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EXHIBIT 10(b)
INDEMNIFICATION AGREEMENT
This Indemnification Agreement ("Agreement") is made as of the day of
, 19 , by and between The Lincoln Electric Company, an
Ohio corporation (the "Company"), and
(the "Indemnitee"), an Officer of
the Company.
RECITALS
A. The Indemnitee is presently serving as an Officer of the Company and the
Company desires the Indemnitee to continue in that capacity. The Indemnitee
is willing, subject to certain conditions, including, without limitation, the
execution and performance of this Agreement by the Company, to continue in
that capacity.
B. In addition to the indemnification to which the Indemnitee is entitled under
the Code of Regulations, as amended, of the Company (the "Regulations"), the
Company has obtained, at its sole expense, insurance protecting the Company
and its officers and directors including the Indemnitee against certain
losses arising out of actual or threatened actions, suits or proceedings to
which such persons may be made or threatened to be made parties. However, as
a result of circumstances having no relation to, and beyond the control of,
the Company and the Indemnitee, there can be no assurance of the continuation
or renewal of that insurance, and the additional protection offered by this
Agreement is therefore appropriate.
Accordingly, and in order to induce the Indemnitee to continue to serve in
his present capacity, the Company and the Indemnitee agree as follows:
1. CONTINUED SERVICE. The Indemnitee shall continue to serve at the will
of the Company as an Officer of the Company so long as he is duly
elected and qualified in accordance with the Regulations or until he
resigns in writing in accordance with applicable law.
2. INITIAL INDEMNITY. (a) The Company shall indemnify the Indemnitee, if
or when he is a party or is threatened to be made a party to any
threatened, pending or completed action, suit or proceeding, whether
civil, criminal, administrative or investigative (other than an action
by or in the right of the Company), by reason of the fact that he is or
was an Officer of the Company or is or was serving at the request of
the Company as a director, trustee, officer, employee or agent of
another corporation, domestic or foreign, nonprofit or for profit,
partnership, joint venture, trust or other enterprise, or by reason of
any action alleged to have been taken or omitted in any such capacity,
against any and all costs, charges, expenses (including without
limitation fees and expenses of attorneys and/or others; all such
costs, charges and expenses being herein jointly referred to as
"Expenses"), judgments, fines and amounts paid in settlement, actually
and reasonably incurred by the Indemnitee in connection therewith
including any appeal of or from any judgment or decision, unless it is
proved by clear and convincing evidence in a court of competent
jurisdiction that the Indemnitee's action or failure to act involved an
act or omission undertaken with deliberate intent to cause injury to
the Company or undertaken with reckless disregard for the best
interests of the Company. In addition, with respect to any criminal
action or proceeding, indemnification hereunder shall be made only if
the Indemnitee had no reasonable cause to believe his conduct was
unlawful. The termination of any action, suit or proceeding by
judgment, order, settlement or conviction, or upon a plea of "nolo
contendere" or its equivalent, shall not, of itself, create a
presumption that the Indemnitee did not satisfy the foregoing standard
of conduct to the extent applicable thereto.
(b) The Company shall indemnify the Indemnitee, if or when he is a
party or is threatened to be made a party to any threatened,
pending or completed action, suit or proceeding by or in the right
of the Company to procure a judgment in its favor, by reason of the
fact that the Indemnitee is or was an officer of the Company or is
or was serving at the request of the Company as a director,
trustee, officer, employee or agent of another corporation,
domestic or foreign, nonprofit or for profit, partnership, joint
venture, trust or other enterprise, against any
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and all Expenses actually and reasonably incurred by the Indemnitee
in connection with the defense or settlement thereof or any appeal
of or from any judgment or decision, unless it is proved by clear
and convincing evidence in a court of competent jurisdiction that
the Indemnitee's action or failure to act involved an act or
omission undertaken with deliberate intent to cause injury to the
Company or undertaken with reckless disregard for the best
interests of the Company, except that no indemnification shall be
made in respect of any action or suit in which the only liability
asserted against the Indemnitee is pursuant to Section 1701.95 of
the Ohio Revised Code (the "ORC").
(c) Any indemnification under Section 2(a) or 2(b) (unless ordered by a
court) shall be made by the Company only as authorized in the
specific case upon a determination that indemnification of the
Indemnitee is proper in the circumstances because he has met the
applicable standard of conduct set forth in Section 2(a) or 2(b).
Such authorization shall be made (i) by the Officers of the Company
(the "Board") by a majority vote of a quorum consisting of Officers
who were not and are not parties to or threatened with such action,
suit or proceeding, or (ii) if such a quorum of disinterested
Officers is not available or if a majority of such quorum so
directs, in a written opinion by independent legal counsel
(designated for such purpose by the Board) which shall not be an
attorney, or a firm having associated with it an attorney, who has
been retained by or who has performed services for the Company, or
any person to be indemnified, within the five years preceding such
determination, or (iii) by the shareholders of the Company (the
"Shareholders"), or (iv) by the court in which such action, suit or
proceeding was brought.
(d) To the extent that the Indemnitee has been successful on the merits
or otherwise, including without limitation the dismissal of an
action without prejudice, in defense of any action, suit or
proceeding referred to in Section 2(a) or 2(b), or in defense of any
claim, issue or matter therein, he shall be indemnified against
Expenses actually and reasonably incurred by him in connection
therewith. Expenses actually and reasonably incurred by the
Indemnitee in defending any such action, suit or proceeding shall be
paid by the Company as they are incurred in advance of the final
disposition of such action, suit or proceeding under the procedure
set forth in Section 4(b) hereof.
(e) For purposes of this Agreement, references to "other enterprises"
shall include employee benefit plans; references to "fines" shall
include any excise taxes assessed on the Indemnitee with respect to
any employee benefit plan; references to "serving at the request of
the Company" shall include any service as a director, officer,
employee or agent of the Company which imposes duties on, or
involves services by, the Indemnitee with respect to an employee
benefit plan, its participants or beneficiaries; references to the
masculine shall include the feminine; and references to the singular
shall include the plural and vice versa.
3. ADDITIONAL INDEMNIFICATION. Pursuant to Section 1701.13(E)(6) of the
ORC, without limiting any right which the Indemnitee may have pursuant
to Section 2 hereof or any other provision of this Agreement or the
Articles of Incorporation, as amended, of the Company (the "Articles"),
the Regulations, the ORC, any policy of insurance or otherwise, but
subject to any limitation on the maximum permissible indemnity which
may exist under applicable law at the time of any request for indemnity
hereunder and subject to the following provisions of this Section 3,
the Company shall indemnify the Indemnitee against any amount which he
is or becomes obligated to pay relating to or arising out of any claim
made against him because of an act, failure to act or neglect or breach
of duty, including any actual or alleged error, misstatement or
misleading statement, which he commits, suffers, permits or acquiesces
in while acting in his capacity as an officer of the Company. The
payments which the Company is obligated to make pursuant to this
Section 3 shall include, without limitation, judgments, fines and
amounts paid in settlement and any and all Expenses actually and
reasonably incurred by the Indemnitee in connection therewith including
any appeal of or from any judgment or decision; provided, however, that
the Company shall not be obligated under this Section 3 to make any
payment in connection with any claim against the Indemnitee:
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(a) to the extent of any fine or similar governmental imposition which
the Company is prohibited by applicable law from paying which
results from a final, nonappealable order; or
(b) to the extent based upon or attributable to the Indemnitee having
actually realized a personal gain or profit to which he was not
legally entitled, including without limitation profit from the
purchase and sale by the Indemnitee of equity securities of the
Company which are recoverable by the Company pursuant to Section
16(b) of the Securities Exchange Act of 1934, or profit arising from
transactions in publicly traded securities of the Company which were
effected by the Indemnitee in violation of Section 10(b) of the
Securities Exchange Act of 1934, or Rule l0b-5 promulgated
thereunder.
A determination as to whether the Indemnitee shall be entitled to
indemnification under this Section 3 shall be made in accordance with
Section 4(a) hereof. Expenses incurred by the Indemnitee in defending any
claim to which this Section 3 applies shall be paid by the Company as they
are actually and reasonably incurred in advance of the final disposition of
such claim under the procedure set forth in Section 4(b) hereof.
4. CERTAIN PROCEDURES RELATING TO INDEMNIFICATION. (a) For purposes of
pursuing his rights to indemnification under Section 3 hereof, the
Indemnitee shall (i) submit to the Board a sworn statement of request
for indemnification substantially in the form of Exhibit 1 attached
hereto and made a part hereof (the "Indemnification Statement")
averring that he is entitled to indemnification hereunder; and (ii)
present to the Company reasonable evidence of all amounts for which
indemnification is requested. Submission of an Indemnification
Statement to the Board shall create a presumption that the Indemnitee
is entitled to indemnification hereunder, and the Company shall, within
sixty (60) calendar days after submission of the Indemnification
Statement, make the payments requested in the Indemnification Statement
to or for the benefit of the Indemnitee, unless (i) within such
60-calendar-day period the Board shall resolve by vote of a majority of
the Officers at a meeting at which a quorum is present that the
Indemnitee is not entitled to indemnification under Section 3 hereof,
(ii) such vote shall be based upon clear and convincing evidence
(sufficient to rebut the foregoing presumption) and (iii) the
Indemnitee shall have received within such period notice in writing of
such vote, which notice shall disclose with particularity the evidence
upon which the vote is based. The foregoing notice shall be sworn to by
all persons who participated in the vote and voted to deny
indemnification. The provisions of this Section 4(a) are intended to be
procedural only and shall not affect the right of Indemnitee to
indemnification under Section 3 of this Agreement so long as Indemnitee
follows the prescribed procedure, and any determination by the Board
that Indemnitee is not entitled to indemnification and any failure to
make the payments requested in the Indemnification Statement shall be
subject to judicial review by any court of competent jurisdiction.
(b) For purposes of obtaining payments of Expenses in advance of final
disposition pursuant to the second sentence of Section 2(d) or the
last sentence of Section 3 hereof, the Indemnitee shall submit to
the Company a sworn request for advancement of Expenses
substantially in the form of Exhibit 2 attached hereto and made a
part hereof (the "Undertaking"), averring that he has reasonably
incurred actual Expenses in defending an action, suit or proceeding
referred to in Section 2(a) or 2(b) or any claim referred to in
Section 3, or pursuant to Section 7 hereof. Unless at the time of
the Indemnitee's act or omission at issue, the Articles or
Regulations of the Company prohibit such advances by specific
reference to ORC Section 1701.13(E)(5)(a) and unless the only
liability asserted against the Indemnitee in the subject action,
suit or proceeding is pursuant to ORC Section 1701.95, the
Indemnitee shall be eligible to execute Part A of the Undertaking by
which he undertakes to (a) repay such amount if it is proved by
clear and convincing evidence in a court of competent jurisdiction
that the Indemnitee's action or failure to act involved an act or
omission undertaken with deliberate intent to cause injury to the
Company or undertaken with reckless disregard for the best interests
of the Company and (b) reasonably cooperate with the Company
concerning the action, suit, proceeding or claim. In all cases, the
Indemnitee shall be eligible to execute Part B of the Undertaking by
which he undertakes to repay such amount if it ultimately is
determined that he is not entitled to be
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indemnified by the Company under this Agreement or otherwise. In the
event that the Indemnitee is eligible to and does execute both Part A
and Part B of the Undertaking, the Expenses which are paid by the
Company pursuant thereto shall be required to be repaid by the
Indemnitee only if he is required to do so under the terms of both
Part A and Part B of the Undertaking. Upon receipt of the Undertaking,
the Company shall thereafter promptly pay such Expenses of the
Indemnitee as are noticed to the Company in writing and in reasonable
detail arising out of the matter described in the Undertaking. No
security shall be required in connection with any Undertaking.
5. LIMITATION ON INDEMNITY. Notwithstanding anything contained herein to
the contrary, the Company shall not be required hereby to indemnify the
Indemnitee with respect to any action, suit or proceeding that was
initiated by the Indemnitee unless (i) such action, suit or proceeding
was initiated by the Indemnitee to enforce any rights to
indemnification arising hereunder and such person shall have been
formally adjudged to be entitled to indemnity by reason hereof, (ii)
authorized by another agreement to which the Company is a party whether
heretofore or hereafter entered or (iii) otherwise ordered by the court
in which the suit was brought.
6. SUBROGATION; DUPLICATION OF PAYMENTS. (a) In the event of payment
under this Agreement, the Company shall be subrogated to the extent of
such payment to all of the rights of recovery of the Indemnitee, who
shall execute all papers required and shall do everything that may be
necessary to secure such rights, including the execution of such
documents necessary to enable the Company effectively to bring suit to
enforce such rights.
(b) The Company shall not be liable under this Agreement to make any
payment in connection with any claim made against the Indemnitee to
the extent the Indemnitee has actually received payment (under any
insurance policy, the Company's Regulations or otherwise) of the
amounts otherwise payable hereunder.
7. FEES AND EXPENSES OF ENFORCEMENT. It is the intent of the Company that
the Indemnitee not be required to incur the expenses associated with
the enforcement of his rights under this Agreement by litigation or
other legal action because the cost and expense thereof would
substantially detract from the benefits intended to be extended to the
Indemnitee hereunder. Accordingly, if it should appear to the
Indemnitee that the Company has failed to comply with any of its
obligations under this Agreement or in the event that the Company or
any other person takes any action to declare this Agreement void or
unenforceable, or institutes any action, suit or proceeding to deny, or
to recover from, the Indemnitee the benefits intended to be provided to
the Indemnitee hereunder, the Company irrevocably authorizes the
Indemnitee from time to time to retain counsel of his choice, at the
expense of the Company as hereafter provided, to represent the
Indemnitee in connection with the initiation or defense of any
litigation or other legal action, whether by or against the Company or
any director, officer, shareholder or other person affiliated with the
Company, in any jurisdiction. Regardless of the outcome thereof, the
Company shall pay and be solely responsible for any and all costs,
charges and expenses, including without limitation fees and expenses of
attorneys and others, reasonably incurred by the Indemnitee pursuant to
this Section 7.
8. MERGER OR CONSOLIDATION. In the event that the Company shall be a
constituent corporation in a consolidation, merger or other
reorganization, the Company, if it shall not be the surviving,
resulting or acquiring corporation therein, shall require as a
condition thereto that the surviving, resulting or acquiring
corporation agree to assume all of the obligations of the Company
hereunder and to indemnify the Indemnitee to the full extent provided
herein. Whether or not the Company is the resulting, surviving or
acquiring corporation in any such transaction, the Indemnitee shall
also stand in the same position under this Agreement with respect to
the resulting, surviving or acquiring corporation as he would have with
respect to the Company if its separate existence had continued.
9. NONEXCLUSIVITY AND SEVERABILITY. (a) The rights to indemnification
provided by this Agreement shall not be exclusive of any other rights
of indemnification to which the Indemnitee may be entitled under the
Articles, the Regulations, the ORC or any other statute, any insurance
policy, agreement
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or vote of shareholders or directors or otherwise, as to any actions or
failures to act by the Indemnitee, and shall continue after he has ceased
to be a Director, officer, employee or agent of the Company or other
entity for which his service gives rise to a right hereunder, and shall
inure to the benefit of his heirs, executors and administrators.
(b) If any provision of this Agreement or the application of any
provision hereof to any person or circumstances is held invalid,
unenforceable or otherwise illegal, the remainder of this Agreement
and the application of such provision to other persons or
circumstances shall not be affected, and the provision so held to
be invalid, unenforceable or otherwise illegal shall be reformed to
the extent (and only to the extent) necessary to make it
enforceable, valid and legal.
10. GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of Ohio, without giving effect to
the principles of conflict of laws thereof.
11. MODIFICATION. This Agreement and the rights and duties of the
Indemnitee and the Company hereunder may be modified only by an
instrument in writing signed by both parties hereto.
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as of
the date first above written.
THE LINCOLN ELECTRIC COMPANY
By
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Donald F. Hastings
Chairman and
Chief Executive Officer
By
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EXHIBIT 1
INDEMNIFICATION STATEMENT
STATE OF
SS
COUNTY OF
I, , being first duly sworn, do depose and
say as follows:
1. This Indemnification Statement is submitted pursuant to the
Indemnification Agreement, dated , 19 ,
between The Lincoln Electric Company (the "Company"), an Ohio
corporation, and the undersigned.
2. I am requesting indemnification against costs, charges, expenses (which
may include fees and expenses of attorneys and/or others), judgments,
fines and amounts paid in settlement (collectively, "Liabilities"),
which have been actually and reasonably incurred by me in connection
with a claim referred to in Section 3 of the aforesaid Indemnification
Agreement.
3. With respect to all matters related to any such claim, I am entitled to
be indemnified as herein contemplated pursuant to the aforesaid
Indemnification Agreement.
4. Without limiting any other rights which I have or may have, I am
requesting indemnification against Liabilities which have or may arise
out of ________________________________________________________________
_______________________________________________________________________
_______________________________________________________________________
------------------------------------
(Signature of Indemnitee)
Subscribed and sworn to before me, a Notary Public in and for said County and
State, this day of , 19 .
[SEAL]
------------------------------------
My commission expires the day of , 19 .
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EXHIBIT 2
UNDERTAKING
STATE OF
SS
COUNTY OF
I, being first duly sworn, do depose and say
as follows:
1. This Undertaking is submitted pursuant to the Indemnification Agreement,
dated , 19 , between The Lincoln Electric Company
(the "Company"), an Ohio corporation, and the undersigned.
2. I am requesting payment of costs, charges and expenses which I have
reasonably incurred or will reasonably incur in defending an action, suit or
proceeding, referred to in Section 2(a) or 2(b) or any claim referred to in
Section 3, or pursuant to Section 7, of the aforesaid Indemnification
Agreement.
3. The costs, charges, and expenses for which payment is requested are, in
general, all expenses related to
4. PART A
I hereby undertake to (a) repay all amounts paid pursuant hereto if it is proved
by clear and convincing evidence in a court of competent jurisdiction that my
action or failure to act which is the subject of the matter described herein
involved an act or omission undertaken with deliberate intent to cause injury to
the Company or undertaken with reckless disregard for the best interests of the
Company and (b) reasonably cooperate with the Company concerning the action,
suit, proceeding or claim.
------------------------------------
(Signature of Indemnitee)
PART B
I hereby undertake to repay all amounts paid pursuant hereto if it ultimately is
determined that I am not entitled to be indemnified by the Company under the
aforesaid Indemnification Agreement or otherwise.
------------------------------------
(Signature of Indemnitee)
Subscribed and sworn to before me, a Notary Public in and for said County and
State, this day of , 19 .
[SEAL]
------------------------------------
My commission expires the day of , 19 .