1
EXHIBIT 10(b)
AMENDMENT NO.2 TO CREDIT AGREEMENT
AMENDMENT dated as of May 8, 1998 (this "Amendment") among THE
LINCOLN ELECTRIC COMPANY (the "Company"), the BANKS listed on the signature
pages hereof (the "Banks") and KEYBANK NATIONAL ASSOCIATION, as Agent (the
"Agent").
WITNESSETH:
WHEREAS, the parties hereto have heretofore entered into a Credit
Agreement dated as of December 20, 1995 (as heretofore amended, the "Credit
Agreement"); and
WHEREAS, the Company intends to enter into a Merger Agreement (the
"Merger Agreement") with Lincoln Electric Merger Co., an Ohio corporation
("Merger Co.") and Lincoln Electric Holdings, Inc., an Ohio corporation
("Holdings"); and
WHEREAS, pursuant to such Merger Agreement, Merger Co. will merge with
and into the Company, with the Company as the survivor to such merger (the
"Merger");
WHEREAS, the parties hereto desire to amend the Credit Agreement as set
forth below to permit the consummation of the Merger;
NOW, THEREFORE, the parties hereto agree as follows:
SECTION 1. Definitions; References. Unless otherwise specifically
defined herein, each term used herein which is defined in the Credit Agreement
shall have the meaning assigned to such term in the Credit Agreement. Each
reference to "hereof", "hereunder", "herein" and "hereby" and each other similar
reference and each reference to "this Agreement" and each other similar
reference contained in the Credit Agreement shall from and after the date hereof
refer to the Credit Agreement as amended hereby.
SECTION 2. Additional Definitions. New definitions of "Holdings",
"Merger", "Merger Agreement", "Merger Co." and "Merger Date" are added in
alphabetical order in Section 1.01 of the Credit Agreement, to read in their
entirety as follows:
"Holdings" means Lincoln Electric Holdings, Inc., an Ohio corporation,
and its successors.
2
"Merger" means the merger of Merger Co. with and into the Company on
the terms set forth in the Merger Agreement.
"Merger Agreement" means a Merger Agreement to be entered into among
the Company, Holdings and Merger Co. substantially in the form provided by the
Company to the Banks prior to the effectiveness of Amendment No.2 to this
Agreement dated as of May 8, 1998 among the Company and the Banks, as such
Merger Agreement may be amended or waived from time to time with the prior
written consent of the Required Banks.
"Merger Co." means Lincoln Electric Merger Co., an Ohio corporation.
"Merger Date" means the date of consummation of the Merger on the terms
set forth in the Merger Agreement.
SECTION 3. Amendment to the Change of Control Event of Default. Section
6.01(k) of the Credit Agreement is amended to read in its entirety as follows:
"(k) (A) any person or group of persons (within the meaning of Section
13 or 14 of the Securities Exchange Act of 1934, as amended) shall have acquired
(i) prior to the Merger Date, beneficial ownership (within the meaning of Rule
13d-3 promulgated by the Securities and Exchange Commission under said Act) of
30% or more of the outstanding capital stock of the Company having voting power
in the general election of directors or (ii) on or after the Merger Date,
beneficial ownership of 30% (within the meaning of Rule 13d-3 promulgated by the
Securities and Exchange Commission under said Act) or more of the outstanding
capital stock of Holdings having voting power in the general election of
directors, but excluding (x) in the case of clauses (i) and (ii), any Person or
group of Persons who are officers, directors or employees of the Company or any
Subsidiary as of the date hereof or are related by blood or marriage to the
descendants of James F. or John C. Lincoln, and any trusts or similar
arrangements for any of the foregoing and any foundations established by any of
the foregoing and (y) in the case of clause (ii), pursuant to the Merger or (B)
at any time after the Merger Date, Holdings shall cease to own 100% of the
capital stock of the Company;"
SECTION 4. Governing Law. This Amendment shall be governed by and
construed in accordance with the laws of the State of New York.
SECTION 5. Counterparts; Effectiveness. This Amendment may be signed in
any number of counterparts, each of which shall be an original, with the same
effect as if the signatures thereto and hereto were upon the same instrument.
This Amendment shall become effective as of the date hereof when the Agent shall
have received duly executed counterparts hereof signed by the Company and the
Required Banks (or, in the case of any party as to which an executed counterpart
shall not have been received, the Agent shall have received telegraphic, telex
or other written confirmation from such party of execution of a counterpart
hereof by such party).
3
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
duly executed as of the date first above written.
THE LINCOLN ELECTRIC COMPANY
By /s/ H. Jay Elliott
--------------------------------
Name:
Title:
KEYBANK NATIONAL ASSOCIATION
By /s/
---------------------------------
Title: Vice President
MORGAN GUARANTY TRUST
COMPANY OF NEW YORK
By
---------------------------------
Title:
NBD BANK
By
---------------------------------
Title:
NATIONAL CITY BANK
By
---------------------------------
Title:
4
ABN AMRO BANK N.V.
By /s/ Roy D. Hasbrook
---------------------------------
Title: Roy D. Hasbrook
Group Vice President and
Director
By /s/ Louis K. McLinden, Jr.
---------------------------------
Title: Louis K. McLinden, Jr.
Vice President
BANK OF AMERICA NATIONAL
TRUST AND SAVINGS
ASSOCIATION, successor by merger to
BANK OF AMERICA ILLINOIS
By
---------------------------------
Title:
CIBC INC.
By
---------------------------------
Title:
5
CREDIT LYONNAIS CAYMAN
ISLAND BRANCH
By
---------------------------------
Title:
CREDIT LYONNAIS CHICAGO
BRANCH
BY /s/ Lee E. Greve
---------------------------------
Title: LEE E. GREVE
FIRST VICE PRESIDENT
PNC BANK, NATIONAL ASSOCIATION
By
--------------------------------
Title:
6
[EXECUTION COPY]
AMENDMENT NO. 3 TO CREDIT AGREEMENT
AMENDMENT dated as of October 23, 1998 (this "Amendment") among THE
LINCOLN ELECTRIC COMPANY (the "Company"), the BANKS listed on the signature
pages hereof (the "Banks") and KEYBANK NATIONAL ASSOCIATION, as Agent (the
"Agent").
WITNESSETH:
WHEREAS, the parties hereto have heretofore entered into a Credit
Agreement dated as of December 20, 1995 (as amended from time to time, the
"Credit Agreement"); and
WHEREAS, Lincoln Electric Holdings, Inc. ("Holdings") and the Company
intend to consummate a reorganization of the corporate structure of the Company
and its Subsidiaries (the "Reorganization") substantially on the terms described
in the Proxy Statement/Prospectus of the Company dated April 20, 1998, as in
effect on such date, and in the supplemental materials provided by the Company
to the Banks prior to the Amendment Effective Date (as defined in Section 8
hereof) related thereto (collectively, the "Reorganization Documents"); and
WHEREAS, pursuant to the Reorganization, the Company may transfer to
Holdings and/or to certain subsidiaries of Holdings (other than Subsidiaries)
all of the capital stock of the Subsidiaries listed on Schedule I hereto (the
"Disposed Subsidiaries") and all of the assets held by the Disposed
Subsidiaries, whether by asset transfer, merger, consolidation or otherwise,
substantially on the terms set forth in the Reorganization Documents; and
WHEREAS, the parties hereto desire to amend the Credit Agreement as set
forth below to permit such transfers;
NOW, THEREFORE, the parties hereto agree as follows:
SECTION 1. Definitions; Reference. Unless otherwise specifically
defined herein, each term used herein which is defined in the Credit Agreement
shall have the meaning assigned to such term in the Credit Agreement Each
reference to "hereof", "hereunder", "herein" and "hereby" and each other
similar reference and each reference to "this Credit Agreement" and each other
similar reference contained in the Credit Agreement shall from and after the
Amendment Effective Date refer to the Credit Agreement as amended hereby.
7
SECTION 2. Additional Definitions. New definitions of "Disposed
Subsidiaries", "Reorganization" and "Reorganization Documents" are added in
alphabetical order in Section 1.Ol of the Credit Agreement, to read in their
entirety as follows:
"Disposed Subsidiaries" means the Subsidiaries listed on Schedule I to
this Agreement.
"Reorganization" means the reorganization of the corporate structure of
the Company and its Subsidiaries substantially on the terms set forth in the
Reorganization Documents.
"Reorganization Documents" means the Proxy Statement/Prospectus of the
Company dated April 20, 1998, as in effect on such date, and the supplemental
materials provided by the Company to the Banks prior to the date of
effectiveness of Amendment NOT 3 to this Agreement dated as of October 23, 1998
among the Company, the Banks and the Agent.
SECTION 3. Amendment to the Conduct of Business and Maintenance of
Existence Covenant. The proviso set forth in Section 5.04 of the Credit
Agreement is hereby amended to read in its entirety as follows: ";provided that
nothing in this Section 5.04 shall prohibit (i) the merger or consolidation of
any Disposed Subsidiary with or into Holdings or any of its subsidiaries (other
than the Company and its Subsidiaries) in order to consummate the
Reorganization, (ii) the merger of a Subsidiary into the Company or the merger
or consolidation of a Subsidiary with or into another Person (other than any
such merger or consolidation described in clause (i) of this proviso) if the
corporation surviving such consolidation or merger is a Subsidiary and if in
each case, after giving effect thereto, no Default shall have occurred and be
continuing, (iii) the termination of the corporate existence of any Disposed
Subsidiary in connection with the Reorganization or (iv) the termination of the
corporate existence of any Subsidiary (other than as permitted by clause (iii)),
so long as such Subsidiary is not a Significant Subsidiary and so long as the
Company in good faith determines that such termination is in the best interest
of the Company and is not otherwise materially disadvantageous to the interests
of the Banks hereunder."
Section 4. Amendment to the Merger Covenant. Section 5.10(b) of the
Credit Agreement is hereby amended by adding the following proviso at the end of
the first sentence thereof: ";provided that any Borrower may transfer any
capital stock of any Disposed Subsidiary or any assets held by any Disposed
Subsidiary to Holdings or any of its subsidiaries (other than the Company or any
of its Subsidiaries) in order to consummate the Reorganization."
SECTION 5. Addition of a Schedule. A Schedule I is hereby added to the
Credit Agreement, to read in its entirety as set forth on Schedule I hereto.
SECTION 6. Licensing Agreements; No Defaults. (a) Prior to or
simultaneously with the transfer of capital stock of a Disposed Subsidiary or
the transfer of all or substantially all of the assets of a Disposed Subsidiary
to Holdings
2
8
or any of its subsidiaries (other than Subsidiaries), the Company shall have
entered into such licensing agreements and other agreements relating to the use
of the assets held by such Disposed Subsidiary as may be necessary or desirable
to ensure that the consummation of the Reorganization substantially on the terms
set forth in the Reorganization Documents will not have a material adverse
effect on the business, financial position, results of operations or prospects
of the Company and its Subsidiaries (other than Disposed Subsidiaries),
considered as a whole; provided that, in any event, prior to or simultaneously
with the transfer of ownership of the name "Lincoln" to Holdings or any of its
subsidiaries (other than Subsidiaries), the Company shall have entered into a
licensing agreement or other similar agreement granting the Company and its
Subsidiaries the use of the name "Lincoln".
(b) As of the Amendment Effective Date, no Default has occurred and is
continuing.
SECTION 7. Governing Law. This Amendment shall be governed by and
construed in accordance with the laws of the State of New York.
SECTION 8. Counterparts; Effectiveness This Amendment may be signed in
any number of counterparts, each of which shall be an original, with the same
effect as if the signatures thereto and hereto were upon the same instrument.
This Amendment shall become effective on the date (the "Amendment Effective
Date") on which each of the following conditions shall be satisfied:
(i) the Agent shall have received duly executed counterparts hereof
signed by the Company and the Required Banks (or, in the case of any party as to
which an executed counterpart shall not have been received, the Agent shall have
received telegraphic, telex or other written confirmation from such party of
execution of a counterpart hereof by such party);
(ii) the Banks shall have received the pro forma consolidated statement
of financial condition of the Company and its Consolidated Subsidiaries at
December 31, 1997 and the pro forma consolidated statement of income of the
Company and its Consolidated Subsidiaries for the fiscal year then ended, in
each case adjusted to give effect to the Reorganization as if the Reorganization
had been consummated substantially on the terms set forth in the Reorganization
Documents on December 31, 1997, in the case of such pro forma statement of
financial condition and on January 1, 1997, in the case of such pro forma
consolidated statement of income;
(iii) the fact that (x) on the basis of the pro forma consolidated
statement of financial condition described in clause (ii) above, the Company is
in compliance with the financial covenant set forth in Section 5.08 of the
Credit Agreement at June 30, 1998, after giving effect to any Debt outstanding
on the Amendment Effective Date and not reflected in such statement of financial
condition and(y) on the basis of the pro forma consolidated statement of income
described in clause (ii) above, the Company is in compliance with the financial
covenant set forth in
3
9
Section 5.07 of the Credit Agreement for the period of four consecutive fiscal
quarters ended June 30, 1998;
(iv) receipt by the Agent of evidence reasonably satisfactory to it
that the Company and the Prudential Insurance Company of America shall have
entered into an amendment to the Note Agreement dated as of November 1, 1991
with respect to the $75,000,000 8.73% Senior Notes Due 2003 of the Company in
form and substance reasonably satisfactory to the Agent;
(v) receipt by the Agent of a duly executed Election to Terminate with
respect to each Disposed Subsidiary that is a Borrower immediately prior to the
effectiveness of this Amendment (each, a "Disposed Borrower"); and
(vi) the fact that all Loans of each Disposed Borrower outstanding
immediately prior to the effectiveness of this Amendment shall have been repaid
in full, together with all accrued and unpaid interest thereon and all amounts
payable to any Bank with respect thereto pursuant to Section 2.12 of the Credit
Agreement.
4
10
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
duly executed.
THE LINCOLN ELECTRIC COMPANY
By /s/ A. A. Massaro
----------------------------------
Name: A. A. Massaro
Title: Chairman and CEO
By /s/ H. Jay Elliott
----------------------------------
Name: H. Jay Elliott
Senior Vice President
Title: Chief Financial Officer and Treasurer
KEYBANK NATIONAL ASSOCIATION
By
------------------------------------
Title:
MORGAN GUARANTY TRUST
COMPANY OF NEW YORK
By
------------------------------------
Title:
BANK ONE (formerly known as NBD
Bank)
By
------------------------------------
Title:
11
NATIONAL CITY BANK
By /s/
---------------------------------
Title:
ABN AMRO BANK N.V.
By
---------------------------------
Title:
By
---------------------------------
Title:
BANK OF AMERICA NATIONAL
TRUST AND SAVINGS
ASSOCIATION, successor by merger to
BANK OF AMERICA ILLINOIS
By
---------------------------------
Title:
CIBC INC.
By
---------------------------------
Title:
12
CREDIT LYONNAIS CAYMAN
ISLAND BRANCH
By
------------------------------
Title:
CREDIT LYONNAIS CHICAGO
BRANCH
By
------------------------------
Title:
PNC BANK, NATIONAL ASSOCIATION
By /s/
------------------------------
Title:
13
SCHEDULE I
DISPOSED SUBSIDIARIES
Lincoln Electric International Holding Co.
ASIA
Nippon Lincoln Electric K.K.
Lincoln Electric Asia Pacific Pte. Ltd.
PT L.E. Dharma Indonesia
Lincoln Electric Shanghai Holdings Pte. Ltd.
PT L.E. Austenite Indonesia
LE (Shanghai) Welding Co. Ltd.
Lincoln Electric Philippines Inc.
AUSTRALIA
The Lincoln Electric Company (Australia) Pty. Ltd.
The Lincoln Electric Company (New Zealand) Limited
Liquidarc Pty. Limited
EUROPE
Harris Calorific GmbH
Harris Calorific Limited
Harris Calorific SRL
Lincoln Electric Europe, Ltd (to be liquidated)
Lincoln Electric France SA
Lincoln Electric Italia SRL
Lincoln Electric (U.K.) Ltd
Lincoln KD S.A.
Lincoln Electric Norge AS
Lincoln Electric Europe BV
Lincoln Smitweld Belgium SA
Lincoln Smitweld BV
Lincoln Smitweld GmbH
Lincoln Electric Sverige AB
Sacit SRL
Lincoln Electric Company BV (to be liquidated)
14
Lincoln Electric Company GmbH (to be liquidated)
Askaynek (Turkey)
LATIN AMERICA
Champion Internacional S.A. de C.V.
Hirax Participacoes Ltda (to be liquidated)
Lincoln Electric do Brasil Ltda.
Lincoln do Brasil Industries E Comercio Ltda (to be liquidated)
Lincoln Electric Mexicana, S.A. de C.V.
Gardell Corporation (to be liquidated)
NORTH AMERICA
Harris Calorific Division ("Harris")
Lincoln Electric Company of Canada Limited ("Lincoln Canada")
Seal-Seat Division Assets ("Seal Seat")
Lincoln Venezuela Inc. (to be liquidated)
Lincoln Electric GmbH Inc. (to be liquidated)
Indalco Alloy
OTHERS
Any Subsidiaries (other than any Subsidiaries listed above (the "Listed
Subsidiaries")) existing on the date (the "Amendment Date") of effectiveness of
Amendment No.3 to the Credit Agreement dated as of October 23, 1998 among the
Company, the Banks and the Agent which, in the aggregate, do not, and would not,
constitute a "Significant Subsidiary" and (ii) any Subsidiary created after the
Amendment Date to facilitate the consummation of the Reorganization (but only so
long as the Company and its Subsidiaries transfer no assets (other than the
assets held by any Listed Subsidiary) to any such Subsidiary), including any
such Subsidiary to which all the welding technology held by the Company, Harris
and Seal Seat, along with the names "Lincoln", "Harris" and "Seal Seat", may be
transferred.