Regulations. The Obligors will
apply the proceeds of the sale of the Notes as set forth in Schedule 5.14. No
part of the proceeds from the sale of the Notes hereunder will be used, directly
or indirectly, for the purpose of buying or carrying any margin stock within the
meaning of Regulation U of the Board of Governors of the Federal Reserve System
(12 CFR 221), or for the purpose of buying or carrying or trading in any
securities under such circumstances as to involve either Obligor in a violation
of Regulation X of said Board (12 CFR 224) or to involve any broker or dealer in
a violation of Regulation T of said Board (12 CFR 220). Margin stock does not
constitute more than 5% of the value of the consolidated assets of Holdings and
its Restricted Subsidiaries and the Obligors do not have any present intention
that margin stock will constitute more than 5% of the value of such assets. As
used in this Section, the terms "margin stock" and "purpose of buying or
carrying" shall have the meanings assigned to them in said Regulation U.
Section 5.15. Existing Indebtedness. Schedule 5.15 sets forth a complete
and correct list of all outstanding Indebtedness of Holdings and its Restricted
Subsidiaries as of December 31, 2001, since which date there has been no
Material change in the amounts, interest rates, sinking funds, installment
payments or maturities of the Indebtedness of Holdings or its Restricted
Subsidiaries. Neither Obligor nor any Restricted Subsidiary is in default and no
waiver of default is currently in effect, in the payment of any principal or
interest on any Indebtedness of such Obligor or such Restricted Subsidiary and
no event or condition exists with respect to any
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Lincoln Electric Holdings, Inc. Note Purchase Agreement
The Lincoln Electric Company
Indebtedness of either Obligor or any Restricted Subsidiary that would permit
(or that with notice or the lapse of time, or both, would permit) one or more
Persons to cause such Indebtedness to become due and payable before its stated
maturity or before its regularly scheduled dates of payment.
Section 5.16. Foreign Assets Control Regulations, etc. Neither the sale
of the Notes by the Obligors hereunder nor their use of the proceeds thereof
will violate the Trading with the Enemy Act, as amended, or any of the foreign
assets control regulations of the United States Treasury Department (31 CFR,
Subtitle B, Chapter V, as amended) or any enabling legislation or executive
order relating thereto. Without limiting the foregoing, neither the Obligors nor
any Subsidiary (i) is or will become a person whose property or interests in
property are blocked pursuant to Section 1 of Executive Order 13224 of September
23, 2001, Blocking Property and Prohibiting Transactions With Persons Who
Commit, Threaten to Commit, or Support Terrorism (66 Fed. Reg. 49079 (2001)) or
(ii) to its knowledge, after reasonable inquiry, engages or will engage in any
dealings or transactions, or be otherwise associated, with any such person.
Section 5.17. Status under Certain Statutes. Neither Obligor nor any of
their Subsidiaries is subject to regulation under the Investment Company Act of
1940, as amended, the Public Utility Holding Company Act of 1935, as amended,
the ICC Termination Act of 1995, as amended, or the Federal Power Act, as
amended.
Section 5.18. Existing Investments. Schedule 5.18 sets forth a complete
and correct list of all outstanding Investments of Holdings and each of its
Restricted Subsidiaries as of the date of the Closing.
SECTION 6. REPRESENTATIONS OF THE PURCHASER.
Section 6.1. Purchase for Investment. Each Purchaser represents that it
is a Person duly organized, validly existing and in good standing under the laws
of the jurisdiction of its organization. Such Purchaser is purchasing the Notes
for its own account or for one or more separate accounts maintained by it or for
the account of one or more pension or trust funds and not with a view to the
distribution or sale thereof, provided that (i) the disposition and sale of such
Purchaser's or their property shall at all times be within its or their control
and (ii) you and each such pension trust fund are "accredited investors" within
the meaning of Rule 501(a)(1), (2), (3) or (7) under the Securities Act. Each
Purchaser understands that the Notes have not been, and will not be, registered
under the Securities Act and may be resold only if an exemption from
registration is available, except under circumstances where neither such
registration nor such an exemption is required by law, and that the Obligors are
not required to register the Notes.
Section 6.2. Source of Funds. Each Purchaser represents that at least
one of the following statements is an accurate representation as to each source
of funds (a "Source") to be used by such Purchaser to pay the purchase price of
the Notes to be purchased by it hereunder:
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Lincoln Electric Holdings, Inc. Note Purchase Agreement
The Lincoln Electric Company
(a) the Source is an "insurance company general account"
within the meaning of Department of Labor Prohibited Transaction
Exemption ("PTE") 95-60 (issued July 12, 1995) and there is no employee
benefit plan, treating as a single plan, all plans maintained by the
same employer or employee organization, with respect to which the
amount of the general account reserves and liabilities for all
contracts held by or on behalf of such plan, exceeds ten percent (10%)
of the total reserves and liabilities of such general account
(exclusive of separate account liabilities) plus surplus, as set forth
in the NAIC Annual Statement filed with such Purchaser's state of
domicile; or
(b) the Source is either (i) an insurance company pooled
separate account, within the meaning of PTE 90-1 (issued January 29,
1990), or (ii) a bank collective investment fund, within the meaning of
the PTE 91-38 (issued July 12, 1991) and, except as such Purchaser has
disclosed to the Obligors in writing pursuant to this paragraph (b), no
employee benefit plan or group of plans maintained by the same employer
or employee organization beneficially owns more than 10% of all assets
allocated to such pooled separate account or collective investment
fund; or
(c) the Source constitutes assets of an "investment fund"
(within the meaning of Part V of the QPAM Exemption) managed by a
"qualified professional asset manager" or "QPAM" (within the meaning of
Part V of the QPAM Exemption), no employee benefit plan's assets that
are included in such investment fund, when combined with the assets of
all other employee benefit plans established or maintained by the same
employer or by an affiliate (within the meaning of Section V(c)(1) of
the QPAM Exemption) of such employer or by the same employee
organization and managed by such QPAM, exceed 20% of the total client
assets managed by such QPAM, the conditions of Part I(c) and (g) of the
QPAM Exemption are satisfied, neither the QPAM nor a person controlling
or controlled by the QPAM (applying the definition of "control" in
Section V(e) of the QPAM Exemption) owns a 5% or more interest in
either Obligor and (i) the identity of such QPAM and (ii) the names of
all employee benefit plans whose assets are included in such investment
fund have been disclosed to the Obligors in writing pursuant to this
paragraph (c); or
(d) the Source is a governmental plan; or
(e) the Source is one or more employee benefit plans, or a
separate account or trust fund comprised of one or more employee
benefit plans, each of which has been identified to the Obligors in
writing pursuant to this paragraph (e); or
(f) the Source does not include assets of any employee
benefit plan, other than a plan exempt from the coverage of ERISA.
If any Purchaser or any subsequent transferee of the Notes indicates
that such Purchaser or such transferee are relying on any representation
contained in paragraph (b), (c) or (e) above, the Obligors shall deliver a
certificate on the date of the Closing, with respect to such Purchaser and, on
or prior to the date of any transfer of the Notes, with respect to any such
transferee of the
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Lincoln Electric Holdings, Inc. Note Purchase Agreement
The Lincoln Electric Company
Notes, which certificate shall either state that (i) each Obligor is neither a
"party in interest" (as defined in Title I, Section 3(14) of ERISA) nor a
"disqualified person" (as defined in Section 4975(e)(2) of the Internal Revenue
Code of 1986, as amended), with respect to any plan identified pursuant to
paragraph (b) or (e) above, or (ii) with respect to any plan identified pursuant
to paragraph (c) above, neither Obligor nor any "affiliate" (as defined in
Section V(c) of the QPAM Exemption) has at such time, and during the immediately
preceding one year, exercised the authority to appoint or terminate said QPAM as
manager of the assets of any plan identified in writing pursuant to paragraph
(c) above or to negotiate the terms of said QPAM's management agreement on
behalf of any such identified plans.
As used in this Section 6.2, the terms "employee benefit plan", "governmental
plan", "party in interest" and "separate account" shall have the respective
meanings assigned to such terms in Section 3 of ERISA.
SECTION 7. INFORMATION AS TO OBLIGORS.
Section 7.1. Financial and Business Information. The Obligors shall
deliver to each holder of Notes that is an Institutional Investor:
(a) Quarterly Statements -- promptly, and in any event within
60 days after the end of each Fiscal Quarter in each Fiscal Year (other
than the last Fiscal Quarter of each such Fiscal Year),
(i) duplicate copies of Holdings' Quarterly Report
on Form 10-Q prepared in compliance with the requirements
therefor and filed with the SEC, together with:
(1) a consolidated balance sheet of
Holdings and its Restricted Subsidiaries as at the
end of such Fiscal Quarter; and
(2) consolidated statements of income and
cash flows of Holdings and its Restricted
Subsidiaries for such Fiscal Quarter and (in the case
of the second and third quarters) for the portion of
the Fiscal Year ending with such Fiscal Quarter, and
setting forth in each case in comparative form the figures for
the corresponding periods in the previous Fiscal Year, all in
reasonable detail, prepared in accordance with GAAP applicable
to quarterly financial statements generally, but excluding
footnotes, and certified by a Senior Financial Officer of
Holdings as fairly presenting, in all material respects, the
financial position of the companies being reported on and
their results of operations and cash flows, subject to changes
resulting from year-end adjustments;
(ii) duplicate copies of:
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Lincoln Electric Holdings, Inc. Note Purchase Agreement
The Lincoln Electric Company
(1) a consolidated balance sheet of the
Company and its Restricted Subsidiaries as at the end
of such Fiscal Quarter, and
(2) consolidated statements of income and
cash flows of the Company and its Restricted
Subsidiaries for such Fiscal Quarter and (in the case
of the second and third quarters) for the portion of
the Fiscal Year ending with such Fiscal Quarter,
setting forth in each case in comparative form the figures for
the corresponding periods in the previous Fiscal Year, all in
reasonable detail, prepared in accordance with GAAP applicable
to quarterly financial statements generally, but excluding
footnotes, and certified by a Senior Financial Officer of the
Company as fairly presenting, in all material respects, the
financial position of the companies being reported on and
their results of operations and cash flows, subject to changes
resulting from year-end adjustments;
(b) Annual Statements -- promptly, and in any event within 120
days after the end of each Fiscal Year,
(i) duplicate copies of Holdings' Annual Report on
Form 10-K for such Fiscal Year (together with Holdings' annual
report to shareholders, if any, prepared pursuant to Rule
14a-3 under the Exchange Act) prepared in accordance with the
requirements therefor and filed with the SEC, together with:
(1) a consolidated balance sheet of Holdings
and its Restricted Subsidiaries, as at the end of
such Fiscal Year, and
(2) consolidated statements of income,
changes in shareholders' equity and cash flows of
Holdings and its Restricted Subsidiaries, for such
Fiscal Year,
setting forth in each case in comparative form the figures for
the previous Fiscal Year, all in reasonable detail, prepared
in accordance with GAAP applicable to year-end financial
statements generally, but excluding footnotes, and certified
by a Senior Financial Officer of Holdings as fairly
presenting, in all material respects, the financial position
of the companies being reported upon and their results of
operations and cash flows; and
(ii) duplicate copies of:
(1) a consolidated balance sheet of the
Company and its Restricted Subsidiaries as at the end
of such Fiscal Year; and
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Lincoln Electric Holdings, Inc. Note Purchase Agreement
The Lincoln Electric Company
(2) consolidated statements of income,
changes in shareholders' equity and cash flows of the
Company and its Restricted Subsidiaries, for such
Fiscal Year,
setting forth in each case in comparative form the figures for
the previous Fiscal Year, all in reasonable detail, prepared
in accordance with GAAP applicable to year-end financial
statements generally, but excluding footnotes, and certified
by a Senior Financial Officer of the Company as fairly
presenting, in all material respects, the financial position
of the companies being reported on and their results of
operations and cash flows.
(c) SEC and Other Reports -- promptly upon their becoming
available, one copy of (i) each financial statement, report, notice or
information statement sent by either Obligor or any Restricted
Subsidiary to public securities holders generally (including, without
limitation, proxy materials), and (ii) each regular or periodic report
(including, without limitation, any report of any Obligor on Form 8-K),
each registration statement that shall have become effective and each
final prospectus and all amendments thereto filed by either Obligor or
any Restricted Subsidiary with the SEC;
(d) Notice of Default or Event of Default -- promptly, and in
any event within five Business Days after a Responsible Officer of
either Obligor becoming aware of the existence of any Default or Event
of Default, a written notice specifying the nature and period of
existence thereof and what action the Obligors are taking or propose to
take with respect thereto;
(e) ERISA Matters -- promptly, and in any event within 30
days after a Responsible Officer of either Obligor becoming aware of
any of the following, a written notice setting forth the nature thereof
and the action, if any, that Holdings or an ERISA Affiliate proposes to
take with respect thereto:
(i) with respect to any Plan, any reportable event,
as defined in section 4043(b) of ERISA and the regulations
thereunder, for which notice thereof has not been waived
pursuant to such regulations as in effect on the date hereof;
or
(ii) the taking by the PBGC of steps to institute, or
the threatening by the PBGC of the institution of, proceedings
under section 4042 of ERISA for the termination of, or the
appointment of a trustee to administer, any Plan, or the
receipt by Holdings or any ERISA Affiliate of a notice from a
Multiemployer Plan that such action has been taken by the PBGC
with respect to such Multiemployer Plan (including a copy of
any notice thereof); or
(iii) any event, transaction or condition that could
result in the incurrence of any liability by Holdings or any
ERISA Affiliate pursuant to Title I or IV of ERISA or the
penalty or excise tax provisions of the Code relating to
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Lincoln Electric Holdings, Inc. Note Purchase Agreement
The Lincoln Electric Company
employee benefit plans, or in the imposition of any Lien on
any of the rights, properties or assets of Holdings or any
ERISA Affiliate pursuant to Title I or IV of ERISA or such
penalty or excise tax provisions, if such liability or Lien,
taken together with any other such liabilities or Liens then
existing, would reasonably be expected to have a Material
Adverse Effect;
(f) Litigation or Other Proceedings -- promptly, and in any
event within five Business Days after a Responsible Officer of either
Obligor becoming aware of any of the following, written notice of any
pending litigation or, to the knowledge of either Obligor, threat of
litigation against or affecting either Obligor or any Restricted
Subsidiary or any property of either Obligor or any Restricted
Subsidiary, that, individually or in the aggregate, is reasonably
likely to have a Material Adverse Effect; and
(g) Requested Information -- with reasonable promptness, such
other data and information relating to the business, operations,
affairs, financial condition, assets or properties of either Obligor or
any Restricted Subsidiary or relating to the ability of the Obligors to
perform their obligations hereunder and under the Notes as from time to
time may be reasonably requested by any such holder of Notes.
Section 7.2. Officer's Certificate. Each set of financial statements
delivered to a holder of Notes pursuant to Section 7.1(a) or Section 7.1(b)
hereof shall be accompanied by a certificate of a Senior Financial Officer of
Holdings setting forth:
(a) Covenant Compliance -- the information (including
detailed calculations) required in order to establish whether the
Obligors were in compliance with the requirements of Section 10.2
through Section 10.7 hereof, inclusive, during the quarterly or annual
period covered by the statements then being furnished (including with
respect to each such Section, where applicable, the calculations of the
maximum or minimum amount, ratio or percentage, as the case may be,
permissible under the terms of such Sections, and the calculation of
the amount, ratio or percentage then in existence); and
(b) Event of Default -- a statement that such officer has
reviewed the relevant terms hereof and has made, or caused to be made,
under his or her supervision, a review of the transactions and
conditions of Holdings and its Restricted Subsidiaries from the
beginning of the quarterly or annual period covered by the statements
then being furnished to the date of the certificate and that such
review shall not have disclosed the existence during such period of any
condition or event that constitutes a Default or an Event of Default
or, if any such condition or event existed or exists (including,
without limitation, any such event or condition resulting from the
failure of either Obligor or any Restricted Subsidiary to comply with
any Environmental Law), specifying the nature and period of existence
thereof and what action the Obligors shall have taken or proposes to
take with respect thereto.
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Lincoln Electric Holdings, Inc. Note Purchase Agreement
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Section 7.3. Inspection. The Obligors shall permit the representatives
of each holder of Notes that is an Institutional Investor:
(a) No Default -- if no Default or Event of Default then
exists, at the expense of such holder and upon reasonable prior notice
to the Obligors, to visit the principal executive office of each
Obligor, to discuss the affairs, finances and accounts of the Obligors
and the Restricted Subsidiaries with each Obligor's officers, and, with
the consent of the Obligors (which consent will not be unreasonably
withheld), to visit the other offices and properties of each Obligor
and the Restricted Subsidiaries, all at such reasonable times and as
often as may be reasonably requested in writing; and
(b) Default -- if a Default or Event of Default then exists,
at the expense of the Obligors to visit and inspect any of the offices
or properties of each Obligor or any Restricted Subsidiary, to examine
all their respective books of account, records, reports and other
papers, to make copies and extracts therefrom, and to discuss their
respective affairs, finances and accounts with their respective
officers and independent public accountants (and by this provision the
Obligors authorize said accountants to discuss the affairs, finances
and accounts of the Obligors and the Restricted Subsidiaries), all at
such times and as often as may be requested.
SECTION 8. PREPAYMENT OF THE NOTES.
Section 8.1. Required Prepayments.
(a) Series A Notes. The entire outstanding principal amount of the
Series A Notes shall be due on March 12, 2007. Except as set forth in Section
8.2, the Series A Notes may not be prepaid prior to maturity at the option of
the Obligors.
(b) Series B. Notes. The entire outstanding principal amount of the
Series B Notes shall be due on March 12, 2009. Except as set forth in Section
8.2, the Series B Notes may not be prepaid prior to maturity at the option of
the Obligors.
(c) Series C. Notes. The entire outstanding principal amount of the
Series C Notes shall be due on March 12, 2012. Except as set forth in Section
8.2, the Series C Notes may not be prepaid prior to maturity at the option of
the Obligors.
Section 8.2. Optional Prepayments with Make-Whole Amount. The Obligors
may, at their option, upon notice as provided below, prepay at any time all, or
from time to time any part of, the Notes, in a minimum principal amount of
$10,000,000 in the case of a partial prepayment, at 100% of the principal amount
so prepaid, together with interest accrued thereon to the date of such
prepayment, plus the Make-Whole Amount determined for the prepayment date with
respect to such principal amount. The Obligors will give each holder of Notes
written notice of each optional prepayment under this Section 8.2 not less than
30 days and not more than 60 days prior to the date fixed for such prepayment.
Each such notice shall specify such date, the aggregate principal amount of the
Notes to be prepaid on such date, the principal amount of each
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Lincoln Electric Holdings, Inc. Note Purchase Agreement
The Lincoln Electric Company
Note held by such holder to be prepaid (determined in accordance with Section
8.4), and the interest to be paid on the prepayment date with respect to such
principal amount being prepaid, and shall be accompanied by a certificate of a
Senior Financial Officer of Holdings as to the estimated Make-Whole Amount due
in connection with such prepayment (calculated as if the date of such notice
were the date of the prepayment), setting forth the details of such computation.
Two Business Days prior to such prepayment, the Obligors shall deliver to each
holder of Notes a certificate of a Senior Financial Officer of Holdings
specifying the calculation of such Make-Whole Amount as of the specified
prepayment date.
Section 8.3. Prepayment of Notes upon Change of Control. (a) In the
event that any Change of Control shall occur or either Obligor shall have
knowledge of any proposed Change of Control, the Obligors will give written
notice (the "Obligor Notice") of such fact in the manner provided in Section 18
hereof to the holders of the Notes. The Obligor Notice shall be delivered
promptly upon receipt of such knowledge by an Obligor and in any event no later
than three Business Days following the occurrence of any Change of Control. The
Obligor Notice shall (i) describe the facts and circumstances of such Change of
Control in reasonable detail, (ii) make reference to this Section 8.3 and the
right of the holders of the Notes to require prepayment of the Notes on the
terms and conditions provided for in this Section 8.3, (iii) offer in writing to
prepay the outstanding Notes, together with accrued interest to the date of
prepayment, and without payment of the Make-Whole Amount or any premium, (iv)
specify a date for such prepayment (the "Change of Control Prepayment Date"),
which Change of Control Prepayment Date shall be not more than 90 days nor less
than 30 days following the date of such Obligor Notice, and (v) specify the date
by which such holder is required to give notice of its acceptance to be prepaid.
Each holder of the then outstanding Notes shall have the right to accept such
offer and require prepayment of the Notes held by such holder in full by written
notice to an Obligor (a "Noteholder Notice") given not later than 20 days after
receipt of the Obligor Notice. The Obligors shall on the Change of Control
Prepayment Date prepay in full all of the Notes held by holders which have so
accepted such offer of prepayment. The prepayment price of the Notes payable
upon the occurrence of any Change of Control shall be an amount equal to 100% of
the outstanding principal amount of the Notes so to be prepaid and accrued
interest thereon to the date of such prepayment.
(b)(i) Without limiting the foregoing, notwithstanding any failure on the
part of the Obligors to give the Obligor Notice herein required, as a result of
the occurrence of a Change of Control each holder of the Notes shall have the
right by delivery of written notice to the Obligors to require the Obligors to
prepay, and the Obligors will prepay, such holder's Notes in full, together with
accrued interest thereon to the date of prepayment, and without payment of the
Make-Whole Amount or any premium. Notice of any required prepayment pursuant to
this Section 8.3(b)(i) shall be delivered by any holder of the Notes which was
entitled to, but did not receive, such Obligor Notice to the Obligors after such
holder has actual knowledge of such Change of Control. On the date (the "Change
of Control Delayed Prepayment Date") designated in such holder's notice (which
shall be not more than 90 days nor less than 30 days following the date of such
holder's notice), the Obligors shall prepay in full all of the Notes held by
such holder, together with accrued interest thereon to the date of prepayment.
If the holder of any Note gives any notice pursuant to this Section 8.3(b)(i),
the Obligors shall give an Obligor
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Lincoln Electric Holdings, Inc. Note Purchase Agreement
The Lincoln Electric Company
Notice within three Business Days of receipt of such notice and identify the
Change of Control Delayed Prepayment Date to all other holders of the Notes and
each of such other holders shall then and thereupon have the right to accept the
Obligors' offer to prepay the Notes held by such holder in full and require
prepayment of such Notes by delivery of a Noteholder Notice within 20 days
following receipt of such Obligor Notice; provided only that any date for
prepayment of such holder's Notes shall be the Change of Control Delayed
Prepayment Date. On the Change of Control Delayed Prepayment Date, the Obligors
shall prepay in full the Notes of each holder thereof which has accepted such
offer of prepayment at a prepayment price equal to 100% of the outstanding
principal amount of the Notes so to be prepaid and accrued interest thereon to
the date of such prepayment.
(ii) Compliance with the provisions of this Section 8.3(b) shall not be
deemed to constitute a waiver of, or consent to, any Default or Event of Default
caused by any violation of the provisions of Section 8.3(a).
(c) "Change of Control" means if any person (as such term is used in
section 13(d) and section 14(d)(2) of the Exchange Act as in effect on the date
of the Closing) or related persons constituting a group (as such term is used in
Rule 13d-5 under the Exchange Act), become the "beneficial owners" (as such term
is used in Rule 13d-3 under the Exchange Act as in effect on the date of the
Closing), directly or indirectly, of more than 50% of the issued and outstanding
common stock of Holdings.
Section 8.4. Allocation of Partial Prepayments. In the case of each
partial prepayment of the Notes (other than a partial prepayment under Section
8.3), the principal amount of the Notes to be prepaid shall be allocated among
all of the Notes of all Series at the time outstanding in proportion, as nearly
as practicable, to the respective unpaid principal amounts thereof.
Section 8.5. Maturity; Surrender, etc. In the case of each prepayment
of Notes pursuant to this Section 8, the principal amount of each Note to be
prepaid shall mature and become due and payable on the date fixed for such
prepayment, together with interest on such principal amount accrued to such date
and the applicable Make-Whole Amount, if any. From and after such date, unless
the Obligors shall fail to pay such principal amount when so due and payable,
together with the interest and Make-Whole Amount, if any, as aforesaid, interest
on such principal amount shall cease to accrue. Any Note paid or prepaid in full
shall be surrendered to Holdings and cancelled and shall not be reissued, and no
Note shall be issued in lieu of any prepaid principal amount of any Note.
Section 8.6. Purchase of Notes. The Obligors will not and will not
permit any Affiliate to purchase, redeem, prepay or otherwise acquire, directly
or indirectly, any of the outstanding Notes except (a) upon the payment or
prepayment of the Notes in accordance with the terms of this Agreement and the
Notes or (b) pursuant to an offer to purchase made by the Obligors or an
Affiliate pro rata to the holders of all Notes at the time outstanding upon the
same terms and conditions (but taking into account the respective interest rates
of each Series). Any such offer shall provide each holder with sufficient
information to enable it to make an informed decision with respect to such
offer, and shall remain open for at least 20 Business Days. If the holders of
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Lincoln Electric Holdings, Inc. Note Purchase Agreement
The Lincoln Electric Company
more than 20% of the principal amount of the Notes then outstanding accept such
offer, the Obligors shall promptly notify the remaining holders of such fact and
the expiration date for the acceptance by holders of Notes of such offer shall
be extended by the number of days necessary to give each such remaining holder
at least 10 Business Days from its receipt of such notice to accept such offer.
The Obligors will promptly cancel all Notes acquired by it or any Affiliate
pursuant to any payment, prepayment or purchase of Notes pursuant to any
provision of this Agreement and no Notes may be issued in substitution or
exchange for any such Notes.
Section 8.7. Make-Whole Amount. The term "Make-Whole Amount" means,
with respect to any Note, an amount equal to the excess, if any, of the
Discounted Value of the Remaining Scheduled Payments with respect to the Called
Principal of such Note over the amount of such Called Principal, provided that
the Make-Whole Amount may in no event be less than zero. For the purposes of
determining the Make-Whole Amount, the following terms have the following
meanings:
"Called Principal" means, with respect to any Note, the
principal of such Note that is to be prepaid pursuant to Section 8.2 or
has become or is declared to be immediately due and payable pursuant to
Section 12.1, as the context requires.
"Discounted Value" means, with respect to the Called Principal
of any Note, the amount obtained by discounting all Remaining Scheduled
Payments with respect to such Called Principal from their respective
scheduled due dates to the Settlement Date with respect to such Called
Principal, in accordance with accepted financial practice and at a
discount factor (applied on the same periodic basis as that on which
interest on the Notes is payable) equal to the Reinvestment Yield with
respect to such Called Principal.
"Reinvestment Yield" means, with respect to the Called
Principal of any Note, 0.50% over the yield to maturity implied by (i)
the yields reported, as of 10:00 A.M. (New York City time) on the
second Business Day preceding the Settlement Date with respect to such
Called Principal, on the display designated as "Page PX1" on the
Bloomberg Financial Services Screen (or such other display as may
replace Page PX1 on the Bloomberg Financial Services Screen) for
"on-the-run" U.S. Treasury securities having a maturity equal to the
Remaining Average Life of such Called Principal as of such Settlement
Date, or (ii) if such yields are not reported as of such time or the
yields reported as of such time are not ascertainable, the Treasury
Constant Maturity Series Yields reported, for the latest day for which
such yields have been so reported as of the second Business Day
preceding the Settlement Date with respect to such Called Principal, in
Federal Reserve Statistical Release H.15 (519) (or any comparable
successor publication) for "on-the-run" U.S. Treasury securities having
a constant maturity equal to the Remaining Average Life of such Called
Principal as of such Settlement Date. Such implied yield will be
determined, if necessary, by (a) converting U.S. Treasury bill
quotations to bond-equivalent yields in accordance with accepted
financial practice and (b) interpolating linearly between (1) the
"on-the-run" U.S. Treasury security with the maturity closest to and
greater than the Remaining Average Life and (2) the "on-the-run"
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The Lincoln Electric Company
U.S. Treasury security with the maturity closest to and less than the
Remaining Average Life.
"Remaining Average Life" means, with respect to any Called
Principal, the number of years (calculated to the nearest one-twelfth
year) obtained by dividing (i) such Called Principal into (ii) the sum
of the products obtained by multiplying (a) the principal component of
each Remaining Scheduled Payment with respect to such Called Principal
by (b) the number of years (calculated to the nearest one-twelfth year)
that will elapse between the Settlement Date with respect to such
Called Principal and the scheduled due date of such Remaining Scheduled
Payment.
"Remaining Scheduled Payments" means, with respect to the
Called Principal of any Note, all payments of such Called Principal and
interest thereon that would be due after the Settlement Date with
respect to such Called Principal if no payment of such Called Principal
were made prior to its scheduled due date, provided that if such
Settlement Date is not a date on which interest payments are due to be
made under the terms of the Notes, then the amount of the next
succeeding scheduled interest payment will be reduced by the amount of
interest accrued to such Settlement Date and required to be paid on
such Settlement Date pursuant to Section 8.2 or 12.1.
"Settlement Date" means, with respect to the Called Principal
of any Note, the date on which such Called Principal is to be prepaid
pursuant to Section 8.2 or has become or is declared to be immediately
due and payable pursuant to Section 12.1, as the context requires.
SECTION 9. AFFIRMATIVE COVENANTS.
Each Obligor, jointly and severally, covenants that so long as any of
the Notes are outstanding:
Section 9.1. Compliance with Law. Each Obligor will, and will cause
each of its Subsidiaries to, comply with all laws, ordinances or governmental
rules or regulations to which each of them is subject, including, without
limitation, Environmental Laws, and will obtain and maintain in effect all
licenses, certificates, permits, franchises and other governmental
authorizations necessary to the ownership of their respective properties or to
the conduct of their respective businesses, in each case to the extent necessary
to ensure that non-compliance with such laws, ordinances or governmental rules
or regulations or failures to obtain or maintain in effect such licenses,
certificates, permits, franchises and other governmental authorizations would
not reasonably be expected, individually or in the aggregate, to have a Material
Adverse Effect.
Section 9.2. Insurance. Each Obligor will, and each Obligor will cause
each of the Restricted Subsidiaries to, maintain, with financially sound and
reputable insurers, insurance with respect to their respective properties and
businesses against such casualties and contingencies, of such types, on such
terms and in such amounts (including deductibles, co-
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The Lincoln Electric Company
insurance and self-insurance, if adequate reserves are maintained with respect
thereto) as is customary in the case of entities of established reputations
engaged in the same or a similar business and similarly situated.
Section 9.3. Maintenance of Properties. Each Obligor will, and each
Obligor will cause each of the Restricted Subsidiaries to, maintain and keep, or
cause to be maintained and kept, their respective properties in good repair,
working order and condition (other than ordinary wear and tear), so that the
business carried on in connection therewith may be properly conducted at all
times, provided that this Section shall not prevent either Obligor or any
Restricted Subsidiary from discontinuing the operation and the maintenance of
any of its properties if such discontinuance is desirable in the conduct of its
business and the Obligors have concluded that such discontinuance would not,
individually or in the aggregate, have a Material Adverse Effect.
Section 9.4. Payment of Taxes. Each Obligor will, and each Obligor will
cause each of its Subsidiaries to, file all income tax or similar tax returns
required to be filed in any jurisdiction and to pay and discharge all taxes
shown to be due and payable on such returns and all other taxes, assessments,
governmental charges, or levies payable by any of them, to the extent such taxes
and assessments have become due and payable and before they have become
delinquent, provided that neither Obligor nor any of its Subsidiaries need pay
any such tax or assessment if (i) the amount, applicability or validity thereof
is contested by such Obligor or such Subsidiary on a timely basis in good faith
and in appropriate proceedings diligently conducted, and such Obligor or such
Subsidiary has established adequate reserves therefor in accordance with GAAP on
the books of such Obligor or such Subsidiary or (ii) the failure to file such
tax return or the nonpayment of all such taxes and assessments in the aggregate
would not reasonably be expected to have a Material Adverse Effect.
Section 9.5. Corporate Existence, etc. Each Obligor will at all times
preserve and keep in full force and effect its corporate existence. Subject to
Section 10.6, each Obligor will at all times preserve and keep in full force and
effect the corporate existence of the Restricted Subsidiaries and all rights and
franchises of such Obligor and its Restricted Subsidiaries unless, in the good
faith judgment of such Obligor, the termination of or failure to preserve and
keep in full force and effect such corporate existence, right or franchise would
not, individually or in the aggregate, have a Material Adverse Effect.
Section 9.6. Notes to Rank Pari Passu. The Notes of the Obligors are
and shall at all times rank at least pari passu as against the assets of each
Obligor with all other present and future unsecured Indebtedness (actual or
contingent) of such Obligor which is not expressed to be subordinate or junior
in rank to any other unsecured Debt of such Obligor.
Section 9.7. Ownership of the Company. Holdings shall at all times own
100%, directly or indirectly, of the issued and outstanding capital stock of the
Company.
Section 9.8. Changes in Status of Subsidiaries. (a) So long as no
Default or Event of Default shall have occurred and be continuing, a Senior
Financial Officer of Holdings may at any time and from time to time, upon not
less than 30 days' prior written notice given to each holder
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of Notes, designate a previously Unrestricted Subsidiary as a Restricted
Subsidiary, provided that immediately after such designation and after giving
effect thereto (i) no Default or Event of Default shall have occurred and be
continuing and (ii) Holdings and its Restricted Subsidiaries would be in
compliance with the provisions of Sections 10.2, 10.3, 10.4, 10.5 and 10.7
hereof, assuming, for purposes of determining such compliance, that the date of
such designation was the last day of the most recently ended Fiscal Quarter, and
provided, further, that the status of such Subsidiary had not previously been
changed more than once.
(b) So long as no Default or Event of Default shall have occurred and
be continuing, a Senior Financial Officer of Holdings may at any time and from
time to time, upon not less than 30 days' prior written notice given to each
holder of Notes, designate a previously Restricted Subsidiary (other than the
Company and any Restricted Subsidiary that owns, directly or indirectly, any
capital stock of the Company), or a new Subsidiary on the date of its formation
or acquisition, as an Unrestricted Subsidiary, provided that such designation is
treated as a sale of assets subject to the provisions of Section 10.6 and
immediately after such designation and after giving effect thereto (i) no
Default or Event of Default shall have occurred and be continuing, (ii) such
previously Restricted Subsidiary does not own, directly or indirectly, any Debt,
shares of capital stock or any other Securities of Holdings or any Restricted
Subsidiary and (iii) Holdings and its Restricted Subsidiaries would be in
compliance with the provisions of Sections 10.2, 10.3, 10.4, 10.5, 10.6 and 10.7
hereof, assuming, for purposes of determining such compliance, that the date of
such designation was the last day of the most recently ended Fiscal Quarter, and
provided, further, that the status of such Subsidiary had not previously been
changed more than once.
(c) Any notice of designation pursuant to this Section 9.8 shall be
accompanied by a certificate signed by a Responsible Officer of Holdings stating
that the provisions of this Section 9.8 have been complied with in connection
with such designation and setting forth the name of each other Subsidiary (if
any) which has or will become a Restricted Subsidiary or an Unrestricted
Subsidiary as a result of such designation.
SECTION 10. NEGATIVE COVENANTS.
Each Obligor covenants that so long as any of the Notes are
outstanding:
Section 10.1. Transactions with Affiliates. Neither Obligor will, nor
will it permit any Restricted Subsidiary to enter into directly or indirectly
any transaction or group of related transactions (including without limitation
the purchase, lease, sale or exchange of properties of any kind or the rendering
of any service) with any Affiliate (other than an Obligor or another Restricted
Subsidiary), except in the ordinary course and pursuant to the reasonable
requirements of such Obligor's or such Restricted Subsidiary's business and upon
fair and reasonable terms no less favorable to such Obligor or such Restricted
Subsidiary than would be obtainable in a comparable arm's-length transaction
with a Person not an Affiliate.
Section 10.2. Fixed Charges Coverage Ratio. The Obligors will not, at
any time, permit the Fixed Charges Coverage Ratio to be less than 1.75 to 1.00.
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Section 10.3. Leverage Ratio. The Obligors will not, at any time,
permit the Leverage Ratio to exceed 3.00 to 1.00.
Section 10.4. Priority Debt. The Obligors will not, at any time, permit
Priority Debt to exceed 20% of Consolidated Net Worth determined at such time.
Section 10.5. Investments. The Obligors will not, and will not permit
any Restricted Subsidiary to, make or have outstanding any Investments, other
than:
(a) Investments by Holdings and its Restricted Subsidiaries
in and to Restricted Subsidiaries, including any Investment in any
Person which, after giving effect to such Investment, will become a
Restricted Subsidiary or a division of Holdings or of a Restricted
Subsidiary;
(b) Investments of Holdings and its Restricted Subsidiaries
existing as of the date of the Closing and described on Schedule 5.18
hereto;
(c) Investments in Cash Equivalents;
(d) Investments in mutual funds registered under the
Investment Company Act of 1940, as amended, which invest only in either
money market securities or United States Governmental Securities, in
either case, maturing within three years from the date of acquisition
thereof by such mutual fund;
(e) Investments in Related Industries, provided that such
Investments are in furtherance of the reasonable business purposes of
Holdings and its Restricted Subsidiaries and are not speculative in
nature;
(f) Subject to the limitations provided for under Section
10.6(b) hereof, Investments in Special Purpose Companies incidental to
the consummation of Qualifying Securitization Transactions and not
involving any significant investment of capital;
(g) Investments in property to be used in the ordinary course
of business of Holdings and its Restricted Subsidiaries;
(h) Investments in current assets arising from the sale of
goods and services in the ordinary course of business of Holdings and
its Restricted Subsidiaries; and
(i) Investments of Holdings and its Restricted Subsidiaries
not described in the foregoing clauses (a) through (h); provided that
the aggregate amount of all such Investments outstanding under this
clause (i) shall not at any time exceed 15% of Consolidated Net Worth.
As of any date of determination, each Investment shall be valued at the greater
of:
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(x) the amount at which such is shown on the books of Holdings
or any of its Restricted Subsidiaries (or zero if such Investment is
not shown on any such books); and
(y) either
(i) in the case of any Guaranty of the obligation of
any Person, the amount which Holdings or any of its Restricted
Subsidiaries has paid on account of such obligation less any
recoupment by Holdings or such Restricted Subsidiary of any
such payments, or
(ii) in the case of any other Investment, the excess
of (x) the greater of (A) the amount originally entered on the
books of Holdings or any of its Restricted Subsidiaries with
respect thereto and (B) the cost thereof to Holdings or its
Restricted Subsidiary over (y) any return of capital (after
income taxes applicable thereto) upon such Investment through
the sale or other liquidation thereof or part thereof or
otherwise.
Section 10.6. Mergers, Consolidations and Sales of Assets. (a) The
Obligors will not, and will not permit any Restricted Subsidiary to, consolidate
with or be a party to a merger with any other Person, or sell, lease or
otherwise dispose of all or substantially all of its assets; provided that:
(i) any Subsidiary (other than the Company) may merge or
consolidate with or into, or transfer all or substantially all of its
assets to, Holdings or any Restricted Subsidiary so long as in (1) any
merger or consolidation involving an Obligor pursuant to this clause
(i), such Obligor shall be the surviving or continuing corporation, (2)
any merger or consolidation involving a Restricted Subsidiary (other
than the Company) (other than a merger or consolidation with Holdings),
a Restricted Subsidiary shall be the surviving or continuing
corporation, provided that any decrease in the percentage of the Voting
Stock of such Restricted Subsidiary beneficially owned, directly or
indirectly, by Holdings shall be treated as a disposition of such
Voting Stock by Holdings subject to the provisions of Section 10.6(b)
hereof and (3) at the time of such consolidation or merger and
immediately after giving effect thereto, no Default or Event of Default
would exist;
(ii) any Restricted Subsidiary (other than the Company) may
sell, lease or otherwise dispose of all or substantially all of its
assets in compliance with the provisions of Section 10.6(b);
(iii) either Obligor may consolidate or merge with or into any
other corporation if (1) the corporation which results from such
consolidation or merger (the "surviving corporation") is organized
under the laws of any state of the United States or the District of
Columbia, (2) if such Obligor is not the surviving corporation, the due
and punctual performance and observation of all of the covenants in
this Agreement and the Notes to be performed or observed by such
Obligor are expressly assumed in writing by the surviving corporation
(pursuant to such agreements and instruments as shall be
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The Lincoln Electric Company
satisfactory in form and substance to the Required Holders of the
Notes), and the surviving corporation shall furnish to the Required
Holders an opinion of counsel satisfactory to such holders to the
effect that the agreements and instruments of assumption have been duly
authorized, executed and delivered and constitute the legal, valid and
binding contracts and agreements of the surviving corporation
enforceable in accordance with their respective terms, except as
enforcement of such terms may be limited by bankruptcy, insolvency,
reorganization, moratorium and similar laws affecting the enforcement
of creditors' rights generally and by general equitable principles, and
(3) at the time of such consolidation or merger and immediately after
giving effect thereto, no Default or Event of Default would exist; and
(iv) the Obligors may, collectively, sell or otherwise dispose
of all or substantially all of their assets, taken as a whole (other
than as provided in this Section 10.6(a) and Section 10.6(c)) to any
Person for consideration which represents the fair market value of such
assets (as determined in good faith by a Senior Financial Officer of
such Obligor or, to the extent the approval of the Board of Directors
is required, the Board of Directors of such Obligor), at the time of
such sale or other disposition if (1) the acquiring Person is a
corporation organized under the laws of any state of the United States
or the District of Columbia, (2) the due and punctual performance and
observance of all of the covenants in this Agreement and the Notes to
be performed or observed by such Obligor are expressly assumed in
writing by the acquiring corporation (pursuant to such agreements and
instruments as shall be satisfactory in form and substance to the
Required Holders of the Notes), and the acquiring corporation shall
furnish to the Required Holders an opinion of counsel satisfactory to
such holders to the effect that the agreements and instruments of
assumption have been duly authorized, executed and delivered and
constitute the legal, valid and binding contracts and agreements of the
surviving corporation enforceable in accordance with their respective
terms, except as enforcement of such terms may be limited by
bankruptcy, insolvency, reorganization, moratorium and similar laws
affecting the enforcement of creditors' rights generally and by general
equitable principles, and (3) at the time of such sale or disposition
and immediately after giving effect thereto, no Default or Event of
Default would exist.
(b) The Obligors will not, and will not permit any Restricted
Subsidiary to, sell, lease, transfer, abandon or otherwise dispose of assets,
including, without limitation, any Restricted Subsidiary Stock of, or any
Investment in, any Restricted Subsidiary; provided that the foregoing
restrictions do not apply to:
(i) the sale, lease, transfer or other disposition of assets
of a Restricted Subsidiary (other than the Company) to Holdings or a
Restricted Subsidiary, provided that any sale, lease, transfer or other
disposition of assets from a transferring Restricted Subsidiary to
another Restricted Subsidiary with a larger minority interest than the
transferring Restricted Subsidiary shall be treated as a sale, lease,
transfer or other disposition of assets by such transferring Restricted
Subsidiary, to the extent that the minority interest of such other
Restricted Subsidiary exceeds the minority interest of the
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Lincoln Electric Holdings, Inc. Note Purchase Agreement
The Lincoln Electric Company
transferring Restricted Subsidiary, subject to the provisions of
Section 10.6(b)(v) hereof; or
(ii) the sale of assets in the ordinary course of business for
fair market value; or
(iii) the sale or other disposition of all or substantially
all of the assets of the Obligors, taken as a whole, as provided in
Section 10.6(a)(iv) hereof; or
(iv) the sale, transfer or other disposition of Restricted
Subsidiary Stock (1) to qualify directors, (2) to comply with local
laws requiring multiple shareholders, or (3) in connection with a
merger or consolidation permitted under Section 10.6(a)(i); or
(v) the sale of assets (including, without limitation, (A) a
decrease in the percentage of Voting Stock of a Restricted Subsidiary
(other than the Company) beneficially owned, directly or indirectly, by
Holdings as a result of a merger or consolidation pursuant to Section
10.6(a)(i) hereof, (B) a sale, lease or other disposition of all or
substantially all of the assets of a Restricted Subsidiary (other than
the Company) pursuant to Section 10.6(a)(ii), (C) any Restricted
Subsidiary Stock of, or any Investment in, any Restricted Subsidiary
pursuant to Section 10.6(b)(i) and (D) an increase in the minority
interest in the stock and surplus of a Restricted Subsidiary as a
result of the issuance of stock by such Restricted Subsidiary permitted
under Section 10.6(c)) for cash or Cash Equivalents to a Person or
Persons other than an Affiliate if all of the following conditions are
met:
(1) the Disposition Value of such assets does not,
together with the Disposition Value of all other assets of
Holdings and its Restricted Subsidiaries previously disposed
of during the Fiscal Year in which such sale occurs (other
than pursuant to Sections 10.6(b)(i) (subject to the proviso
therein), 10.6(b)(ii), 10.6(b)(iii), 10.6(b)(iv) and
10.6(b)(vi)), exceed 15% of Consolidated Total Assets;
(2) a Senior Financial Officer of Holdings, or (to
the extent the approval of the Board of Directors is required)
the Board of Directors of Holdings (as evidenced by a
resolution thereof) shall have determined, that the proposed
sale, lease, transfer or other disposition is for fair value
and is in the best interests of Holdings and its Restricted
Subsidiaries;
(3) if, after giving effect to such sale, transfer
or other disposition of Restricted Subsidiary Stock of a
Restricted Subsidiary, such Restricted Subsidiary shall no
longer qualify to be a "Restricted Subsidiary" hereunder,
simultaneously with such sale, transfer or disposition, all
shares of such Restricted Subsidiary Stock related to such
Restricted Subsidiary and all Investment in such Restricted
Subsidiary at the time owned by Holdings and by every other
Restricted Subsidiary shall be sold, transferred or disposed
of as an entirety and such
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Restricted Subsidiary shall not have any continuing Investment
in Holdings or any other Restricted Subsidiary not being
simultaneously disposed of;
(4) any Restricted Subsidiary Stock of and
Investment in any Restricted Subsidiary that are sold,
transferred or otherwise disposed of shall be sold,
transferred or otherwise disposed of to a Person on terms
reasonably deemed by a Senior Financial Officer of Holdings or
(to the extent the approval of the Board of Directors is
required) the Board of Directors of Holdings to be adequate
and satisfactory; and
(5) immediately after the consummation of the
transaction and after giving effect thereto no Default or
Event of Default would exist;
provided, however, that for purposes of the foregoing calculation,
there shall not be included any assets the net proceeds of which were
or are applied either (A) within twelve months after the date of sale
of such assets, to the acquisition of assets of a similar character
useful and intended to be used in the operation of the business of
Holdings and its Restricted Subsidiaries and having a fair market value
and a capacity to contribute to Consolidated EBITDA (as determined in
good faith by a Senior Financial Officer of Holdings or (to the extent
the approval of the Board of Directors is required) the Board of
Directors of Holdings), in each case, at least equal to that of the
assets so disposed of or (B) immediately upon receipt, to the
prepayment, together with any applicable prepayment premium, on a pro
rata basis, of the Notes and any other Consolidated Senior Funded Debt,
provided that the Obligors may prepay any secured Consolidated Senior
Funded Debt then outstanding prior to unsecured Consolidated Senior
Funded Debt. It is understood and agreed by the Obligors that any such
proceeds paid and applied to the prepayment of the Notes as hereinabove
provided shall be prepaid as and to the extent provided in Section 8.2;
or
(vi) the sale or other transfer of Trade Receivables to a
Special Purpose Company pursuant to one or more Qualifying
Securitization Transactions, to the extent that the aggregate amount
outstanding under all financing facilities relating to such Qualifying
Securitization Transactions shall not exceed $75,000,000 at any time of
determination.
(c) The Obligors will not permit any Restricted Subsidiary to issue any
of its own stock (or any options or warrants to purchase stock or other
Securities exchangeable for or convertible into such stock) to any Person other
than an Obligor (except (i) to qualify directors, (ii) stock issued to comply
with local laws requiring multiple shareholders, or (iii) in connection with an
issuance of such stock whereby Holdings maintains its same direct or indirect
proportionate interest in such Restricted Subsidiary), unless
(i) such issuance is for cash consideration or Cash
Equivalents and after giving effect to such issuance of such stock,
such Restricted Subsidiary shall continue to be a "Restricted
Subsidiary" hereunder;
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(ii) a Senior Financial Officer of Holdings, or (to the extent
the approval of the Board of Directors is required) the Board of
Directors of Holdings (as evidenced by a resolution thereof) shall have
determined that the proposed issuance of said stock is for fair value
and is in the best interest of Holdings and its Restricted
Subsidiaries;
(iii) said stock issued to a Person on terms reasonably deemed
by such Senior Financial Officer of Holdings or (to the extent the
approval of the Board of Directors is required) the Board of Directors
of Holdings to be adequate and satisfactory; and
(iv) such issuance shall be treated as a disposition of assets
by Holdings of a portion of such Restricted Subsidiary equal to the
increase in the minority interests in the stock and surplus of such
Restricted Subsidiary subject to the provisions of Section 10.6(b)
hereof.
Section 10.7. Limitation on Liens. The Obligors will not, and will not
permit any Restricted Subsidiary to, create or incur, or suffer to be incurred
or to exist, any Lien on its or their property or assets, whether now owned or
hereafter acquired, or upon any income or profits therefrom, or transfer any
property for the purpose of subjecting the same to the payment of obligations in
priority to the payment of its or their general creditors, or acquire or agree
to acquire, or permit any Restricted Subsidiary to acquire or agree to acquire,
any property or assets upon conditional sales agreements or other title
retention devices, except:
(a) Liens for taxes, assessments or other governmental
charges or levies which are not yet due and payable or if they can
thereafter be paid without penalty or the payment of which is not at
the time required by Section 9.4;
(b) any attachment or judgment Lien, unless either (i) the
judgment it secures shall not, within thirty (30) days after the entry
thereof, have been discharged or execution thereof stayed pending
appeal, or shall not have been discharged within thirty (30) days after
the expiration of any such stay or (ii) the judgment it secures, when
taken together with all other judgments under this subclause (ii)
related to attachment and judgment Liens under this clause (b), does
not exceed $5,000,000 in the aggregate;
(c) statutory Liens of landlords and Liens of carriers,
warehousemen, workmen, repairmen, mechanics, materialmen and other
similar Liens, in each case, incurred in the ordinary course of
business for sums not yet due and payable or the amount, applicability
or validity thereof is contested by such Obligor or such Restricted
Subsidiary on a timely basis in good faith and in appropriate
proceedings diligently conducted, and such Obligor or such Restricted
Subsidiary has established adequate reserves therefor in accordance
with GAAP on the books of such Obligor or such Restricted Subsidiary;
(d) Liens (other than any Lien imposed by ERISA) incurred or
deposits made in the ordinary course of business in connection with
workers' compensation obligations, unemployment insurance, other types
of social security or retirement benefits;
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(e) Liens incurred in the ordinary course of business to
secure (i) the non-delinquent performance of bids, trade contracts,
leases (other than Capital Leases) and statutory obligations, (ii)
contingent obligations on surety bonds and appeal bonds, and (iii)
other similar non-delinquent obligations, in each case, not incurred or
made in connection with the borrowing of money, the obtaining of
advances or credit or the payment of the deferred purchase price of
property, provided that such Liens, taken as a whole, would not, even
if enforced, have a Material Adverse Effect on Holdings and its
Restricted Subsidiaries, taken as a whole;
(f) leases or subleases granted to others, easements,
rights-of-way, restrictions and other similar charges or encumbrances
in the ordinary course of business, in each case incidental to, and not
interfering in any material respect with, the ordinary conduct of the
business of Holdings or any of its Restricted Subsidiaries, and which
do not in the aggregate materially impair the use of such property in
the operation of the business of Holdings and its Restricted
Subsidiaries, taken as a whole, or the value of such property for the
purposes of such business;
(g) Liens created or incurred after the date of the Closing
given to secure all or any part of the purchase price, or to secure
Debt incurred solely for the purpose of financing the acquisition or
purchase, of property (or any improvement thereon) acquired by Holdings
or a Restricted Subsidiary; provided that
(i) the Lien shall attach solely to the property (or
improvement thereon) so acquired or purchased,
(ii) such Lien shall have been created or incurred
contemporaneously with or within 180 days of the date of
acquisition or purchase of such property,
(iii) the aggregate principal amount of Debt secured
by such Lien and all other Debt secured by any other Lien on
such property or such improvement does not exceed in the
aggregate 100% of the cost to Holdings or such Restricted
Subsidiary of such property (or improvement thereon), and
(iv) at the time of creation, issuance, assumption,
guarantee or incurrence of the Debt secured by such Lien and
after giving effect thereto and to the application of the
proceeds thereof, no Default or Event of Default would exist;
(h) any such Lien existing on property or assets of a
corporation at the time such corporation is consolidated with or merged
into Holdings or a Restricted Subsidiary or its becoming a Restricted
Subsidiary, or any Lien existing on any property or assets acquired by
Holdings or any Restricted Subsidiary at the time such property or
assets are so acquired (whether or not the Debt secured thereby shall
have been assumed), provided that (i) each such Lien shall extend
solely to the corporation or property or assets so acquired, (ii) such
Lien was not incurred in contemplation of such consolidation, merger
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or acquisition, and (iii) at the time of creation, issuance,
assumption, guarantee or incurrence of the Debt secured by such Lien
and after giving effect thereto and to the application of the proceeds
thereof, no Default or Event of Default would exist;
(i) Liens securing operating leases with respect to personal
property pursuant to which Holdings or a Restricted Subsidiary is the
lessee (excluding financing leases, synthetic leases and similar
arrangements), in each case incidental to, and not interfering with,
the ordinary conduct of the business of Holdings or any of its
Restricted Subsidiaries, provided that the Lien shall attach solely to
the leased property or assets;
(j) Liens existing on the date of this Agreement and securing
the Debt of Holdings and its Restricted Subsidiaries, provided that (i)
no Liens securing Debt in excess of $5,000,000 exist on the date of the
Closing and (ii) the aggregate amount of all Debt secured by Liens
existing on the date of the Closing does not exceed $12,000,000; and
(k) any extension, renewal or refunding of any Lien permitted
by the preceding clauses (g), (h) and (j) of this Section 10.7 in
respect of the same property theretofore subject to such Lien in
connection with the extension, renewal or refunding of the Debt secured
thereby; provided that (i) such extension, renewal or refunding of Debt
shall be without increase in the principal amount remaining unpaid as
of the date of such extension, renewal or refunding, (ii) such Lien
shall attach solely to the same such property, (iii) the principal
amount remaining unpaid as of the date of such extension, renewal or
refunding of Debt is less than or equal to the fair market value of the
property (determined in good faith by the Board or Directors of
Holdings) to which such Lien is attached, (iv) at the time of such
extension, renewal or refunding and after giving effect thereto, no
Default or Event of Default would exist and (v) all Debt of Holdings
and the Company secured by any Lien with respect to any property of
Holdings or the Company and all Debt of the Restricted Subsidiaries
(other than the Company) shall not in the aggregate exceed 20% of
Consolidated Net Worth.
Section 10.8. Sale-and-Leaseback Transactions. The Obligors will not,
and will not permit any Restricted Subsidiary to, enter into any
Sale-and-Leaseback Transaction unless, immediately after giving effect thereto,
the aggregate amount of Priority Debt does not exceed 20% of Consolidated Net
Worth.
SECTION 11. EVENTS OF DEFAULT.
An "Event of Default" shall exist if any of the following conditions or
events shall occur and be continuing:
(a) the Obligors default in the payment of any principal or
Make-Whole Amount, if any, on any Note when the same becomes due and
payable, whether at maturity or at a date fixed for prepayment or by
declaration or otherwise; or
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(b) the Obligors default in the payment of any interest on any
Note for more than five days after the same becomes due and payable; or
(c) the Obligors default in the performance of or compliance
with any term contained in Section 10.2, 10.3, 10.4, 10.5, 10.6, 10.7
or 10.8; or
(d) the Obligors default in the performance of or compliance
with any term contained herein (other than those referred to in
paragraphs (a), (b) or (c) of this Section 11) and such default is not
remedied within 30 days after the earlier of (i) a Responsible Officer
of either Obligor obtaining actual knowledge of such default and (ii)
either Obligor receiving written notice of such default from any holder
of a Note (any such written notice to be identified as a "notice of
default" and to refer specifically to this paragraph (d) of Section
11); or
(e) any representation or warranty made in writing by or on
behalf of the Obligors or by any officer of an Obligor in this
Agreement or in any writing furnished in connection with the
transactions contemplated hereby proves to have been false or incorrect
in any material respect on the date as of which made; or
(f) (i) an Obligor or any Restricted Subsidiary is in default
(as principal or as guarantor or other surety) in the payment of any
principal of or premium or make-whole amount or interest on any
Indebtedness that is outstanding in an aggregate principal amount
exceeding $10,000,000 beyond any period of grace provided with respect
thereto, or (ii) an Obligor or any Restricted Subsidiary is in default
in the performance of or compliance with any term of any evidence of
any Indebtedness in an aggregate outstanding principal amount exceeding
$10,000,000 or of any mortgage, indenture or other agreement relating
thereto or any other condition exists, and as a consequence of such
default or condition such Indebtedness has become, or has been
declared, due and payable before its stated maturity or before its
regularly scheduled dates of payment; or
(g) an Obligor or any Restricted Subsidiary (i) is generally
not paying, or admits in writing its inability to pay, its debts as
they become due, (ii) files, or consents by answer or otherwise to the
filing against it of, a petition for relief or reorganization or
arrangement or any other petition in bankruptcy, for liquidation or to
take advantage of any bankruptcy, insolvency, reorganization,
moratorium or other similar law of any jurisdiction, (iii) makes an
assignment for the benefit of its creditors, (iv) consents to the
appointment of a custodian, receiver, trustee or other officer with
similar powers with respect to it or with respect to any substantial
part of its property, (v) is adjudicated as insolvent or to be
liquidated, or (vi) takes corporate action for the purpose of any of
the foregoing; or
(h) a court or Governmental Authority of competent
jurisdiction enters an order appointing, without consent by an Obligor
or any Restricted Subsidiary, a custodian, receiver, trustee or other
officer with similar powers with respect to it or with respect to any
substantial part of its property, or constituting an order for relief
or
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approving a petition for relief or reorganization or any other petition
in bankruptcy or for liquidation or to take advantage of any bankruptcy
or insolvency law of any jurisdiction, or ordering the dissolution,
winding-up or liquidation of an Obligor or any Restricted Subsidiary,
or any such petition shall be filed against an Obligor or any
Restricted Subsidiary and such petition shall not be dismissed within
60 days; or
(i) a final judgment or judgments for the payment of money
aggregating in excess of $5,000,000 are rendered against one or more of
the Obligors and the Restricted Subsidiaries and which judgments are
not, within 60 days after entry thereof, bonded, discharged or stayed
pending appeal or are not discharged within 60 days after the
expiration of such stay; or
(j) If (i) any Plan shall fail to satisfy the minimum funding
standards of ERISA or the Code for any plan year or part thereof or a
waiver of such standards or extension of any amortization period is
sought or granted under section 412 of the Code, (ii) a notice of
intent to terminate any Plan shall have been or is reasonably expected
to be filed with the PBGC or the PBGC shall have instituted proceedings
under ERISA section 4042 to terminate or appoint a trustee to
administer any Plan or the PBGC shall have notified Holdings or any
ERISA Affiliate that a Plan may become a subject of any such
proceedings, (iii) the aggregate "amount of unfunded benefit
liabilities" (within the meaning of section 4001(a)(18) of ERISA) under
all Plans, determined in accordance with Title IV of ERISA, shall
exceed $50,000,000, (iv) Holdings or any ERISA Affiliate shall have
incurred or is reasonably expected to incur any liability pursuant to
Title I or IV of ERISA or the penalty or excise tax provisions of the
Code relating to employee benefit plans, (v) Holdings or any ERISA
Affiliate withdraws from any Multiemployer Plan, or (vi) Holdings or
any Subsidiary establishes or amends any employee welfare benefit plan
that provides post-employment welfare benefits in a manner that would
increase the liability of Holdings or any Subsidiary thereunder; and
any such event or events described in clauses (i) through (vi) above,
either individually or together with any other such event or events,
would reasonably be expected to have a Material Adverse Effect.
As used in Section 11(j), the terms "employee benefit plan" and "employee
welfare benefit plan" shall have the respective meanings assigned to such terms
in Section 3 of ERISA.
SECTION 12. REMEDIES ON DEFAULT, ETC.
Section 12.1. Acceleration. (a) If an Event of Default with respect to
either Obligor described in paragraph (g) or (h) of Section 11 (other than an
Event of Default described in clause (i) of paragraph (g) or described in clause
(vi) of paragraph (g) by virtue of the fact that such clause encompasses clause
(i) of paragraph (g)) has occurred, all the Notes then outstanding shall
automatically become immediately due and payable.
(b) If any other Event of Default has occurred and is continuing, any
holder or holders of a majority in principal amount of the Notes at the time
outstanding may at any time at its or
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their option, by notice or notices to either Obligor, declare all the Notes then
outstanding to be immediately due and payable.
(c) If any Event of Default described in paragraph (a) or (b) of
Section 11 has occurred and is continuing, any holder of Notes at the time
outstanding affected by such Event of Default may at any time, at its option, by
notice or notices to either Obligor, declare all the Notes held by it to be
immediately due and payable.
Upon any Note becoming due and payable under this Section 12.1, whether
automatically or by declaration, such Note will forthwith mature and the entire
unpaid principal amount of such Note, plus (x) all accrued and unpaid interest
thereon and (y) the Make-Whole Amount determined in respect of such principal
amount (to the full extent permitted by applicable law), shall all be
immediately due and payable, in each and every case without presentment, demand,
protest or further notice, all of which are hereby waived. Each Obligor
acknowledges, and the parties hereto agree, that each holder of a Note has the
right to maintain its investment in the Notes free from repayment by the
Obligors (except as herein specifically provided for) and that the provision for
payment of a Make-Whole Amount by the Obligors in the event that the Notes are
prepaid or are accelerated as a result of an Event of Default, is intended to
provide compensation for the deprivation of such right under such circumstances.
Section 12.2. Other Remedies. If any Default or Event of Default has
occurred and is continuing, and irrespective of whether any Notes have become or
have been declared immediately due and payable under Section 12.1, the holder of
any Note at the time outstanding may proceed to protect and enforce the rights
of such holder by an action at law, suit in equity or other appropriate
proceeding, whether for the specific performance of any agreement contained
herein or in any Note, or for an injunction against a violation of any of the
terms hereof or thereof, or in aid of the exercise of any power granted hereby
or thereby or by law or otherwise.
Section 12.3. Rescission. At any time after any Notes have been declared
due and payable pursuant to clause (b) or (c) of Section 12.1, the holders of
not less than 66-2/3% in principal amount of the Notes then outstanding, by
written notice to the Obligors, may rescind and annul any such declaration and
its consequences if (a) the Obligors have paid all overdue interest on the Notes
of each Series, all principal of and Make-Whole Amount, if any, on any Notes of
each Series that are due and payable and are unpaid other than by reason of such
declaration, and all interest on such overdue principal and Make-Whole Amount,
if any, and (to the extent permitted by applicable law) any overdue interest in
respect of the Notes of each Series, at the respective Default Rates, (b) all
Events of Default and Defaults, other than non-payment of amounts that have
become due solely by reason of such declaration, have been cured or have been
waived pursuant to Section 17, and (c) no judgment or decree has been entered
for the payment of any monies due pursuant hereto or to the Notes. No rescission
and annulment under this Section 12.3 will extend to or affect any subsequent
Event of Default or Default or impair any right consequent thereon.
Section 12.4. No Waivers or Election of Remedies, Expenses, etc. No
course of dealing and no delay on the part of any holder of any Note in
exercising any right, power or remedy shall
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operate as a waiver thereof or otherwise prejudice such holder's rights, powers
or remedies. No right, power or remedy conferred by this Agreement or by any
Note upon any holder thereof shall be exclusive of any other right, power or
remedy referred to herein or therein or now or hereafter available at law, in
equity, by statute or otherwise. Without limiting the obligations of the
Obligors under Section 15, the Obligors will pay to the holder of each Note on
demand such further amount as shall be sufficient to cover all costs and
expenses of such holder incurred in any enforcement or collection under this
Section 12, including, without limitation, reasonable attorneys' fees, expenses
and disbursements.
SECTION 13. REGISTRATION; EXCHANGE; SUBSTITUTION OF NOTES.
Section 13.1. Registration of Notes. The Obligors shall keep at the
principal executive office of Holdings a register for the registration and
registration of transfers of Notes. The name and address of each holder of one
or more Notes, each transfer thereof and the name and address of each transferee
of one or more Notes shall be registered in such register. Prior to due
presentment for registration of transfer, the Person in whose name any Note
shall be registered shall be deemed and treated as the owner and holder thereof
for all purposes hereof, and the Obligors shall not be affected by any notice or
knowledge to the contrary. The Obligors shall give to any holder of a Note that
is an Institutional Investor promptly upon request therefor, a complete and
correct copy of the names and addresses of all registered holders of Notes.
Section 13.2. No Transfers of Notes to Competitors; Transfer and
Exchange of Notes. (a) Without the consent of Holdings, which consent shall not
be unreasonably withheld, no holder of a Note may transfer such Note to a
Competitor.
(b) Upon surrender of any Note at the principal executive office of
Holdings for registration of transfer or exchange (and in the case of a
surrender for registration of transfer, duly endorsed or accompanied by a
written instrument of transfer duly executed by the registered holder of such
Note or its attorney duly authorized in writing and accompanied by the address
for notices of each transferee of such Note or part thereof), the Obligors shall
execute and deliver, at the Obligors' expense (except as provided below), one or
more new Notes (as requested by the holder thereof) of the same Series in
exchange therefor, in an aggregate principal amount equal to the unpaid
principal amount of the surrendered Note. Each such new Note shall be payable to
such Person as such holder may request and shall be substantially in the form of
Exhibit 1-A, 1-B or 1-C, as the case may be. Each such new Note shall be dated
and bear interest from the date to which interest shall have been paid on the
surrendered Note or dated the date of the surrendered Note if no interest shall
have been paid thereon. The Obligors may require payment of a sum sufficient to
cover any stamp tax or governmental charge imposed in respect of any such
transfer of Notes. Notes shall not be transferred in denominations of less than
$100,000, provided that if necessary to enable the registration of transfer by a
holder of its entire holding of Notes, one Note may be in a denomination of less
than $100,000. Any transferee of a Note, or purchaser of a participation
therein, shall, by its acceptance of such Note be deemed to make the same
representations to the Obligors regarding the Note or participation as the
Purchasers have made pursuant to Sections 6.1 and 6.2, provided that such entity
may (in reliance upon information provided by the Obligors, which shall not be
unreasonably withheld) make a representation to
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the effect that the purchase by such entity of any Note will not constitute a
non-exempt prohibited transaction under Section 406(a) of ERISA.
Section 13.3. Replacement of Notes. Upon receipt by the Obligors of
evidence reasonably satisfactory to it of the ownership of and the loss, theft,
destruction or mutilation of any Note (which evidence shall be, in the case of
an Institutional Investor, notice from such Institutional Investor of such
ownership and such loss, theft, destruction or mutilation), and
(a) in the case of loss, theft or destruction, of indemnity
reasonably satisfactory to it (provided that if the holder of such Note
is, or is a nominee for, an original Purchaser or another holder of a
Note with a minimum net worth of at least $50,000,000, such Person's
own unsecured agreement of indemnity shall be deemed to be
satisfactory), or
(b) in the case of mutilation, upon surrender and cancellation
thereof,
the Obligors at their own expense shall execute and deliver, in lieu thereof, a
new Note of the same Series, dated and bearing interest from the date to which
interest shall have been paid on such lost, stolen, destroyed or mutilated Note
or dated the date of such lost, stolen, destroyed or mutilated Note if no
interest shall have been paid thereon.
SECTION 14. PAYMENTS ON NOTES.
Section 14.1. Place of Payment. Subject to Section 14.2, payments of
principal, Make-Whole Amount, if any, and interest becoming due and payable on
the Notes shall be made in Cleveland, Ohio at the principal office of the
Company in such jurisdiction. The Obligors may at any time, by notice to each
holder of a Note, change the place of payment of the Notes so long as such place
of payment shall be either the principal office of an Obligor in such
jurisdiction or the principal office of a bank or trust company in such
jurisdiction.
Section 14.2. Home Office Payment. So long as any Purchaser or its
nominee shall be the holder of any Note, and notwithstanding anything contained
in Section 14.1 or in such Note to the contrary, the Obligors will pay all sums
becoming due on such Note for principal, Make-Whole Amount, if any, and interest
by the method and at the address specified for such purpose below such
Purchaser's name in Schedule A, or by such other method or at such other address
as such Purchaser shall have from time to time specified to Holdings in writing
for such purpose, without the presentation or surrender of such Note or the
making of any notation thereon, except that upon written request of the Obligors
made concurrently with or reasonably promptly after payment or prepayment in
full of any Note, such Purchaser shall surrender such Note for cancellation,
reasonably promptly after any such request, to Holdings at its principal
executive office or at the place of payment most recently designated by the
Obligors pursuant to Section 14.1. The Obligors will afford the benefits of this
Section 14.2 to any Institutional Investor that is the direct or indirect
transferee of any Note purchased by any Purchaser under this Agreement and that
has made the same agreement relating to such Note as such Purchaser has made in
this Section 14.2.
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SECTION 15. EXPENSES, ETC.
Section 15.1. Transaction Expenses. Whether or not the transactions
contemplated hereby are consummated, the Obligors will pay all costs and
expenses (including reasonable attorneys' fees of a special counsel and, if
reasonably required, local or other counsel) incurred by each Purchaser or
holder of a Note in connection with such transactions and in connection with any
amendments, waivers or consents under or in respect of this Agreement or the
Notes (whether or not such amendment, waiver or consent becomes effective),
including, without limitation: (a) the costs and expenses incurred in enforcing
or defending (or determining whether or how to enforce or defend) any rights
under this Agreement or the Notes or in responding to any subpoena or other
legal process or informal investigative demand issued in connection with this
Agreement or the Notes, or by reason of being a holder of any Note, and (b) the
costs and expenses, including financial advisors' fees, incurred in connection
with the insolvency or bankruptcy of either Obligor or any Subsidiary or in
connection with any work-out or restructuring of the transactions contemplated
hereby and by the Notes. The Obligors will pay, and will save each Purchaser and
each other holder of a Note harmless from, all claims in respect of any fees,
costs or expenses if any, of brokers and finders (other than those retained by
such Purchaser).
Section 15.2. Survival. The obligations of the Obligors under this
Section 15 will survive the payment or transfer of any Note, the enforcement,
amendment or waiver of any provision of this Agreement or the Notes, and the
termination of this Agreement.
SECTION 16. SURVIVAL OF REPRESENTATIONS AND WARRANTIES; ENTIRE AGREEMENT.
All representations and warranties contained herein shall survive the
execution and delivery of this Agreement and the Notes, the purchase or transfer
by any Purchaser of any Note or portion thereof or interest therein and the
payment of any Note, and may be relied upon by any subsequent holder of a Note,
regardless of any investigation made at any time by or on behalf of such
Purchaser or any other holder of a Note. All statements contained in any
certificate or other instrument delivered by or on behalf of an Obligor pursuant
to this Agreement shall be deemed representations and warranties of such Obligor
under this Agreement. Subject to the preceding sentence, this Agreement and the
Notes embody the entire agreement and understanding between each Purchaser and
the Obligors and supersede all prior agreements and understandings relating to
the subject matter hereof.
SECTION 17. AMENDMENT AND WAIVER.
Section 17.1. Requirements. This Agreement and the Notes may be
amended, and the observance of any term hereof or of the Notes may be waived
(either retroactively or prospectively), with (and only with) the written
consent of the Obligors and the Required Holders, except that (a) no amendment
or waiver of any of the provisions of Section 1, 2, 3, 4, 5, 6 or 21 hereof, or
any defined term (as it is used therein), will be effective as to any Purchaser
unless consented to by such Purchaser in writing, and (b) no such amendment or
waiver may, without the written consent of the holder of each Note at the time
outstanding affected thereby,
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(i) subject to the provisions of Section 12 relating to acceleration or
rescission, change the amount or time of any prepayment or payment of principal
of, or reduce the rate or change the time of payment or method of computation of
interest or of the Make-Whole Amount on, the Notes, (ii) change the percentage
of the principal amount of the Notes the holders of which are required to
consent to any such amendment or waiver, or (iii) amend any of Sections 8,
11(a), 11(b), 12, 17 or 20.
Section 17.2. Solicitation of Holders of Notes.
(a) Solicitation. The Obligors will provide each holder of the Notes
(irrespective of the amount of Notes then owned by it) with sufficient
information, sufficiently far in advance of the date a decision is required, to
enable such holder to make an informed and considered decision with respect to
any proposed amendment, waiver or consent in respect of any of the provisions
hereof or of the Notes. The Obligors will deliver executed or true and correct
copies of each amendment, waiver or consent effected pursuant to the provisions
of this Section 17 to each holder of outstanding Notes promptly following the
date on which it is executed and delivered by, or receives the consent or
approval of, the requisite holders of Notes.
(b) Payment. The Obligors will not directly or indirectly pay or cause
to be paid any remuneration, whether by way of supplemental or additional
interest, fee or otherwise, or grant any security, to any holder of Notes as
consideration for or as an inducement to the entering into by any holder of
Notes or any waiver or amendment of any of the terms and provisions hereof or of
the Notes unless such remuneration is concurrently paid, or security is
concurrently granted, on the same terms, ratably to each holder of Notes then
outstanding whether or not such holder consented to such waiver or amendment.
Section 17.3. Binding Effect, etc. Any amendment or waiver consented to
as provided in this Section 17 applies equally to all holders of Notes and is
binding upon them and upon each future holder of any Note and upon the Obligors
without regard to whether such Note has been marked to indicate such amendment
or waiver. No such amendment or waiver will extend to or affect any obligation,
covenant, agreement, Default or Event of Default not expressly amended or waived
or impair any right consequent thereon. No course of dealing between the
Obligors and the holder of any Note nor any delay in exercising any rights
hereunder or under any Note shall operate as a waiver of any rights of any
holder of such Note. As used herein, the term "this Agreement" and references
thereto shall mean this Agreement as it may from time to time be amended or
supplemented.
Section 17.4. Notes Held by the Obligors, etc. Solely for the purpose of
determining whether the holders of the requisite percentage of the aggregate
principal amount of Notes then outstanding approved or consented to any
amendment, waiver or consent to be given under this Agreement or the Notes, or
have directed the taking of any action provided herein or in the Notes to be
taken upon the direction of the holders of a specified percentage of the
aggregate principal amount of Notes then outstanding, Notes directly or
indirectly owned by the Obligors or any of their Affiliates shall be deemed not
to be outstanding.
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SECTION 18. NOTICES.
All notices and communications provided for hereunder shall be in
writing and sent (a) by telefacsimile if the sender on the same day sends a
confirming copy of such notice by a recognized overnight delivery service
(charges prepaid), or (b) by registered or certified mail with return receipt
requested (postage prepaid), or (c) by a recognized overnight delivery service
(with charges prepaid). Any such notice must be sent:
(i) if to any Purchaser or its nominee, to such Purchaser or
it at the address specified for such communications in Schedule A, or
at such other address as such Purchaser or it shall have specified to
the Obligors in writing,
(ii) if to any other holder of any Note, to such holder at
such address as such other holder shall have specified to the Obligors
in writing, or
(iii) if to an Obligor, to the such Obligor at its address set
forth at the beginning hereof to the attention of the Treasurer of such
Obligor, or at such other address as such Obligor shall have specified
to the holder of each Note in writing.
Notices under this Section 18 will be deemed given only when actually received.
SECTION 19. REPRODUCTION OF DOCUMENTS.
This Agreement and all documents relating thereto, including, without
limitation, (a) consents, waivers and modifications that may hereafter be
executed, (b) documents received by any Purchaser at the Closing (except the
Notes themselves), and (c) financial statements, certificates and other
information previously or hereafter furnished to any Purchaser, may be
reproduced by such Purchaser by any photographic, photostatic, microfilm,
microcard, miniature photographic or other similar process and such Purchaser
may destroy any original document so reproduced. Each Obligor agrees and
stipulates that, to the extent permitted by applicable law, any such
reproduction shall be admissible in evidence as the original itself in any
judicial or administrative proceeding (whether or not the original is in
existence and whether or not such reproduction was made by such Purchaser in the
regular course of business) and any enlargement, facsimile or further
reproduction of such reproduction shall likewise be admissible in evidence. This
Section 19 shall not prohibit the Obligors or any other holder of Notes from
contesting any such reproduction to the same extent that it could contest the
original, or from introducing evidence to demonstrate the inaccuracy of any such
reproduction.
SECTION 20. CONFIDENTIAL INFORMATION.
For the purposes of this Section 20, "Confidential Information" means
information delivered to any Purchaser or other holder of the Notes (each a
"Recipient") by or on behalf of either Obligor or any Subsidiary in connection
with the transactions contemplated by or otherwise pursuant to this Agreement
that is proprietary in nature and that was clearly marked or labeled or
otherwise adequately identified when received by such Recipient as being
confidential
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information of such Obligor or such Subsidiary, provided that such term does not
include information that (a) was publicly known or otherwise known to such
Recipient prior to the time of such disclosure, (b) subsequently becomes
publicly known through no act or omission by such Recipient or any person acting
on such Recipient's behalf, (c) otherwise becomes known to such Recipient other
than through disclosure by an Obligor or any Subsidiary or (d) constitutes
financial statements delivered to such Recipient under Section 7.1 that are
otherwise publicly available. Each Recipient will maintain the confidentiality
of such Confidential Information in accordance with procedures adopted by such
Recipient in good faith to protect confidential information of third parties
delivered to such Recipient, provided that such Recipient may deliver or
disclose Confidential Information to (i) such Recipient's directors, officers,
employees, agents, attorneys and affiliates (to the extent such disclosure
reasonably relates to the administration of the investment represented by such
Recipient's Notes), (ii) such Recipient's financial advisors and other
professional advisors who agree to hold confidential the Confidential
Information substantially in accordance with the terms of this Section 20, (iii)
any other holder of any Note, (iv) any Institutional Investor to which such
Recipient sells or offers to sell such Note or any part thereof or any
participation therein (if such Person has agreed in writing prior to its receipt
of such Confidential Information to be bound by the provisions of this Section
20), (v) any Person from which such Recipient offers to purchase any security of
an Obligor (if such Person has agreed in writing prior to its receipt of such
Confidential Information to be bound by the provisions of this Section 20), (vi)
any federal or state regulatory authority having jurisdiction over such
Recipient, (vii) the National Association of Insurance Commissioners or any
similar organization, or any nationally recognized rating agency that requires
access to information about such Recipient's investment portfolio, or (viii) any
other Person to which such delivery or disclosure may be necessary or
appropriate (w) to effect compliance with any law, rule, regulation or order
applicable to such Recipient, (x) in response to any subpoena or other legal
process, (y) in connection with any litigation to which such Recipient is a
party or (z) if an Event of Default has occurred and is continuing, to the
extent such Recipient may reasonably determine such delivery and disclosure to
be necessary or appropriate in the enforcement or for the protection of the
rights and remedies under such Recipient's Notes and this Agreement. Each holder
of a Note, by its acceptance of a Note, will be deemed to have agreed to be
bound by and to be entitled to the benefits of this Section 20 as though it were
a party to this Agreement. On reasonable request by the Obligors in connection
with the delivery to any holder of a Note of information required to be
delivered to such holder under this Agreement or requested by such holder (other
than a holder that is a party to this Agreement or its nominee or any other
holder that shall have previously delivered such a confirmation), such holder
will confirm in writing that it is bound by the provisions of this Section 20.
SECTION 21. SUBSTITUTION OF PURCHASER.
Each Purchaser shall have the right to substitute any one of such
Purchaser's Affiliates as the purchaser of the Notes that such Purchaser has
agreed to purchase hereunder, by written notice to the Obligors, which notice
shall be signed by both such Purchaser and such Affiliate, shall contain such
Affiliate's agreement to be bound by this Agreement and shall contain a
confirmation by such Affiliate of the accuracy with respect to it of the
representations set forth in Section 6. Upon receipt of such notice, wherever
the word "Purchaser" is used in this
-38-
Lincoln Electric Holdings, Inc. Note Purchase Agreement
The Lincoln Electric Company
Agreement (other than in this Section 21), such word shall be deemed to refer to
such Affiliate in lieu of such substituting Purchaser. In the event that such
Affiliate is so substituted as a purchaser hereunder and such Affiliate
thereafter transfers to the substituting Purchaser all of the Notes then held by
such Affiliate, upon receipt by the Obligors of notice of such transfer,
wherever the word "Purchaser" is used in this Agreement (other than in this
Section 21), such word shall no longer be deemed to refer to such Affiliate, but
shall refer to such Purchaser, and such Purchaser shall have all the rights of
an original holder of the Notes under this Agreement.
SECTION 22. MISCELLANEOUS.
Section 22.1. Successors and Assigns. All covenants and other agreements
contained in this Agreement by or on behalf of any of the parties hereto bind
and inure to the benefit of their respective successors and assigns (including,
without limitation, any subsequent holder of a Note) whether so expressed or
not.
Section 22.2. Payments Due on Non-Business Days. Anything in this
Agreement or the Notes to the contrary notwithstanding, any payment of principal
of or Make-Whole Amount or interest on any Note that is due on a date other than
a Business Day shall be made on the next succeeding Business Day without
including the additional days elapsed in the computation of the interest payable
on such next succeeding Business Day.
Section 22.3. Severability. Any provision of this Agreement that is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall (to the full extent permitted by law)
not invalidate or render unenforceable such provision in any other jurisdiction.
Section 22.4. Construction. Each covenant contained herein shall be
construed (absent express provision to the contrary) as being independent of
each other covenant contained herein, so that compliance with any one covenant
shall not (absent such an express contrary provision) be deemed to excuse
compliance with any other covenant. Where any provision herein refers to action
to be taken by any Person, or which such Person is prohibited from taking, such
provision shall be applicable whether such action is taken directly or
indirectly by such Person.
Section 22.5. Counterparts. This Agreement may be executed in any
number of counterparts, each of which shall be an original but all of which
together shall constitute one instrument. Each counterpart may consist of a
number of copies hereof, each signed by fewer than all, but together signed by
all, of the parties hereto.
SECTION 22.6. GOVERNING LAW. THIS AGREEMENT SHALL BE CONSTRUED AND
ENFORCED IN ACCORDANCE WITH, AND THE RIGHTS OF THE PARTIES SHALL BE GOVERNED BY,
THE LAW OF THE STATE OF NEW YORK EXCLUDING CHOICE-OF-LAW PRINCIPLES OF THE LAW
OF SUCH STATE THAT WOULD REQUIRE THE APPLICATION OF THE LAWS OF A JURISDICTION
OTHER THAN SUCH STATE.
-39-
Lincoln Electric Holdings, Inc. Note Purchase Agreement
The Lincoln Electric Company
Section 22.7. Consent to Jurisdiction and Service of Process. (a) To the
extent permitted by applicable law, each Obligor (i) hereby irrevocably submits
to the nonexclusive jurisdiction of the Supreme Court of the State of New York,
New York County (without prejudice to the rights of any holder of a Note to
remove to the United States District Court for the Southern District of New
York) and to the nonexclusive jurisdiction of the United States District Court
for the Southern District of New York, for the purposes of any suit, action or
other proceeding arising out of this Agreement, or the subject matter hereof or
any of the transactions contemplated hereby or thereby brought by any holder of
the Notes, (ii) hereby irrevocably agrees that all claims in respect of such
action or proceeding may be heard and determined in such New York State court
or, to the fullest extent permitted by applicable law, in such federal court,
and (iii) hereby irrevocably waives, and agrees not to assert, by way of motion,
as a defense, or otherwise, in any such suit, action or proceeding any claim
that is not personally subject to the jurisdiction of the above-named courts,
that the suit, action or proceeding is improper or that this Agreement, or the
subject matter hereof may not be enforced in or by such court.
(b) A final judgment obtained in respect of any action, suit or
proceeding referred to in this Section 22.7 shall be conclusive and may be
enforced in other jurisdictions by suit or judgment or in any manner as provided
by applicable law. Each Obligor hereby consents to service of process by
registered mail, Federal Express, or similar courier at its address set forth in
Section 18, it being agreed that service in such manner shall constitute valid
service upon or its respective successors or assigns in connection with any such
action or proceeding only; provided, however, that nothing in this Section 22.7
shall affect the right of any holder of the Notes to serve legal process in any
other manner permitted by applicable law.
* * * * *
-40-
Lincoln Electric Holdings, Inc. Note Purchase Agreement
The Lincoln Electric Company
The execution hereof by the Purchasers shall constitute a contract
among the Obligors and the Purchasers for the uses and purposes hereinabove set
forth.
Very truly yours,
LINCOLN ELECTRIC HOLDINGS, INC.
By _______________________________
Title:
By
Title:
THE LINCOLN ELECTRIC COMPANY
By _______________________________
Title:
By ______________________________
Title
The foregoing is hereby
agreed to as of the
date thereof.
STATE FARM LIFE INSURANCE COMPANY
By _______________________________
Its
By _______________________________
Its
-41-
Lincoln Electric Holdings, Inc. Note Purchase Agreement
The Lincoln Electric Company
The foregoing is hereby
agreed to as of the
date thereof.
THE PRUDENTIAL INSURANCE COMPANY OF AMERICA
By _________________________________
Its
The foregoing is hereby
agreed to as of the
date thereof.
MEDICA HEALTH PLAN
By: Prudential Private Placement Investors,
L.P., as Investment Advisor
By: Prudential Private Placement Investors,
Inc., General Partner
By ________________________
Its Vice President
The foregoing is hereby
agreed to as of the
date thereof.
HARTFORD LIFE INSURANCE COMPANY
By: Prudential Private Placement Investors,
L.P., as Investment Advisor
By: Prudential Private Placement Investors,
Inc., General Partner
By ________________________
Its Vice President
-42-
Lincoln Electric Holdings, Inc. Note Purchase Agreement
The Lincoln Electric Company
The foregoing is hereby
agreed to as of the
date thereof.
CONNECTICUT GENERAL LIFE INSURANCE COMPANY
By: CIGNA Investments, Inc. (authorized agent)
By ______________________________
Its
The foregoing is hereby
agreed to as of the
date thereof.
CONNECTICUT GENERAL LIFE INSURANCE COMPANY,
on behalf of one or more separate accounts
By: CIGNA Investments, Inc. (authorized agent)
By ____________________________
Its
The foregoing is hereby
agreed to as of the
date thereof.
NATIONWIDE LIFE INSURANCE COMPANY
By _________________________________
Its
-43-
Lincoln Electric Holdings, Inc. Note Purchase Agreement
The Lincoln Electric Company
The foregoing is hereby
agreed to as of the
date thereof.
NATIONWIDE LIFE AND ANNUITY INSURANCE COMPANY
By _________________________________
Its
The foregoing is hereby
agreed to as of the
date thereof.
THE LINCOLN NATIONAL LIFE INSURANCE COMPANY
By Delaware Lincoln Investment Advisers,
a series of Delaware Management
Business Trust, Attorney-In-Fact
By _________________________________
Its
The foregoing is hereby
agreed to as of the
date thereof.
MODERN WOODMEN OF AMERICA
By _________________________________
Its
-44-
Lincoln Electric Holdings, Inc. Note Purchase Agreement
The Lincoln Electric Company
The foregoing is hereby
agreed to as of the
date thereof.
AMERICAN UNITED LIFE INSURANCE COMPANY
By _________________________________
Its
The foregoing is hereby agreed to as of the date thereof.
PIONEER MUTUAL LIFE INSURANCE COMPANY
By: American United Life Insurance Company, Its Agent
By:_______________________________
Its:
The foregoing is hereby
agreed to as of the
date thereof.
THE STATE LIFE INSURANCE COMPANY
By: American United Life Insurance Company, Its Agent
By:_______________________________
Its:
-45-
Lincoln Electric Holdings, Inc. Note Purchase Agreement
The Lincoln Electric Company
The foregoing is hereby
agreed to as of the
date thereof.
WEST AMERICAN INSURANCE COMPANY
By _________________________________
Its
The foregoing is hereby agreed to as of the date thereof.
THE OHIO CASUALTY INSURANCE COMPANY
By _________________________________
Its
The foregoing is hereby
agreed to as of the
date thereof.
CLARICA LIFE INSURANCE COMPANY-U.S.
By _________________________________
Its
-46-
DEFINED TERMS
GENERAL PROVISIONS
Where the character or amount of any asset or liability or item of
income or expense is required to be determined or any consolidation or other
accounting computation is required to be made for the purposes of this
Agreement, the same shall be done in accordance with GAAP, to the extent
applicable, except where such principles are inconsistent with the express
requirements of this Agreement.
DEFINITIONS
As used herein, the following terms have the respective meanings set
forth below or set forth in the Section hereof following such term:
"Affiliate" means, at any time, and with respect to any Person, (a) any
other Person that at such time directly or indirectly through one or more
intermediaries Controls, or is Controlled by, or is under common Control with,
such first Person. As used in this definition, "Control" means the possession,
directly or indirectly, of the power to direct or cause the direction of the
management and policies of a Person, whether through the ownership of voting
securities, by contract or otherwise. Unless the context otherwise clearly
requires, any reference to an "Affiliate" is a reference to an Affiliate of
Holdings.
"Attributable Debt" means, as to any particular lease relating to a
Sale-and-Leaseback Transaction, the present value of all Lease Rentals required
to be paid by the Holdings or any Restricted Subsidiary under such lease during
the remaining term thereof (determined in accordance with generally accepted
financial practice using a discount factor equal to the interest rate implicit
in such lease if known or, if not known, of 7% per annum).
"Business Day" means (a) for the purposes of Section 8.7 only, any day
other than a Saturday, a Sunday or a day on which commercial banks in New York
City are required or authorized to be closed, and (b) for the purposes of any
other provision of this Agreement, any day other than a Saturday, a Sunday or a
day on which commercial banks in New York, New York, or Cleveland, Ohio are
required or authorized to be closed.
"Capital Lease" means, at any time, a lease with respect to which the
lessee is required concurrently to recognize the acquisition of an asset and the
incurrence of a liability in accordance with GAAP.
"Capital Lease Obligation" means, with respect to any Person and a
Capital Lease, the amount of the obligation of such Person as the lessee under
such Capital Lease which would, in accordance with GAAP, appear as a liability
on a balance sheet of such Person.
"Cash Equivalents" means investments in (i) United States Governmental
Securities maturing within 365 days from the date of acquisition thereof; (ii)
negotiable certificates of deposit and bankers' acceptances maturing within 365
days from the date of acquisition thereof
SCHEDULE B
(to Note Purchase Agreement)
issued by any commercial bank or trust company organized under the laws of the
United States or any state thereof or the District of Columbia, having at any
date of determination combined capital and surplus and retained earnings of not
less than $100,000,000, provided, that the long-term unsecured debt obligations
of such bank or trust company (or the long-term unsecured debt obligations of
the bank holding company owning all of the capital stock of such bank or trust
company) shall have been given a rating of "A" or better by S&P or an equivalent
rating by any other credit rating agency of recognized national standing, and
(iii) commercial paper maturing not more than 270 days from the date of issuance
thereof which has a rating, at the time of acquisition by Holdings or such
Restricted Subsidiary, of "A-1" or better by S&P or an equivalent rating by any
other credit rating agency of recognized national standing.
"Closing" is defined in Section 3.
"Code" means the Internal Revenue Code of 1986, as amended from time to
time, and the rules and regulations promulgated thereunder from time to time.
"Company" means The Lincoln Electric Company, an Ohio corporation.
"Competitor" shall mean any Person directly or indirectly through its
Affiliates has substantial operations related to the welding and cutting
industry, including the manufacture and sale of welding and cutting equipment
and related consummables, industrial gases and gas apparatus, lasers and
robotics for welding applications, and the engineered adhesives and industrial
fastener industries, provided that:
(a) the provision of investment advisory services by a Person
to a Plan which is owned or controlled by a Person which would
otherwise be a Competitor shall not of itself cause the Person
providing such services to be deemed to be a Competitor; and
(b) in no event shall an Institutional Investor be deemed a
Competitor unless such Institutional Investor controls, or is
controlled by, or is under common control with, a Person that is
substantially engaged in the welding and cutting industry, including
the manufacture and sale of welding and cutting equipment and related
consummables, industrial gases and gas apparatus, lasers and robotics
for welding applications, and the engineered adhesives and industrial
fastener industries.
"Confidential Information" is defined in Section 20.
"Consolidated Debt" means, as of any date of determination, the sum of
all Debt of Holdings and its Restricted Subsidiaries outstanding on such date,
after eliminating all offsetting debits and credits between Holdings and its
Restricted Subsidiaries and all other items required to be eliminated in the
course of the preparation of consolidated financial statements of Holdings and
its Restricted Subsidiaries in accordance with GAAP.
"Consolidated EBITDA" for any period means the sum of (a) Consolidated
Net Income during such period plus (to the extent deducted in determining
Consolidated Net Income for such period), (b) all provisions for any Federal,
state or local income taxes made by Holdings and its
B-2
Restricted Subsidiaries during such period, (c) all provisions for depreciation
and amortization (other than amortization of debt discount) made by Holdings and
its Restricted Subsidiaries during such period, and (d) Interest Charges during
such period.
"Consolidated Fixed Charges" means, with respect to any period, on a
consolidated basis the sum of (a) Interest Charges for such period and (b) Lease
Rentals for such period.
"Consolidated Funded Debt" means, as of any date of determination, the
sum of all Funded Debt of Holdings and its Restricted Subsidiaries outstanding
on such date, after eliminating all offsetting debits and credits between
Holdings and its Restricted Subsidiaries and all other items required to be
eliminated in the course of the preparation of consolidated financial statements
of Holdings and its Restricted Subsidiaries in accordance with GAAP.
"Consolidated Income Available for Fixed Charges" means, with respect
to any period, Consolidated Net Income for such period plus all amounts deducted
in the computation thereof on account of (a) Consolidated Fixed Charges and (b)
taxes imposed on or measured by income or excess profits.
"Consolidated Net Income" means, with reference to any period, the net
income (or loss) of Holdings and its Restricted Subsidiaries for such period
(taken as a cumulative whole), as determined in accordance with GAAP, after
eliminating all offsetting debits and credits between Holdings and its
Restricted Subsidiaries and all other items required to be eliminated in the
course of the preparation of consolidated financial statements of Holdings and
its Restricted Subsidiaries in accordance with GAAP, provided that there shall
be excluded:
(a) the income (or loss) of any Person accrued prior to the
date it becomes a Restricted Subsidiary or is merged into or
consolidated with Holdings or a Restricted Subsidiary, and the income
(or loss) of any Person, substantially all of the assets of which have
been acquired in any manner, realized by such other Person prior to the
date of acquisition,
(b) the income (or loss) of any Person (other than a
Restricted Subsidiary) in which Holdings or any Restricted Subsidiary
has an ownership interest, except to the extent that any such income
has been actually received by Holdings or such Restricted Subsidiary in
the form of cash dividends or similar cash distributions,
(c) the undistributed earnings of any Restricted Subsidiary
to the extent that, to the best of the knowledge of the Obligors, the
declaration or payment of dividends or similar distributions by such
Restricted Subsidiary is (i) not at the time permitted by the terms of
its charter or any agreement, instrument, judgment, decree, order,
statute, rule or governmental regulation applicable to such Restricted
Subsidiary, or (ii) otherwise unavailable for payment,
(d) any aggregate net gain (but not any aggregate net loss)
during such period arising from the sale, conversion, exchange or other
disposition of Investments or capital assets (such term to include,
without limitation, the following, whether or not current: all
B-3
fixed assets, whether tangible or intangible, and all inventory sold in
conjunction with the disposition of fixed assets), and any taxes on
such net gain (or net loss),
(e) any gains resulting from any write-up or reappraisal of
any assets (but not any losses resulting from any write-down or
reappraisal of any assets),
(f) any net gain from the collection of the proceeds of life
insurance policies,
(g) any gain arising from the acquisition of any Security, or
the extinguishment, under GAAP, of any Debt, of Holdings or any
Restricted Subsidiary,
(h) any deferred or other credit representing the excess of
equity in any Restricted Subsidiary at the date of acquisition over the
cost of the investment in such Restricted Subsidiary; and
(i) any non-cash charges related to the implementation by
Holdings and its Restricted Subsidiaries of FASB Statement 142.
"Consolidated Net Worth" means, at any time,
(a) the sum (adjusted for any non-cash charges related to the
implementation by Holdings and its Restricted Subsidiaries of FASB
Statement 142) of (i) the par value (or value stated on the books of
the corporation) of the capital stock (but excluding treasury stock and
capital stock subscribed and unissued) of Holdings and its Restricted
Subsidiaries plus (ii) the amount of the paid-in capital and retained
earnings of Holdings and its Restricted Subsidiaries, in each case as
such amounts would be shown on a consolidated balance sheet of Holdings
and its Restricted Subsidiaries as of such time prepared in accordance
with GAAP, minus
(b) to the extent included in clause (a), all amounts
properly attributable to minority interests, if any, in the stock and
surplus of Restricted Subsidiaries.
"Consolidated Senior Funded Debt" means (a) all Debt evidenced by the
Notes, and (b) all other Consolidated Funded Debt ranking pari passu or senior
in right of payment with the Debt evidenced by the Notes.
"Consolidated Total Assets" means, at any time,
(a) total assets of Holdings and its Restricted Subsidiaries
determined as of the end of the most recently ended Fiscal Year on a
consolidated basis in accordance with GAAP, minus
(b) to the extent included in clause (a), all amounts properly
attributable to minority interests, if any, in the stock and surplus of such
Restricted Subsidiaries.
B-4
"Current Maturities of Funded Debt" means, at any time and with respect
to any item of Funded Debt, the portion of such Funded Debt outstanding at such
time which by the terms of such Funded Debt or the terms of any instrument or
agreement relating thereto is due on demand or within one year from such time
(whether by sinking fund, other required prepayment or final payment at
maturity) and is not directly or indirectly renewable, extendible or refundable
at the option of the obligor under an agreement or firm commitment in effect at
such time to a date one year or more from such time.
"Debt" means, with respect to any Person, without duplication,
(a) its liabilities for borrowed money;
(b) its liabilities for the deferred purchase price of
property acquired by such Person (excluding accounts payable arising in
the ordinary course of business but including, without limitation, all
liabilities created or arising under any conditional sale or other
title retention agreement with respect to any such property);
(c) its Capital Lease Obligations;
(d) all liabilities for borrowed money secured by any Lien
with respect to any property owned by such Person (whether or not it
has assumed or otherwise become liable for such liabilities); and
(e) any Guaranty of such Person with respect to liabilities
of a type described in any of clauses (a) through (d) hereof.
Debt of any Person shall include all obligations of such Person of the
character described in clauses (a) through (e) to the extent such Person remains
legally liable in respect thereof notwithstanding that any such obligation is
deemed to be extinguished under GAAP.
"Default" means an event or condition the occurrence or existence of
which would, with the lapse of time or the giving of notice or both, become an
Event of Default.
"Default Rate" with respect to a Series means that rate of interest
that is the greater of (i) 2% per annum above the rate of interest stated in
clause (a) of the first paragraph of the Notes of such Series or (ii) 2% over
the rate of interest publicly announced by The Bank of New York in New York, New
York as its "base" or "prime" rate.
"Disposition Value" means, at any time, with respect to any property
(a) in the case of property that does not constitute
Subsidiary Stock, the book value thereof, valued at the time of such
disposition in good faith by Holdings, and
(b) in the case of property that constitutes Subsidiary
Stock, an amount equal to that percentage of book value of the assets
of the Subsidiary that issued such stock as is equal to the percentage
that the book value of such Subsidiary Stock represents of the
B-5
book value of all of the outstanding capital stock of such Subsidiary
(assuming, in making such calculations, that all Securities convertible
into such capital stock are so converted and giving full effect to all
transactions that would occur or be required in connection with such
conversion) determined at the time of the disposition thereof, in good
faith by Holdings.
"Environmental Laws" means any and all Federal, state, local, and
foreign statutes, laws, regulations, ordinances, rules, judgments, orders,
decrees, permits, concessions, grants, franchises, licenses, agreements or
governmental restrictions relating to pollution and the protection of the
environment or the release of any materials into the environment, including but
not limited to those related to hazardous substances or wastes, air emissions
and discharges to waste or public systems.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, and the rules and regulations promulgated thereunder
from time to time in effect.
"ERISA Affiliate" means any trade or business (whether or not
incorporated) that is treated as a single employer together with Holdings under
section 414 of the Code.
"Event of Default" is defined in Section 11.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Fair Market Value" means, at any time and with respect to any
property, the sale value of such property that would be realized in an
arm's-length sale at such time between an informed and willing buyer and an
informed and willing seller (neither being under a compulsion to buy or sell).
"Fiscal Quarter" means the three month fiscal period of Holdings
beginning on each January 1, April 1, July 1 and October 1 of each year and
ending on the succeeding March 31, June 30, September 30 and December 31,
respectively.
"Fiscal Year" means the fiscal year of Holdings beginning on January 1
of each year and ending on the succeeding December 31.
"Fixed Charges Coverage Ratio" means, at any time, the ratio of (a)
Consolidated Income Available for Fixed Charges for the period of four
consecutive fiscal quarters ending as of the most recent fiscal quarter ended
prior to such time to (b) Consolidated Fixed Charges for such period.
"Funded Debt" means, with respect to any Person, all Debt of such
Person which by its terms or by the terms of any instrument or agreement
relating thereto matures, or which is otherwise payable or unpaid, one year or
more from, or is directly or indirectly renewable or extendible at the option of
the obligor in respect thereof to a date one year or more (including, without
limitation, an option of such obligor under a revolving credit or similar
agreement
B-6
obligating the lender or lenders to extend credit over a period of one
year or more) from, the date of the creation thereof, provided that Funded Debt
shall include, as at any date of determination, Current Maturities of Funded
Debt.
"GAAP" means generally accepted accounting principles as in effect from
time to time in the United States of America.
"Governmental Authority" means
(a) the government of
(i) the United States of America or any State or
other political subdivision thereof, or
(ii) any jurisdiction in which either Obligor or any
Restricted Subsidiary conducts all or any part of its
business, or which asserts jurisdiction over any properties of
either Obligor or any Restricted Subsidiary, or
(b) any entity exercising executive, legislative, judicial,
regulatory or administrative functions of, or pertaining to, any such
government.
"Guaranty" means, with respect to any Person, any obligation (except
the endorsement in the ordinary course of business of negotiable instruments for
deposit or collection) of such Person guaranteeing or in effect guaranteeing any
indebtedness, dividend or other obligation of any other Person in any manner,
whether directly or indirectly, including (without limitation) obligations
incurred through an agreement, contingent or otherwise, by such Person:
(a) to purchase such indebtedness or obligation or any
property constituting security therefor;
(b) to advance or supply funds (i) for the purchase or payment
of such indebtedness or obligation, or (ii) to maintain any working
capital or other balance sheet condition or any income statement
condition of any other Person or otherwise to advance or make available
funds for the purchase or payment of such indebtedness or obligation;
(c) to lease properties or to purchase properties or services
primarily for the purpose of assuring the owner of such indebtedness or
obligation of the ability of any other Person to make payment of the
indebtedness or obligation; or
(d) otherwise to assure the owner of such indebtedness or
obligation against loss in respect thereof.
In any computation of the indebtedness or other liabilities of the obligor under
any Guaranty, the indebtedness or other obligations that are the subject of such
Guaranty shall be assumed to be direct obligations of such obligor.
B-7
"holder" means, with respect to any Note, the Person in whose name such
Note is registered in the register maintained by Holdings pursuant to Section
13.1.
"Holdings" means Lincoln Electric Holdings, Inc., an Ohio corporation.
"Indebtedness" with respect to any Person means, at any time, without
duplication,
(a) its liabilities for borrowed money and its redemption
obligations in respect of mandatorily redeemable Preferred Stock;
(b) its liabilities for the deferred purchase price of
property acquired by such Person (excluding accounts payable arising in
the ordinary course of business but including all liabilities created
or arising under any conditional sale or other title retention
agreement with respect to any such property);
(c) all liabilities appearing on its balance sheet in
accordance with GAAP in respect of Capital Leases;
(d) all liabilities for borrowed money secured by any Lien
with respect to any property owned by such Person (whether or not it
has assumed or otherwise become liable for such liabilities);
(e) all its liabilities in respect of letters of credit or
instruments serving a similar function issued or accepted for its
account by banks and other financial institutions (whether or not
representing obligations for borrowed money);
(f) Swaps of such Person; and
(g) any Guaranty of such Person with respect to liabilities of
a type described in any of clauses (a) through (f) hereof.
"Institutional Investor" means (a) any original purchaser of a Note,
(b) any holder of a Note holding more than 5% of the aggregate principal amount
of the Notes then outstanding, and (c) any bank, trust company, savings and loan
association or other financial institution, any pension plan, any investment
company, any insurance company, any broker or dealer, or any other similar
financial institution or entity, regardless of legal form.
"Interest Charges" means, with respect to any period, the sum (without
duplication) of the following (in each case, eliminating all offsetting debits
and credits between Holdings and its Restricted Subsidiaries and all other items
required to be eliminated in the course of the preparation of consolidated
financial statements of Holdings and its Restricted Subsidiaries in accordance
with GAAP): (a) all interest in respect of Indebtedness of Holdings and its
Restricted Subsidiaries (including imputed interest on Capital Lease
Obligations) deducted in determining Consolidated Net Income for such period,
and (b) all debt discount and expense amortized or required to be amortized in
the determination of Consolidated Net Income for such period.
B-8
"Investment" means any investment, made in cash or by delivery of
property, by Holdings or any of its Restricted Subsidiaries (i) in any Person,
whether by acquisition of stock, indebtedness or other obligation or Security,
or by loan, Guaranty, advance, capital contribution or otherwise, or (ii) in any
property.
"Lease Rentals" means, with respect to any period, the sum of the
rental and other obligations required to be paid during such period by Holdings
or any Restricted Subsidiary as lessee under all leases of real or personal
property (other than Capital Leases), excluding any amount required to be paid
by the lessee (whether or not therein designated as rental or additional rental)
on account of maintenance and repairs, insurance, taxes, assessments, water
rates and similar charges, provided that, if at the date of determination, any
such rental or other obligations (or portion thereof) are contingent or not
otherwise definitely determinable by the terms of the related lease, the amount
of such obligations (or such portion thereof) (i) shall be assumed to be equal
to the amount of such obligations for the period of 12 consecutive calendar
months immediately preceding the date of determination or (ii) if the related
lease was not in effect during such preceding 12-month period, shall be the
amount estimated by a Senior Financial Officer of Holdings on a reasonable basis
and in good faith.
"Leverage Ratio" means, at any time, the ratio of (a) Consolidated Debt
at such time to (b) Consolidated EBITDA for the period of four consecutive
fiscal quarters ending as of the most recent fiscal quarter ended prior to such
time.
"Lien" means, with respect to any Person, any mortgage, lien, pledge,
charge, security interest or other encumbrance, or any interest or title of any
vendor, lessor, lender or other secured party to or of such Person under any
conditional sale or other title retention agreement or Capital Lease, upon or
with respect to any property or asset of such Person (including in the case of
stock, stockholder agreements, voting trust agreements and all similar
arrangements).
"Make-Whole Amount" is defined in Section 8.7.
"Material" means material in relation to the business, operations,
affairs, financial condition, assets, or properties of Holdings and its
Restricted Subsidiaries taken as a whole.
"Material Adverse Effect" means a material adverse effect on (a) the
business, operations, affairs, financial condition, assets or properties of
Holdings and its Restricted Subsidiaries taken as a whole, or (b) the ability of
the Obligors to perform their obligations under this Agreement and the Notes, or
(c) the validity or enforceability of this Agreement or the Notes.
"Memorandum" is defined in Section 5.3.
"Multiemployer Plan" means any Plan that is a "multiemployer plan" (as
such term is defined in section 4001(a)(3) of ERISA).
"Notes" is defined in Section 1.
B-9
"Officer's Certificate" of an Obligor means a certificate of a Senior
Financial Officer of such Obligor or of any other officer of such Obligor whose
responsibilities extend to the subject matter of such certificate.
"PBGC" means the Pension Benefit Guaranty Corporation referred to and
defined in ERISA or any successor thereto.
"Person" means an individual, partnership, corporation, limited
liability company, association, trust, unincorporated organization, or a
government or agency or political subdivision thereof.
"Plan" means an "employee benefit plan" (as defined in section 3(3) of
ERISA) that is or, within the preceding five years, has been established or
maintained, or to which contributions are or, within the preceding five years,
have been made or required to be made, by Holdings or any ERISA Affiliate or
with respect to which Holdings or any ERISA Affiliate may have any liability.
"Preferred Stock" means any class of capital stock of a corporation
that is preferred over any other class of capital stock of such corporation as
to the payment of dividends or the payment of any amount upon liquidation or
dissolution of such corporation.
"Priority Debt" means the sum of (a) all Debt of the Obligors secured
by Liens, (b) all Debt of Restricted Subsidiaries (other than the Company) and
(c) all Attributable Debt of Holdings and its Restricted Subsidiaries.
"property" or "properties" means, unless otherwise specifically
limited, real or personal property of any kind, tangible or intangible, choate
or inchoate.
"QPAM Exemption" means Prohibited Transaction Class Exemption 84-14
issued by the United States Department of Labor.
"Qualifying Securitization Transaction" means a bona fide
securitization transaction effected under terms and conditions customary in the
capital markets and consisting of sales of Trade Receivables by Holdings or a
Restricted Subsidiary to a Special Purpose Company which in turn either sells or
pledges such Trade Receivables (or undivided interests therein) to a commercial
paper conduit or other financing source (whether with or without recourse to the
Special Purpose Company), and as to which each of the following conditions shall
be satisfied: (i) such sales to the Special Purpose Company are not accounted
for under GAAP as secured loans, (ii) such transactions are, in the good faith
opinion of a Senior Financial Officer of Holdings, for fair value and in the
best interests of Holdings and its Restricted Subsidiaries, and (iii) recourse
to the Obligors or any Restricted Subsidiary in connection with any such sale of
Trade Receivables is limited to repurchase, substitution or indemnification
obligations customarily provided for in asset securitization transactions and
arising from breaches of representations or warranties made by Holdings or such
Restricted Subsidiary in connection with such sale.
B-10
"Related Industries" means the welding and cutting industry, including
the manufacture and sale of welding and cutting equipment and related
consummables, industrial gases and gas apparatus, laser and robotics for welding
applications, and the engineered adhesives and industrial fastener industries.
"Required Holders" means, at any time, the holders of a majority in
principal amount of each Series of the Notes at the time outstanding (exclusive
of Notes then owned by either or both of the Obligors or any of their
Affiliates).
"Responsible Officer" of an Obligor means any Senior Financial Officer
of such Obligor and any other officer of such Obligor with responsibility for
the administration of the relevant portion of this agreement.
"Restricted Subsidiary" means at any time any Subsidiary (a) of which
at least a majority (by number of votes) of the Voting Stock is beneficially
owned, directly or indirectly, by Holdings or one or more Wholly-Owned
Restricted Subsidiaries; and (b) which is (i) not designated as an Unrestricted
Subsidiary in the most recent notice, if any, with respect thereto delivered
pursuant to Section 9.8, or (ii) which is designated a Restricted Subsidiary in
the most recent notice, if any, with respect thereto delivered pursuant to
Section 9.8.
"Restricted Subsidiary Stock" means the stock (or any options or
warrants to purchase stock or other Securities exchangeable for or convertible
into stock) of any Restricted Subsidiary (other than the Company).
"Sale-and-Leaseback Transaction" means a transaction or series of
transactions pursuant to which Holdings or any Restricted Subsidiary shall sell
or transfer to any Person (other than Holdings or a Restricted Subsidiary) any
property, whether now owned or hereafter acquired, and, as part of the same
transaction or series of transactions, Holdings or any Restricted Subsidiary
shall rent or lease as lessee (other than pursuant to a Capital Lease), or
similarly acquire the right to possession or use of, such property or one or
more properties which it intends to use for the same purpose or purposes as such
property.
"SEC" means the Securities and Exchange Commission or any Governmental
Authority succeeding to any of its functions.
"Securities Act" means the Securities Act of 1933, as amended from time
to time.
"Security" shall have the same meaning as in Section 2(1) of the
Securities Act.
"Senior Financial Officer" of an Obligor means the chief financial
officer, principal accounting officer, treasurer or comptroller of such Obligor.
"Series" is defined in Section 1.
"Series A Notes" is defined in Section 1.
B-11
"Series B Notes" is defined in Section 1.
"Series C Notes" is defined in Section 1.
"S&P" means Standard & Poor's Ratings Group, a division of McGraw Hill,
Inc.
"Special Purpose Company" means any Person created in connection with a
Qualifying Securitization Transaction, provided, that any Special Purpose
Company shall not own any property or conduct any activities other than those
properties and activities which are reasonably required to be owned and
conducted in connection with the involvement of such Person in Qualifying
Securitization Transactions.
"Subsidiary" means, as to any Person, any corporation, association or
other business entity in which such Person or one or more of its Subsidiaries or
such Person and one or more of its Subsidiaries owns sufficient equity or voting
interests to enable it or them (as a group) ordinarily, in the absence of
contingencies, to elect a majority of the directors (or Persons performing
similar functions) of such entity, and any partnership or joint venture if more
than a 50% interest in the profits or capital thereof is owned by such Person or
one or more of its Subsidiaries or such Person and one or more of its
Subsidiaries (unless such partnership or joint venture can and does ordinarily
take major business actions without the prior approval of such Person or one or
more of its Subsidiaries). Unless the context otherwise clearly requires, any
reference to a "Subsidiary" is a reference to a Subsidiary of Holdings.
"Subsidiary Stock" means, with respect to any Person, the stock (or any
options or warrants to purchase stock or other Securities exchangeable for or
convertible into stock) of any Subsidiary of such Person.
"Swaps" means, with respect to any Person, payment obligations with
respect to interest rate swaps, currency swaps and similar obligations
obligating such Person to make payments, whether periodically or upon the
happening of a contingency. For the purposes of this Agreement, the amount of
the obligation under any Swap shall be the amount determined in respect thereof
as of the end of the then most recently ended fiscal quarter of such Person,
based on the assumption that such Swap had terminated at the end of such fiscal
quarter, and in making such determination, if any agreement relating to such
Swap provides for the netting of amounts payable by and to such Person
thereunder or if any such agreement provides for the simultaneous payment of
amounts by and to such Person, then in each such case, the amount of such
obligation shall be the net amount so determined.
"Trade Receivables" means indebtedness and other obligations owed to
Holdings or any Restricted Subsidiary, whether constituting accounts, chattel
paper, instruments or general intangibles, arising in connection with the sale
of goods and services by Holdings or such Restricted Subsidiary to commercial
customers, including, without limitation, the obligation to pay any finance
charges with respect thereto, and agreements relating thereto, collateral
securing the foregoing, books and records relating thereto and all proceeds
thereof.
B-12
"United States Governmental Security" means any direct obligation of,
or obligation guaranteed by, the United States of America, or any agency
controlled or supervised by or acting as an instrumentality of the United States
of America pursuant to authority granted by the Congress of the United States of
America, so long as such obligation or guarantee shall have the benefit of the
full faith and credit of the United States of America which shall have been
pledged pursuant to authority granted by the Congress of the United States of
America.
"Unrestricted Subsidiary" means any Subsidiary that is not a Restricted
Subsidiary.
"Voting Stock" means Securities of any class or classes, the holders of
which are ordinarily, in the absence of contingencies, entitled to elect a
majority of the corporate directors (or Persons performing similar functions).
"Wholly-Owned Restricted Subsidiary" means, at any time, any Restricted
Subsidiary one hundred percent (100%) of all of the equity interests (except
directors' qualifying shares) and voting interests of which are owned by any one
or more of the Obligors and Holdings' other Wholly-Owned Restricted Subsidiaries
at such time.
B-13