1
Exhibit 1
DRAFT 4/25/95
__________ Shares
THE LINCOLN ELECTRIC COMPANY
(an Ohio corporation)
Class A Common Shares
(Without Par Value)
PURCHASE AGREEMENT
------------------
__________, 1995
MERRILL LYNCH & CO.
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
J.P. MORGAN SECURITIES INC.
MCDONALD & COMPANY SECURITIES, INC.
as Representatives of the several Underwriters
c/o Merrill Lynch & Co.
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
Merrill Lynch World Headquarters
North Tower
World Financial Center
New York, New York 10281
Dear Sirs:
The Lincoln Electric Company, an Ohio corporation (the "Company"), and
each of the Shareholders of the Company as named in Schedule B hereto (the
"Sellers"), confirm their respective agreements with Merrill Lynch & Co.,
Merrill Lynch, Pierce, Fenner & Smith Incorporated, J.P. Morgan Securities
Inc., McDonald & Company Securities, Inc., and each of the other Underwriters
named in Schedule A hereto (collectively, the "Underwriters," which term shall
also include any underwriter substituted as hereinafter provided in Section
10), for whom Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith
Incorporated, J.P. Morgan Securities Inc. and McDonald & Company Securities,
Inc.. are acting as representatives (in such capacity, the "Representatives"),
with respect to (i) the sale by the Company and the purchase by the
Underwriters, acting severally and not jointly, of the respective number of
Class A Common Shares, without par value, of the Company (the "Class A
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Common Shares") set forth in said Schedule A, (ii) the sale by the Sellers,
acting severally and not jointly, and the purchase by the Underwriters, acting
severally and not jointly, of the respective number of Class A Common Shares
set forth opposite such Seller's name in Schedule B; and (iii) the grant by the
Company and the Sellers, acting severally and not jointly, to the Underwriters,
acting severally and not jointly, of the option described in Section 2(b)
hereof to purchase all or any part of _______ additional Class A Common Shares
to cover over-allotments, in each case except as may otherwise be provided in
the Pricing Agreement, as hereinafter defined. The aforesaid ____________
Class A Common Shares (the "Initial Securities") to be purchased by the
Underwriters and all or any part of the _________ Class A Common Shares subject
to the option described in Section 2(b) hereof (the "Option Securities") are
collectively hereinafter called the "Securities".
Prior to the purchase and public offering of the Securities by the
several Underwriters, the Company, the Sellers and the Representatives, acting
on behalf of the several Underwriters, shall enter into an agreement
substantially in the form of Exhibit A hereto (the "Pricing Agreement"). The
Pricing Agreement may take the form of an exchange of any standard form of
written telecommunication among the Company, the Sellers and the
Representatives and shall specify such applicable information as is indicated
in Exhibit A hereto. The offering of the Securities will be governed by this
Agreement, as supplemented by the Pricing Agreement. From and after the date
of the execution and delivery of the Pricing Agreement, this Agreement shall be
deemed to incorporate the Pricing Agreement.
The Company has filed with the Securities and Exchange Commission (the
"Commission") a registration statement on Form S-3 (No. 33- _____) and a
related preliminary prospectus for the registration of the Securities under the
Securities Act of 1933 (the "1933 Act"), has filed such amendments thereto, if
any, and such amended preliminary prospectuses as may have been required to the
date hereof, and will file such additional amendments thereto and such amended
prospectuses as may hereafter be required. Such registration statement (as
amended, if applicable) and the prospectus constituting a part thereof
(including in each case the information, if any, deemed to be part thereof
pursuant to Rule 430A(b) of the rules and regulations of the Commission under
the 1933 Act (the "1933 Act Regulations")), as from time to time amended or
supplemented pursuant to the 1933 Act, the Securities Exchange Act of 1934, as
amended (the "1934 Act") or otherwise, are hereinafter referred to as the
"Registration Statement" and the "Prospectus", respectively, except that if any
revised prospectus shall be provided to the Underwriters by the Company for use
in connection with the offering of the Securities which differs from the
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Prospectus on file at the Commission at the time the Registration Statement
becomes effective (whether or not such revised prospectus is required to be
filed by the Company pursuant to Rule 424(b) of the 1933 Act Regulations), the
term "Prospectus" shall refer to such revised prospectus from and after the
time it is first provided to the Underwriters for such use. All references in
this Agreement to financial statements and schedules and other information
which is "contained," "included" or "stated" in the Registration Statement or
the Prospectus (and all other references of like import) shall be deemed to
mean and include all such financial statements and schedules and other
information which is or is deemed to be incorporated by reference in the
Registration Statement or the Prospectus, as the case may be; and all
references in this Agreement to amendments or supplements to the Registration
Statement or the Prospectus shall be deemed to mean and include the filing of
any document under the 1934 Act which is or is deemed to be incorporated by
reference in the Registration Statement or the Prospectus, as the case may be.
The Company and the Sellers understand that the Underwriters propose
to make a public offering of the Securities as soon as the Representatives deem
advisable after the Registration Statement becomes effective and the Pricing
Agreement has been executed and delivered.
The Company and the Underwriters agree that up to _________ shares of
the Securities to be purchased by the Underwriters (the "Reserved Shares")
shall be reserved for sale by the Underwriters to certain eligible employees of
the Company, as part of the distribution of the Securities by the Underwriters,
in accordance with the terms of this Agreement, the applicable rules,
regulations and interpretations of the National Association of Securities
Dealers, Inc. ("NASD") and all other applicable laws, rules and regulations.
To the extent that such Reserved Shares are not so purchased by such eligible
employees, such Reserved Shares may be offered to the public as part of the
public offering contemplated hereby.
SECTION 1. REPRESENTATIONS AND WARRANTIES.
(a) The Company represents and warrants to each Underwriter as of the
date hereof and as of the date of the Pricing Agreement (such latter date being
hereinafter referred to as the "Representation Date") as follows:
(i) At the time the Registration Statement becomes effective
and at the Representation Date, the Registration Statement will comply
in all material respects with the requirements of the 1933 Act and the
1933 Act Regulations and will not contain an untrue statement of a
material fact
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or omit to state a material fact required to be stated therein or necessary to
make the statements therein not misleading. The Prospectus, at the
Representation Date (unless the term "Prospectus" refers to a prospectus which
has been provided to the Underwriters by the Company for use in connection with
the offering of the Securities which differs from the Prospectus on file at the
Commission at the time the Registration Statement becomes effective, in which
case at the time it is first provided to the Underwriters for such use) and at
Closing Time referred to in Section 2 hereof, will not include an untrue
statement of a material fact or omit to state a material fact necessary in
order to make the statements therein, in the light of the circumstances under
which they were made, not misleading; PROVIDED, HOWEVER, that the
representations and warranties in this subsection shall not apply to statements
in or omissions from the Registration Statement or Prospectus made in reliance
upon and in conformity with information furnished to the Company in writing by
any Underwriter through the Representatives expressly for use in the
Registration Statement or Prospectus.
(ii) The accountants who certified the financial statements
and supporting schedules included in the Registration Statement are independent
public accountants as required by the 1933 Act and the 1933 Act Regulations.
(iii) The financial statements included in the Registration Statement
and the Prospectus present fairly the financial position of the Company and its
consolidated subsidiaries as of the dates indicated and the results of their
operations for the periods specified; except as otherwise stated in the
Registration Statement, said financial statements have been prepared in
conformity with generally accepted accounting principles applied on a consistent
basis; and the supporting schedules included in the Registration Statement
present fairly the information required to be stated therein.
(iv) Since the respective dates as of which information is given in
the Registration Statement and the Prospectus, except as otherwise stated
therein, (A) there has been no material adverse change in the condition,
financial or otherwise, or in the earnings, business affairs or business
prospects of the Company and its subsidiaries considered as one enterprise,
whether or not arising in the ordinary course of business, (B) there have been
no transactions entered into by the Company or any of its subsidiaries, other
than those in the ordinary course of business, which are material with respect
to the Company and its subsidiaries considered as one enterprise, and (C) there
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has been no dividend or distribution of any kind declared,
paid or made by the Company on any class of its capital stock.
(v) The Company has been duly incorporated and is validly existing as
a corporation in good standing under the laws of the State of Ohio with
corporate power and authority to own, lease and operate its properties and to
conduct its business as described in the Prospectus and to enter into and
perform its obligations under this Agreement and the Pricing Agreement; and the
Company is duly qualified as a foreign corporation to transact business and is
in good standing in each jurisdiction in which such qualification is required,
whether by reason of the ownership or leasing of property or the conduct of
business, except where the failure to so qualify would not have a material
adverse effect on the condition, financial or otherwise, or the earnings,
business affairs or business prospects of the Company and its subsidiaries
considered as one enterprise.
(vi) Each subsidiary of the Company has been duly incorporated and is
validly existing as a corporation in good standing under the laws of the
jurisdiction of its incorporation, has corporate power and authority to own,
lease and operate its properties and to conduct its business as described in
the Prospectus and is duly qualified as a foreign corporation to transact
business and is in good standing in each jurisdiction in which such
qualification is required, whether by reason of the ownership or leasing of
property or the conduct of business, except where the failure to so qualify
would not have a material adverse effect on the condition, financial or
otherwise, or the earnings, business affairs or business prospects of the
Company and its subsidiaries considered as one enterprise; all of the issued
and outstanding capital stock of each such subsidiary has been duly authorized
and validly issued, is fully paid and non-assessable and, except as disclosed
in the Registration Statement, is owned by the Company, directly or through
subsidiaries, free and clear of any security interest, mortgage, pledge, lien,
encumbrance, claim or equity.
(vii) The authorized, issued and outstanding capital stock of the
Company is as set forth in the Prospectus under "Capitalization" (except for
subsequent issuances, if any, pursuant to this Agreement or pursuant to
reservations, agreements or employee benefit plans referred to in the
Prospectus); all of the issued and outstanding shares of capital stock of the
Company (including the Securities to be sold by the Sellers) have been duly
authorized and validly issued and are fully paid and non-assessable; the
Securities
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to be sold by the Company have been duly authorized for issuance and sale to the
Underwriters pursuant to this Agreement and, when issued and delivered by the
Company pursuant to this Agreement against payment of the consideration set
forth in the Pricing Agreement, will be validly issued and fully paid and non-
assessable; the capital stock of the Company conforms to all statements
relating thereto contained in the Prospectus; and the issuance of the
Securities to be sold by the Company is not subject to preemptive or other
similar rights.
(viii) Neither the Company nor any of its subsidiaries is in
violation of its charter or by-laws or in default in the performance or
observance of any material obligation, agreement, covenant or condition
contained in any contract, indenture, mortgage, loan agreement, note, lease or
other instrument to which the Company or any of its subsidiaries is a party or
by which it or any of them may be bound, or to which any of the property or
assets of the Company or any of its subsidiaries is subject; and the execution,
delivery and performance of this Agreement and the Pricing Agreement and the
consummation of the transactions contemplated herein and therein and compliance
by the Company with its obligations hereunder and thereunder have been duly
authorized by all necessary corporate action and will not conflict with or
constitute a breach of, or default under, or result in the creation or
imposition of any lien, charge or encumbrance upon any property or assets of
the Company or any of its subsidiaries pursuant to, any contract, indenture,
mortgage, loan agreement, note, lease or other instrument to which the Company
or any of its subsidiaries is a party or by which it or any of them may be
bound, or to which any of the property or assets of the Company or any of its
subsidiaries is subject, nor will such action result in any violation of the
provisions of the charter or by-laws of the Company or any applicable law,
administrative regulation or administrative or court decree.
(ix) No labor dispute with the employees of the Company or any of its
subsidiaries exists or, to the knowledge of the Company, is imminent; and the
Company is not aware of any existing or imminent labor disturbance by the
employees of any of its principal suppliers, manufacturers or contractors which
might be expected to result in any material adverse change in the condition,
financial or otherwise, or in the earnings, business affairs or business
prospects of the Company and its subsidiaries considered as one enterprise.
(x) There is no action, suit or proceeding before or by any court or
governmental agency or body, domestic or
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foreign, now pending, or, to the knowledge of the Company, threatened, against
or affecting the Company or any of its subsidiaries, which is required to be
disclosed in the Registration Statement (other than as disclosed therein), or
which might result in any material adverse change in the condition, financial or
otherwise, or in the earnings, business affairs or business prospects of the
Company and its subsidiaries considered as one enterprise, or which might
materially and adversely affect the properties or assets thereof or which might
materially and adversely affect the consummation of this Agreement; all pending
legal or governmental proceedings to which the Company or any subsidiary is a
party or of which any of their respective property or assets is the subject
which are not described in the Registration Statement, including ordinary
routine litigation incidental to the business, are, considered in the aggregate,
not material; and there are no contracts or documents of the Company or any of
its subsidiaries which are required to be filed as exhibits to the Registration
Statement by the 1933 Act or by the 1933 Act Regulations which have not been
so filed.
(xi) The Company and its subsidiaries own or possess, or can acquire
on reasonable terms, the patents, patent rights, licenses, inventions,
copyrights, know-how (including trade secrets and other unpatented and/or
unpatentable proprietary or confidential information, systems or procedures),
trademarks, service marks and trade names (collectively, "patent and
proprietary rights") presently employed by them in connection with the business
now operated by them, and neither the Company nor any of its subsidiaries has
received any notice or is otherwise aware of any infringement of or conflict
with asserted rights of others with respect to any patent or proprietary
rights, or of any facts which would render any patent and proprietary rights
invalid or inadequate to protect the interest of the Company or any of its
subsidiaries therein, and which infringement or conflict (if the subject of any
unfavorable decision, ruling or finding) or invalidity or inadequacy, singly
or in the aggregate, would result in any material adverse change in the
condition, financial or otherwise, or in the earnings, business affairs or
business prospects of the Company and its subsidiaries considered as one
enterprise.
(xii) No authorization, approval or consent of any court or
governmental authority or agency is necessary in connection with the offering,
issuance or sale of the Securities hereunder, except such as may be required
under the 1933 Act or the 1933 Act Regulations or state securities laws.
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(xiii) The Company and its subsidiaries possess such
certificates, authorities or permits issued by the appropriate state,
federal or foreign regulatory agencies or bodies necessary to conduct
the business now operated by them, and neither the Company nor any of
its subsidiaries has received any notice of proceedings relating to
the revocation or modification of any such certificate, authority or
permit which, singly or in the aggregate, if the subject of an
unfavorable decision, ruling or finding, would materially and
adversely affect the condition, financial or otherwise, or the
earnings, business affairs or business prospects of the Company and
its subsidiaries considered as one enterprise.
(xiv) This Agreement has been, and, at the Representation Date, the
Pricing Agreement will have been, duly authorized, executed and
delivered by the Company.
(xv) There are no persons with registration or other similar rights
to have any securities registered pursuant to the Registration
Statement or otherwise registered by the Company under the 1933 Act.
(xvi) The Company has obtained and delivered to the Representatives
the agreements of the persons named in Schedule C annexed hereto to
the effect that each such person will not, for a period of 180 days
from the date of the Prospectus, without the prior written consent of
the Representatives, sell, offer to sell, grant any option for the
sale of, or otherwise dispose of, directly or indirectly, any of the
Company's Common Shares, without par value, or Class A Common Shares
(collectively, "Common Equity") or any security convertible or
exchangeable into or exercisable for any shares of Common Equity owned
by such person or entity or with respect to which such person has the
power of disposition.
(xvii) The documents incorporated or deemed to be incorporated by
reference in the Prospectus, at the time they were or hereafter are
filed with the Commission, complied and will comply in all material
respects with the requirements of the 1934 Act and the rules and
regulations of the Commission under the 1934 Act (the "1934 Act
Regulations"), and, when read together with the other information in
the Prospectus, at the time the Registration Statement become
effective and at the Closing Time, will not contain an untrue
statement of a material fact or omit to state a material fact required
to be stated therein or necessary to make the statements therein, in
the light of the circumstances under which they were made, not
misleading.
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(xviii) The Company and its subsidiaries (A) are in compliance with
any and all applicable federal, state, local or foreign or other laws
and regulations relating to the protection of human health and safety,
the environment or hazardous or toxic substances or wastes, pollutants
or contaminants ("Environmental Laws"), (B) have received all permits,
licenses or other approvals required of them under applicable
Environmental Laws to conduct their respective businesses and (C) are
in compliance with all terms and conditions of any such permit,
license or approval, except where such noncompliance with
Environmental Law, failure to receive required permits, licenses or
other approvals or failure to comply with the terms and conditions of
such permits, licenses or approvals would not, singly or in the
aggregate, have a material adverse effect on the condition, financial
or otherwise, or the earnings, business affairs or business prospects
of the Company and its subsidiaries considered as one enterprise.
(xix) The Company has not taken and will not take, directly or
indirectly, any action which is designed to or which has constituted
or which might reasonably be expected to cause or result in
stabilization or manipulation of the price of any security of the
Company to facilitate the sale of the Securities; and the Company has
not distributed and will not distribute any prospectus (as such term
is defined in the 1933 Act and the 1933 Act Regulations) in connection
with the offering and sale of the Securities other than any
preliminary prospectus filed with the Commission or the Prospectus or
other material permitted by the 1933 Act or the 1933 Act Regulations.
(xx) Neither the Company nor any of its subsidiaries has violated
any federal or state law relating to discrimination in the hiring,
promotion or pay of employees nor any applicable federal or state
wages and hours laws, nor any provisions of the Employee Retirement
Income Security Act or the rules and regulations promulgated
thereunder, which in each case might have a material adverse effect on
the condition, financial or otherwise, or the earnings, business
affairs or business prospects of the Company and its subsidiaries
considered as one enterprise.
(xxi) The Class A Common Shares have been approved for
listing on the National Association of Securities Dealers Automated
Quotation System-National Market System.
(b) Each of the Sellers, severally and not jointly, represents and
warrants to, and agrees with, each Underwriter as of the date hereof and as of
the Representation Date, as follows:
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(i) The execution, delivery and performance of this
Agreement and the Pricing Agreement and the consummation of the
transactions contemplated herein and therein and compliance by such
Seller with its obligations hereunder and thereunder have been duly
authorized, where appropriate, by all necessary corporate action and
will not conflict with or constitute a breach of, or default under, or
result in the creation or imposition of any lien, charge or
encumbrance upon any property or assets of such Seller pursuant to,
any contract, indenture, mortgage, loan agreement, note, lease or
other instrument to which such Seller is a party or by which it may be
bound, or to which any of the property or assets of such Seller is
subject, nor will such action result in any violation of the
provisions of the charter or by-laws of such Seller or any applicable
law, judgement, order, administrative regulation or administrative or
court decree.
(ii) Such Seller has and will have, at the Closing Time
referred to in Section 2(c), good and marketable title to the
Securities to be sold by such Seller hereunder, free and clear of any
pledge, lien, security interest, encumbrance, claim or equity, created
by or arising through the Seller other than pursuant to this
Agreement; such Seller has full right, power and authority to sell,
transfer and deliver the Securities to be sold by such Seller
hereunder; and upon delivery of the Securities to be sold by such
Seller hereunder and payment of the purchase price therefor as herein
contemplated, each of the Underwriters will receive good and
marketable title to its ratable share of the Securities purchased by
it from such Seller, free and clear of any pledge, lien, security
interest, encumbrance, claim or equity.
(iii) Such Seller has duly executed and delivered in the form
heretofore furnished by the Underwriters, a power of attorney and
custody agreement (the "Power of Attorney and Custody Agreement") with
_______________________, as the attorney-in-fact and the custodian
(the "Attorney-in-Fact" and the "Custodian", respectively); the
Attorney-in-Fact is authorized to execute and deliver this Agreement,
the Pricing Agreement and the certificates referred to in Section 5(d)
or that may be required pursuant to Section 5(h) on behalf of such
Seller, to determine the purchase price to be paid by the Underwriters
to such Seller as provided in Section 2(a) hereof, to authorize the
delivery of the Securities to be sold by such Seller hereunder, to
duly endorse (in blank or otherwise) the certificate or certificates
representing such Securities, to accept payment therefor, and
otherwise to act on behalf of such Seller in connection with this
Agreement and the Pricing Agreement.
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(iv) All authorizations, approvals and consents necessary for
the execution and delivery by such Seller of the Power of Attorney and
Custody Agreement, the execution and delivery by or on behalf of such
Seller of this Agreement, and the Pricing Agreement, and the sale and
delivery of the Securities to be sold by such Seller hereunder and
thereunder (other than, at the time of the execution hereof, the
issuance of the order of the Commission declaring the Registration
Statement effective and such authorizations, approvals or consents as
may be necessary under state securities laws), have been obtained and
are in full force and effect; and such Seller has the full right,
power and authority to enter into this Agreement and the Pricing
Agreement and such Power of Attorney and Custody Agreement and to
sell, transfer and deliver the Securities to be sold by such Seller
hereunder.
(v) For a period of 180 days from the date of the Prospectus,
such Seller will not, without the prior written consent of the
Representatives, sell, offer to sell, grant any option for the sale
of, or otherwise dispose of, directly or indirectly, any shares of
Common Equity or any security convertible or exchangeable into or
exercisable for Common Equity owned by such Seller or with respect to
which such Seller has the power of disposition, other than to the
Underwriters pursuant to this Agreement.
(vi) Such Seller has not taken, and will not take, directly
or indirectly, any action which is designed to or which has
constituted or which might reasonably be expected to cause or result
in stabilization or manipulation of the price of any security of the
Company to facilitate the sale of the Securities; and such Seller has
not distributed and will not distribute any prospectus (as such term
is defined in the 1933 Act and the 1933 Act Regulations) in connection
with the offering and sale of the Securities other than any
preliminary prospectus filed with the Commission or the Prospectus or
other material permitted by the 1933 Act or the 1933 Act Regulations.
(vii) Such Seller is not prompted to sell the Class A Common
Shares by any information concerning the Company or its subsidiaries
that is not set forth in the Prospectus or other documents filed by
the Company with the Commission pursuant to the periodic reporting and
other information requirements of the 1934 Act.
(viii) When the Registration Statement shall become
effective, and at all times subsequent thereto up to the Closing Time,
such parts of the Registration Statement and any amendments and
supplements thereto as specifically refer
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to the Sellers will not contain an untrue statement of a material fact
or omit to state a material fact necessary in order to make statements
therein, in light of the circumstances under which they were made, not
misleading.
(ix) Neither such Seller nor any of its affiliates directly,
or indirectly through one or more intermediaries, controls, or is
controlled by, or is under common control with, or has any other
association with (within the meaning of Article 1, paragraph (m) of
the By-laws of the NASD), any member firm of the NASD.
(x) Such Seller agrees to deliver to the Representatives at
or prior to the Closing Time a properly completed and executed United
States Treasury Department Form W-9 (or other applicable form or
statement specified by Treasury Department regulations in lieu
thereof).
[(xii) Certificates in negotiable form for all Securities to
be sold by such Seller hereunder have been placed in custody with the
Custodian by or for the benefit of such Seller for the purposes or
effecting delivery by such Seller hereunder.]
(c) Any certificate signed by any officer of the Company and
delivered to the Representatives or to counsel for the Underwriters shall be
deemed a representation and warranty by the Company to each Underwriter as to
the matters covered thereby; and any certificate signed by or on behalf of any
Seller and delivered to the Representatives or to counsel for the Underwriters
shall be deemed a representation and warranty by such Seller to each
Underwriter as to matters covered thereby.
SECTION 2. SALE AND DELIVERY TO UNDERWRITERS: CLOSING.
(a) On the basis of the representations and warranties herein
contained and subject to the terms and conditions herein set forth, (i) the
Company agrees to sell to each Underwriter, severally and not jointly, and each
Underwriter, severally and not jointly, agrees to purchase from the Company, at
the price per share set forth in the Pricing Agreement, that proportion of the
number of Initial Securities set forth in Schedule B opposite the name of the
Company which the number of Initial Securities, set forth in Schedule A
opposite the name of such Underwriter (plus any additional number of Initial
Securities that such Underwriter may become obligated to purchase pursuant to
the provisions of Section 10 hereof), bears to the total number of Initial
Securities; and (ii) each of the Sellers, severally and not jointly, agrees to
sell to each Underwriter, severally and not jointly, and each Underwriter,
severally and not jointly, agrees to purchase from each of the Sellers,
severally and not
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jointly, at such price per share to be paid by the Underwriters to the Company,
that proportion of the number of Initial Securities being sold by such Seller
set forth in Schedule B opposite the name of such Seller which the number of
Initial Securities set forth in Schedule A opposite the name of such
Underwriter (plus any additional number of Initial Securities which such
Underwriter may become obligated to purchase pursuant to the provisions of
Section 10 hereof) bears to the total number of Initial Securities, subject, in
each case, to such adjustments as the Underwriters in their discretion shall
make to eliminate any sales or purchases of fractional securities.
(1) If the Company has elected not to rely upon Rule 430A
under the 1933 Act Regulations, the initial public offering price and
the purchase price per share to be paid by the several Underwriters
for the Securities have each been determined and set forth in the
Pricing Agreement, dated the date hereof, and an amendment to the
Registration Statement and the Prospectus containing such information
will be filed before the Registration Statement becomes effective.
(2) If the Company has elected to rely upon Rule 430A under
the 1933 Act Regulations, the initial public offering price and the
purchase price per share to be paid by the several Underwriters for
the Securities shall be determined by agreement among the
Representatives, the Company and the Sellers. The initial public
offering price and the purchase price, when so determined, shall be
set forth in the Pricing Agreement. In the event that such prices
have not been agreed upon and the Pricing Agreement has not been
executed and delivered by all parties thereto by the close of business
on the fourth business day following the date of this Agreement, this
Agreement shall terminate forthwith, without liability of any party to
any other party, unless otherwise agreed to by the Company, the
Sellers and the Representatives.
(b) In addition, on the basis of the representations and warranties
herein contained and subject to the terms and conditions herein set forth, the
Company and the Sellers, acting severally and not jointly, hereby grant an
option to the Underwriters, severally and not jointly, to purchase up to an
additional _________ shares of Common Stock at the price per share set forth in
the Pricing Agreement. The option hereby granted will expire 30 days after (i)
the date the Registration Statement becomes effective, if the Company has
elected not to rely on Rule 430A under the 1933 Act Regulations, or (ii) the
Representation Date, if the Company has elected to rely on Rule 430A under the
1933 Act Regulations, and may be exercised in whole or in part from time to
time only for the purpose of
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covering over-allotments which may be made in connection with the offering and
distribution of the Initial Securities upon notice by the Representatives to
the Company and the Sellers setting forth the number of Option Securities as to
which the several Underwriters are then exercising the option and the time and
date of payment and delivery for such Option Securities. Any such time and
date of delivery (a "Date of Delivery") shall be determined by the
Representatives, but shall not be later than seven full business days after the
exercise of said option, nor in any event prior to the Closing Time, as
hereinafter defined, unless otherwise agreed by the Representatives, the
Company and the Sellers. If the option is exercised as to all or any portion
of the Option Securities, the Option Securities to be sold by the Company and
the Sellers shall be in proportion to the number of Initial Securities being
sold by the Company and the Sellers and each of the Underwriters, acting
severally and not jointly, will purchase that proportion of the total number of
Option Securities then being purchased which the number of Initial Securities
set forth in Schedule A opposite the name of such Underwriter bears to the
total number of Initial Securities (except as otherwise provided in the Pricing
Agreement), subject in each case to such adjustments as the Representatives in
their discretion shall make to eliminate any sales or purchases of fractional
shares.
(c) Payment of the purchase price for, and delivery of certificates
for, the Initial Securities shall be made at the office of
______________________, or at such other place as shall be agreed upon by the
Company, the Sellers and the Representatives, at 10:00 A.M. on the [fifth]
business day (unless postponed in accordance with the provisions of Sections 10
or 11) following the date the Registration Statement becomes effective (or, if
the Company has elected to rely upon Rule 430A of the 1933 Act Regulations, the
fifth business day after execution of the Pricing Agreement), or such other
time not later than ten business days after such date as shall be agreed upon
by the Company, the Sellers and the Representatives (such time and date of
payment and delivery being herein called "Closing Time"). In addition, in the
event that any or all of the Option Securities are purchased by the
Underwriters, payment of the purchase price for, and delivery of certificates
for, such Option Securities shall be made at the above-mentioned offices of
________________, or at such other place as shall be agreed upon by the
Representatives, the Company and the Sellers, on each Date of Delivery as
specified in the notice from the Representatives to the Company and the
Sellers. Payment shall be made to the Company and the Sellers by certified or
official bank check or checks drawn in New York Clearing House funds or similar
next day funds payable to the order of the Company and the Custodian pursuant
to each Seller's Power of Attorney and Custody Agreement, or directly to each
of the Sellers, if so instructed by the Custodian against delivery to the
Representatives, for the
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respective accounts of the Underwriters of certificates for the Securities to
be purchased by them. Certificates for the Initial Securities and the Option
Securities, if any, shall be in such denominations and registered in such names
as the Representatives may request in writing at least two business days before
the Closing Time or the relevant Date of Delivery, as the case may be. It is
understood that each Underwriter has authorized the Representatives, for its
account, to accept delivery of, receipt for, and make payment of the purchase
price for, the Initial Securities and the Option Securities, if any, which it
has agreed to purchase. Merrill Lynch, Pierce, Fenner & Smith Incorporated,
individually and not as representative of the Underwriters, may (but shall not
be obligated to) make payment of the purchase price for the Initial Securities
or the Option Securities, if any, to be purchased by any Underwriter whose
check has not been received by the Closing Time or the relevant Date of
Delivery, as the case may be, but such payment shall not relieve such
Underwriter from its obligations hereunder. The certificates for the Initial
Securities and the Option Securities, if any, will be made available for
examination and packaging by the Representatives not later than 10:00 A.M. on
the last business day prior to the Closing Time or the relevant Date of
Delivery, as the case may be.
SECTION 3. COVENANTS OF THE COMPANY. The Company covenants with each
Underwriter as follows:
(a) The Company will notify the Representatives immediately,
and confirm the notice in writing, (i) of the effectiveness of the
Registration Statement and any amendment thereto (including any
post-effective amendment), (ii) of the receipt of any comments from
the Commission, (iii) of any request by the Commission for any
amendment to the Registration Statement or any amendment or supplement
to the Prospectus or for additional information, and (iv) of the
issuance by the Commission of any stop order suspending the
effectiveness of the Registration Statement or any order preventing or
suspending the use of any preliminary prospectus, or the initiation of
any proceedings for that purpose, and (v) of the suspension of the
qualification of the Securities for offering or sale in any
jurisdiction, or the initiation or threatening of any proceeding for
any such purpose. The Company will make every reasonable effort to
prevent the issuance of any stop order and, if any stop order is
issued, to obtain the lifting thereof at the earliest possible moment.
(b) The Company will give the Representatives notice of its
intention to file or prepare any amendment to the Registration
Statement (including any post-effective amendment) or any amendment or
supplement to the Prospectus
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(including any revised prospectus which the Company proposes for use
by the Underwriters in connection with the offering of the Securities
which differs from the prospectus on file at the Commission at the
time the Registration Statement becomes effective, whether or not such
revised prospectus is required to be filed pursuant to Rule 424(b) of
the 1933 Act Regulations), whether pursuant to the 1933 Act, the 1934
Act or otherwise, will furnish the Representatives with copies of any
such amendment or supplement a reasonable amount of time prior to such
proposed filing or use, as the case may be, and will not file any such
amendment or supplement or use any such prospectus to which the
Representatives or counsel for the Underwriters shall reasonably
object.
(c) The Company will deliver to the Representatives as many
signed copies of the Registration Statement as originally filed and of
each amendment thereto (including exhibits filed therewith or
incorporated by reference therein and documents incorporated or deemed
to be incorporated by reference therein) as the Representatives may
reasonably request and will also deliver to the Representatives a
conformed copy of the Registration Statement as originally filed and
of each amendment thereto (without exhibits) for each of the
Underwriters.
(d) The Company will furnish to each Underwriter, from time
to time during the period when the Prospectus is required to be
delivered under the 1933 Act or the 1934 Act, such number of copies of
the Prospectus (as amended or supplemented) as such Underwriter may
reasonably request for the purposes contemplated by the 1933 Act or
the 1934 Act or the respective applicable rules and regulations of the
Commission thereunder.
(e) If any event shall occur as a result of which it is
necessary, in the opinion of counsel for the Underwriters, to amend or
supplement the Prospectus in order to make the Prospectus not
misleading in the light of the circumstances existing at the time it
is delivered to a purchaser, or if for any other reason it shall be
necessary to amend or supplement the Prospectus in order to comply
with the 1933 Act or 1933 Act Regulations, the Company will forthwith
amend or supplement the Prospectus (in form and substance satisfactory
to counsel for the Underwriters) so that, as so amended or
supplemented, the Prospectus will not include an untrue statement of a
material fact or omit to state a material fact necessary in order to
make the statements therein, in the light of the circumstances
existing at the time it is delivered to a purchaser, not misleading,
and the Company will furnish to the Underwriters
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a reasonable number of copies of such amendment or supplement.
(f) The Company will endeavor, in cooperation with the
Underwriters, to qualify the Securities for offering and sale under
the applicable securities laws of such states and other jurisdictions
of the United States as the Representatives may designate; PROVIDED,
HOWEVER, that the Company shall not be obligated to qualify as a
foreign corporation in any jurisdiction in which it is not so
qualified. In each jurisdiction in which the Securities have been so
qualified, the Company will file such statements and reports as may be
required by the laws of such jurisdiction to continue such
qualification in effect for a period of not less than one year from
the effective date of the Registration Statement.
(g) The Company will make generally available to its security
holders as soon as practicable, but not later than 60 days after the
close of the period covered thereby, an earnings statement (in form
complying with the provisions of Rule 158 of the 1933 Act Regulations)
covering a twelve month period beginning not later than the first day
of the Company's fiscal quarter next following the "effective date"
(as defined in said Rule 158) of the Registration Statement.
(h) The Company will use the net proceeds received by it from
the sale of the Securities in the manner specified in the Prospectus
under "Use of Proceeds".
(i) If, at the time that the Registration Statement becomes
effective, any information shall have been omitted therefrom in
reliance upon Rule 430A of the 1933 Act Regulations, then immediately
following the execution of the Pricing Agreement, the Company will
prepare, and file or transmit for filing with the Commission in
accordance with such Rule 430A and Rule 424(b) of the 1933 Act
Regulations, copies of an amended Prospectus, or, if required by such
Rule 430A, a post-effective amendment to the Registration Statement
(including an amended Prospectus), containing all information so
omitted.
(j) The Company, during the period when the Prospectus is
required to be delivered under the 1933 Act or the 1934 Act, will file
all documents required to be filed with the Commission pursuant to
Section 13, 14 or 15 of the 1934 Act within the time periods required
by the 1934 Act and the 1934 Act Regulations.
(k) The Company will file with the NASD all documents and
notices required by the NASD of companies that have
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issued securities that are traded in the over-the-counter market and
quotations for which are reported by the National Association of
Securities Dealers Automated Quotation System-National Market System.
(l) During a period of 180 days from the date of the
Prospectus, the Company will not, without the Representatives' prior
written consent, sell, offer to sell, grant any option for the sale
of, or otherwise dispose of, directly or indirectly, any shares of
Common Equity or any security convertible or exchangeable into or
exercisable for Common Equity (except for Common Equity issued
pursuant to reservations, agreements or employee benefit plans
referred to in Section 1(a)(vii) hereof).
(m) If the Company has elected to rely upon Rule 430A, it
will take such steps as it deems necessary to ascertain promptly
whether the form of prospectus transmitted for filing under Rule
424(b) under the 1933 Act was actually received for filing by the
Commission and, in the event that they were not, it will promptly file
such prospectus.
SECTION 4. PAYMENT OF EXPENSES. The Company will pay all expenses
incident to the performance of the obligations of the Company and the Sellers
under this Agreement, including (i) the printing and filing of the Registration
Statement as originally filed and of each amendment thereto, (ii) the
reproduction of this Agreement and the Pricing Agreement, (iii) the
preparation, issuance and delivery of the certificates for the Securities to
the Underwriters, including any stock transfer taxes payable upon the issuance,
sale and delivery of certificates for the Securities to the Underwriters, (iv)
the fees and disbursements of the Company's counsel and accountants, (v) the
qualification of the Securities under securities laws in accordance with the
provisions of Section 3(f) hereof, including filing fees and the fees and
disbursements of counsel for the Underwriters in connection therewith and in
connection with the preparation of the Blue Sky Survey and any supplement
thereto, (vi) the printing and delivery to the Underwriters of copies of the
Registration Statement as originally filed and of each amendment thereto, of
each preliminary prospectus, and of the Prospectus and any amendments or
supplements thereto, (vii) the printing and delivery to the Underwriters of
copies of the Blue Sky Survey and any supplement thereto, (viii) the fee of the
National Association of Securities Dealers, Inc., (ix) the fees and expenses
incurred in connection with the listing of the Securities on the National
Association of Securities Dealers Automated Quotation System-National Market
System, and (x) the fee and disbursements of counsel for the Underwriters in
connection with matters related to Securities which are
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designated by the Company for sale to employees and others having a business
relationship with the Company.
If this Agreement is terminated by the Representatives in accordance
with the provisions of Section 5, Section 9(a)(i) or Section 11 hereof, the
Company shall reimburse the Underwriters for all of their out-of-pocket
expenses, including the reasonable fees and disbursements of counsel for the
Underwriters.
SECTION 5. CONDITIONS OF UNDERWRITERS' OBLIGATIONS. The obligations
of the Underwriters hereunder are subject to the accuracy of the
representations and warranties of the Company and the Sellers herein contained,
to the performance by the Company and the Sellers of their obligations
hereunder, and to the following further conditions:
(a) The Registration Statement shall have become effective
not later than 5:30 P.M. on the date hereof, or with the consent of
the Representatives, at a later time and date, not later, however,
than 5:30 P.M. on the first business day following the date hereof, or
at such later time and date as may be approved by a majority in
interest of the Underwriters; and at Closing Time no stop order
suspending the effectiveness of the Registration Statement shall have
been issued under the 1933 Act or proceedings therefor initiated or
threatened by the Commission. If the Company has elected to rely upon
Rule 430A of the 1933 Act Regulations, the price of the Securities and
any price-related information previously omitted from the effective
Registration Statement pursuant to such Rule 430A shall have been
transmitted to the Commission for filing pursuant to Rule 424(b) of
the 1933 Act Regulations within the prescribed time period and prior
to Closing Time the Company shall have provided evidence satisfactory
to the Representatives of such timely filing, or a post-effective
amendment providing such information shall have been promptly filed
and declared effective in accordance with the requirements of Rule
430A of the 1933 Act Regulations.
(b) At Closing Time the Representatives shall have received:
(1) The favorable opinion, dated as of Closing Time,
of Jones, Day, Reavis & Pogue, counsel for the Company, in
form and substance satisfactory to counsel for the
Underwriters, to the effect that:
(i) The Company has been duly incorporated
and is validly existing as a corporation in good
standing under the laws of the State of Ohio.
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(ii) The Company has corporate power and
authority to own, lease and operate its properties
and to conduct its business as described in the
Registration Statement and to enter into and perform
its obligations under this Agreement and the Pricing
Agreement.
(iii) To the best of their knowledge and
information, the Company is duly qualified as a
foreign corporation to transact business and is in
good standing in each jurisdiction in which such
qualification is required.
(iv) The authorized, issued and outstanding
capital stock of the Company is as set forth in the
Prospectus under "Capitalization" (except for
subsequent issuances, if any, pursuant to
reservations, agreements or employee benefit plans
referred to in the Prospectus), all the issued and
outstanding shares of capital stock of the Company
(including the Securities to be sold by the Sellers)
have been duly authorized and validly issued and are
fully paid and non-assessable.
(v) The Securities to be sold by the Company
have been duly authorized for issuance and sale to
the Underwriters pursuant to this Agreement and, when
issued and delivered by the Company pursuant to this
Agreement against payment of the consideration set
forth in the Pricing Agreement, will be validly
issued and fully paid and non-assessable.
(vi) The issuance of the Securities to be
sold by the Company is not subject to preemptive or
other similar rights arising by operation of law,
under the charter or by-laws of the Company or, to
the best of their knowledge and information,
otherwise.
(vii) Each subsidiary of the Company has
been duly incorporated and is validly existing as a
corporation in good standing under the laws of the
jurisdiction of its incorporation, has corporate
power and authority to own, lease and operate its
properties and to conduct its business as described
in the Registration Statement and, to the best of
their knowledge and information, is duly qualified as
a foreign corporation to transact business and is in
good standing in each jurisdiction in which such
qualification is
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required; all of the issued and outstanding
capital stock of each such subsidiary has been duly
authorized and validly issued, is fully paid and
non-assessable and, to the best of their knowledge
and information and other than as disclosed in the
Registration Statement, is owned by the Company,
directly or through subsidiaries, free and clear of
any security interest, mortgage, pledge, lien,
encumbrance, claim or equity.
(viii) This Agreement and the Pricing
Agreement have each been duly authorized, executed
and delivered by the Company.
(ix) The Registration Statement is effective
under the 1933 Act and, to the best of their
knowledge and information, no stop order suspending
the effectiveness of the Registration Statement has
been issued under the 1933 Act or proceedings
therefor initiated or threatened by the Commission.
(x) At the time the Registration Statement
became effective and at the Representation Date, the
Registration Statement (other than the financial
statements and supporting schedules included therein,
as to which no opinion need be rendered) complied as
to form in all material respects with the
requirements of the 1933 Act and the 1933 Act
Regulations.
(xi) The capital stock of the Company
conforms to the description thereof contained in the
Prospectus, and the form of certificate used to
evidence the Class A Common Shares is in due and
proper form and complies with all applicable
statutory requirements.
(xii) To the best of their knowledge and
information, there are no legal or governmental
proceedings pending or threatened which are required
to be disclosed in the Registration Statement, other
than those disclosed therein, and all pending legal
or governmental proceedings to which the Company or
any subsidiary is a party or to which any of their
property is subject which are not described in the
Registration Statement, including ordinary routine
litigation incidental to the business, are,
considered in the aggregate, not material.
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(xiii) The information in the Prospectus
under "Description of Capital Stock," "Legal
Proceedings," and "Patents and Trademarks," to the
extent that it constitutes matters of law, summaries
of legal matters, documents or proceedings, or legal
conclusions, has been reviewed by them and is correct
in all material respects.
(xiv) To the best of their knowledge and
information, there are no contracts, indentures,
mortgages, loan agreements, notes, leases or other
instruments required to be described or referred to
in the Registration Statement or to be filed as
exhibits thereto other than those described or
referred to therein or filed as exhibits thereto, the
descriptions thereof or references thereto are
correct, and no default exists in the due performance
or observance of any material obligation, agreement,
covenant or condition contained in any contract,
indenture, mortgage, loan agreement, note, lease or
other instrument so described, referred to or filed.
(xv) No authorization, approval, consent or
order of any court or governmental authority or
agency is required in connection with the offering,
issuance or sale of the Securities to the
Underwriters, except such as may be required under
the 1933 Act or the 1933 Act Regulations or state
securities law; and, to the best of their knowledge
and information, the execution, delivery and
performance of this Agreement and the Pricing
Agreement and the consummation of the transactions
contemplated herein and therein and compliance by the
Company with its obligations hereunder and thereunder
will not conflict with or constitute a breach of, or
default under, or result in the creation or
imposition of any lien, charge or encumbrance upon
any property or assets of the Company or any of its
subsidiaries pursuant to, any contract, indenture,
mortgage, loan agreement, note, lease or other
instrument to which the Company or any of its
subsidiaries is a party or by which it or any of them
may be bound, or to which any of the property or
assets of the Company or any of its subsidiaries is
subject, nor will such action result in any violation
of the provisions of the charter or by-laws of the
Company, or any applicable law, administrative
regulation or administrative or court decree.
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(xvi) To the best of their knowledge and
information, there are no persons with registration
or other similar rights to have any securities
registered pursuant to the Registration Statement or
otherwise registered by the Company under the 1933
Act.
(xvii) Each document filed pursuant to the
1934 Act (other than the financial statements and
supporting schedules included therein, as to which no
opinion need be rendered) and incorporated or deemed
to be incorporated by reference in the Prospectus
complied when so filed as to form in all material
respects with the 1934 Act and the 1934 Act
Regulations.
(2) The favorable opinion, dated as of Closing
Time, of ____________________________, counsel for the
Sellers, in form and substance satisfactory to counsel for the
Underwriters, to the effect that:
(i) This Agreement and the Pricing
Agreement each have been duly authorized, executed
and delivered by or on behalf of each of the Sellers.
(ii) The Power of Attorney and Custody
Agreement has been duly authorized, executed and
delivered by each of the Sellers and constitutes the
valid and binding obligations of each such Seller in
accordance with its terms.
(iii) Each of the Sellers has good and
marketable title to the Securities to be sold by such
Seller hereunder and full power, right and authority
to sell such Securities as herein contemplated, and
each of the Underwriters will receive good and
marketable title to the Securities purchased by it
from the Sellers, free and clear of any mortgage,
pledge, lien, security interest, encumbrance, claim
or equity created by or arising through the Seller.
In rendering such opinion, counsel may assume that
the Underwriters are without notice of any defect in
the title of the Sellers to the Securities being
purchased from the Sellers.
(iv) No authorization, approval, consent, or
order of any court or governmental authority or
agency is required in connection with the sale of the
Securities from each of the Sellers to the
Underwriters, except such as may be required under
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the 1933 Act of the 1933 Act Regulations or
state securities law; and, to the best of their
knowledge and information, the execution, delivery
and performance of this Agreement and the Pricing
Agreement and the consummation of the transactions
contemplated herein and therein and compliance by
each Seller with its obligations hereunder and
thereunder will not conflict with or constitute a
breach of, or default under, or result in the
creation or imposition of any lien, charge or
encumbrance upon any property or assets of such
Seller pursuant to, any contract, indenture,
mortgage, loan agreement, note, lease or other
instrument to which such Seller is a party or by
which it may be bound, or to which any of the
property or assets of such Seller is subject, nor
will such action result in any violation of the
provisions of the charter or by-laws of such Seller,
or any applicable law, judgment, order,
administrative regulation or administrative or court
decree.
(3) The favorable opinion, dated as of Closing Time,
of Mayer, Brown & Platt, counsel for the Underwriters, with
respect to the matters set forth in (i), (ii), (v), (vi)
(solely as to preemptive rights arising by operation of law or
under the charter or by-laws of the Company) and (viii) to
(xi), inclusive, of subsection (b)(1) of this Section. In
rendering such opinion, Mayer, Brown & Platt may rely as to
matters of Ohio law upon the opinion of Jones, Day, Reavis &
Pogue set forth in subsection (b)(1) of this Section.
(4) In giving their opinions required by subsections
(b)(1) and (b)(3), respectively, of this Section, Jones, Day,
Reavis & Pogue and Mayer, Brown & Platt shall each
additionally state that nothing has come to their attention
that would lead them to believe that the Registration
Statement (except for financial statements and schedules and
other financial or statistical data included therein, as to
which counsel need express no opinion), at the time it became
effective or at the Representation Date, contained an untrue
statement of a material fact or omitted to state a material
fact required to be stated therein or necessary to make the
statements therein not misleading or that the Prospectus
(except for financial statements and schedules and other
financial or statistical data included therein, as to which
counsel need express no opinion), at the Representation Date
(unless the term "Prospectus" refers to a prospectus which has
been
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provided to the Underwriters by the Company for use in
connection with the offering of the Securities which differs
from the Prospectus on file at the Commission at the time the
Registration Statement becomes effective, in which case at the
time it is first provided to the Underwriters for such use) or
at Closing Time, included or includes an untrue statement of a
material fact or omitted or omits to state a material fact
necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not
misleading.
(c) At Closing Time there shall not have been, since the date
hereof or since the respective dates as of which information is given
in the Prospectus, any material adverse change in the condition,
financial or otherwise, or in the earnings, business affairs or
business prospects of the Company and its subsidiaries considered as
one enterprise, whether or not arising in the ordinary course of
business, and the Representatives shall have received a certificate of
the President or a Vice President of the Company and of the chief
financial or chief accounting officer of the Company, dated as of
Closing Time, to the effect that (i) there has been no such material
adverse change, (ii) the representations and warranties of the Company
contained in Section 1(a) are true and correct with the same force and
effect as though expressly made at and as of Closing Time, (iii) the
Company has complied with all agreements and satisfied all conditions
on its part to be performed or satisfied hereunder at or prior to
Closing Time, and (iv) no stop order suspending the effectiveness of
the Registration Statement has been issued and no proceedings for that
purpose have been initiated or threatened by the Commission. As used
in this Section 5(c), the term "Prospectus" means the Prospectus in
the form first used to confirm sales of the Securities.
(d) At Closing Time the Representatives shall have
received a certificate of the Attorney-in-Fact for each of the
Sellers, dated as of Closing Time, to the effect that (i) the
representations and warranties of each Seller contained in Section
1(b) are true and correct with the same force and effect as though
expressly made at and as of Closing Time and (ii) each Seller has
complied with all agreements and satisfied all conditions on its part
to be performed or satisfied hereunder at or prior to Closing Time.
The Attorney-in-Fact shall be entitled to rely upon certificates of
the Sellers in giving its certificate.
(e) At the time of the execution of this Agreement, the
Representatives shall have received from Ernst & Young
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26
LLP a letter dated such date, in form and substance satisfactory to
the Representatives, to the effect that (i) they are independent
public accountants with respect to the Company and its subsidiaries
within the meaning of the 1933 Act and the 1933 Act Regulations; (ii)
it is their opinion that the financial statements and supporting
schedules included in the Registration Statement and covered by their
opinions therein comply as to form in all material respects with the
applicable accounting requirements of the 1933 Act and the 1933 Act
Regulations; (iii) based upon limited procedures set forth in detail
in such letter, nothing has come to their attention which causes them
to believe that (A) the unaudited financial statements and supporting
schedules of the Company and its subsidiaries included in the
Registration Statement do not comply as to form in all material
respects with the applicable accounting requirements of the 1933 Act
and the 1933 Act Regulations or are not presented in conformity with
generally accepted accounting principles applied on a basis
substantially consistent with that of the audited financial statements
included in the Registration Statement, (B) the unaudited amounts of
revenues, net income and net income per share set forth under
"[Selected Financial Information]" in the Prospectus were not
determined on a basis substantially consistent with that used in
determining the corresponding amounts in the audited financial
statements included in the Registration Statement, or (C) at a
specified date not more than five days prior to the date of this
Agreement, there has been any change in the capital stock of the
Company or any increase in the consolidated long term debt of the
Company and its subsidiaries or any decrease in consolidated net
current assets or net assets as compared with the amounts shown in the
March 31, 1995 balance sheet included in the Registration Statement
or, during the period from March 31, 1995 to a specified date not more
than five days prior to the date of this Agreement, there were any
decreases, as compared with the corresponding period in the preceding
year, in consolidated revenues, net income or net income per share of
the Company and its subsidiaries, except in all instances for changes,
increases or decreases which the Registration Statement and the
Prospectus disclose have occurred or may occur; and (iv) in addition
to the examination referred to in their opinions and the limited
procedures referred to in clause (iii) above, they have carried out
certain specified procedures, not constituting an audit, with respect
to certain amounts, percentages and financial information which are
included in the Registration Statement and Prospectus and which are
specified by the Representatives, and have found such amounts,
percentages and financial information to be in agreement with the
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27
relevant accounting, financial and other records of the Company and its
subsidiaries identified in such letter.
(f) At Closing Time the Representatives shall have received
from Ernst & Young LLP a letter, dated as of Closing Time, to the
effect that they reaffirm the statements made in the letter furnished
pursuant to subsection (e) of this Section, except that the specified
date referred to shall be a date not more than five days prior to
Closing Time and, if the Company has elected to rely on Rule 430A of
the 1933 Act Regulations, to the further effect that they have carried
out procedures as specified in clause (iv) of subsection (d) of this
Section with respect to certain amounts, percentages and financial
information specified by the Representatives and deemed to be a part
of the Registration Statement pursuant to Rule 430(A)(b) and have
found such amounts, percentages and financial information to be in
agreement with the records specified in such clause (iv).
(g) At the time of the execution of this Agreement and at
Closing Time, the Representatives shall have received from Price
Waterhouse LLP, letters dated as of such respective dates, covering
such specified financial statement items and procedures as the
Representatives may reasonably request, in form and substance
satisfactory to the Representatives.
(h) At Closing Time and at each Date of Delivery, if any,
counsel for the Underwriters shall have been furnished with such
documents and opinions as they may require for the purpose of enabling
them to pass upon the issuance and sale of the Securities as herein
contemplated and related proceedings, or in order to evidence the
accuracy of any of the representations or warranties, or the
fulfillment of any of the conditions, herein contained; and all
proceedings taken by the Company and the Sellers in connection with
the issuance and sale of the Securities as herein contemplated shall
be satisfactory in form and substance to the Representatives and
counsel for the Underwriters.
(i) In the event that the Underwriters exercise their option
provided in Section 2(b) hereof to purchase all or any portion of the
Option Securities, the representations and warranties of the Company
and the Sellers contained herein and the statements in any
certificates furnished by the Company and the Sellers hereunder shall
be true and correct as of each Date of Delivery and, at the relevant
Date of Delivery, the Representatives shall have received:
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(1) Certificates, dated such Date of Delivery, of
(x) the President or a Vice President of the Company and of
the chief financial or chief accounting officer of the Company
and (y) the Attorney-in-Fact for each of the Sellers
confirming that the certificates delivered at the Closing Time
pursuant to Section 5(c) and 5(d) hereof, respectively, remain
true and correct as of such Date of Delivery.
(2) The favorable opinion of Jones, Day, Reavis &
Pogue, counsel for the Company, in form and substance
satisfactory to counsel for the Underwriters, dated such Date
of Delivery, relating to the Option Securities to be purchased
on such Date of Delivery and otherwise to the same effect as
the opinion required by Sections 5(b)(1) and 5(b)(4) hereof.
(3) The favorable opinion of _______________ counsel
for the Sellers, in form and substance satisfactory to counsel
for the Underwriters, dated such Date of Delivery, relating to
the Option Securities to be purchased on such Date of Delivery
and otherwise to the same effect as the opinion required by
Section 5(b)(2) hereof.
(4) The favorable opinion of Mayer, Brown & Platt,
counsel for the Underwriters, dated such Date of Delivery,
relating to the Option Securities to be purchased on such Date
of Delivery and otherwise to the same effect as the opinion
required by Sections 5(b)(2) and 5(b)(4) hereof.
(5) A letter from Ernst & Young LLP, in form and
substance satisfactory to the Representatives and dated such
Date of Delivery, substantially the same in form and substance
as the letter furnished to the Representatives pursuant to
Section 5(e) hereof, except that the "specified date" in the
letter furnished pursuant to this Section 5(i)(5) shall be a
date not more than five days prior to such Date of Delivery.
(6) A letter from Price Waterhouse LLP, in form and
substance satisfactory to the Representatives and dated such
Date of Delivery, substantially the same in form and substance
as the letter furnished to the Representatives pursuant to
Section 5(g) hereof.
If any condition specified in this Section shall not have been
fulfilled when and as required to be fulfilled, this Agreement may be
terminated by the Representatives by notice to the Company and the Sellers at
any time at or prior to Closing Time, and such termination shall be without
liability of any party to any other party except as provided in Section 4
hereof.
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SECTION 6. INDEMNIFICATION.
(a) The Company and the Sellers agree to jointly and severally
indemnify and hold harmless each Underwriter and each person, if any, who
controls any Underwriter within the meaning of Section 15 of the 1933 Act as
follows:
(i) against any and all loss, liability, claim, damage and
expense whatsoever, as incurred, arising out of any untrue statement
or alleged untrue statement of a material fact contained in the
Registration Statement (or any amendment thereto), including the
information deemed to be part of the Registration Statement pursuant
to Rule 430A(b) of the 1933 Act Regulations, if applicable, or the
omission or alleged omission therefrom of a material fact required to
be stated therein or necessary to make the statements therein not
misleading or arising out of any untrue statement or alleged untrue
statement of a material fact contained in any preliminary prospectus
or the Prospectus (or any amendment or supplement thereto) or the
omission or alleged omission therefrom of a material fact necessary in
order to make the statements therein, in the light of the
circumstances under which they were made, not misleading;
(ii) against any and all loss, liability, claim, damage or
expense whatsoever, as incurred, to the extent of the aggregate amount
paid in settlement of any litigation, or any investigation or
proceeding by any governmental agency or body, commenced or
threatened, or of any claim whatsoever based upon any such untrue
statement or omission, or any such alleged untrue statement or
omission, if such settlement is effected with the written consent of
the Company; and
(iii) against any and all expense whatsoever, as incurred
(including, subject to Section 6(c) hereof, the fees and disbursements
of counsel chosen by the Representatives), reasonably incurred in
investigating, preparing or defending against any litigation, or any
investigation or proceeding by any governmental agency or body,
commenced or threatened, or any claim whatsoever based upon any such
untrue statement or omission, or any such alleged untrue statement or
omission, to the extent that any such expense is not paid under (i) or
(ii) above;
PROVIDED, HOWEVER, that this indemnity agreement shall not apply to any loss,
liability, claim, damage or expense to the extent arising out of any untrue
statement or omission or alleged untrue statement or omission made in reliance
upon and in conformity with written information furnished to the Company by any
Underwriter through the Representatives expressly for use in the Registration
Statement (or any amendment thereto) or any preliminary prospectus or the
Prospectus (or any amendment or supplement thereto). Without limiting any
obligation of the
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Company, the liability of each Seller under this Section 6 shall not exceed the
product of the number of Securities sold by such Seller times the initial
public offering price per share appearing on the cover page of the Prospectus.
(b) Each Underwriter severally agrees to indemnify and hold harmless
the Company, its directors, each of its officers who signed the Registration
Statement, each person, if any, who controls the Company within the meaning of
Section 15 of the 1933 Act and each Seller against any and all loss, liability,
claim, damage and expense described in the indemnity contained in subsection
(a) of this Section, as incurred, but only with respect to untrue statements or
omissions, or alleged untrue statements or omissions, made in the Registration
Statement (or any amendment thereto) or any preliminary prospectus or the
Prospectus (or any amendment or supplement thereto) in reliance upon and in
conformity with written information furnished to the Company by such
Underwriter through the Representatives expressly for use in the Registration
Statement (or any amendment thereto) or such preliminary prospectus or the
Prospectus (or any amendment or supplement thereto).
(c) Each indemnified party shall give notice as promptly as
reasonably practicable to each indemnifying party of any action commenced
against it in respect of which indemnity may be sought hereunder, but failure
to so notify an indemnifying party shall not relieve such indemnifying party
from any liability which it may have otherwise than on account of this
indemnity agreement. An indemnifying party may participate at its own expense
in the defense of any such action. In no event shall the indemnifying parties
be liable for fees and expenses of more than one counsel (in addition to any
local counsel) separate from their own counsel for all indemnified parties in
connection with any one action or separate but similar or related actions in
the same jurisdiction arising out of the same general allegations or
circumstances.
SECTION 7. CONTRIBUTION. In order to provide for just and equitable
contribution in circumstances in which the indemnity agreement provided for in
Section 6 hereof is for any reason held to be unenforceable by the indemnified
parties although applicable in accordance with its terms, the Company, the
Sellers and the Underwriters shall contribute to the aggregate losses,
liabilities, claims, damages and expenses of the nature contemplated by said
indemnity agreement incurred by the Company, the Sellers and one or more of the
Underwriters, as incurred, in such proportions that the Underwriters are
responsible for that portion represented by the percentage that the
underwriting discount appearing on the cover page of the Prospectus bears to
the initial public offering price appearing thereon and the Company and the
Sellers are jointly and severally responsible for the balance; PROVIDED,
HOWEVER, that no person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the 1933 Act) shall be entitled to contribution
from any
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person who was not guilty of such fraudulent misrepresentation.
Notwithstanding the provisions of this Section 7, no Underwriter shall be
required to contribute any amounts in excess of the amount by which the total
price at which the Securities underwritten by it and distributed to the public
exceeds the amount of any damages of the kind described in Section 6(a) which
such Underwriter has otherwise paid in respect of such losses, liabilities,
claims, damages and expenses. For purposes of this Section, each person, if
any, who controls an Underwriter within the meaning of Section 15 of the 1933
Act shall have the same rights to contribution as such Underwriter, and each
director of the Company, each officer of the Company who signed the
Registration Statement, and each person, if any, who controls the Company
within the meaning of Section 15 of the 1933 Act shall have the same rights to
contribution as the Company and the Sellers.
SECTION 8. REPRESENTATIONS, WARRANTIES AND AGREEMENTS TO SURVIVE
DELIVERY. All representations, warranties and agreements contained in this
Agreement and the Pricing Agreement, or contained in certificates of officers
of the Company or the Sellers submitted pursuant hereto, shall remain operative
and in full force and effect, regardless of any investigation made by or on
behalf of any Underwriter or controlling person, or by or on behalf of the
Company or the Sellers, and shall survive delivery of the Securities to the
Underwriters.
SECTION 9. TERMINATION OF AGREEMENT.
(a) The Representatives may terminate this Agreement, by notice to
the Company and the Sellers, at any time at or prior to Closing Time (i) if
there has been, since the date of this Agreement or since the respective dates
as of which information is given in the Prospectus, any material adverse change
in the condition, financial or otherwise, or in the earnings, business affairs
or business prospects of the Company and its subsidiaries considered as one
enterprise, whether or not arising in the ordinary course of business, or (ii)
if there has occurred any material adverse change in the financial markets in
the United States or elsewhere or any outbreak of hostilities or escalation
thereof or other calamity or crisis the effect of which is such as to make it,
in the judgment of the Representatives, impracticable to market the Securities
or to enforce contracts for the sale of the Securities, or (iii) if trading in
the Class A Common Shares has been suspended by the Commission, or if trading
generally on the New York Stock Exchange has been suspended, or minimum or
maximum prices for trading have been fixed, or maximum ranges for prices for
securities have been required, by said Exchange or by order of the Commission
or any other governmental authority, or if a banking moratorium has been
declared by either Federal, New York or Ohio authorities. As used in this
Section 9(a), the term "Prospectus" means the Prospectus in the form first used
to confirm sales of the Securities.
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(b) If this Agreement is terminated pursuant to this Section, such
termination shall be without liability of any party to any other party except
as provided in Section 4 hereof. Notwithstanding any such termination, the
provisions of Sections 6 and 7 hereof shall remain in effect.
SECTION 10. DEFAULT BY ONE OR MORE OF THE UNDERWRITERS. If one or
more of the Underwriters shall fail at Closing Time to purchase the Initial
Securities which it or they are obligated to purchase under this Agreement and
the Pricing Agreement (the "Defaulted Securities"), the Representatives shall
have the right, within 24 hours thereafter, to make arrangements for one or
more of the non-defaulting Underwriters, or any other underwriters, to purchase
all, but not less than all, of the Defaulted Securities in such amounts as may
be agreed upon and upon the terms herein set forth; if, however, the
Representatives shall not have completed such arrangements within such 24-hour
period, then:
(a) if the number of Defaulted Securities does not exceed 10%
of the number of Initial Securities, the non-defaulting Underwriters
shall be obligated to purchase the full amount thereof in the
proportions that their respective underwriting obligations hereunder
bear to the underwriting obligations of all non-defaulting
Underwriters, or
(b) if the number of Defaulted Securities exceeds 10% of the
number of Initial Securities, this Agreement shall terminate without
liability on the part of any non-defaulting Underwriter.
No action taken pursuant to this Section shall relieve any defaulting
Underwriter from liability in respect of its default.
In the event of any such default which does not result in a
termination of this Agreement, either the Representatives or the Company shall
have the right to postpone Closing Time for a period not exceeding seven days
in order to effect any required changes in the Registration Statement or
Prospectus or in any other documents or arrangements.
SECTION 11. DEFAULT BY ONE OR MORE SELLERS OR THE COMPANY. If one or
more of the Sellers shall fail at Closing Time to sell and deliver the number
of Securities which such Seller or Sellers are obligated to sell hereunder,
then the Representatives may, at their option, by notice to the Company and the
non-defaulting Sellers, either (a) terminate this Agreement without liability
on the part of any non-defaulting party or (b) elect to purchase the
Securities which the Company and the non-defaulting Sellers, if any, have
agreed to sell hereunder.
In the event of a default by any Seller as referred to in this Section
11, the Underwriters, the Company and the non-defaulting Sellers, if any, shall
have the right to postpone
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Closing Time for a period not exceeding seven days in order to effect any
required changes in the Registration Statement or the Prospectus or in any
other documents or arrangements.
If the Company shall fail at Closing Time or at the Date of Delivery
to sell and deliver the number of Securities that it is obligated to sell
hereunder, then this Agreement shall terminate without any liability on the
part of any non-defaulting party.
No action taken pursuant to this Section 11 shall relieve the Company
or any Seller from liability, if any, in respect of such default.
SECTION 12. NOTICES. All notices and other communications hereunder
shall be in writing and shall be deemed to have been duly given if mailed or
transmitted by any standard form of telecommunication. Notices to the
Underwriters shall be directed to the Representatives at Merrill Lynch World
Headquarters, North Tower, World Financial Center, New York, New York
10281-1201, attention of ____________, Vice President; notices to the Company
shall be directed to it at 22801 St. Clair Ave., Cleveland, Ohio, attention of
Frederick G. Stueber, Esq., Vice President, General Counsel and Secretary; and,
notices to the Sellers shall be directed to ______________,
____________________, ______________________.
SECTION 13. PARTIES. This Agreement and the Pricing Agreement shall
each inure to the benefit of and be binding upon the Underwriters, the Company
and the Sellers and their respective successors[, heirs and legal
representatives]. Nothing expressed or mentioned in this Agreement or the
Pricing Agreement is intended or shall be construed to give any person, firm or
corporation, other than the Underwriters, the Company and the Sellers and their
respective successors[, heirs and legal representatives] and the controlling
persons and officers and directors referred to in Sections 6 and 7 and their
respective successors, heirs and legal representatives, any legal or equitable
right, remedy or claim under or in respect of this Agreement or the Pricing
Agreement or any provision herein or therein contained. This Agreement and the
Pricing Agreement and all conditions and provisions hereof and thereof are
intended to be for the sole and exclusive benefit of the Underwriters, the
Company and the Sellers and their respective successors[, heirs and legal
representatives,] and said controlling persons and officers and directors and
their respective successors, heirs and legal representatives, and for the
benefit of no other person, firm or corporation. No purchaser of Securities
from any Underwriter shall be deemed to be a successor by reason merely of such
purchase.
SECTION 14. GOVERNING LAW AND TIME. This Agreement and the Pricing
Agreement shall be governed by and construed in accordance with the laws of the
State of New York applicable to
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agreements made and to be performed in said State. Specified times of day
refer to New York City time.
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If the foregoing is in accordance with your understanding of our
agreement, please sign and return to each of the Company and the
Attorney-in-Fact a counterpart hereof, whereupon this instrument, along with
all counterparts, will become a binding agreement among the Underwriters, the
Company and each Seller in accordance with its terms.
Very truly yours,
THE LINCOLN ELECTRIC COMPANY
By:______________________________
Title:
THE SELLERS
By:____________________________
As Attorney-in-Fact, acting on
behalf of each of the Sellers named
in Schedule B hereto.
CONFIRMED AND ACCEPTED,
as of the date first above written:
MERRILL LYNCH & CO.
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
J.P. MORGAN SECURITIES INC.
MCDONALD & COMPANY SECURITIES, INC.
By: MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
By:____________________________
Authorized Signatory
For themselves and as Representatives of the other
Underwriters named in Schedule A hereto.
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SCHEDULE A
Number
Name of Underwriter of Securities
------------------- -------------
Merrill Lynch, Pierce, Fenner & Smith
Incorporated. . . . . . . . . .
J.P. Morgan Securities Inc . . . . . . . .
McDonald & Company Securities, Inc. . . . .
_____________
Total. . . . . . . . . . . . . . . . . _____________
Sch A - 1
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SCHEDULE B
Maximum
Number of Number of
Initial Option
Securities Securities
Name to be sold to be sold
---- ---------- ----------
The Lincoln Electric Company . . . . . . .
[Sellers]
Total. . . . . . . . . . . . . . . .
---------- ----------
Sch B - 1
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SCHEDULE C
Shareholders who have agreed to 180-day lock-up pursuant to Section
1(a)(xvi):
Sch C - 1
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Exhibit A
_________ Shares
THE LINCOLN ELECTRIC COMPANY
(an Ohio corporation)
Class A Common Shares
(Without Par Value)
PRICING AGREEMENT
-----------------
_____________, 1995
MERRILL LYNCH & CO.
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
J.P. MORGAN SECURITIES INC.
MCDONALD & COMPANY SECURITIES, INC.
as Representatives of the several Underwriters
c/o Merrill Lynch & Co.
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
Merrill Lynch World Headquarters
North Tower
World Financial Center
New York, New York 10281-1209
Dear Sirs:
Reference is made to the Purchase Agreement dated , 1995 (the
"Purchase Agreement") relating to the purchase by the several Underwriters
named in Schedule A thereto, for whom Merrill Lynch & Co., Merrill Lynch,
Pierce, Fenner & Smith Incorporated, J.P. Morgan Securities Inc. and McDonald &
Company Securities, Inc. are acting as representatives (the "Representatives"),
of the above Class A Common Shares (the "Securities"), of The Lincoln Electric
Company, an Ohio corporation (the "Company").
Pursuant to Section 2 of the Purchase Agreement, the Company and each
of the Sellers named in Schedule B to the Purchase Agreement (the "Sellers"),
severally and not jointly, agree with each Underwriter as follows:
1. The initial public offering price per share for the
Securities, determined as provided in said Section 2, shall be $ .
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2. The purchase price per share for the Securities to be paid
by the several Underwriters shall be $ , being an amount
equal to the initial public offering price set forth above less
$ per share.
If the foregoing is in accordance with your understanding of our
agreement, please sign and return to the Company and the Attorney-in-Fact for
the Sellers a counterpart hereof, whereupon this instrument, along with all
counterparts, will become a binding agreement among the Underwriters, the
Company and the Sellers in accordance with its terms.
Very truly yours,
THE LINCOLN ELECTRIC COMPANY
By:_______________________________
Title:
THE SELLERS
By:____________________________
As Attorney-in-Fact, acting on
behalf of each of the Sellers named
in Schedule B hereto.
CONFIRMED AND ACCEPTED,
as of the date first above written:
MERRILL LYNCH & CO.
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
J.P. MORGAN SECURITIES INC.
MCDONALD & COMPANY SECURITIES, INC.
By:________________________________
Authorized Signatory
For themselves and as Representatives of the
other Underwriters named in the Purchase Agreement
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