10-Q

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934

For the three months ended March 31, 2002 Commission File No. 0-1402

LINCOLN ELECTRIC HOLDINGS, INC.
(Exact name of registrant as specified in its charter)

Ohio	34-1860551
(State of incorporation)	(I.R.S. Employer Identification No.)
22801 St. Clair Avenue, Cleveland, Ohio	44117
(Address of principal executive offices)	(Zip Code)
(216) 481-8100
(Registrant’s telephone number, including area code)

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months, and (2) has been subject to such filing requirements for the past 90 days.

               Yes    X    No        

The number of shares outstanding of the issuer’s class of common stock as of March 31, 2002 was 42,291,221.

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TABLE OF CONTENTS

CONSOLIDATED STATEMENTS OF OPERATIONS
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED STATEMENTS OF CASH FLOWS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Part 1 – Item 2
	Management’s Discussion and Analysis of Financial Condition and Results of Operations
	Item 3. Market Risk
Part II – Other Information
SIGNATURE
EX-10(Q) - Note Purchase Agreement
EX-10(R) - Credit Agreement
EX-10(S) - Amended Deferred Compensation Plan
EX-10(T) - Amendment #1 Benefit Plan
EX-10(U) - Amended Supplemental Retirement Plan

LINCOLN ELECTRIC HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Amounts in thousands of dollars, except per share data)
(UNAUDITED)

			Three months ended March 31,
			2002			2001
Net sales			$	248,343		$	252,623
Cost of goods sold				174,295			169,190
Gross profit				74,048			83,433
Selling, general & administrative expenses				49,390			50,180
Rationalization charges (Note M)				10,468			—
Operating income				14,190			33,253
Other income / (expense):
		Interest income		301			238
		Other income (expense)		306			(247	)
		Interest expense		(1,476	)		(1,800	)
Total other income / (expense)				(869	)		(1,809	)
Income before income taxes				13,321			31,444
Income taxes				2,837			9,464
Income before the cumulative effect of a change in accounting principle				10,484			21,980
Cumulative effect of a change in accounting principle, net
	of tax (Note B)			(37,607	)		—
Net (loss) income			$	(27,123	)	$	21,980
Per share amounts:
Basic (loss) earnings per share
Earnings per share before the cumulative effect of a change in accounting principle			$	0.25		$	0.52
Cumulative effect of a change in accounting principle, net of tax (Note D)				(0.89	)		—
Basic (loss) earnings per share			$	(0.64	)	$	0.52
Diluted (loss) earnings per share
Earnings per share before the cumulative effect of a change in accounting principle			$	0.25		$	0.52
Cumulative effect of a change in accounting principle, net of tax (Note D)				(0.88	)		—
Diluted (loss) earnings per share			$	(0.63	)	$	0.52
Cash dividends declared per share			$	0.15		$	0.15

See notes to these consolidated financial statements.

2

LINCOLN ELECTRIC HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Amounts in thousands of dollars)

			March 31,		December 31,
			2002		2001
			(UNAUDITED)		(NOTE A)
ASSETS
CURRENT ASSETS
	Cash and cash equivalents		$	174,380	$	23,493
	Accounts receivable (less allowances of $4,992 in 2002; $4,551 in 2001)			167,817		154,094
	Inventories
		Raw materials and in-process		74,506		73,038
		Finished goods		92,956		91,465
				167,462		164,503
	Deferred income taxes			15,131		11,996
	Other current assets			18,975		23,589
TOTAL CURRENT ASSETS				543,765		377,675
PROPERTY, PLANT AND EQUIPMENT
	Land			12,489		12,210
	Buildings			136,124		134,981
	Machinery and equipment			435,580		435,074
				584,193		582,265
	Less: accumulated depreciation and amortization			316,272		311,294
				267,921		270,971
OTHER ASSETS
	Goodwill, net			4,270		40,416
	Prepaid pension costs			38,787		38,784
	Equity investments in affiliates			26,056		26,157
	Intangibles, net			6,666		5,846
	Other			28,118		21,462
				103,897		132,665
TOTAL ASSETS			$	915,583	$	781,311

See notes to these consolidated financial statements.

3

LINCOLN ELECTRIC HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Amounts in thousands of dollars, except share data)

			March 31,			December 31,
			2002			2001
			(UNAUDITED)			(NOTE A)
LIABILITIES AND SHAREHOLDERS’ EQUITY
CURRENT LIABILITIES
	Notes payable to banks		$	11,808		$	13,163
	Trade accounts payable			65,381			67,569
	Accrued employee compensation and benefits			39,036			26,456
	Accrued expenses			12,396			13,519
	Taxes, including income taxes			40,125			34,216
	Dividend payable			6,343			6,355
	Other current liabilities			28,649			22,788
	Current portion of long-term debt			13,432			13,434
TOTAL CURRENT LIABILITIES				217,170			197,500
Long-term debt, less current portion				172,903			24,181
Deferred income taxes				32,005			31,751
Other long-term liabilities				33,443			29,181
SHAREHOLDERS’ EQUITY
	Preferred Shares, without par value – at stated capital amount:
		Authorized – 5,000,000 shares in 2002 and 2001; Issued and outstanding – none		—			—
	Common Shares, without par value – at stated capital amount:
		Authorized – 120,000,000 shares in 2002 and 2001; Issued – 49,282,306 shares in 2002 and 2001; Outstanding – 42,291,221 shares in 2002 and 42,369,145 shares in 2001		4,928			4,928
	Additional paid-in capital			105,610			105,380
	Retained earnings			561,107			594,701
	Accumulated other comprehensive income (loss)			(69,647	)		(66,726	)
	Treasury shares, at cost – 6,991,085 shares in 2002 and 6,913,161 shares in 2001			(141,936	)		(139,585	)
TOTAL SHAREHOLDERS’ EQUITY				460,062			498,698
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY			$	915,583		$	781,311

See notes to these consolidated financial statements.

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LINCOLN ELECTRIC HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Amounts in thousands of dollars)
(UNAUDITED)

				Three months ended March 31,
				2002			2001
OPERATING ACTIVITIES
Net (loss) income				$	(27,123	)	$	21,980
Cumulative effect of a change in accounting principle, net of tax (See Note B)					37,607			—
Rationalization charges (see Note M)					10,468			—
Adjustments to reconcile net (loss) income to net cash provided by operating activities:
		Depreciation and amortization			8,976			8,923
		Gain on disposal of fixed assets			(19	)		(172	)
		Changes in operating assets and liabilities:
			(Increase) in accounts receivable		(14,559	)		(15,364	)
			(Increase) in inventories		(2,514	)		(11,271	)
			Decrease in other current assets		4,522			4,052
			(Decrease) increase in accounts payable		(2,756	)		5,832
			Increase (decrease) in other current liabilities		15,186			(598	)
			Gross change in other non-current assets and liabilities		(4,180	)		(412	)
			Other – net		2,138			1,301
NET CASH PROVIDED BY OPERATING ACTIVITIES					27,746			14,271
INVESTING ACTIVITIES
	Capital expenditures				(5,562	)		(7,784	)
	Acquisition				(8,009	)		—
	Proceeds from maturities of marketable securities				—			15
	Proceeds from sale of fixed assets				509			301
NET CASH USED BY INVESTING ACTIVITIES					(13,062	)		(7,468	)
FINANCING ACTIVITIES
	Proceeds from short-term borrowings				12,324			11,900
	Payments on short-term borrowings				(13,170	)		(11,773	)
	Notes payable to banks – net				(709	)		(2,457	)
	Proceeds from long-term borrowings				150,000			—
	Payments on long-term borrowings				(1,050	)		(573	)
	(Purchase) issuance of shares for treasury				(2,478	)		629
	Cash dividends paid				(6,355	)		(6,351	)
	Other				(73	)		—
NET CASH PROVIDED (USED) BY FINANCING ACTIVITIES					138,489			(8,625	)
Effect of exchange rate changes on cash and cash equivalents					(2,286	)		(387	)
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS					150,887			(2,209	)
Cash and cash equivalents at beginning of period					23,493			11,319
CASH AND CASH EQUIVALENTS AT END OF PERIOD				$	174,380		$	9,110

See notes to these consolidated financial statements.

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LINCOLN ELECTRIC HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
March 31, 2002

NOTE A – BASIS OF PRESENTATION

The accompanying unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, these consolidated financial statements do not include all of the information and notes required by accounting principles generally accepted in the United States for complete financial statements. However, in the opinion of management, these consolidated financial statements contain all the adjustments (consisting of normal recurring accruals) considered necessary to present fairly the financial position, results of operations and changes in cash flows for the interim periods. Operating results for the three-months ended March 31, 2002 are not necessarily indicative of the results to be expected for the year ending December 31, 2002.

The balance sheet at December 31, 2001 has been derived from the audited financial statements at that date, but does not include all of the information and notes required by accounting principles generally accepted in the United States for complete financial statements.

For further information, refer to the consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2001.

Certain amounts have been reclassified in order to conform to current year presentation.

NOTE B – CHANGE IN ACCOUNTING PRINCIPLE

Prior to January 1, 2002, the Company amortized goodwill on a straight line basis over periods not exceeding 40 years. Goodwill had previously been tested for impairment under the provisions of Financial Accounting Standards Board (FASB) Statement of Financial Accounting Standards (SFAS) No. 121, “Accounting for the Impairment of Long-lived Assets and Long-lived Assets to be Disposed of”. The Company previously evaluated goodwill for impairment by comparing the unamortized balance of goodwill to projected undiscounted cash flows, which did not indicate an impairment. Effective January 1, 2002, the Company adopted SFAS No. 142, “Goodwill and Other Intangible Assets”. SFAS No. 142 requires cessation of goodwill amortization and a fair value approach to testing the impairment of goodwill and other intangibles. Application of the nonamortization provisions of the Statement is expected to result in an increase in net income of approximately $1.6 million ($0.04 per share) per year. The Company has performed the required impairment tests of goodwill and indefinite lived intangible assets as of January 1, 2002. As a result of these impairment tests, including third-party valuations based on acquisition prices of comparable businesses, a non-cash impairment charge of $37.6 million or $0.88 per diluted share, net of tax benefits of $0.7 million, has been recorded as a cumulative effect of a change in accounting principle. This non-cash charge is primarily due to weak market conditions in the European region and the Company’s expectations of lower financial performance at these reporting units. The following table reflects net (loss) income adjusted to exclude amortization of goodwill and the cumulative effect of a change in accounting principle, net of tax, in the periods presented:

	For the Three Months Ended
	March 31,
($000’s, except for earnings per share amounts)	2002			2001
Net (loss) income, as reported	$	(27,123	)	$	21,980
Add: Goodwill amortization		—			427
Adjusted net (loss) income	$	(27,123	)	$	22,407
Add: Cumulative effect of a change in accounting principle, net of tax		37,607			—
Adjusted net income before the cumulative effect of a change in accounting principle	$	10,484		$	22,407

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NOTE B – CHANGE IN ACCOUNTING PRINCIPLE (continued)

	For the Three Months Ended
	March 31,
	2002			2001
Basic (Loss) Earnings Per Share:
Net (loss) income, as reported	$	(0.64	)	$	0.52
Add: Goodwill amortization		—			0.01
Adjusted net (loss) income		(0.64	)		0.53
Add: Cumulative effect of a change in accounting principle, net of tax		0.89			—
Adjusted net income before the cumulative effect of a change in accounting principle	$	0.25		$	0.53
Diluted (Loss) Earnings Per Share:
Net (loss) income, as reported	$	(0.63	)	$	0.52
Add: Goodwill amortization		—			0.01
Adjusted net (loss) income		(0.63	)		0.53
Add: Cumulative effect of a change in accounting principle, net of tax		0.88			—
Adjusted net income before the cumulative effect of a change in accounting principle	$	0.25		$	0.53

NOTE C – GOODWILL AND INTANGIBLE ASSETS

The changes in the carrying amount of net goodwill by segment for the three months ended March 31, 2002 are as follows:

	United						Other			Consolidated
(Dollars in thousands)	States			Europe			Countries			Total
Balance as of January 1, 2002	$	22,688		$	17,027		$	701		$	40,416
Foreign exchange effect on prior balances					(656	)		7			(649	)
Goodwill acquired during the period		—			2,145			665			2,810
Impairment loss from adoption of SFAS No. 142		(22,688	)		(14,812	)		(807	)		(38,307	)
Balance as of March 31, 2002	$	—		$	3,704		$	566		$	4,270

Gross intangible assets as of March 31, 2002 of $13,789 include accumulated amortization of $7,123. Aggregate amortization expense was $260 and $270 for the three months ended March 31, 2002 and 2001, respectively.

Estimated annual intangible amortization expense in each of the next five years ending December 31 will be approximately $900.

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NOTE D – (LOSS) EARNINGS PER SHARE

Basic and diluted (loss) earnings per share were computed as follows:

(Dollars and shares in thousands, except per share amounts)		Three months ended March 31,
		2002			2001
Numerator:
	Income before the cumulative effect of a change in accounting principle	$	10,484		$	21,980
	Cumulative effect of a change in accounting principle, net of tax		(37,607	)		—
	Net (loss) income	$	(27,123	)	$	21,980
Denominator:
	Denominator for basic earnings per share – Weighted-average shares outstanding		42,284			42,350
	Effect of dilutive securities – Employee stock options		451			199
	Denominator for diluted earnings per share – Adjusted weighted-average shares outstanding		42,735			42,549
Basic (loss) earnings per share
	Income before the cumulative effect of a change in accounting principle	$	0.25		$	0.52
	Cumulative effect of a change in accounting principle, net of tax		(0.89	)		—
	Basic (loss) earnings per share	$	(0.64	)	$	0.52
Diluted (loss) earnings per share
	Income before the cumulative effect of a change in accounting principle	$	0.25		$	0.52
	Cumulative effect of a change in accounting principle, net of tax		(0.88	)		—
	Diluted (loss) earnings per share	$	(0.63	)	$	0.52

NOTE E – COMPREHENSIVE (LOSS) INCOME

The components of comprehensive (loss) income are as follows:

		Three months ended March 31,
(Dollars in thousands)		2002			2001
Net (loss) income		$	(27,123	)	$	21,980
Other comprehensive (loss) income:
	Unrealized loss on derivatives designated and                      qualified as cash flow hedges, net of tax		(213	)		(72	)
	Change in currency translation adjustment		(2,708	)		(10,403	)
Comprehensive (loss) income		$	(30,044	)	$	11,505

NOTE F – INVENTORY VALUATION

The valuation of inventory under the Last-In, First-Out (LIFO) method is made at the end of each year based on inventory levels and costs at that time. Accordingly, interim LIFO calculations, by necessity, are based on estimates of expected year-end inventory levels and costs and are subject to final year-end LIFO inventory calculations.

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NOTE G – ACCRUED EMPLOYEE COMPENSATION AND BENEFITS

Accrued employee compensation and benefits at March 31, 2002 include provisions for year-end bonuses and related payroll taxes of approximately $13 million related to Lincoln employees worldwide. The payment of bonuses is discretionary and is subject to approval by the Board of Directors.

NOTE H – SEGMENT INFORMATION

(Dollars in thousands)			United				Other
			States		Europe		Countries		Eliminations			Consolidated
Three months ended March 31, 2002:
	Net sales to unaffiliated customers		$	155,576	$	50,392	$	42,375	$	—		$	248,343
	Inter-segment sales			15,322		2,701		7,862		(25,885	)		—
		Total	$	170,898	$	53,093	$	50,237	$	(25,885	)	$	248,343
	Income before interest and income taxes		$	9,359	$	2,258	$	2,198	$	681		$	14,496
	Interest income												301
	Interest expense												(1,476	)
	Income before income taxes											$	13,321
	Total assets		$	630,696	$	179,521	$	165,901	$	(60,535	)	$	915,583
Three months ended March 31, 2001:
	Net sales to unaffiliated customers		$	166,213	$	47,506	$	38,904	$	—		$	252,623
	Inter-segment sales			19,154		2,313		7,658		(29,125	)		—
		Total	$	185,367	$	49,819	$	46,562	$	(29,125	)	$	252,623
	Income before interest and income taxes		$	27,576	$	1,609	$	3,468	$	353		$	33,006
	Interest income												238
	Interest expense												(1,800	)
	Income before income taxes											$	31,444
	Total assets		$	518,216	$	173,465	$	180,731	$	(76,946	)	$	795,466

NOTE I – ACQUISITION

On January 16, 2002, the Company acquired 85% of Bester Spolka Akcyjna (“Bester”) for approximately $8 million. The results of Bester’s operations have been included in the consolidated financial statements since that date. Bester is a manufacturer of welding equipment and supplies located in Poland. This acquisition is expected to increase the Company’s market share while providing a strategic presence in Eastern Europe and a platform for global sourcing opportunities.

None of the goodwill is expected to be deductible for tax purposes. All of the Bester related goodwill is presented as part of the Europe segment in Note H.

NOTE J – NEW ACCOUNTING PRONOUNCEMENT

Effective January 1, 2002, the Company adopted SFAS No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets”. SFAS No. 144 supercedes SFAS No. 121, “Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of ” and Accounting Principles Board (APB) Opinion No. 30, “Reporting the Results of Operations — Reporting the Effects of Disposal of a Segment of a Business, and Extraordinary, Unusual and Infrequently Occurring Events”. SFAS No. 144 retains the requirements of SFAS No. 121 whereby an impairment loss is recognized if the carrying value of the asset is not recoverable from its undiscounted cash flows or fair values are less than carrying values. SFAS No. 144 broadens the scope of APB Opinion No. 30 provisions for the presentation of discontinued operations to include a component of an entity. The Statement requires that a component of an entity that is sold or is considered held for sale must be presented as a discontinued operation. In addition, expected future operating losses from

9

NOTE J – NEW ACCOUNTING PRONOUNCEMENT – (continued)

discontinued operations must be reflected in the periods incurred, rather than at the measurement date as previously required by APB Opinion No. 30. The adoption of this Statement did not have a material impact on the financial statements of the Company.

NOTE K – CONTINGENCIES

The Company is subject, from time to time, to a variety of civil and administrative proceedings arising out of its normal operations, including, without limitation, product liability claims and health, safety and environmental claims. The Company believes it has meritorious defenses to these claims and intends to contest such suits vigorously. All costs associated with these claims, including defense and settlements, have been immaterial to the Company’s consolidated financial statements. Based on the Company’s historical experience in litigating these claims, including a significant number of dismissals, summary judgments and defense verdicts in many cases and immaterial settlement amounts, as well as the Company’s current assessment of the underlying merits of the claims and applicable insurance, the Company believes resolution of these claims and proceedings, individually or in the aggregate, will not have a material adverse impact upon the Company’s consolidated financial statements.

NOTE L – LONG-TERM DEBT

During March 2002, the Company issued Senior Unsecured Notes (the “Notes”) totaling $150 million through a private placement. The Notes, as shown in the table below, have maturities ranging from five to ten years with a weighted average interest rate of 6.1% and an average tenure of eight years. Interest is payable semi-annually in March and September. The proceeds will be used for general corporate purposes, including acquisitions and to purchase shares under the share repurchase program. The Notes contain certain affirmative and negative covenants, including restrictions on asset dispositions and financial covenants (interest coverage and funded debt-to-EBITDA ratios). The Notes will not be and have not been registered under the Securities Act of 1933, as amended, and may not be offered or sold in the United States absent registration or an applicable exemption from registration requirements.

The maturity and interest rates of the Notes follow (in thousands):

	Amount Due		Matures	Interest Rate
Series A	$	40,000	March 2007		5.58	%
Series B	$	30,000	March 2009		5.89	%
Series C	$	80,000	March 2012		6.36	%

During March 2002, the Company entered into floating rate interest rate swap agreements with notional amounts totaling $80 million, to convert a portion of the outstanding Notes from fixed to floating rates based on six-month London Inter-bank Offered Rate (“LIBOR”), plus a spread of between 15.5 and 37.5 basis points. The variable rates are reset every six months, at which time payment or receipt of interest is settled. These swaps were designated as fair value hedges, and as such, the gain or loss on the derivative instrument as well as the offsetting gain or loss on the hedged item attributable to the hedged risk are recognized in earnings. Net payments or receipts under these agreements will be recognized as an adjustment to interest expense. The fair value of these swaps at March 31, 2002 was not material.

NOTE M – RATIONALIZATION CHARGES

During the first quarter of 2002, the Company recorded rationalization charges of $10.5 million ($7.0 million after-tax), or $0.16 per diluted share. The rationalization charges are principally related to a voluntary retirement program affecting approximately 3% of the Company’s U.S. workforce and asset impairment charges. Workforce reduction charges were $5.4 million, while non-cash asset impairment charges were $5.1 million.

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NOTE N – SUBSEQUENT EVENT

During April 2002, the Company replaced its prior committed revolving credit facility with a new three-year revolving Credit Agreement that provides up to $125 million in borrowings and expires in April 2005. This Credit Agreement may be used for general corporate purposes, including acquisitions. The interest rate on borrowings under the Credit Agreement is based on either the LIBOR plus a spread based on the Company’s leverage ratio or the prime rate, at the Company’s election. A facility fee is payable based upon the daily aggregate amount of commitments. The facility fee is based on the Company’s leverage ratio. The Credit Agreement provides for the issuance of Letters of Credit, subject to limits based on amounts outstanding under the Credit Agreement and is subject to the same covenants as the Notes (see Note L).

11

Part 1 – Item 2

Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following table sets forth the Company’s results of operations for the three-month periods ended March 31, 2002 and 2001:

	Three months ended March 31,
(dollars in millions)	2002						2001
	Amount			% of Sales			Amount			% of Sales
Net sales	$	248.4			100.0	%	$	252.6			100.0	%
Cost of goods sold		174.3			70.2	%		169.2			67.0	%
Gross profit		74.1			29.8	%		83.4			33.0	%
Selling, general & administrative expenses		49.4			19.9	%		50.2			19.9	%
Rationalization charges		10.5			4.2	%		—			—
Operating income		14.2			5.7	%		33.2			13.1	%
Interest income		0.3			0.1	%		0.2			0.1	%
Other income (expense)		0.3			0.1	%		(0.2	)		(0.1	%)
Interest expense		(1.5	)		(0.6	%)		(1.8	)		(0.7	%)
Income before income taxes		13.3			5.3	%		31.4			12.4	%
Income taxes		2.8			1.1	%		9.4			3.7	%
Income before cumulative effect of a change in accounting principle, net of tax	$	10.5			4.2	%	$	22.0			8.7	%
Cumulative effect of a change in accounting principle, net of tax		(37.6	)		(15.1	%)		—			—
Net (loss) income	$	(27.1	)		(10.9	)%	$	22.0			8.7	%

Three Months Ended March 31, 2002 Compared to Three Months Ended March 31, 2001

Net Sales. Net sales for the first quarter of 2002 were $248.4 million, a $4.2 million or 1.7% decline from $252.6 million last year. Net sales from U.S. operations were $155.6 million for the quarter, down 6.4% from $166.2 million for the first quarter last year. This decrease reflects lower U.S. demand in the industrial segment of the U.S. market. Export sales from the U.S. of $15.0 million were up $0.1 million, or 0.9% from last year. U.S. exports have increased into the regions of Asia and Latin America. Non-U.S. sales increased 7.4% to $92.8 million in the first quarter 2002, compared with $86.4 million last year. The strength of the U.S. dollar continues to have a negative impact on non-U.S. sales compared with last year. This negative impact on consolidated net sales was $3.2 million, or 1.3% for the quarter. In local currencies, European sales increased 9.9%. Excluding the results of Bester, which was acquired in January 2002, European sales increased 7.8% in local currencies. In the rest of the world, the Company’s sales increased 7.0% in local currencies. Excluding the results of Messer Soldaduras Venezuela, which was acquired in December 2001, rest of the world sales increased 1.6% in local currencies.

Gross Profit. Gross profit of $74.1 million for the first quarter 2002 declined 11.2%, or $9.3 million from last year. Gross profit as a percentage of net sales declined to 29.8% from 33.0%, compared with the first quarter last year. Gross profit margins in the U.S. declined because of lower sales volumes and lower overhead absorption due to lower plant utilization and continuing inventory reductions. Non-U.S. gross margins declined due to product mix and competitive pricing pressures.

Selling, General & Administrative (SG&A) Expenses. SG&A expenses decreased $0.8 million, or 1.6% to $49.4 million for the first quarter 2002, compared with $50.2 million for 2001. SG&A expense as a percentage of net sales remained flat at 19.9%. The reduction in SG&A expenses is due primarily to the non-amortization of goodwill. Goodwill amortization expense for the three months ended March 31, 2001 was $0.4 million. The Company expects a $1.6 million annual reduction in SG&A due to the adoption of SFAS No. 142, “Goodwill and Other Intangible Assets” (See Note B).

Rationalization Charges. During the first quarter of 2002, the Company recorded rationalization charges of $10.5 million ($7.0 million after-tax). The rationalization charges are principally related to a voluntary retirement program affecting approximately 3% of the Company’s U.S. workforce and asset impairment charges. Workforce reduction charges were $5.4 million, while non-cash asset impairment charges were $5.1 million. The Company anticipates this rationalization program will result in future annual cost savings of over $5 million.

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Interest Expense. Interest expense decreased to $1.5 million in the first quarter 2002 from $1.8 million for the same period last year. The decrease in interest expense was commensurate with a lower average debt balance in 2002, compared to the first quarter of 2001. In March 2002, the Company issued $150 million of Senior Unsecured Notes with a weighted average interest rate of 6.1% (see Note L). Also in March 2002, the Company entered into floating rate interest rate swaps with notional amounts totaling $80 million to effectively swap fixed interest rates with variable rates. The weighted average effective rate on the Notes for the first quarter was 4.27%.

Income Taxes. Income taxes for the first quarter 2002 were $2.8 million on income before income taxes of $13.3 million, an effective rate of 21.3%, as compared with income taxes of $9.4 million on income before income taxes of $31.4 million, or an effective rate of 30.1% for the same period in 2001. The decrease is due to the Company’s foreign operations and the tax effect of the rationalization charges.

Cumulative Effect of a Change in Accounting Principle. Prior to January 1, 2002, the Company amortized goodwill on a straight line basis over periods not exceeding 40 years. Goodwill had previously been tested for impairment under the provisions of Financial Accounting Standards Board (FASB) Statement of Financial Accounting Standards (SFAS) No. 121, “Accounting for the Impairment of Long-lived Assets and Long-lived Assets to be Disposed of ”. The Company previously evaluated goodwill for impairment by comparing the unamortized balance of goodwill to projected undiscounted cash flows, which did not indicate an impairment. Effective January 1, 2002, the Company adopted SFAS No. 142, “Goodwill and Other Intangible Assets”. SFAS No. 142 requires cessation of goodwill amortization and a fair value approach to testing the impairment of goodwill and other intangibles. Application of the nonamortization provisions of the Statement is expected to result in an increase in net income of approximately $1.6 million ($0.04 per share) per year.

The Company has applied the new rules on accounting for goodwill and other intangible assets prescribed under SFAS No. 142, “Goodwill and Other Intangible Assets”, beginning January 1, 2002 (see Note B). As a result of the initial tests performed by an independent third-party, the Company has recorded an impairment to goodwill of $37.6 million, net of tax. The Company previously evaluated goodwill for impairment by comparing the unamortized balance of goodwill to projected undiscounted cash flows, which did not indicate an impairment.

Net (Loss) Income. Net loss for the first quarter 2002 was $27.1 million compared to net income of $22.0 million last year. Diluted loss per share for 2002 was $0.63 per share compared to diluted earnings per share of $0.52 per share in 2001. Excluding the rationalization charges and the accounting change, net income would have been $17.5 million and diluted earnings per share would have been $0.41. The effect of foreign currency exchange rate movements on net income was not significant.

Liquidity and Capital Resources

Cash provided from operating activities for the three months ended March 31, 2002 was $27.7 million compared with $14.3 million for 2001. Higher cash flow from operations is due to the Company’s continuing focus and improvement on working capital management.

The Company’s ratio of total debt to total capitalization increased to 30.1% at March 31, 2002 from 9.2% at December 31, 2001. During March 2002, the Company issued Senior Unsecured Notes (the “Notes”) totaling $150 million through a private placement. Maturities and interest rates on the Notes are $40 million at 5.58% in 2007, $30 million at 5.89% in 2009 and $80 million at 6.36% in 2012. Interest is payable semi-annually in March and September. The proceeds will be used for general corporate purposes, including acquisitions and the purchase of shares under the share repurchase program. The Notes contain certain affirmative and negative covenants, including restrictions on asset dispositions and financial covenants (interest coverage and funded Debt-to-EBITDA ratios). The Notes will not be and have not been registered under the Securities Act of 1933, as amended, and may not be offered or sold in the United States absent registration or an applicable exemption from registration requirements.

During March 2002, the Company entered into floating rate interest rate swap agreements with notional amounts totaling $80 million, to convert a portion of the outstanding Notes from fixed to floating rates based on six-month LIBOR, plus a spread of between 15.5 and 37.5 basis points. The variable rates are reset every six months, at which time payment or receipt of interest is settled. These swaps were designated as fair value hedges, and as such, the gain or loss on the

13

derivative instrument as well as the offsetting gain or loss on the hedged item attributable to the hedged risk are recognized in earnings. Net payments or receipts under these agreements will be recognized as an adjustment to interest expense. The fair value of these swaps at March 31, 2002 was not material.

Capital expenditures decreased $2.2 million to $5.6 million in the first quarter of 2002, compared with $7.8 million in 2001.

On January 16, 2002, the Company acquired 85% of Bester Spolka Akcyjna (“Bester”). The results of Bester’s operations have been included in the consolidated financial statements since that date. Bester is a manufacturer of welding equipment and supplies located in Poland. This acquisition is expected to increase the Company’s market share while providing a strategic presence in Eastern Europe.

During the first quarter of 2002, the Company purchased 136,500 shares of its common stock on the open market at a cost of $3.4 million, bringing the total shares purchased to 7,375,959 at a cost of $149.0 million through March 31, 2002. The Company is authorized to purchase up to an additional 2,624,041 shares under the share repurchase program.

The Company paid cash dividends of $6.4 million or $0.15 per share during the first three months of 2002, the same as was paid in the first quarter of 2001. Cash dividends declared per share of $0.15 remained the same year-over-year.

The quarterly dividend of $0.15 per share was paid April 15, 2002, to holders of record on March 31, 2002.

NEW ACCOUNTING PRONOUNCEMENTS

Prior to January 1, 2002, the Company amortized goodwill on a straight line basis over periods not exceeding 40 years. Goodwill had previously been tested for impairment under the provisions of FASB SFAS No. 121, “Accounting for the Impairment of Long-lived Assets and Long-lived Assets to be Disposed of ”. The Company previously evaluated goodwill for impairment by comparing the unamortized balance of goodwill to projected undiscounted cash flows, which did not indicate an impairment. Effective January 1, 2002, the Company adopted SFAS No. 142, “Goodwill and Other Intangible Assets”. SFAS No. 142 requires cessation of goodwill amortization and a fair value approach to testing the impairment of goodwill and other intangibles. Application of the nonamortization provisions of the Statement is expected to result in an increase in net income of approximately $1.6 million ($0.04 per share) per year. The Company has performed the required impairment tests of goodwill and indefinite lived intangible assets as of January 1, 2002. As a result of these impairment tests, including third-party valuations based on comparable businesses, a non-cash impairment to goodwill of $37.6 million or $0.88 per diluted share, net of tax benefits of $0.7 million, has been recorded as a cumulative effect of a change in accounting principle.

Effective January 1, 2002, the Company adopted SFAS No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets”. SFAS No. 144 supercedes SFAS No. 121, “Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of ” and Accounting Principle Board (APB) Opinion No. 30, “Reporting the Results of Operations — Reporting the Effects of Disposal of a Segment of a Business, and Extraordinary, Unusual and Infrequently Occurring Events”. SFAS No. 144 retains the requirements of SFAS No. 121 whereby an impairment loss is recognized if the carrying value of the asset is not recoverable from its undiscounted cash flows or fair values are less than carrying values. SFAS No. 144 broadens the scope of APB Opinion No. 30 provisions for the presentation of discontinued operations to include a component of an entity. The Statement requires that a component of an entity that is sold or is considered held for sale must be presented as a discontinued operation. In addition, expected future operating losses from discontinued operations must be reflected in the periods incurred, rather than at the measurement date as previously required by APB Opinion No. 30. The effective date for the Company was January 1, 2002. The adoption of this Statement did not have a material impact on the financial statements of the Company.

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Certain Factors That May Affect Future Results

From time to time, information provided by the Company, statements by its employees or information included in its filings with the Securities and Exchange Commission (including those portions of this Management’s Discussion and Analysis that refer to the future) may contain forward-looking statements that are not historical facts. Those statements are “forward-looking” within the meaning of the Private Securities Litigation Reform Act of 1995. All such forward-looking statements involve risks and uncertainties. Such forward-looking statements, and the Company’s future performance, operating results, financial position and liquidity, are subject to a variety of factors that could materially affect future results, including:

• Competition. The Company operates in a highly competitive global environment and is subject to a variety of competitive factors such as pricing, the actions and strength of its competitors, and the Company’s ability to maintain its position as a recognized leader in welding technology. The intensity of foreign competition is substantially affected by fluctuations in the value of the United States dollar against other currencies. The Company’s competitive position could also be adversely affected should new or emerging entrants (particularly where foreign currencies have been significantly devalued) become more active in the arc welding business.

• International Markets. The Company’s long-term strategy is to increase its share in growing international markets, particularly Asia, Latin America, Central Europe and other developing markets. However, there can be no certainty that the Company will be successful in its expansion efforts. The Company is subject to the currency risks of doing business abroad, and the possible effects of international terrorism and hostilities. Moreover, international expansion poses challenging demands within the Company’s infrastructure.

• Cyclicality and Maturity of the Welding and Cutting Industry. The United States arc welding and cutting industry is both mature and cyclical. The growth of the domestic arc welding and cutting industry has been and continues to be constrained by numerous factors, including the substitution of plastics and other materials in place of fabricated metal parts in many products and structures. Increased offshore production of fabricated steel structures has also decreased the domestic demand for arc welding and cutting products in the Company’s largest market.

• Litigation. The Company, like other manufacturers, is subject in the U.S. market to a variety of product liability lawsuits and potential lawsuits that arise in the ordinary course of business. While past experience has generally shown these cases to be immaterial, product liability cases in the U.S. remain somewhat unpredictable.

• Operating Factors. The Company is highly dependent on its skilled workforce and efficient production facilities, which could be adversely affected by its labor relations, business interruptions at its domestic facilities and short-term or long-term interruptions in the availability of supplies or raw materials or in transportation of finished goods.

• Research and Development. The Company’s continued success depends, in part, on its ability to continue to meet customer welding needs through the introduction of new products and the enhancement of existing product design and performance characteristics. There can be no assurances that new products or product improvements, once developed, will meet with customer acceptance and contribute positively to the operating results of the Company, or that product development will continue at a pace to sustain future growth.

The above list of factors that could materially affect the Company’s future results is not all inclusive. Any forward-looking statements reflect only the beliefs of the Company or its management at the time the statement is made.

Item 3. Market Risk

The Company’s primary financial market risks include fluctuations in currency exchange rates, commodity prices and interest rates. The Company manages these risks by using derivative financial instruments in accordance with established policies and procedures. The Company does not enter into derivatives or other financial instruments for trading or speculative purposes.

The Company enters into forward foreign exchange contracts principally to hedge the currency fluctuations in transactions denominated in foreign currencies, thereby limiting the Company’s risk that would otherwise result from

15

changes in exchange rates. During the first quarter of 2002, the principal transactions hedged were intercompany loans and intercompany purchases. The periods of the forward foreign exchange contracts correspond to the periods of the hedged transactions. Gains and losses on forward foreign exchange contracts and the offsetting losses and gains on hedged transactions are reflected in the income statement. At March 31, 2002, the Company had approximately $34 million notional amount of foreign exchange contracts which primarily hedged recorded balance sheet exposures or intercompany purchases. The potential loss from a hypothetical 10% adverse change in foreign currency rates on the Company’s open foreign exchange contracts at March 31, 2002 would not materially affect the Company’s financial statements.

From time to time, the Company uses various hedging arrangements to manage the Company’s exposure to price risk from commodity purchases. The primary commodities hedged are aluminum and copper. These hedging arrangements have the effect of locking in for specified periods (at predetermined prices or ranges of prices) the prices the Company will pay for the volume to which the hedge relates. The potential loss from a hypothetical 10% adverse change in commodity prices on the Company’s open commodity futures at March 31, 2002, would not materially affect the Company’s financial statements.

The fair value of the Company’s cash and cash equivalents at March 31, 2002, approximated carrying value due to its short-term duration. Market risk was estimated as the potential decrease in fair value resulting from a hypothetical 10% increase in interest rates for the issues contained in the investment portfolio and was not materially different from the year-end carrying value.

The Company uses floating rate swaps to convert a portion of its $150 million fixed-rate, long-term borrowings (the Senior Unsecured Notes) into short-term variable interest rates. The weighted average interest rate on the Senior Unsecured Notes is 6.1% and the average maturity is eight years. At March 31, 2002, the Company’s interest rate swaps had a notional amount of $80 million with no significant fair value. The weighted average effective rate on the Senior Unsecured Notes with the interest rate swaps was 4.27% for the first quarter of 2002. A hypothetical decrease of 1% in the floating rate would not materially affect the Company’s financial statements.

At March 31, 2002, the fair value of Notes payable to banks approximated carrying value due to its short-term maturities. Market risk was estimated as the potential increase in fair value resulting from a hypothetical 10% decrease in the Company’s weighted-average short-term borrowing rate at March 31, 2002, and was not materially different from the year-end carrying value.

Part II – Other Information

Item 1. Legal Proceedings

The Company is subject, from time to time, to a variety of civil and administrative proceedings arising out of its normal operations, including, without limitation, product liability claims and health, safety and environmental claims. Among such proceedings are the cases described below.

At March 31, 2002, the Company was a co-defendant in cases alleging asbestos induced illness involving claims by approximately 26,010 plaintiffs, which is a net increase of 1,330 claims from those previously reported. In each instance, the Company is one of a large number of defendants. The asbestos claimants seek compensatory and punitive damages, in most cases for unspecified sums. The Company has been a co-defendant in other similar cases that have been resolved over the last 5 years involving 9,773 claimants. 9,690 of those claims were dismissed, eight were tried to defense verdicts and 75 were decided in favor of the Company following summary judgment motions.

At March 31, 2002, the Company was a co-defendant in twelve cases involving plaintiffs alleging that exposure to manganese contained in welding consumables caused the plaintiffs to develop adverse neurological conditions, including a condition known as manganism. Ten of these cases were previously reported. Eleven of the pending cases are in state court in three jurisdictions. The twelfth case, initially pending in state court in Mississippi, has been removed to federal court. The plaintiffs seek compensatory and, in most instances, punitive damages, usually for unspecified sums. The Company has been a co-defendant in 36 other similar cases during the last five years. Nineteen of those cases were dismissed, five were tried to defense verdicts in favor of the Company and twelve were settled.

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Item 2.	Changes in Securities – None.
Item 3.	Defaults Upon Senior Securities – None.
Item 4.	Submission of Matters to a Vote of Security Holders – None.
Item 5.	Other Information – None.
Item 6.	Exhibits and Reports on Form 8-K
	Form 8-K filed on February 12, 2002 relating to the private placement of Senior Unsecured Notes by the Company, incorporated herein by reference and made a part of hereof.
	10(q)	Note Purchase Agreement dated March 12, 2002 between Lincoln Electric Holdings, Inc. and The Lincoln Electric Company and the Purchasers listed in Schedule A thereof.
	10(r)	Credit Agreement dated April 24, 2002 among Lincoln Electric Holdings, Inc., The Lincoln Electric Company, Lincoln Electric International Holding Company, Harris Calorific, Inc. and Lincoln Global, Inc. and the financial institutions listed in Annex A thereof, and KeyBank National Association, as Letter of Credit Issuer and Agent.
	10(s)	Amended and Restated Lincoln Electric Holdings, Inc. Deferred Compensation Plan dated January 1, 2002.
	10(t)	Amendment No. 1 to The Lincoln Electric Company Executive Benefit Plan dated January 1, 2002.
	10(u)	Amended and Restated Lincoln Electric Holdings, Inc. Supplemental Executive Retirement Plan dated March 1, 2002.

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

LINCOLN ELECTRIC HOLDINGS, INC.

/s/ H. JAY ELLIOTT

H. Jay Elliott
Senior Vice President,
Chief Financial Officer and Treasurer

May 14, 2002

17 EX-10.Q 3 l94043aex10-q.txt EX-10(Q) - NOTE PURCHASE AGREEMENT Exhibit 10(q) ================================================================================ LINCOLN ELECTRIC HOLDINGS, INC. THE LINCOLN ELECTRIC COMPANY $40,000,000 5.58% Senior Notes, Series A, due March 12, 2007 $30,000,000 5.89% Senior Notes, Series B, due March 12, 2009 and $80,000,000 6.36% Senior Notes, Series C, due March 12, 2012 ---------------- NOTE PURCHASE AGREEMENT ---------------- Dated as of March 12, 2002 ================================================================================ TABLE OF CONTENTS SECTION HEADING PAGE SECTION 1. AUTHORIZATION OF NOTES..............................................1 SECTION 2. SALE AND PURCHASE OF NOTES..........................................2 SECTION 3. CLOSING.............................................................2 SECTION 4. CONDITIONS TO CLOSING...............................................2 Section 4.1. Representations and Warranties......................................2 Section 4.2. Performance; No Default.............................................3 Section 4.3. Compliance Certificates.............................................3 Section 4.4. Opinions of Counsel.................................................3 Section 4.5. Purchase Permitted by Applicable Law, etc...........................3 Section 4.6. Sale of Other Notes.................................................3 Section 4.7. Payment of Special Counsel Fees.....................................4 Section 4.8. Private Placement Number............................................4 Section 4.9. Changes in Corporate Structure......................................4 Section 4.10. Proceedings and Documents...........................................4 Section 4.11. Funding Instructions................................................4 SECTION 5. REPRESENTATIONS AND WARRANTIES OF THE OBLIGORS......................4 Section 5.1. Organization; Power and Authority...................................4 Section 5.2. Authorization, etc..................................................5 Section 5.3. Disclosure..........................................................5 Section 5.4. Organization and Ownership of Shares of Subsidiaries................5 Section 5.5. Financial Statements................................................6 Section 5.6. Compliance with Laws, Other Instruments, etc........................6 Section 5.7. Governmental Authorizations, etc....................................6 Section 5.8. Litigation; Observance of Statutes and Orders.......................6 Section 5.9. Taxes...............................................................7 Section 5.10. Title to Property; Leases...........................................7 Section 5.11. Licenses, Permits, etc..............................................7 Section 5.12. Compliance with ERISA...............................................7 Section 5.13. Private Offering by the Obligors....................................8 Section 5.14. Use of Proceeds; Margin Regulations.................................9 Section 5.15. Existing Indebtedness...............................................9 Section 5.16. Foreign Assets Control Regulations, etc.............................9 Section 5.17. Status under Certain Statutes.......................................9 Section 5.18. Existing Investments...............................................10 SECTION 6. REPRESENTATIONS OF THE PURCHASER...................................10 -i- Section 6.1. Purchase for Investment............................................10 Section 6.2. Source of Funds....................................................10 SECTION 7. INFORMATION AS TO OBLIGORS.........................................11 Section 7.1. Financial and Business Information.................................11 Section 7.2. Officer's Certificate..............................................15 Section 7.3. Inspection.........................................................15 SECTION 8. PREPAYMENT OF THE NOTES............................................16 Section 8.1. Required Prepayments...............................................16 Section 8.2. Optional Prepayments with Make-Whole Amount........................16 Section 8.3. Prepayment of Notes upon Change of Control.........................16 Section 8.4. Allocation of Partial Prepayments..................................18 Section 8.5. Maturity; Surrender, etc...........................................18 Section 8.6. Purchase of Notes..................................................18 Section 8.7. Make-Whole Amount..................................................18 SECTION 9. AFFIRMATIVE COVENANTS..............................................20 Section 9.1. Compliance with Law................................................20 Section 9.2. Insurance..........................................................20 Section 9.3. Maintenance of Properties..........................................20 Section 9.4. Payment of Taxes...................................................21 Section 9.5. Corporate Existence, etc...........................................21 Section 9.6. Notes to Rank Pari Passu...........................................21 Section 9.7. Ownership of the Company...........................................21 Section 9.8. Changes in Status of Subsidiaries..................................21 SECTION 10. NEGATIVE COVENANTS.................................................22 Section 10.1. Transactions with Affiliates.......................................22 Section 10.2. Fixed Charges Coverage Ratio.......................................22 Section 10.3. Leverage Ratio.....................................................22 Section 10.4. Priority Debt......................................................23 Section 10.5. Investments........................................................23 Section 10.6. Mergers, Consolidations and Sales of Assets........................24 Section 10.7. Limitation on Liens................................................28 Section 10.8. Sale-and-Leaseback Transactions....................................30 SECTION 11. EVENTS OF DEFAULT..................................................30 SECTION 12. REMEDIES ON DEFAULT, ETC...........................................32 Section 12.1. Acceleration.......................................................32 Section 12.2. Other Remedies.....................................................33 Section 12.3. Rescission.........................................................33 -ii- Section 12.4. No Waivers or Election of Remedies, Expenses, etc..................34 SECTION 13. REGISTRATION; EXCHANGE; SUBSTITUTION OF NOTES......................34 Section 13.1. Registration of Notes..............................................34 Section 13.2. No Transfers of Notes to Competitors; Transfer and Exchange of Notes.............................................34 Section 13.3. Replacement of Notes...............................................35 SECTION 14. PAYMENTS ON NOTES..................................................35 Section 14.1. Place of Payment...................................................35 Section 14.2. Home Office Payment................................................35 SECTION 15. EXPENSES, ETC......................................................36 Section 15.1. Transaction Expenses...............................................36 Section 15.2. Survival...........................................................36 SECTION 16. SURVIVAL OF REPRESENTATIONS AND WARRANTIES; ENTIRE AGREEMENT.......36 SECTION 17. AMENDMENT AND WAIVER...............................................37 Section 17.1. Requirements.......................................................37 Section 17.2. Solicitation of Holders of Notes...................................37 Section 17.3. Binding Effect, etc................................................38 Section 17.4. Notes Held by the Obligors, etc....................................38 SECTION 18. NOTICES............................................................38 SECTION 19. REPRODUCTION OF DOCUMENTS..........................................39 SECTION 20. CONFIDENTIAL INFORMATION...........................................39 SECTION 21. SUBSTITUTION OF PURCHASER..........................................40 SECTION 22. MISCELLANEOUS......................................................40 Section 22.1. Successors and Assigns.............................................40 Section 22.2. Payments Due on Non-Business Days..................................40 Section 22.3. Severability.......................................................41 Section 22.4. Construction.......................................................41 Section 22.5. Counterparts.......................................................41 Section 22.6. Governing Law......................................................41 Section 22.7. Consent to Jurisdiction and Service of Process.....................41 -iii- SCHEDULE A -- INFORMATION RELATING TO PURCHASERS SCHEDULE B -- DEFINED TERMS SCHEDULE 5.3 -- Disclosure Materials SCHEDULE 5.4 -- Subsidiaries of the Obligors and Ownership of Subsidiary Stock SCHEDULE 5.5 -- Financial Statements SCHEDULE 5.8 -- Certain Litigation SCHEDULE 5.11 -- Patents, etc. SCHEDULE 5.14 -- Use of Proceeds SCHEDULE 5.15 -- Existing Indebtedness SCHEDULE 5.18 -- Existing Investments EXHIBIT 1-A -- Form of 5.58% Senior Note, Series A, due March 12, 2007 EXHIBIT 1-B -- Form of 5.89% Senior Note, Series B, due March 12, 2009 EXHIBIT 1-C -- Form of 6.36% Senior Note, Series C, due March 12, 2012 EXHIBIT 4.4(a) -- Description of Opinion of Counsel to the Obligors EXHIBIT 4.4(b) -- Description of Opinion of Special Counsel to the Purchasers -iv- LINCOLN ELECTRIC HOLDINGS, INC. THE LINCOLN ELECTRIC COMPANY 22801 SAINT CLAIR AVENUE CLEVELAND, OH 44117-1199 $40,000,000 5.58% Senior Notes, Series A, due March 12, 2007 $30,000,000 5.89% Senior Notes, Series B, due March 12, 2009 and $80,000,000 6.36% Senior Notes, Series C, due March 12, 2012 Dated as of March 12, 2002 TO EACH OF THE PURCHASERS LISTED IN THE ATTACHED SCHEDULE A: Ladies and Gentlemen: LINCOLN ELECTRIC HOLDINGS, INC., an Ohio corporation ("Holdings") and THE LINCOLN ELECTRIC COMPANY, an Ohio corporation (the "Company", and together with Holdings are each hereinafter referred to as an "Obligor" and collectively as the "Obligors"), jointly and severally agree with the Purchasers named on Schedule A hereto as follows: SECTION 1. AUTHORIZATION OF NOTES. The Obligors will authorize the issue and sale of (i) $40,000,000 aggregate principal amount of their 5.58% Senior Notes, Series A, due March 12, 2007, (ii) $30,000,000 aggregate principal amount of their 5.89% Senior Notes, Series B, due March 12, 2009, and (iii) $80,000,000 aggregate principal amount of their 6.36% Senior Notes, Series C, due March 12, 2012 (respectively, the "Series A Notes", "Series B Notes" and the "Series C Notes", each being a "Series" of Notes and collectively the "Notes", such term to include any such notes issued in substitution therefor pursuant to Section 13 of this Agreement). The Series A Notes shall be substantially in the form set out in Exhibit 1-A, the Series B Notes shall be substantially in the form set out in Exhibit 1-B and the Series C Notes shall be substantially in the form set out in Exhibit 1-C, in each case, with such changes therefrom, if any, as may be approved by each of the Purchasers and the Obligors. Certain capitalized terms used in this Agreement are defined in Schedule B; references to a "Schedule" or an "Exhibit" are, unless otherwise specified, to a Schedule or an Exhibit attached to this Agreement. Lincoln Electric Holdings, Inc. Note Purchase Agreement The Lincoln Electric Company SECTION 2. SALE AND PURCHASE OF NOTES. Subject to the terms and conditions of this Agreement, the Obligors will issue and sell to each Purchaser and such Purchaser will purchase from the Obligors, at the Closing provided for in Section 3, Notes in the principal amount and of the Series specified opposite such Purchaser's name in Schedule A at the purchase price of 100% of the principal amount thereof. The obligations of each of the Purchasers under this Agreement are several and not joint obligations and no Purchaser shall have any obligation under this Agreement nor any liability to any Person for the performance or nonperformance by any other Purchaser hereunder. SECTION 3. CLOSING. The sale and purchase of the Notes to be purchased by the Purchasers shall occur at the offices of Chapman and Cutler, 111 West Monroe Street, Chicago, Illinois 60603, at 10:00 A.M. Chicago time, at a closing (the "Closing") on March 12, 2002 or on such other Business Day thereafter on or prior to March 29, 2002 as may be agreed upon by the Obligors and each of the Purchasers. At the Closing the Obligors will deliver to each Purchaser the Notes of each Series to be purchased by such Purchaser in the form of a single Note of such Series (or such greater number of Notes in denominations of at least $100,000 as such Purchaser may request) dated the date of the Closing and registered in such Purchaser's name (or in the name of its nominee), against delivery by such Purchaser to the Obligors or their order of immediately available funds in the amount of the purchase price therefor by wire transfer of immediately available funds for the account of the Obligors. If at the Closing the Obligors shall fail to tender such Notes to any Purchaser as provided above in this Section 3, or any of the conditions specified in Section 4 shall not have been fulfilled to any Purchaser's satisfaction, such Purchaser shall, at its election, be relieved of all further obligations under this Agreement, without thereby waiving any rights it may have by reason of such failure or such nonfulfillment. SECTION 4. CONDITIONS TO CLOSING. Each Purchaser's obligation to purchase and pay for the Notes to be sold to such Purchaser at the Closing is subject to the fulfillment to such Purchaser's reasonable satisfaction, prior to or at the Closing, of the following conditions: Section 4.1. Representations and Warranties. The representations and warranties of the Obligors in this Agreement shall be correct when made and at the time of the Closing (or if such representation or warranty is expressly stated to have been made as of a specific date, at such specific date). Section 4.2. Performance; No Default. Each of the Obligors shall have performed and complied with all agreements and conditions contained in this Agreement required to be performed or complied with by it prior to or at the Closing, and after giving effect to the issue and sale of the Notes (and the application of the proceeds thereof as contemplated by Schedule 5.14), no Default or Event of Default shall have occurred and be continuing. -2- Lincoln Electric Holdings, Inc. Note Purchase Agreement The Lincoln Electric Company Section 4.3. Compliance Certificates. (a) Officer's Certificate. Each of the Obligors shall have delivered to such Purchaser an Officer's Certificate, dated the date of the Closing, certifying that the conditions specified in Sections 4.1, 4.2 and 4.9 have been fulfilled. (b) Secretary's Certificate. Each of the Obligors shall have delivered to such Purchaser a certificate certifying as to the resolutions attached thereto and other corporate proceedings relating to the authorization, execution and delivery of the Notes and this Agreement. Section 4.4. Opinions of Counsel. Such Purchaser shall have received opinions in form and substance reasonably satisfactory to such Purchaser, dated the date of the Closing (a) from Jones, Day, Reavis & Pogue, special counsel for the Obligors, and from Frederick G. Stueber, Esq., Senior Vice President, General Counsel and Secretary of each of the Obligors, collectively covering the matters set forth in Exhibit 4.4(a) (and the Obligors hereby instruct their counsel to deliver such opinions to such Purchaser) and (b) from Chapman and Cutler, the Purchasers' special counsel in connection with such transactions, substantially in the form set forth in Exhibit 4.4(b) and covering such other matters incident to such transactions as such Purchaser may reasonably request. Section 4.5. Purchase Permitted by Applicable Law, etc. On the date of the Closing such Purchaser's purchase of Notes shall (i) be permitted by the laws and regulations of each jurisdiction to which such Purchaser is subject, without recourse to provisions (such as Section 1405(a)(8) of the New York Insurance Law) permitting limited investments by insurance companies without restriction as to the character of the particular investment, (ii) not violate any applicable law or regulation (including, without limitation, Regulation T, U or X of the Board of Governors of the Federal Reserve System) and (iii) not subject such Purchaser to any tax, penalty or liability under or pursuant to any applicable law or regulation, which law or regulation was not in effect on the date hereof. Section 4.6. Sale of Other Notes. Contemporaneously with the Closing, the Obligors shall sell to each of the Purchasers, and each of the Purchasers shall purchase, the Notes to be purchased by it at the Closing as specified in Schedule A. Section 4.7. Payment of Special Counsel Fees. Without limiting the provisions of Section 15.1, the Obligors shall have paid on or before the Closing the fees, charges and disbursements of Purchasers' special counsel referred to in Section 4.4 to the extent reflected in a statement of such counsel rendered to the Obligors at least one Business Day prior to the Closing. Section 4.8. Private Placement Number. A Private Placement number issued by Standard & Poor's CUSIP Service Bureau (in cooperation with the Securities Valuation Office of the National Association of Insurance Commissioners) shall have been obtained for each Series of Notes. -3- Lincoln Electric Holdings, Inc. Note Purchase Agreement The Lincoln Electric Company Section 4.9. Changes in Corporate Structure. No Obligor shall have changed its jurisdiction of incorporation or been a party to any merger or consolidation and no Obligor shall have succeeded to all or any substantial part of the liabilities of any other entity, at any time following the date of the most recent financial statements referred to in Schedule 5.5. Section 4.10. Proceedings and Documents. All corporate and other proceedings in connection with the transactions contemplated by this Agreement and all documents and instruments incident to such transactions shall be satisfactory to such Purchaser and Purchasers' special counsel, and such Purchaser and Purchasers' special counsel shall have received all such counterpart originals or certified or other copies of such documents as such Purchaser or such Purchaser's special counsel may reasonably request. Section 4.11. Funding Instructions. At least three Business Days prior to the date of such Closing, such Purchaser shall have received written instructions executed by a Responsible Officer of each of the Obligors directing the manner of the payment of funds and setting forth (a) the name and address of the transferee bank, (b) such transferee bank's ABA number, (c) the account name and number into which the purchase price for the Notes is to be deposited, and (d) the name and telephone number of the account representative responsible for verifying receipt of such funds. SECTION 5. REPRESENTATIONS AND WARRANTIES OF THE OBLIGORS. Each Obligor, jointly and severally, represents and warrants to each of the Purchasers that: Section 5.1. Organization; Power and Authority. Each Obligor is a corporation duly organized, validly existing and in good standing under the laws of its jurisdiction of incorporation, and is duly qualified as a foreign corporation and is in good standing in each jurisdiction in which such qualification is required by law, other than those jurisdictions as to which the failure to be so qualified or in good standing would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect. Each Obligor has the corporate power and authority to own or hold under lease the properties it purports to own or hold under lease, to transact the business it transacts and proposes to transact, to execute and deliver this Agreement and the Notes and to perform the provisions hereof and thereof. Section 5.2. Authorization, etc. This Agreement and the Notes have been duly authorized by all necessary corporate action on the part of each Obligor, and this Agreement constitutes, and upon execution and delivery thereof each Note will constitute, a legal, valid and binding obligation of each Obligor enforceable against such Obligor in accordance with its terms, except as such enforceability may be limited by (i) applicable bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting the enforcement of creditors' rights generally and (ii) general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law). -4- Lincoln Electric Holdings, Inc. Note Purchase Agreement The Lincoln Electric Company Section 5.3. Disclosure. The Obligors, through their agent, PNC Capital Markets, Inc., have delivered to each of the Purchasers a copy of a Confidential Offering Memorandum, dated January, 2002 (the "Memorandum"), relating to the transactions contemplated hereby. Except as disclosed in Schedule 5.3, this Agreement, the Memorandum, the documents, certificates or other writings identified in Schedule 5.3 and the financial statements listed in Schedule 5.5, taken as a whole, do not contain any untrue statement of a material fact or omit to state any material fact necessary to make the statements therein not misleading in light of the circumstances under which they were made. Except as disclosed in the Memorandum or as expressly described in Schedule 5.3, or in the financial statements listed in Schedule 5.5, since December 31, 2001, there has been no change in the financial condition, operations, business or properties of Holdings or any of its Restricted Subsidiaries except changes that individually or in the aggregate would not reasonably be expected to have a Material Adverse Effect. Section 5.4. Organization and Ownership of Shares of Subsidiaries. (a) Schedule 5.4 is (except as noted therein) a complete and correct list of each Obligor's Subsidiaries, showing, as to each Subsidiary (i) the correct name thereof, (ii) the jurisdiction of its organization and (iii) the percentage of shares of each class of its capital stock or similar equity interests outstanding owned by each Obligor and each other Subsidiary. All Subsidiaries of the Obligors on the date of the Closing are Restricted Subsidiaries. (b) All of the outstanding shares of capital stock or similar equity interests of each Subsidiary shown in Schedule 5.4 as being owned by the Obligors and their Subsidiaries have been validly issued, are fully paid and nonassessable and are owned by the Obligors or another Subsidiary free and clear of any Lien (except as otherwise disclosed in Schedule 5.4). (c) Each Subsidiary identified in Schedule 5.4 is a corporation or other legal entity duly organized, validly existing and in good standing under the laws of its jurisdiction of organization, and is duly qualified as a foreign corporation or other legal entity and is in good standing in each jurisdiction in which such qualification is required by law, other than those jurisdictions as to which the failure to be so qualified or in good standing would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect. Each such Subsidiary has the corporate or other power and authority to own or hold under lease the properties it purports to own or hold under lease and to transact the business it transacts and proposes to transact. Section 5.5. Financial Statements. The Obligors have delivered to each Purchaser copies of the financial statements listed on Schedule 5.5 of Holdings and its Restricted Subsidiaries on a consolidated basis. The financial statements (including in each case the related schedules and notes) fairly present in all material respects the consolidated financial position of Holdings and its Restricted Subsidiaries as of the respective dates specified in such Schedule and the consolidated results of their operations and cash flows for the respective periods so specified and have been prepared in accordance with GAAP consistently applied throughout the periods involved except as set forth in the notes thereto (subject, in the case of any interim financial statements, to normal year-end adjustments). -5- Lincoln Electric Holdings, Inc. Note Purchase Agreement The Lincoln Electric Company Section 5.6. Compliance with Laws, Other Instruments, etc. The execution, delivery and performance by the Obligors of this Agreement and the Notes will not (i) contravene, result in any breach of, or constitute a default under, or result in the creation of any Lien in respect of any property of either Obligor or any Restricted Subsidiary under, any indenture, mortgage, deed of trust, loan, purchase or credit agreement, lease, corporate charter or by-laws, or any other Material agreement or instrument to which either Obligor or any Restricted Subsidiary is bound or by which either Obligor or any Restricted Subsidiary or any of their respective properties may be bound or affected, (ii) conflict with or result in a breach of any of the terms, conditions or provisions of any order, judgment, decree, or ruling of any court, arbitrator or Governmental Authority applicable to either Obligor or any Restricted Subsidiary or (iii) violate any provision of any statute or other rule or regulation of any Governmental Authority applicable to either Obligor or any Restricted Subsidiary which violation or violations under this clause (iii), individually or in the aggregate, would reasonably be expected to have a Material Adverse Effect. Section 5.7. Governmental Authorizations, etc. No consent, approval or authorization of, or registration, filing or declaration with, any Governmental Authority is required in connection with the execution, delivery or performance by either Obligor of this Agreement or the Notes. Section 5.8. Litigation; Observance of Statutes and Orders. (a) Except as disclosed in Schedule 5.8, there are no actions, suits or proceedings pending or, to the knowledge of either Obligor, threatened against or affecting either Obligor or any Restricted Subsidiary or any property of either Obligor or any Restricted Subsidiary in any court or before any arbitrator of any kind or before or by any Governmental Authority that, individually or in the aggregate, would reasonably be expected to have a Material Adverse Effect. (b) Neither Obligor nor any Restricted Subsidiary is in default under any order, judgment, decree or ruling of any court, arbitrator or Governmental Authority or is in violation of any applicable law, ordinance, rule or regulation (including without limitation Environmental Laws) of any Governmental Authority, which default or violation, individually or in the aggregate, would reasonably be expected to have a Material Adverse Effect. Section 5.9. Taxes. The Obligors and all Restricted Subsidiaries have filed all income tax returns that are required to have been filed in any jurisdiction, and have paid all taxes shown to be due and payable on such returns and all other taxes and assessments payable by them, to the extent such taxes and assessments have become due and payable and before they have become delinquent, except for any taxes and assessments (i) the amount of which is not individually or in the aggregate Material or (ii) the amount, applicability or validity of which is currently being contested in good faith by appropriate proceedings and with respect to which an Obligor or a Restricted Subsidiary, as the case may be, has established adequate reserves in accordance with GAAP. The Federal income tax liabilities of the Obligors and their Restricted Subsidiaries have been determined by the Internal Revenue Service and paid for all fiscal years up to and including the fiscal year ended December 31, 1996. -6- Lincoln Electric Holdings, Inc. Note Purchase Agreement The Lincoln Electric Company Section 5.10. Title to Property; Leases. The Obligors and the Restricted Subsidiaries have good and sufficient title to their respective Material properties, including all such properties reflected in the most recent audited balance sheet referred to in Section 5.5 or purported to have been acquired by an Obligor or any Restricted Subsidiary after said date (except as sold or otherwise disposed of in the ordinary course of business), in each case free and clear of Liens prohibited by this Agreement, except for those defects in title and Liens that, individually or in the aggregate, would not reasonably be expected to have a Material Adverse Effect. All Material leases are valid and subsisting and are in full force and effect in all material respects. Section 5.11. Licenses, Permits, etc. Except as disclosed in Schedule 5.11, the Obligors and the Restricted Subsidiaries own or possess all licenses, permits, franchises, authorizations, patents, copyrights, service marks, trademarks and trade names, or rights thereto, that are Material, without known conflict with the rights of others, except for those conflicts that, individually or in the aggregate, would not reasonably be expected to have a Material Adverse Effect. Section 5.12. Compliance with ERISA. (a) Holdings and each ERISA Affiliate have operated and administered each Plan in compliance with all applicable laws except for such instances of noncompliance as have not resulted in and could not reasonably be expected to result in a Material Adverse Effect. Neither Holdings nor any ERISA Affiliate has incurred any liability pursuant to Title I or IV of ERISA or the penalty or excise tax provisions of the Code relating to employee benefit plans (as defined in Section 3 of ERISA), and no event, transaction or condition has occurred or exists that would reasonably be expected to result in the incurrence of any such liability by Holdings or any ERISA Affiliate, or in the imposition of any Lien on any of the rights, properties or assets of Holdings or any ERISA Affiliate, in either case pursuant to Title I or IV of ERISA or to such penalty or excise tax provisions or to Section 401(a)(29) or 412 of the Code, other than such liabilities or Liens as would not be individually or in the aggregate Material. (b) The present value of the aggregate benefit liabilities under each of the Plans (other than Multiemployer Plans), determined as of January 1, 2001 on the basis of the actuarial assumptions specified for funding purposes in such Plan's most recent actuarial valuation report, did not exceed the aggregate current value of the assets of such Plan allocable to such benefit liabilities by more than $60,000 in the case of any single Plan and by more than $0 in the aggregate for all Plans, provided that Holdings' Annual Report on Form 10-K for the Fiscal Year ended December 31, 2001 indicated that, as of December 31, 2001, the projected benefit obligation under all such Plans exceeds the plan assets of such Plan by not more than $47,000,000. The term "benefit liabilities" has the meaning specified in Section 4001 of ERISA and the terms "current value" and "present value" have the meanings specified in Section 3 of ERISA. (c) Holdings and its ERISA Affiliates have not incurred withdrawal liabilities (and are not subject to contingent withdrawal liabilities) under section 4201 or 4204 of ERISA in respect of Multiemployer Plans that individually or in the aggregate are Material. -7- Lincoln Electric Holdings, Inc. Note Purchase Agreement The Lincoln Electric Company (d) The expected post-retirement benefit obligation (determined as of the last day of Holdings' most recently ended Fiscal Year in accordance with Financial Accounting Standards Board Statement No. 106, without regard to liabilities attributable to continuation coverage mandated by section 4980B of the Code) of Holdings and its Restricted Subsidiaries is not Material. (e) The execution and delivery of this Agreement and the issuance and sale of the Notes hereunder will not involve any transaction that is subject to the prohibitions of section 406 of ERISA or in connection with which a tax could be imposed pursuant to section 4975(c)(1)(A)-(D) of the Code. The representation by each Obligor in the first sentence of this Section 5.12(e) is made in reliance upon and subject to the accuracy of each Purchaser's representation in Section 6.2 as to the sources of the funds to be used to pay the purchase price of the Notes to be purchased by such Purchaser. Section 5.13. Private Offering by the Obligors. Neither Obligor nor PNC Capital Markets, Inc. (the only Person authorized or employed by either Obligor to act on its behalf in connection with the offer of the Notes or any similar securities) has offered the Notes or any similar securities for sale to, or solicited any offer to buy any of the same from, or otherwise approached or negotiated in respect thereof with, any person other than the Purchasers and not more than 35 other Institutional Investors, each of which has been offered the Notes at a private sale for investment. Neither Obligor nor PNC Capital Markets, Inc. (the only Person authorized or employed by either Obligor to act on its behalf in connection with the offer of the Notes or any similar securities) has taken, or will take, any action that would subject the issuance or sale of the Notes to the registration requirements of Section 5 of the Securities Act. Section 5.14. Use of Proceeds; Margin Regulations. The Obligors will apply the proceeds of the sale of the Notes as set forth in Schedule 5.14. No part of the proceeds from the sale of the Notes hereunder will be used, directly or indirectly, for the purpose of buying or carrying any margin stock within the meaning of Regulation U of the Board of Governors of the Federal Reserve System (12 CFR 221), or for the purpose of buying or carrying or trading in any securities under such circumstances as to involve either Obligor in a violation of Regulation X of said Board (12 CFR 224) or to involve any broker or dealer in a violation of Regulation T of said Board (12 CFR 220). Margin stock does not constitute more than 5% of the value of the consolidated assets of Holdings and its Restricted Subsidiaries and the Obligors do not have any present intention that margin stock will constitute more than 5% of the value of such assets. As used in this Section, the terms "margin stock" and "purpose of buying or carrying" shall have the meanings assigned to them in said Regulation U. Section 5.15. Existing Indebtedness. Schedule 5.15 sets forth a complete and correct list of all outstanding Indebtedness of Holdings and its Restricted Subsidiaries as of December 31, 2001, since which date there has been no Material change in the amounts, interest rates, sinking funds, installment payments or maturities of the Indebtedness of Holdings or its Restricted Subsidiaries. Neither Obligor nor any Restricted Subsidiary is in default and no waiver of default is currently in effect, in the payment of any principal or interest on any Indebtedness of such Obligor or such Restricted Subsidiary and no event or condition exists with respect to any -8- Lincoln Electric Holdings, Inc. Note Purchase Agreement The Lincoln Electric Company Indebtedness of either Obligor or any Restricted Subsidiary that would permit (or that with notice or the lapse of time, or both, would permit) one or more Persons to cause such Indebtedness to become due and payable before its stated maturity or before its regularly scheduled dates of payment. Section 5.16. Foreign Assets Control Regulations, etc. Neither the sale of the Notes by the Obligors hereunder nor their use of the proceeds thereof will violate the Trading with the Enemy Act, as amended, or any of the foreign assets control regulations of the United States Treasury Department (31 CFR, Subtitle B, Chapter V, as amended) or any enabling legislation or executive order relating thereto. Without limiting the foregoing, neither the Obligors nor any Subsidiary (i) is or will become a person whose property or interests in property are blocked pursuant to Section 1 of Executive Order 13224 of September 23, 2001, Blocking Property and Prohibiting Transactions With Persons Who Commit, Threaten to Commit, or Support Terrorism (66 Fed. Reg. 49079 (2001)) or (ii) to its knowledge, after reasonable inquiry, engages or will engage in any dealings or transactions, or be otherwise associated, with any such person. Section 5.17. Status under Certain Statutes. Neither Obligor nor any of their Subsidiaries is subject to regulation under the Investment Company Act of 1940, as amended, the Public Utility Holding Company Act of 1935, as amended, the ICC Termination Act of 1995, as amended, or the Federal Power Act, as amended. Section 5.18. Existing Investments. Schedule 5.18 sets forth a complete and correct list of all outstanding Investments of Holdings and each of its Restricted Subsidiaries as of the date of the Closing. SECTION 6. REPRESENTATIONS OF THE PURCHASER. Section 6.1. Purchase for Investment. Each Purchaser represents that it is a Person duly organized, validly existing and in good standing under the laws of the jurisdiction of its organization. Such Purchaser is purchasing the Notes for its own account or for one or more separate accounts maintained by it or for the account of one or more pension or trust funds and not with a view to the distribution or sale thereof, provided that (i) the disposition and sale of such Purchaser's or their property shall at all times be within its or their control and (ii) you and each such pension trust fund are "accredited investors" within the meaning of Rule 501(a)(1), (2), (3) or (7) under the Securities Act. Each Purchaser understands that the Notes have not been, and will not be, registered under the Securities Act and may be resold only if an exemption from registration is available, except under circumstances where neither such registration nor such an exemption is required by law, and that the Obligors are not required to register the Notes. Section 6.2. Source of Funds. Each Purchaser represents that at least one of the following statements is an accurate representation as to each source of funds (a "Source") to be used by such Purchaser to pay the purchase price of the Notes to be purchased by it hereunder: -9- Lincoln Electric Holdings, Inc. Note Purchase Agreement The Lincoln Electric Company (a) the Source is an "insurance company general account" within the meaning of Department of Labor Prohibited Transaction Exemption ("PTE") 95-60 (issued July 12, 1995) and there is no employee benefit plan, treating as a single plan, all plans maintained by the same employer or employee organization, with respect to which the amount of the general account reserves and liabilities for all contracts held by or on behalf of such plan, exceeds ten percent (10%) of the total reserves and liabilities of such general account (exclusive of separate account liabilities) plus surplus, as set forth in the NAIC Annual Statement filed with such Purchaser's state of domicile; or (b) the Source is either (i) an insurance company pooled separate account, within the meaning of PTE 90-1 (issued January 29, 1990), or (ii) a bank collective investment fund, within the meaning of the PTE 91-38 (issued July 12, 1991) and, except as such Purchaser has disclosed to the Obligors in writing pursuant to this paragraph (b), no employee benefit plan or group of plans maintained by the same employer or employee organization beneficially owns more than 10% of all assets allocated to such pooled separate account or collective investment fund; or (c) the Source constitutes assets of an "investment fund" (within the meaning of Part V of the QPAM Exemption) managed by a "qualified professional asset manager" or "QPAM" (within the meaning of Part V of the QPAM Exemption), no employee benefit plan's assets that are included in such investment fund, when combined with the assets of all other employee benefit plans established or maintained by the same employer or by an affiliate (within the meaning of Section V(c)(1) of the QPAM Exemption) of such employer or by the same employee organization and managed by such QPAM, exceed 20% of the total client assets managed by such QPAM, the conditions of Part I(c) and (g) of the QPAM Exemption are satisfied, neither the QPAM nor a person controlling or controlled by the QPAM (applying the definition of "control" in Section V(e) of the QPAM Exemption) owns a 5% or more interest in either Obligor and (i) the identity of such QPAM and (ii) the names of all employee benefit plans whose assets are included in such investment fund have been disclosed to the Obligors in writing pursuant to this paragraph (c); or (d) the Source is a governmental plan; or (e) the Source is one or more employee benefit plans, or a separate account or trust fund comprised of one or more employee benefit plans, each of which has been identified to the Obligors in writing pursuant to this paragraph (e); or (f) the Source does not include assets of any employee benefit plan, other than a plan exempt from the coverage of ERISA. If any Purchaser or any subsequent transferee of the Notes indicates that such Purchaser or such transferee are relying on any representation contained in paragraph (b), (c) or (e) above, the Obligors shall deliver a certificate on the date of the Closing, with respect to such Purchaser and, on or prior to the date of any transfer of the Notes, with respect to any such transferee of the -10- Lincoln Electric Holdings, Inc. Note Purchase Agreement The Lincoln Electric Company Notes, which certificate shall either state that (i) each Obligor is neither a "party in interest" (as defined in Title I, Section 3(14) of ERISA) nor a "disqualified person" (as defined in Section 4975(e)(2) of the Internal Revenue Code of 1986, as amended), with respect to any plan identified pursuant to paragraph (b) or (e) above, or (ii) with respect to any plan identified pursuant to paragraph (c) above, neither Obligor nor any "affiliate" (as defined in Section V(c) of the QPAM Exemption) has at such time, and during the immediately preceding one year, exercised the authority to appoint or terminate said QPAM as manager of the assets of any plan identified in writing pursuant to paragraph (c) above or to negotiate the terms of said QPAM's management agreement on behalf of any such identified plans. As used in this Section 6.2, the terms "employee benefit plan", "governmental plan", "party in interest" and "separate account" shall have the respective meanings assigned to such terms in Section 3 of ERISA. SECTION 7. INFORMATION AS TO OBLIGORS. Section 7.1. Financial and Business Information. The Obligors shall deliver to each holder of Notes that is an Institutional Investor: (a) Quarterly Statements -- promptly, and in any event within 60 days after the end of each Fiscal Quarter in each Fiscal Year (other than the last Fiscal Quarter of each such Fiscal Year), (i) duplicate copies of Holdings' Quarterly Report on Form 10-Q prepared in compliance with the requirements therefor and filed with the SEC, together with: (1) a consolidated balance sheet of Holdings and its Restricted Subsidiaries as at the end of such Fiscal Quarter; and (2) consolidated statements of income and cash flows of Holdings and its Restricted Subsidiaries for such Fiscal Quarter and (in the case of the second and third quarters) for the portion of the Fiscal Year ending with such Fiscal Quarter, and setting forth in each case in comparative form the figures for the corresponding periods in the previous Fiscal Year, all in reasonable detail, prepared in accordance with GAAP applicable to quarterly financial statements generally, but excluding footnotes, and certified by a Senior Financial Officer of Holdings as fairly presenting, in all material respects, the financial position of the companies being reported on and their results of operations and cash flows, subject to changes resulting from year-end adjustments; (ii) duplicate copies of: -11- Lincoln Electric Holdings, Inc. Note Purchase Agreement The Lincoln Electric Company (1) a consolidated balance sheet of the Company and its Restricted Subsidiaries as at the end of such Fiscal Quarter, and (2) consolidated statements of income and cash flows of the Company and its Restricted Subsidiaries for such Fiscal Quarter and (in the case of the second and third quarters) for the portion of the Fiscal Year ending with such Fiscal Quarter, setting forth in each case in comparative form the figures for the corresponding periods in the previous Fiscal Year, all in reasonable detail, prepared in accordance with GAAP applicable to quarterly financial statements generally, but excluding footnotes, and certified by a Senior Financial Officer of the Company as fairly presenting, in all material respects, the financial position of the companies being reported on and their results of operations and cash flows, subject to changes resulting from year-end adjustments; (b) Annual Statements -- promptly, and in any event within 120 days after the end of each Fiscal Year, (i) duplicate copies of Holdings' Annual Report on Form 10-K for such Fiscal Year (together with Holdings' annual report to shareholders, if any, prepared pursuant to Rule 14a-3 under the Exchange Act) prepared in accordance with the requirements therefor and filed with the SEC, together with: (1) a consolidated balance sheet of Holdings and its Restricted Subsidiaries, as at the end of such Fiscal Year, and (2) consolidated statements of income, changes in shareholders' equity and cash flows of Holdings and its Restricted Subsidiaries, for such Fiscal Year, setting forth in each case in comparative form the figures for the previous Fiscal Year, all in reasonable detail, prepared in accordance with GAAP applicable to year-end financial statements generally, but excluding footnotes, and certified by a Senior Financial Officer of Holdings as fairly presenting, in all material respects, the financial position of the companies being reported upon and their results of operations and cash flows; and (ii) duplicate copies of: (1) a consolidated balance sheet of the Company and its Restricted Subsidiaries as at the end of such Fiscal Year; and -12- Lincoln Electric Holdings, Inc. Note Purchase Agreement The Lincoln Electric Company (2) consolidated statements of income, changes in shareholders' equity and cash flows of the Company and its Restricted Subsidiaries, for such Fiscal Year, setting forth in each case in comparative form the figures for the previous Fiscal Year, all in reasonable detail, prepared in accordance with GAAP applicable to year-end financial statements generally, but excluding footnotes, and certified by a Senior Financial Officer of the Company as fairly presenting, in all material respects, the financial position of the companies being reported on and their results of operations and cash flows. (c) SEC and Other Reports -- promptly upon their becoming available, one copy of (i) each financial statement, report, notice or information statement sent by either Obligor or any Restricted Subsidiary to public securities holders generally (including, without limitation, proxy materials), and (ii) each regular or periodic report (including, without limitation, any report of any Obligor on Form 8-K), each registration statement that shall have become effective and each final prospectus and all amendments thereto filed by either Obligor or any Restricted Subsidiary with the SEC; (d) Notice of Default or Event of Default -- promptly, and in any event within five Business Days after a Responsible Officer of either Obligor becoming aware of the existence of any Default or Event of Default, a written notice specifying the nature and period of existence thereof and what action the Obligors are taking or propose to take with respect thereto; (e) ERISA Matters -- promptly, and in any event within 30 days after a Responsible Officer of either Obligor becoming aware of any of the following, a written notice setting forth the nature thereof and the action, if any, that Holdings or an ERISA Affiliate proposes to take with respect thereto: (i) with respect to any Plan, any reportable event, as defined in section 4043(b) of ERISA and the regulations thereunder, for which notice thereof has not been waived pursuant to such regulations as in effect on the date hereof; or (ii) the taking by the PBGC of steps to institute, or the threatening by the PBGC of the institution of, proceedings under section 4042 of ERISA for the termination of, or the appointment of a trustee to administer, any Plan, or the receipt by Holdings or any ERISA Affiliate of a notice from a Multiemployer Plan that such action has been taken by the PBGC with respect to such Multiemployer Plan (including a copy of any notice thereof); or (iii) any event, transaction or condition that could result in the incurrence of any liability by Holdings or any ERISA Affiliate pursuant to Title I or IV of ERISA or the penalty or excise tax provisions of the Code relating to -13- Lincoln Electric Holdings, Inc. Note Purchase Agreement The Lincoln Electric Company employee benefit plans, or in the imposition of any Lien on any of the rights, properties or assets of Holdings or any ERISA Affiliate pursuant to Title I or IV of ERISA or such penalty or excise tax provisions, if such liability or Lien, taken together with any other such liabilities or Liens then existing, would reasonably be expected to have a Material Adverse Effect; (f) Litigation or Other Proceedings -- promptly, and in any event within five Business Days after a Responsible Officer of either Obligor becoming aware of any of the following, written notice of any pending litigation or, to the knowledge of either Obligor, threat of litigation against or affecting either Obligor or any Restricted Subsidiary or any property of either Obligor or any Restricted Subsidiary, that, individually or in the aggregate, is reasonably likely to have a Material Adverse Effect; and (g) Requested Information -- with reasonable promptness, such other data and information relating to the business, operations, affairs, financial condition, assets or properties of either Obligor or any Restricted Subsidiary or relating to the ability of the Obligors to perform their obligations hereunder and under the Notes as from time to time may be reasonably requested by any such holder of Notes. Section 7.2. Officer's Certificate. Each set of financial statements delivered to a holder of Notes pursuant to Section 7.1(a) or Section 7.1(b) hereof shall be accompanied by a certificate of a Senior Financial Officer of Holdings setting forth: (a) Covenant Compliance -- the information (including detailed calculations) required in order to establish whether the Obligors were in compliance with the requirements of Section 10.2 through Section 10.7 hereof, inclusive, during the quarterly or annual period covered by the statements then being furnished (including with respect to each such Section, where applicable, the calculations of the maximum or minimum amount, ratio or percentage, as the case may be, permissible under the terms of such Sections, and the calculation of the amount, ratio or percentage then in existence); and (b) Event of Default -- a statement that such officer has reviewed the relevant terms hereof and has made, or caused to be made, under his or her supervision, a review of the transactions and conditions of Holdings and its Restricted Subsidiaries from the beginning of the quarterly or annual period covered by the statements then being furnished to the date of the certificate and that such review shall not have disclosed the existence during such period of any condition or event that constitutes a Default or an Event of Default or, if any such condition or event existed or exists (including, without limitation, any such event or condition resulting from the failure of either Obligor or any Restricted Subsidiary to comply with any Environmental Law), specifying the nature and period of existence thereof and what action the Obligors shall have taken or proposes to take with respect thereto. -14- Lincoln Electric Holdings, Inc. Note Purchase Agreement The Lincoln Electric Company Section 7.3. Inspection. The Obligors shall permit the representatives of each holder of Notes that is an Institutional Investor: (a) No Default -- if no Default or Event of Default then exists, at the expense of such holder and upon reasonable prior notice to the Obligors, to visit the principal executive office of each Obligor, to discuss the affairs, finances and accounts of the Obligors and the Restricted Subsidiaries with each Obligor's officers, and, with the consent of the Obligors (which consent will not be unreasonably withheld), to visit the other offices and properties of each Obligor and the Restricted Subsidiaries, all at such reasonable times and as often as may be reasonably requested in writing; and (b) Default -- if a Default or Event of Default then exists, at the expense of the Obligors to visit and inspect any of the offices or properties of each Obligor or any Restricted Subsidiary, to examine all their respective books of account, records, reports and other papers, to make copies and extracts therefrom, and to discuss their respective affairs, finances and accounts with their respective officers and independent public accountants (and by this provision the Obligors authorize said accountants to discuss the affairs, finances and accounts of the Obligors and the Restricted Subsidiaries), all at such times and as often as may be requested. SECTION 8. PREPAYMENT OF THE NOTES. Section 8.1. Required Prepayments. (a) Series A Notes. The entire outstanding principal amount of the Series A Notes shall be due on March 12, 2007. Except as set forth in Section 8.2, the Series A Notes may not be prepaid prior to maturity at the option of the Obligors. (b) Series B. Notes. The entire outstanding principal amount of the Series B Notes shall be due on March 12, 2009. Except as set forth in Section 8.2, the Series B Notes may not be prepaid prior to maturity at the option of the Obligors. (c) Series C. Notes. The entire outstanding principal amount of the Series C Notes shall be due on March 12, 2012. Except as set forth in Section 8.2, the Series C Notes may not be prepaid prior to maturity at the option of the Obligors. Section 8.2. Optional Prepayments with Make-Whole Amount. The Obligors may, at their option, upon notice as provided below, prepay at any time all, or from time to time any part of, the Notes, in a minimum principal amount of $10,000,000 in the case of a partial prepayment, at 100% of the principal amount so prepaid, together with interest accrued thereon to the date of such prepayment, plus the Make-Whole Amount determined for the prepayment date with respect to such principal amount. The Obligors will give each holder of Notes written notice of each optional prepayment under this Section 8.2 not less than 30 days and not more than 60 days prior to the date fixed for such prepayment. Each such notice shall specify such date, the aggregate principal amount of the Notes to be prepaid on such date, the principal amount of each -15- Lincoln Electric Holdings, Inc. Note Purchase Agreement The Lincoln Electric Company Note held by such holder to be prepaid (determined in accordance with Section 8.4), and the interest to be paid on the prepayment date with respect to such principal amount being prepaid, and shall be accompanied by a certificate of a Senior Financial Officer of Holdings as to the estimated Make-Whole Amount due in connection with such prepayment (calculated as if the date of such notice were the date of the prepayment), setting forth the details of such computation. Two Business Days prior to such prepayment, the Obligors shall deliver to each holder of Notes a certificate of a Senior Financial Officer of Holdings specifying the calculation of such Make-Whole Amount as of the specified prepayment date. Section 8.3. Prepayment of Notes upon Change of Control. (a) In the event that any Change of Control shall occur or either Obligor shall have knowledge of any proposed Change of Control, the Obligors will give written notice (the "Obligor Notice") of such fact in the manner provided in Section 18 hereof to the holders of the Notes. The Obligor Notice shall be delivered promptly upon receipt of such knowledge by an Obligor and in any event no later than three Business Days following the occurrence of any Change of Control. The Obligor Notice shall (i) describe the facts and circumstances of such Change of Control in reasonable detail, (ii) make reference to this Section 8.3 and the right of the holders of the Notes to require prepayment of the Notes on the terms and conditions provided for in this Section 8.3, (iii) offer in writing to prepay the outstanding Notes, together with accrued interest to the date of prepayment, and without payment of the Make-Whole Amount or any premium, (iv) specify a date for such prepayment (the "Change of Control Prepayment Date"), which Change of Control Prepayment Date shall be not more than 90 days nor less than 30 days following the date of such Obligor Notice, and (v) specify the date by which such holder is required to give notice of its acceptance to be prepaid. Each holder of the then outstanding Notes shall have the right to accept such offer and require prepayment of the Notes held by such holder in full by written notice to an Obligor (a "Noteholder Notice") given not later than 20 days after receipt of the Obligor Notice. The Obligors shall on the Change of Control Prepayment Date prepay in full all of the Notes held by holders which have so accepted such offer of prepayment. The prepayment price of the Notes payable upon the occurrence of any Change of Control shall be an amount equal to 100% of the outstanding principal amount of the Notes so to be prepaid and accrued interest thereon to the date of such prepayment. (b)(i) Without limiting the foregoing, notwithstanding any failure on the part of the Obligors to give the Obligor Notice herein required, as a result of the occurrence of a Change of Control each holder of the Notes shall have the right by delivery of written notice to the Obligors to require the Obligors to prepay, and the Obligors will prepay, such holder's Notes in full, together with accrued interest thereon to the date of prepayment, and without payment of the Make-Whole Amount or any premium. Notice of any required prepayment pursuant to this Section 8.3(b)(i) shall be delivered by any holder of the Notes which was entitled to, but did not receive, such Obligor Notice to the Obligors after such holder has actual knowledge of such Change of Control. On the date (the "Change of Control Delayed Prepayment Date") designated in such holder's notice (which shall be not more than 90 days nor less than 30 days following the date of such holder's notice), the Obligors shall prepay in full all of the Notes held by such holder, together with accrued interest thereon to the date of prepayment. If the holder of any Note gives any notice pursuant to this Section 8.3(b)(i), the Obligors shall give an Obligor -16- Lincoln Electric Holdings, Inc. Note Purchase Agreement The Lincoln Electric Company Notice within three Business Days of receipt of such notice and identify the Change of Control Delayed Prepayment Date to all other holders of the Notes and each of such other holders shall then and thereupon have the right to accept the Obligors' offer to prepay the Notes held by such holder in full and require prepayment of such Notes by delivery of a Noteholder Notice within 20 days following receipt of such Obligor Notice; provided only that any date for prepayment of such holder's Notes shall be the Change of Control Delayed Prepayment Date. On the Change of Control Delayed Prepayment Date, the Obligors shall prepay in full the Notes of each holder thereof which has accepted such offer of prepayment at a prepayment price equal to 100% of the outstanding principal amount of the Notes so to be prepaid and accrued interest thereon to the date of such prepayment. (ii) Compliance with the provisions of this Section 8.3(b) shall not be deemed to constitute a waiver of, or consent to, any Default or Event of Default caused by any violation of the provisions of Section 8.3(a). (c) "Change of Control" means if any person (as such term is used in section 13(d) and section 14(d)(2) of the Exchange Act as in effect on the date of the Closing) or related persons constituting a group (as such term is used in Rule 13d-5 under the Exchange Act), become the "beneficial owners" (as such term is used in Rule 13d-3 under the Exchange Act as in effect on the date of the Closing), directly or indirectly, of more than 50% of the issued and outstanding common stock of Holdings. Section 8.4. Allocation of Partial Prepayments. In the case of each partial prepayment of the Notes (other than a partial prepayment under Section 8.3), the principal amount of the Notes to be prepaid shall be allocated among all of the Notes of all Series at the time outstanding in proportion, as nearly as practicable, to the respective unpaid principal amounts thereof. Section 8.5. Maturity; Surrender, etc. In the case of each prepayment of Notes pursuant to this Section 8, the principal amount of each Note to be prepaid shall mature and become due and payable on the date fixed for such prepayment, together with interest on such principal amount accrued to such date and the applicable Make-Whole Amount, if any. From and after such date, unless the Obligors shall fail to pay such principal amount when so due and payable, together with the interest and Make-Whole Amount, if any, as aforesaid, interest on such principal amount shall cease to accrue. Any Note paid or prepaid in full shall be surrendered to Holdings and cancelled and shall not be reissued, and no Note shall be issued in lieu of any prepaid principal amount of any Note. Section 8.6. Purchase of Notes. The Obligors will not and will not permit any Affiliate to purchase, redeem, prepay or otherwise acquire, directly or indirectly, any of the outstanding Notes except (a) upon the payment or prepayment of the Notes in accordance with the terms of this Agreement and the Notes or (b) pursuant to an offer to purchase made by the Obligors or an Affiliate pro rata to the holders of all Notes at the time outstanding upon the same terms and conditions (but taking into account the respective interest rates of each Series). Any such offer shall provide each holder with sufficient information to enable it to make an informed decision with respect to such offer, and shall remain open for at least 20 Business Days. If the holders of -17- Lincoln Electric Holdings, Inc. Note Purchase Agreement The Lincoln Electric Company more than 20% of the principal amount of the Notes then outstanding accept such offer, the Obligors shall promptly notify the remaining holders of such fact and the expiration date for the acceptance by holders of Notes of such offer shall be extended by the number of days necessary to give each such remaining holder at least 10 Business Days from its receipt of such notice to accept such offer. The Obligors will promptly cancel all Notes acquired by it or any Affiliate pursuant to any payment, prepayment or purchase of Notes pursuant to any provision of this Agreement and no Notes may be issued in substitution or exchange for any such Notes. Section 8.7. Make-Whole Amount. The term "Make-Whole Amount" means, with respect to any Note, an amount equal to the excess, if any, of the Discounted Value of the Remaining Scheduled Payments with respect to the Called Principal of such Note over the amount of such Called Principal, provided that the Make-Whole Amount may in no event be less than zero. For the purposes of determining the Make-Whole Amount, the following terms have the following meanings: "Called Principal" means, with respect to any Note, the principal of such Note that is to be prepaid pursuant to Section 8.2 or has become or is declared to be immediately due and payable pursuant to Section 12.1, as the context requires. "Discounted Value" means, with respect to the Called Principal of any Note, the amount obtained by discounting all Remaining Scheduled Payments with respect to such Called Principal from their respective scheduled due dates to the Settlement Date with respect to such Called Principal, in accordance with accepted financial practice and at a discount factor (applied on the same periodic basis as that on which interest on the Notes is payable) equal to the Reinvestment Yield with respect to such Called Principal. "Reinvestment Yield" means, with respect to the Called Principal of any Note, 0.50% over the yield to maturity implied by (i) the yields reported, as of 10:00 A.M. (New York City time) on the second Business Day preceding the Settlement Date with respect to such Called Principal, on the display designated as "Page PX1" on the Bloomberg Financial Services Screen (or such other display as may replace Page PX1 on the Bloomberg Financial Services Screen) for "on-the-run" U.S. Treasury securities having a maturity equal to the Remaining Average Life of such Called Principal as of such Settlement Date, or (ii) if such yields are not reported as of such time or the yields reported as of such time are not ascertainable, the Treasury Constant Maturity Series Yields reported, for the latest day for which such yields have been so reported as of the second Business Day preceding the Settlement Date with respect to such Called Principal, in Federal Reserve Statistical Release H.15 (519) (or any comparable successor publication) for "on-the-run" U.S. Treasury securities having a constant maturity equal to the Remaining Average Life of such Called Principal as of such Settlement Date. Such implied yield will be determined, if necessary, by (a) converting U.S. Treasury bill quotations to bond-equivalent yields in accordance with accepted financial practice and (b) interpolating linearly between (1) the "on-the-run" U.S. Treasury security with the maturity closest to and greater than the Remaining Average Life and (2) the "on-the-run" -18- Lincoln Electric Holdings, Inc. Note Purchase Agreement The Lincoln Electric Company U.S. Treasury security with the maturity closest to and less than the Remaining Average Life. "Remaining Average Life" means, with respect to any Called Principal, the number of years (calculated to the nearest one-twelfth year) obtained by dividing (i) such Called Principal into (ii) the sum of the products obtained by multiplying (a) the principal component of each Remaining Scheduled Payment with respect to such Called Principal by (b) the number of years (calculated to the nearest one-twelfth year) that will elapse between the Settlement Date with respect to such Called Principal and the scheduled due date of such Remaining Scheduled Payment. "Remaining Scheduled Payments" means, with respect to the Called Principal of any Note, all payments of such Called Principal and interest thereon that would be due after the Settlement Date with respect to such Called Principal if no payment of such Called Principal were made prior to its scheduled due date, provided that if such Settlement Date is not a date on which interest payments are due to be made under the terms of the Notes, then the amount of the next succeeding scheduled interest payment will be reduced by the amount of interest accrued to such Settlement Date and required to be paid on such Settlement Date pursuant to Section 8.2 or 12.1. "Settlement Date" means, with respect to the Called Principal of any Note, the date on which such Called Principal is to be prepaid pursuant to Section 8.2 or has become or is declared to be immediately due and payable pursuant to Section 12.1, as the context requires. SECTION 9. AFFIRMATIVE COVENANTS. Each Obligor, jointly and severally, covenants that so long as any of the Notes are outstanding: Section 9.1. Compliance with Law. Each Obligor will, and will cause each of its Subsidiaries to, comply with all laws, ordinances or governmental rules or regulations to which each of them is subject, including, without limitation, Environmental Laws, and will obtain and maintain in effect all licenses, certificates, permits, franchises and other governmental authorizations necessary to the ownership of their respective properties or to the conduct of their respective businesses, in each case to the extent necessary to ensure that non-compliance with such laws, ordinances or governmental rules or regulations or failures to obtain or maintain in effect such licenses, certificates, permits, franchises and other governmental authorizations would not reasonably be expected, individually or in the aggregate, to have a Material Adverse Effect. Section 9.2. Insurance. Each Obligor will, and each Obligor will cause each of the Restricted Subsidiaries to, maintain, with financially sound and reputable insurers, insurance with respect to their respective properties and businesses against such casualties and contingencies, of such types, on such terms and in such amounts (including deductibles, co- -19- Lincoln Electric Holdings, Inc. Note Purchase Agreement The Lincoln Electric Company insurance and self-insurance, if adequate reserves are maintained with respect thereto) as is customary in the case of entities of established reputations engaged in the same or a similar business and similarly situated. Section 9.3. Maintenance of Properties. Each Obligor will, and each Obligor will cause each of the Restricted Subsidiaries to, maintain and keep, or cause to be maintained and kept, their respective properties in good repair, working order and condition (other than ordinary wear and tear), so that the business carried on in connection therewith may be properly conducted at all times, provided that this Section shall not prevent either Obligor or any Restricted Subsidiary from discontinuing the operation and the maintenance of any of its properties if such discontinuance is desirable in the conduct of its business and the Obligors have concluded that such discontinuance would not, individually or in the aggregate, have a Material Adverse Effect. Section 9.4. Payment of Taxes. Each Obligor will, and each Obligor will cause each of its Subsidiaries to, file all income tax or similar tax returns required to be filed in any jurisdiction and to pay and discharge all taxes shown to be due and payable on such returns and all other taxes, assessments, governmental charges, or levies payable by any of them, to the extent such taxes and assessments have become due and payable and before they have become delinquent, provided that neither Obligor nor any of its Subsidiaries need pay any such tax or assessment if (i) the amount, applicability or validity thereof is contested by such Obligor or such Subsidiary on a timely basis in good faith and in appropriate proceedings diligently conducted, and such Obligor or such Subsidiary has established adequate reserves therefor in accordance with GAAP on the books of such Obligor or such Subsidiary or (ii) the failure to file such tax return or the nonpayment of all such taxes and assessments in the aggregate would not reasonably be expected to have a Material Adverse Effect. Section 9.5. Corporate Existence, etc. Each Obligor will at all times preserve and keep in full force and effect its corporate existence. Subject to Section 10.6, each Obligor will at all times preserve and keep in full force and effect the corporate existence of the Restricted Subsidiaries and all rights and franchises of such Obligor and its Restricted Subsidiaries unless, in the good faith judgment of such Obligor, the termination of or failure to preserve and keep in full force and effect such corporate existence, right or franchise would not, individually or in the aggregate, have a Material Adverse Effect. Section 9.6. Notes to Rank Pari Passu. The Notes of the Obligors are and shall at all times rank at least pari passu as against the assets of each Obligor with all other present and future unsecured Indebtedness (actual or contingent) of such Obligor which is not expressed to be subordinate or junior in rank to any other unsecured Debt of such Obligor. Section 9.7. Ownership of the Company. Holdings shall at all times own 100%, directly or indirectly, of the issued and outstanding capital stock of the Company. Section 9.8. Changes in Status of Subsidiaries. (a) So long as no Default or Event of Default shall have occurred and be continuing, a Senior Financial Officer of Holdings may at any time and from time to time, upon not less than 30 days' prior written notice given to each holder -20- Lincoln Electric Holdings, Inc. Note Purchase Agreement The Lincoln Electric Company of Notes, designate a previously Unrestricted Subsidiary as a Restricted Subsidiary, provided that immediately after such designation and after giving effect thereto (i) no Default or Event of Default shall have occurred and be continuing and (ii) Holdings and its Restricted Subsidiaries would be in compliance with the provisions of Sections 10.2, 10.3, 10.4, 10.5 and 10.7 hereof, assuming, for purposes of determining such compliance, that the date of such designation was the last day of the most recently ended Fiscal Quarter, and provided, further, that the status of such Subsidiary had not previously been changed more than once. (b) So long as no Default or Event of Default shall have occurred and be continuing, a Senior Financial Officer of Holdings may at any time and from time to time, upon not less than 30 days' prior written notice given to each holder of Notes, designate a previously Restricted Subsidiary (other than the Company and any Restricted Subsidiary that owns, directly or indirectly, any capital stock of the Company), or a new Subsidiary on the date of its formation or acquisition, as an Unrestricted Subsidiary, provided that such designation is treated as a sale of assets subject to the provisions of Section 10.6 and immediately after such designation and after giving effect thereto (i) no Default or Event of Default shall have occurred and be continuing, (ii) such previously Restricted Subsidiary does not own, directly or indirectly, any Debt, shares of capital stock or any other Securities of Holdings or any Restricted Subsidiary and (iii) Holdings and its Restricted Subsidiaries would be in compliance with the provisions of Sections 10.2, 10.3, 10.4, 10.5, 10.6 and 10.7 hereof, assuming, for purposes of determining such compliance, that the date of such designation was the last day of the most recently ended Fiscal Quarter, and provided, further, that the status of such Subsidiary had not previously been changed more than once. (c) Any notice of designation pursuant to this Section 9.8 shall be accompanied by a certificate signed by a Responsible Officer of Holdings stating that the provisions of this Section 9.8 have been complied with in connection with such designation and setting forth the name of each other Subsidiary (if any) which has or will become a Restricted Subsidiary or an Unrestricted Subsidiary as a result of such designation. SECTION 10. NEGATIVE COVENANTS. Each Obligor covenants that so long as any of the Notes are outstanding: Section 10.1. Transactions with Affiliates. Neither Obligor will, nor will it permit any Restricted Subsidiary to enter into directly or indirectly any transaction or group of related transactions (including without limitation the purchase, lease, sale or exchange of properties of any kind or the rendering of any service) with any Affiliate (other than an Obligor or another Restricted Subsidiary), except in the ordinary course and pursuant to the reasonable requirements of such Obligor's or such Restricted Subsidiary's business and upon fair and reasonable terms no less favorable to such Obligor or such Restricted Subsidiary than would be obtainable in a comparable arm's-length transaction with a Person not an Affiliate. Section 10.2. Fixed Charges Coverage Ratio. The Obligors will not, at any time, permit the Fixed Charges Coverage Ratio to be less than 1.75 to 1.00. -21- Lincoln Electric Holdings, Inc. Note Purchase Agreement The Lincoln Electric Company Section 10.3. Leverage Ratio. The Obligors will not, at any time, permit the Leverage Ratio to exceed 3.00 to 1.00. Section 10.4. Priority Debt. The Obligors will not, at any time, permit Priority Debt to exceed 20% of Consolidated Net Worth determined at such time. Section 10.5. Investments. The Obligors will not, and will not permit any Restricted Subsidiary to, make or have outstanding any Investments, other than: (a) Investments by Holdings and its Restricted Subsidiaries in and to Restricted Subsidiaries, including any Investment in any Person which, after giving effect to such Investment, will become a Restricted Subsidiary or a division of Holdings or of a Restricted Subsidiary; (b) Investments of Holdings and its Restricted Subsidiaries existing as of the date of the Closing and described on Schedule 5.18 hereto; (c) Investments in Cash Equivalents; (d) Investments in mutual funds registered under the Investment Company Act of 1940, as amended, which invest only in either money market securities or United States Governmental Securities, in either case, maturing within three years from the date of acquisition thereof by such mutual fund; (e) Investments in Related Industries, provided that such Investments are in furtherance of the reasonable business purposes of Holdings and its Restricted Subsidiaries and are not speculative in nature; (f) Subject to the limitations provided for under Section 10.6(b) hereof, Investments in Special Purpose Companies incidental to the consummation of Qualifying Securitization Transactions and not involving any significant investment of capital; (g) Investments in property to be used in the ordinary course of business of Holdings and its Restricted Subsidiaries; (h) Investments in current assets arising from the sale of goods and services in the ordinary course of business of Holdings and its Restricted Subsidiaries; and (i) Investments of Holdings and its Restricted Subsidiaries not described in the foregoing clauses (a) through (h); provided that the aggregate amount of all such Investments outstanding under this clause (i) shall not at any time exceed 15% of Consolidated Net Worth. As of any date of determination, each Investment shall be valued at the greater of: -22- Lincoln Electric Holdings, Inc. Note Purchase Agreement The Lincoln Electric Company (x) the amount at which such is shown on the books of Holdings or any of its Restricted Subsidiaries (or zero if such Investment is not shown on any such books); and (y) either (i) in the case of any Guaranty of the obligation of any Person, the amount which Holdings or any of its Restricted Subsidiaries has paid on account of such obligation less any recoupment by Holdings or such Restricted Subsidiary of any such payments, or (ii) in the case of any other Investment, the excess of (x) the greater of (A) the amount originally entered on the books of Holdings or any of its Restricted Subsidiaries with respect thereto and (B) the cost thereof to Holdings or its Restricted Subsidiary over (y) any return of capital (after income taxes applicable thereto) upon such Investment through the sale or other liquidation thereof or part thereof or otherwise. Section 10.6. Mergers, Consolidations and Sales of Assets. (a) The Obligors will not, and will not permit any Restricted Subsidiary to, consolidate with or be a party to a merger with any other Person, or sell, lease or otherwise dispose of all or substantially all of its assets; provided that: (i) any Subsidiary (other than the Company) may merge or consolidate with or into, or transfer all or substantially all of its assets to, Holdings or any Restricted Subsidiary so long as in (1) any merger or consolidation involving an Obligor pursuant to this clause (i), such Obligor shall be the surviving or continuing corporation, (2) any merger or consolidation involving a Restricted Subsidiary (other than the Company) (other than a merger or consolidation with Holdings), a Restricted Subsidiary shall be the surviving or continuing corporation, provided that any decrease in the percentage of the Voting Stock of such Restricted Subsidiary beneficially owned, directly or indirectly, by Holdings shall be treated as a disposition of such Voting Stock by Holdings subject to the provisions of Section 10.6(b) hereof and (3) at the time of such consolidation or merger and immediately after giving effect thereto, no Default or Event of Default would exist; (ii) any Restricted Subsidiary (other than the Company) may sell, lease or otherwise dispose of all or substantially all of its assets in compliance with the provisions of Section 10.6(b); (iii) either Obligor may consolidate or merge with or into any other corporation if (1) the corporation which results from such consolidation or merger (the "surviving corporation") is organized under the laws of any state of the United States or the District of Columbia, (2) if such Obligor is not the surviving corporation, the due and punctual performance and observation of all of the covenants in this Agreement and the Notes to be performed or observed by such Obligor are expressly assumed in writing by the surviving corporation (pursuant to such agreements and instruments as shall be -23- Lincoln Electric Holdings, Inc. Note Purchase Agreement The Lincoln Electric Company satisfactory in form and substance to the Required Holders of the Notes), and the surviving corporation shall furnish to the Required Holders an opinion of counsel satisfactory to such holders to the effect that the agreements and instruments of assumption have been duly authorized, executed and delivered and constitute the legal, valid and binding contracts and agreements of the surviving corporation enforceable in accordance with their respective terms, except as enforcement of such terms may be limited by bankruptcy, insolvency, reorganization, moratorium and similar laws affecting the enforcement of creditors' rights generally and by general equitable principles, and (3) at the time of such consolidation or merger and immediately after giving effect thereto, no Default or Event of Default would exist; and (iv) the Obligors may, collectively, sell or otherwise dispose of all or substantially all of their assets, taken as a whole (other than as provided in this Section 10.6(a) and Section 10.6(c)) to any Person for consideration which represents the fair market value of such assets (as determined in good faith by a Senior Financial Officer of such Obligor or, to the extent the approval of the Board of Directors is required, the Board of Directors of such Obligor), at the time of such sale or other disposition if (1) the acquiring Person is a corporation organized under the laws of any state of the United States or the District of Columbia, (2) the due and punctual performance and observance of all of the covenants in this Agreement and the Notes to be performed or observed by such Obligor are expressly assumed in writing by the acquiring corporation (pursuant to such agreements and instruments as shall be satisfactory in form and substance to the Required Holders of the Notes), and the acquiring corporation shall furnish to the Required Holders an opinion of counsel satisfactory to such holders to the effect that the agreements and instruments of assumption have been duly authorized, executed and delivered and constitute the legal, valid and binding contracts and agreements of the surviving corporation enforceable in accordance with their respective terms, except as enforcement of such terms may be limited by bankruptcy, insolvency, reorganization, moratorium and similar laws affecting the enforcement of creditors' rights generally and by general equitable principles, and (3) at the time of such sale or disposition and immediately after giving effect thereto, no Default or Event of Default would exist. (b) The Obligors will not, and will not permit any Restricted Subsidiary to, sell, lease, transfer, abandon or otherwise dispose of assets, including, without limitation, any Restricted Subsidiary Stock of, or any Investment in, any Restricted Subsidiary; provided that the foregoing restrictions do not apply to: (i) the sale, lease, transfer or other disposition of assets of a Restricted Subsidiary (other than the Company) to Holdings or a Restricted Subsidiary, provided that any sale, lease, transfer or other disposition of assets from a transferring Restricted Subsidiary to another Restricted Subsidiary with a larger minority interest than the transferring Restricted Subsidiary shall be treated as a sale, lease, transfer or other disposition of assets by such transferring Restricted Subsidiary, to the extent that the minority interest of such other Restricted Subsidiary exceeds the minority interest of the -24- Lincoln Electric Holdings, Inc. Note Purchase Agreement The Lincoln Electric Company transferring Restricted Subsidiary, subject to the provisions of Section 10.6(b)(v) hereof; or (ii) the sale of assets in the ordinary course of business for fair market value; or (iii) the sale or other disposition of all or substantially all of the assets of the Obligors, taken as a whole, as provided in Section 10.6(a)(iv) hereof; or (iv) the sale, transfer or other disposition of Restricted Subsidiary Stock (1) to qualify directors, (2) to comply with local laws requiring multiple shareholders, or (3) in connection with a merger or consolidation permitted under Section 10.6(a)(i); or (v) the sale of assets (including, without limitation, (A) a decrease in the percentage of Voting Stock of a Restricted Subsidiary (other than the Company) beneficially owned, directly or indirectly, by Holdings as a result of a merger or consolidation pursuant to Section 10.6(a)(i) hereof, (B) a sale, lease or other disposition of all or substantially all of the assets of a Restricted Subsidiary (other than the Company) pursuant to Section 10.6(a)(ii), (C) any Restricted Subsidiary Stock of, or any Investment in, any Restricted Subsidiary pursuant to Section 10.6(b)(i) and (D) an increase in the minority interest in the stock and surplus of a Restricted Subsidiary as a result of the issuance of stock by such Restricted Subsidiary permitted under Section 10.6(c)) for cash or Cash Equivalents to a Person or Persons other than an Affiliate if all of the following conditions are met: (1) the Disposition Value of such assets does not, together with the Disposition Value of all other assets of Holdings and its Restricted Subsidiaries previously disposed of during the Fiscal Year in which such sale occurs (other than pursuant to Sections 10.6(b)(i) (subject to the proviso therein), 10.6(b)(ii), 10.6(b)(iii), 10.6(b)(iv) and 10.6(b)(vi)), exceed 15% of Consolidated Total Assets; (2) a Senior Financial Officer of Holdings, or (to the extent the approval of the Board of Directors is required) the Board of Directors of Holdings (as evidenced by a resolution thereof) shall have determined, that the proposed sale, lease, transfer or other disposition is for fair value and is in the best interests of Holdings and its Restricted Subsidiaries; (3) if, after giving effect to such sale, transfer or other disposition of Restricted Subsidiary Stock of a Restricted Subsidiary, such Restricted Subsidiary shall no longer qualify to be a "Restricted Subsidiary" hereunder, simultaneously with such sale, transfer or disposition, all shares of such Restricted Subsidiary Stock related to such Restricted Subsidiary and all Investment in such Restricted Subsidiary at the time owned by Holdings and by every other Restricted Subsidiary shall be sold, transferred or disposed of as an entirety and such -25- Lincoln Electric Holdings, Inc. Note Purchase Agreement The Lincoln Electric Company Restricted Subsidiary shall not have any continuing Investment in Holdings or any other Restricted Subsidiary not being simultaneously disposed of; (4) any Restricted Subsidiary Stock of and Investment in any Restricted Subsidiary that are sold, transferred or otherwise disposed of shall be sold, transferred or otherwise disposed of to a Person on terms reasonably deemed by a Senior Financial Officer of Holdings or (to the extent the approval of the Board of Directors is required) the Board of Directors of Holdings to be adequate and satisfactory; and (5) immediately after the consummation of the transaction and after giving effect thereto no Default or Event of Default would exist; provided, however, that for purposes of the foregoing calculation, there shall not be included any assets the net proceeds of which were or are applied either (A) within twelve months after the date of sale of such assets, to the acquisition of assets of a similar character useful and intended to be used in the operation of the business of Holdings and its Restricted Subsidiaries and having a fair market value and a capacity to contribute to Consolidated EBITDA (as determined in good faith by a Senior Financial Officer of Holdings or (to the extent the approval of the Board of Directors is required) the Board of Directors of Holdings), in each case, at least equal to that of the assets so disposed of or (B) immediately upon receipt, to the prepayment, together with any applicable prepayment premium, on a pro rata basis, of the Notes and any other Consolidated Senior Funded Debt, provided that the Obligors may prepay any secured Consolidated Senior Funded Debt then outstanding prior to unsecured Consolidated Senior Funded Debt. It is understood and agreed by the Obligors that any such proceeds paid and applied to the prepayment of the Notes as hereinabove provided shall be prepaid as and to the extent provided in Section 8.2; or (vi) the sale or other transfer of Trade Receivables to a Special Purpose Company pursuant to one or more Qualifying Securitization Transactions, to the extent that the aggregate amount outstanding under all financing facilities relating to such Qualifying Securitization Transactions shall not exceed $75,000,000 at any time of determination. (c) The Obligors will not permit any Restricted Subsidiary to issue any of its own stock (or any options or warrants to purchase stock or other Securities exchangeable for or convertible into such stock) to any Person other than an Obligor (except (i) to qualify directors, (ii) stock issued to comply with local laws requiring multiple shareholders, or (iii) in connection with an issuance of such stock whereby Holdings maintains its same direct or indirect proportionate interest in such Restricted Subsidiary), unless (i) such issuance is for cash consideration or Cash Equivalents and after giving effect to such issuance of such stock, such Restricted Subsidiary shall continue to be a "Restricted Subsidiary" hereunder; -26- Lincoln Electric Holdings, Inc. Note Purchase Agreement The Lincoln Electric Company (ii) a Senior Financial Officer of Holdings, or (to the extent the approval of the Board of Directors is required) the Board of Directors of Holdings (as evidenced by a resolution thereof) shall have determined that the proposed issuance of said stock is for fair value and is in the best interest of Holdings and its Restricted Subsidiaries; (iii) said stock issued to a Person on terms reasonably deemed by such Senior Financial Officer of Holdings or (to the extent the approval of the Board of Directors is required) the Board of Directors of Holdings to be adequate and satisfactory; and (iv) such issuance shall be treated as a disposition of assets by Holdings of a portion of such Restricted Subsidiary equal to the increase in the minority interests in the stock and surplus of such Restricted Subsidiary subject to the provisions of Section 10.6(b) hereof. Section 10.7. Limitation on Liens. The Obligors will not, and will not permit any Restricted Subsidiary to, create or incur, or suffer to be incurred or to exist, any Lien on its or their property or assets, whether now owned or hereafter acquired, or upon any income or profits therefrom, or transfer any property for the purpose of subjecting the same to the payment of obligations in priority to the payment of its or their general creditors, or acquire or agree to acquire, or permit any Restricted Subsidiary to acquire or agree to acquire, any property or assets upon conditional sales agreements or other title retention devices, except: (a) Liens for taxes, assessments or other governmental charges or levies which are not yet due and payable or if they can thereafter be paid without penalty or the payment of which is not at the time required by Section 9.4; (b) any attachment or judgment Lien, unless either (i) the judgment it secures shall not, within thirty (30) days after the entry thereof, have been discharged or execution thereof stayed pending appeal, or shall not have been discharged within thirty (30) days after the expiration of any such stay or (ii) the judgment it secures, when taken together with all other judgments under this subclause (ii) related to attachment and judgment Liens under this clause (b), does not exceed $5,000,000 in the aggregate; (c) statutory Liens of landlords and Liens of carriers, warehousemen, workmen, repairmen, mechanics, materialmen and other similar Liens, in each case, incurred in the ordinary course of business for sums not yet due and payable or the amount, applicability or validity thereof is contested by such Obligor or such Restricted Subsidiary on a timely basis in good faith and in appropriate proceedings diligently conducted, and such Obligor or such Restricted Subsidiary has established adequate reserves therefor in accordance with GAAP on the books of such Obligor or such Restricted Subsidiary; (d) Liens (other than any Lien imposed by ERISA) incurred or deposits made in the ordinary course of business in connection with workers' compensation obligations, unemployment insurance, other types of social security or retirement benefits; -27- Lincoln Electric Holdings, Inc. Note Purchase Agreement The Lincoln Electric Company (e) Liens incurred in the ordinary course of business to secure (i) the non-delinquent performance of bids, trade contracts, leases (other than Capital Leases) and statutory obligations, (ii) contingent obligations on surety bonds and appeal bonds, and (iii) other similar non-delinquent obligations, in each case, not incurred or made in connection with the borrowing of money, the obtaining of advances or credit or the payment of the deferred purchase price of property, provided that such Liens, taken as a whole, would not, even if enforced, have a Material Adverse Effect on Holdings and its Restricted Subsidiaries, taken as a whole; (f) leases or subleases granted to others, easements, rights-of-way, restrictions and other similar charges or encumbrances in the ordinary course of business, in each case incidental to, and not interfering in any material respect with, the ordinary conduct of the business of Holdings or any of its Restricted Subsidiaries, and which do not in the aggregate materially impair the use of such property in the operation of the business of Holdings and its Restricted Subsidiaries, taken as a whole, or the value of such property for the purposes of such business; (g) Liens created or incurred after the date of the Closing given to secure all or any part of the purchase price, or to secure Debt incurred solely for the purpose of financing the acquisition or purchase, of property (or any improvement thereon) acquired by Holdings or a Restricted Subsidiary; provided that (i) the Lien shall attach solely to the property (or improvement thereon) so acquired or purchased, (ii) such Lien shall have been created or incurred contemporaneously with or within 180 days of the date of acquisition or purchase of such property, (iii) the aggregate principal amount of Debt secured by such Lien and all other Debt secured by any other Lien on such property or such improvement does not exceed in the aggregate 100% of the cost to Holdings or such Restricted Subsidiary of such property (or improvement thereon), and (iv) at the time of creation, issuance, assumption, guarantee or incurrence of the Debt secured by such Lien and after giving effect thereto and to the application of the proceeds thereof, no Default or Event of Default would exist; (h) any such Lien existing on property or assets of a corporation at the time such corporation is consolidated with or merged into Holdings or a Restricted Subsidiary or its becoming a Restricted Subsidiary, or any Lien existing on any property or assets acquired by Holdings or any Restricted Subsidiary at the time such property or assets are so acquired (whether or not the Debt secured thereby shall have been assumed), provided that (i) each such Lien shall extend solely to the corporation or property or assets so acquired, (ii) such Lien was not incurred in contemplation of such consolidation, merger -28- Lincoln Electric Holdings, Inc. Note Purchase Agreement The Lincoln Electric Company or acquisition, and (iii) at the time of creation, issuance, assumption, guarantee or incurrence of the Debt secured by such Lien and after giving effect thereto and to the application of the proceeds thereof, no Default or Event of Default would exist; (i) Liens securing operating leases with respect to personal property pursuant to which Holdings or a Restricted Subsidiary is the lessee (excluding financing leases, synthetic leases and similar arrangements), in each case incidental to, and not interfering with, the ordinary conduct of the business of Holdings or any of its Restricted Subsidiaries, provided that the Lien shall attach solely to the leased property or assets; (j) Liens existing on the date of this Agreement and securing the Debt of Holdings and its Restricted Subsidiaries, provided that (i) no Liens securing Debt in excess of $5,000,000 exist on the date of the Closing and (ii) the aggregate amount of all Debt secured by Liens existing on the date of the Closing does not exceed $12,000,000; and (k) any extension, renewal or refunding of any Lien permitted by the preceding clauses (g), (h) and (j) of this Section 10.7 in respect of the same property theretofore subject to such Lien in connection with the extension, renewal or refunding of the Debt secured thereby; provided that (i) such extension, renewal or refunding of Debt shall be without increase in the principal amount remaining unpaid as of the date of such extension, renewal or refunding, (ii) such Lien shall attach solely to the same such property, (iii) the principal amount remaining unpaid as of the date of such extension, renewal or refunding of Debt is less than or equal to the fair market value of the property (determined in good faith by the Board or Directors of Holdings) to which such Lien is attached, (iv) at the time of such extension, renewal or refunding and after giving effect thereto, no Default or Event of Default would exist and (v) all Debt of Holdings and the Company secured by any Lien with respect to any property of Holdings or the Company and all Debt of the Restricted Subsidiaries (other than the Company) shall not in the aggregate exceed 20% of Consolidated Net Worth. Section 10.8. Sale-and-Leaseback Transactions. The Obligors will not, and will not permit any Restricted Subsidiary to, enter into any Sale-and-Leaseback Transaction unless, immediately after giving effect thereto, the aggregate amount of Priority Debt does not exceed 20% of Consolidated Net Worth. SECTION 11. EVENTS OF DEFAULT. An "Event of Default" shall exist if any of the following conditions or events shall occur and be continuing: (a) the Obligors default in the payment of any principal or Make-Whole Amount, if any, on any Note when the same becomes due and payable, whether at maturity or at a date fixed for prepayment or by declaration or otherwise; or -29- Lincoln Electric Holdings, Inc. Note Purchase Agreement The Lincoln Electric Company (b) the Obligors default in the payment of any interest on any Note for more than five days after the same becomes due and payable; or (c) the Obligors default in the performance of or compliance with any term contained in Section 10.2, 10.3, 10.4, 10.5, 10.6, 10.7 or 10.8; or (d) the Obligors default in the performance of or compliance with any term contained herein (other than those referred to in paragraphs (a), (b) or (c) of this Section 11) and such default is not remedied within 30 days after the earlier of (i) a Responsible Officer of either Obligor obtaining actual knowledge of such default and (ii) either Obligor receiving written notice of such default from any holder of a Note (any such written notice to be identified as a "notice of default" and to refer specifically to this paragraph (d) of Section 11); or (e) any representation or warranty made in writing by or on behalf of the Obligors or by any officer of an Obligor in this Agreement or in any writing furnished in connection with the transactions contemplated hereby proves to have been false or incorrect in any material respect on the date as of which made; or (f) (i) an Obligor or any Restricted Subsidiary is in default (as principal or as guarantor or other surety) in the payment of any principal of or premium or make-whole amount or interest on any Indebtedness that is outstanding in an aggregate principal amount exceeding $10,000,000 beyond any period of grace provided with respect thereto, or (ii) an Obligor or any Restricted Subsidiary is in default in the performance of or compliance with any term of any evidence of any Indebtedness in an aggregate outstanding principal amount exceeding $10,000,000 or of any mortgage, indenture or other agreement relating thereto or any other condition exists, and as a consequence of such default or condition such Indebtedness has become, or has been declared, due and payable before its stated maturity or before its regularly scheduled dates of payment; or (g) an Obligor or any Restricted Subsidiary (i) is generally not paying, or admits in writing its inability to pay, its debts as they become due, (ii) files, or consents by answer or otherwise to the filing against it of, a petition for relief or reorganization or arrangement or any other petition in bankruptcy, for liquidation or to take advantage of any bankruptcy, insolvency, reorganization, moratorium or other similar law of any jurisdiction, (iii) makes an assignment for the benefit of its creditors, (iv) consents to the appointment of a custodian, receiver, trustee or other officer with similar powers with respect to it or with respect to any substantial part of its property, (v) is adjudicated as insolvent or to be liquidated, or (vi) takes corporate action for the purpose of any of the foregoing; or (h) a court or Governmental Authority of competent jurisdiction enters an order appointing, without consent by an Obligor or any Restricted Subsidiary, a custodian, receiver, trustee or other officer with similar powers with respect to it or with respect to any substantial part of its property, or constituting an order for relief or -30- Lincoln Electric Holdings, Inc. Note Purchase Agreement The Lincoln Electric Company approving a petition for relief or reorganization or any other petition in bankruptcy or for liquidation or to take advantage of any bankruptcy or insolvency law of any jurisdiction, or ordering the dissolution, winding-up or liquidation of an Obligor or any Restricted Subsidiary, or any such petition shall be filed against an Obligor or any Restricted Subsidiary and such petition shall not be dismissed within 60 days; or (i) a final judgment or judgments for the payment of money aggregating in excess of $5,000,000 are rendered against one or more of the Obligors and the Restricted Subsidiaries and which judgments are not, within 60 days after entry thereof, bonded, discharged or stayed pending appeal or are not discharged within 60 days after the expiration of such stay; or (j) If (i) any Plan shall fail to satisfy the minimum funding standards of ERISA or the Code for any plan year or part thereof or a waiver of such standards or extension of any amortization period is sought or granted under section 412 of the Code, (ii) a notice of intent to terminate any Plan shall have been or is reasonably expected to be filed with the PBGC or the PBGC shall have instituted proceedings under ERISA section 4042 to terminate or appoint a trustee to administer any Plan or the PBGC shall have notified Holdings or any ERISA Affiliate that a Plan may become a subject of any such proceedings, (iii) the aggregate "amount of unfunded benefit liabilities" (within the meaning of section 4001(a)(18) of ERISA) under all Plans, determined in accordance with Title IV of ERISA, shall exceed $50,000,000, (iv) Holdings or any ERISA Affiliate shall have incurred or is reasonably expected to incur any liability pursuant to Title I or IV of ERISA or the penalty or excise tax provisions of the Code relating to employee benefit plans, (v) Holdings or any ERISA Affiliate withdraws from any Multiemployer Plan, or (vi) Holdings or any Subsidiary establishes or amends any employee welfare benefit plan that provides post-employment welfare benefits in a manner that would increase the liability of Holdings or any Subsidiary thereunder; and any such event or events described in clauses (i) through (vi) above, either individually or together with any other such event or events, would reasonably be expected to have a Material Adverse Effect. As used in Section 11(j), the terms "employee benefit plan" and "employee welfare benefit plan" shall have the respective meanings assigned to such terms in Section 3 of ERISA. SECTION 12. REMEDIES ON DEFAULT, ETC. Section 12.1. Acceleration. (a) If an Event of Default with respect to either Obligor described in paragraph (g) or (h) of Section 11 (other than an Event of Default described in clause (i) of paragraph (g) or described in clause (vi) of paragraph (g) by virtue of the fact that such clause encompasses clause (i) of paragraph (g)) has occurred, all the Notes then outstanding shall automatically become immediately due and payable. (b) If any other Event of Default has occurred and is continuing, any holder or holders of a majority in principal amount of the Notes at the time outstanding may at any time at its or -31- Lincoln Electric Holdings, Inc. Note Purchase Agreement The Lincoln Electric Company their option, by notice or notices to either Obligor, declare all the Notes then outstanding to be immediately due and payable. (c) If any Event of Default described in paragraph (a) or (b) of Section 11 has occurred and is continuing, any holder of Notes at the time outstanding affected by such Event of Default may at any time, at its option, by notice or notices to either Obligor, declare all the Notes held by it to be immediately due and payable. Upon any Note becoming due and payable under this Section 12.1, whether automatically or by declaration, such Note will forthwith mature and the entire unpaid principal amount of such Note, plus (x) all accrued and unpaid interest thereon and (y) the Make-Whole Amount determined in respect of such principal amount (to the full extent permitted by applicable law), shall all be immediately due and payable, in each and every case without presentment, demand, protest or further notice, all of which are hereby waived. Each Obligor acknowledges, and the parties hereto agree, that each holder of a Note has the right to maintain its investment in the Notes free from repayment by the Obligors (except as herein specifically provided for) and that the provision for payment of a Make-Whole Amount by the Obligors in the event that the Notes are prepaid or are accelerated as a result of an Event of Default, is intended to provide compensation for the deprivation of such right under such circumstances. Section 12.2. Other Remedies. If any Default or Event of Default has occurred and is continuing, and irrespective of whether any Notes have become or have been declared immediately due and payable under Section 12.1, the holder of any Note at the time outstanding may proceed to protect and enforce the rights of such holder by an action at law, suit in equity or other appropriate proceeding, whether for the specific performance of any agreement contained herein or in any Note, or for an injunction against a violation of any of the terms hereof or thereof, or in aid of the exercise of any power granted hereby or thereby or by law or otherwise. Section 12.3. Rescission. At any time after any Notes have been declared due and payable pursuant to clause (b) or (c) of Section 12.1, the holders of not less than 66-2/3% in principal amount of the Notes then outstanding, by written notice to the Obligors, may rescind and annul any such declaration and its consequences if (a) the Obligors have paid all overdue interest on the Notes of each Series, all principal of and Make-Whole Amount, if any, on any Notes of each Series that are due and payable and are unpaid other than by reason of such declaration, and all interest on such overdue principal and Make-Whole Amount, if any, and (to the extent permitted by applicable law) any overdue interest in respect of the Notes of each Series, at the respective Default Rates, (b) all Events of Default and Defaults, other than non-payment of amounts that have become due solely by reason of such declaration, have been cured or have been waived pursuant to Section 17, and (c) no judgment or decree has been entered for the payment of any monies due pursuant hereto or to the Notes. No rescission and annulment under this Section 12.3 will extend to or affect any subsequent Event of Default or Default or impair any right consequent thereon. Section 12.4. No Waivers or Election of Remedies, Expenses, etc. No course of dealing and no delay on the part of any holder of any Note in exercising any right, power or remedy shall -32- Lincoln Electric Holdings, Inc. Note Purchase Agreement The Lincoln Electric Company operate as a waiver thereof or otherwise prejudice such holder's rights, powers or remedies. No right, power or remedy conferred by this Agreement or by any Note upon any holder thereof shall be exclusive of any other right, power or remedy referred to herein or therein or now or hereafter available at law, in equity, by statute or otherwise. Without limiting the obligations of the Obligors under Section 15, the Obligors will pay to the holder of each Note on demand such further amount as shall be sufficient to cover all costs and expenses of such holder incurred in any enforcement or collection under this Section 12, including, without limitation, reasonable attorneys' fees, expenses and disbursements. SECTION 13. REGISTRATION; EXCHANGE; SUBSTITUTION OF NOTES. Section 13.1. Registration of Notes. The Obligors shall keep at the principal executive office of Holdings a register for the registration and registration of transfers of Notes. The name and address of each holder of one or more Notes, each transfer thereof and the name and address of each transferee of one or more Notes shall be registered in such register. Prior to due presentment for registration of transfer, the Person in whose name any Note shall be registered shall be deemed and treated as the owner and holder thereof for all purposes hereof, and the Obligors shall not be affected by any notice or knowledge to the contrary. The Obligors shall give to any holder of a Note that is an Institutional Investor promptly upon request therefor, a complete and correct copy of the names and addresses of all registered holders of Notes. Section 13.2. No Transfers of Notes to Competitors; Transfer and Exchange of Notes. (a) Without the consent of Holdings, which consent shall not be unreasonably withheld, no holder of a Note may transfer such Note to a Competitor. (b) Upon surrender of any Note at the principal executive office of Holdings for registration of transfer or exchange (and in the case of a surrender for registration of transfer, duly endorsed or accompanied by a written instrument of transfer duly executed by the registered holder of such Note or its attorney duly authorized in writing and accompanied by the address for notices of each transferee of such Note or part thereof), the Obligors shall execute and deliver, at the Obligors' expense (except as provided below), one or more new Notes (as requested by the holder thereof) of the same Series in exchange therefor, in an aggregate principal amount equal to the unpaid principal amount of the surrendered Note. Each such new Note shall be payable to such Person as such holder may request and shall be substantially in the form of Exhibit 1-A, 1-B or 1-C, as the case may be. Each such new Note shall be dated and bear interest from the date to which interest shall have been paid on the surrendered Note or dated the date of the surrendered Note if no interest shall have been paid thereon. The Obligors may require payment of a sum sufficient to cover any stamp tax or governmental charge imposed in respect of any such transfer of Notes. Notes shall not be transferred in denominations of less than $100,000, provided that if necessary to enable the registration of transfer by a holder of its entire holding of Notes, one Note may be in a denomination of less than $100,000. Any transferee of a Note, or purchaser of a participation therein, shall, by its acceptance of such Note be deemed to make the same representations to the Obligors regarding the Note or participation as the Purchasers have made pursuant to Sections 6.1 and 6.2, provided that such entity may (in reliance upon information provided by the Obligors, which shall not be unreasonably withheld) make a representation to -33- Lincoln Electric Holdings, Inc. Note Purchase Agreement The Lincoln Electric Company the effect that the purchase by such entity of any Note will not constitute a non-exempt prohibited transaction under Section 406(a) of ERISA. Section 13.3. Replacement of Notes. Upon receipt by the Obligors of evidence reasonably satisfactory to it of the ownership of and the loss, theft, destruction or mutilation of any Note (which evidence shall be, in the case of an Institutional Investor, notice from such Institutional Investor of such ownership and such loss, theft, destruction or mutilation), and (a) in the case of loss, theft or destruction, of indemnity reasonably satisfactory to it (provided that if the holder of such Note is, or is a nominee for, an original Purchaser or another holder of a Note with a minimum net worth of at least $50,000,000, such Person's own unsecured agreement of indemnity shall be deemed to be satisfactory), or (b) in the case of mutilation, upon surrender and cancellation thereof, the Obligors at their own expense shall execute and deliver, in lieu thereof, a new Note of the same Series, dated and bearing interest from the date to which interest shall have been paid on such lost, stolen, destroyed or mutilated Note or dated the date of such lost, stolen, destroyed or mutilated Note if no interest shall have been paid thereon. SECTION 14. PAYMENTS ON NOTES. Section 14.1. Place of Payment. Subject to Section 14.2, payments of principal, Make-Whole Amount, if any, and interest becoming due and payable on the Notes shall be made in Cleveland, Ohio at the principal office of the Company in such jurisdiction. The Obligors may at any time, by notice to each holder of a Note, change the place of payment of the Notes so long as such place of payment shall be either the principal office of an Obligor in such jurisdiction or the principal office of a bank or trust company in such jurisdiction. Section 14.2. Home Office Payment. So long as any Purchaser or its nominee shall be the holder of any Note, and notwithstanding anything contained in Section 14.1 or in such Note to the contrary, the Obligors will pay all sums becoming due on such Note for principal, Make-Whole Amount, if any, and interest by the method and at the address specified for such purpose below such Purchaser's name in Schedule A, or by such other method or at such other address as such Purchaser shall have from time to time specified to Holdings in writing for such purpose, without the presentation or surrender of such Note or the making of any notation thereon, except that upon written request of the Obligors made concurrently with or reasonably promptly after payment or prepayment in full of any Note, such Purchaser shall surrender such Note for cancellation, reasonably promptly after any such request, to Holdings at its principal executive office or at the place of payment most recently designated by the Obligors pursuant to Section 14.1. The Obligors will afford the benefits of this Section 14.2 to any Institutional Investor that is the direct or indirect transferee of any Note purchased by any Purchaser under this Agreement and that has made the same agreement relating to such Note as such Purchaser has made in this Section 14.2. -34- Lincoln Electric Holdings, Inc. Note Purchase Agreement The Lincoln Electric Company SECTION 15. EXPENSES, ETC. Section 15.1. Transaction Expenses. Whether or not the transactions contemplated hereby are consummated, the Obligors will pay all costs and expenses (including reasonable attorneys' fees of a special counsel and, if reasonably required, local or other counsel) incurred by each Purchaser or holder of a Note in connection with such transactions and in connection with any amendments, waivers or consents under or in respect of this Agreement or the Notes (whether or not such amendment, waiver or consent becomes effective), including, without limitation: (a) the costs and expenses incurred in enforcing or defending (or determining whether or how to enforce or defend) any rights under this Agreement or the Notes or in responding to any subpoena or other legal process or informal investigative demand issued in connection with this Agreement or the Notes, or by reason of being a holder of any Note, and (b) the costs and expenses, including financial advisors' fees, incurred in connection with the insolvency or bankruptcy of either Obligor or any Subsidiary or in connection with any work-out or restructuring of the transactions contemplated hereby and by the Notes. The Obligors will pay, and will save each Purchaser and each other holder of a Note harmless from, all claims in respect of any fees, costs or expenses if any, of brokers and finders (other than those retained by such Purchaser). Section 15.2. Survival. The obligations of the Obligors under this Section 15 will survive the payment or transfer of any Note, the enforcement, amendment or waiver of any provision of this Agreement or the Notes, and the termination of this Agreement. SECTION 16. SURVIVAL OF REPRESENTATIONS AND WARRANTIES; ENTIRE AGREEMENT. All representations and warranties contained herein shall survive the execution and delivery of this Agreement and the Notes, the purchase or transfer by any Purchaser of any Note or portion thereof or interest therein and the payment of any Note, and may be relied upon by any subsequent holder of a Note, regardless of any investigation made at any time by or on behalf of such Purchaser or any other holder of a Note. All statements contained in any certificate or other instrument delivered by or on behalf of an Obligor pursuant to this Agreement shall be deemed representations and warranties of such Obligor under this Agreement. Subject to the preceding sentence, this Agreement and the Notes embody the entire agreement and understanding between each Purchaser and the Obligors and supersede all prior agreements and understandings relating to the subject matter hereof. SECTION 17. AMENDMENT AND WAIVER. Section 17.1. Requirements. This Agreement and the Notes may be amended, and the observance of any term hereof or of the Notes may be waived (either retroactively or prospectively), with (and only with) the written consent of the Obligors and the Required Holders, except that (a) no amendment or waiver of any of the provisions of Section 1, 2, 3, 4, 5, 6 or 21 hereof, or any defined term (as it is used therein), will be effective as to any Purchaser unless consented to by such Purchaser in writing, and (b) no such amendment or waiver may, without the written consent of the holder of each Note at the time outstanding affected thereby, -35- Lincoln Electric Holdings, Inc. Note Purchase Agreement The Lincoln Electric Company (i) subject to the provisions of Section 12 relating to acceleration or rescission, change the amount or time of any prepayment or payment of principal of, or reduce the rate or change the time of payment or method of computation of interest or of the Make-Whole Amount on, the Notes, (ii) change the percentage of the principal amount of the Notes the holders of which are required to consent to any such amendment or waiver, or (iii) amend any of Sections 8, 11(a), 11(b), 12, 17 or 20. Section 17.2. Solicitation of Holders of Notes. (a) Solicitation. The Obligors will provide each holder of the Notes (irrespective of the amount of Notes then owned by it) with sufficient information, sufficiently far in advance of the date a decision is required, to enable such holder to make an informed and considered decision with respect to any proposed amendment, waiver or consent in respect of any of the provisions hereof or of the Notes. The Obligors will deliver executed or true and correct copies of each amendment, waiver or consent effected pursuant to the provisions of this Section 17 to each holder of outstanding Notes promptly following the date on which it is executed and delivered by, or receives the consent or approval of, the requisite holders of Notes. (b) Payment. The Obligors will not directly or indirectly pay or cause to be paid any remuneration, whether by way of supplemental or additional interest, fee or otherwise, or grant any security, to any holder of Notes as consideration for or as an inducement to the entering into by any holder of Notes or any waiver or amendment of any of the terms and provisions hereof or of the Notes unless such remuneration is concurrently paid, or security is concurrently granted, on the same terms, ratably to each holder of Notes then outstanding whether or not such holder consented to such waiver or amendment. Section 17.3. Binding Effect, etc. Any amendment or waiver consented to as provided in this Section 17 applies equally to all holders of Notes and is binding upon them and upon each future holder of any Note and upon the Obligors without regard to whether such Note has been marked to indicate such amendment or waiver. No such amendment or waiver will extend to or affect any obligation, covenant, agreement, Default or Event of Default not expressly amended or waived or impair any right consequent thereon. No course of dealing between the Obligors and the holder of any Note nor any delay in exercising any rights hereunder or under any Note shall operate as a waiver of any rights of any holder of such Note. As used herein, the term "this Agreement" and references thereto shall mean this Agreement as it may from time to time be amended or supplemented. Section 17.4. Notes Held by the Obligors, etc. Solely for the purpose of determining whether the holders of the requisite percentage of the aggregate principal amount of Notes then outstanding approved or consented to any amendment, waiver or consent to be given under this Agreement or the Notes, or have directed the taking of any action provided herein or in the Notes to be taken upon the direction of the holders of a specified percentage of the aggregate principal amount of Notes then outstanding, Notes directly or indirectly owned by the Obligors or any of their Affiliates shall be deemed not to be outstanding. -36- Lincoln Electric Holdings, Inc. Note Purchase Agreement The Lincoln Electric Company SECTION 18. NOTICES. All notices and communications provided for hereunder shall be in writing and sent (a) by telefacsimile if the sender on the same day sends a confirming copy of such notice by a recognized overnight delivery service (charges prepaid), or (b) by registered or certified mail with return receipt requested (postage prepaid), or (c) by a recognized overnight delivery service (with charges prepaid). Any such notice must be sent: (i) if to any Purchaser or its nominee, to such Purchaser or it at the address specified for such communications in Schedule A, or at such other address as such Purchaser or it shall have specified to the Obligors in writing, (ii) if to any other holder of any Note, to such holder at such address as such other holder shall have specified to the Obligors in writing, or (iii) if to an Obligor, to the such Obligor at its address set forth at the beginning hereof to the attention of the Treasurer of such Obligor, or at such other address as such Obligor shall have specified to the holder of each Note in writing. Notices under this Section 18 will be deemed given only when actually received. SECTION 19. REPRODUCTION OF DOCUMENTS. This Agreement and all documents relating thereto, including, without limitation, (a) consents, waivers and modifications that may hereafter be executed, (b) documents received by any Purchaser at the Closing (except the Notes themselves), and (c) financial statements, certificates and other information previously or hereafter furnished to any Purchaser, may be reproduced by such Purchaser by any photographic, photostatic, microfilm, microcard, miniature photographic or other similar process and such Purchaser may destroy any original document so reproduced. Each Obligor agrees and stipulates that, to the extent permitted by applicable law, any such reproduction shall be admissible in evidence as the original itself in any judicial or administrative proceeding (whether or not the original is in existence and whether or not such reproduction was made by such Purchaser in the regular course of business) and any enlargement, facsimile or further reproduction of such reproduction shall likewise be admissible in evidence. This Section 19 shall not prohibit the Obligors or any other holder of Notes from contesting any such reproduction to the same extent that it could contest the original, or from introducing evidence to demonstrate the inaccuracy of any such reproduction. SECTION 20. CONFIDENTIAL INFORMATION. For the purposes of this Section 20, "Confidential Information" means information delivered to any Purchaser or other holder of the Notes (each a "Recipient") by or on behalf of either Obligor or any Subsidiary in connection with the transactions contemplated by or otherwise pursuant to this Agreement that is proprietary in nature and that was clearly marked or labeled or otherwise adequately identified when received by such Recipient as being confidential -37- Lincoln Electric Holdings, Inc. Note Purchase Agreement The Lincoln Electric Company information of such Obligor or such Subsidiary, provided that such term does not include information that (a) was publicly known or otherwise known to such Recipient prior to the time of such disclosure, (b) subsequently becomes publicly known through no act or omission by such Recipient or any person acting on such Recipient's behalf, (c) otherwise becomes known to such Recipient other than through disclosure by an Obligor or any Subsidiary or (d) constitutes financial statements delivered to such Recipient under Section 7.1 that are otherwise publicly available. Each Recipient will maintain the confidentiality of such Confidential Information in accordance with procedures adopted by such Recipient in good faith to protect confidential information of third parties delivered to such Recipient, provided that such Recipient may deliver or disclose Confidential Information to (i) such Recipient's directors, officers, employees, agents, attorneys and affiliates (to the extent such disclosure reasonably relates to the administration of the investment represented by such Recipient's Notes), (ii) such Recipient's financial advisors and other professional advisors who agree to hold confidential the Confidential Information substantially in accordance with the terms of this Section 20, (iii) any other holder of any Note, (iv) any Institutional Investor to which such Recipient sells or offers to sell such Note or any part thereof or any participation therein (if such Person has agreed in writing prior to its receipt of such Confidential Information to be bound by the provisions of this Section 20), (v) any Person from which such Recipient offers to purchase any security of an Obligor (if such Person has agreed in writing prior to its receipt of such Confidential Information to be bound by the provisions of this Section 20), (vi) any federal or state regulatory authority having jurisdiction over such Recipient, (vii) the National Association of Insurance Commissioners or any similar organization, or any nationally recognized rating agency that requires access to information about such Recipient's investment portfolio, or (viii) any other Person to which such delivery or disclosure may be necessary or appropriate (w) to effect compliance with any law, rule, regulation or order applicable to such Recipient, (x) in response to any subpoena or other legal process, (y) in connection with any litigation to which such Recipient is a party or (z) if an Event of Default has occurred and is continuing, to the extent such Recipient may reasonably determine such delivery and disclosure to be necessary or appropriate in the enforcement or for the protection of the rights and remedies under such Recipient's Notes and this Agreement. Each holder of a Note, by its acceptance of a Note, will be deemed to have agreed to be bound by and to be entitled to the benefits of this Section 20 as though it were a party to this Agreement. On reasonable request by the Obligors in connection with the delivery to any holder of a Note of information required to be delivered to such holder under this Agreement or requested by such holder (other than a holder that is a party to this Agreement or its nominee or any other holder that shall have previously delivered such a confirmation), such holder will confirm in writing that it is bound by the provisions of this Section 20. SECTION 21. SUBSTITUTION OF PURCHASER. Each Purchaser shall have the right to substitute any one of such Purchaser's Affiliates as the purchaser of the Notes that such Purchaser has agreed to purchase hereunder, by written notice to the Obligors, which notice shall be signed by both such Purchaser and such Affiliate, shall contain such Affiliate's agreement to be bound by this Agreement and shall contain a confirmation by such Affiliate of the accuracy with respect to it of the representations set forth in Section 6. Upon receipt of such notice, wherever the word "Purchaser" is used in this -38- Lincoln Electric Holdings, Inc. Note Purchase Agreement The Lincoln Electric Company Agreement (other than in this Section 21), such word shall be deemed to refer to such Affiliate in lieu of such substituting Purchaser. In the event that such Affiliate is so substituted as a purchaser hereunder and such Affiliate thereafter transfers to the substituting Purchaser all of the Notes then held by such Affiliate, upon receipt by the Obligors of notice of such transfer, wherever the word "Purchaser" is used in this Agreement (other than in this Section 21), such word shall no longer be deemed to refer to such Affiliate, but shall refer to such Purchaser, and such Purchaser shall have all the rights of an original holder of the Notes under this Agreement. SECTION 22. MISCELLANEOUS. Section 22.1. Successors and Assigns. All covenants and other agreements contained in this Agreement by or on behalf of any of the parties hereto bind and inure to the benefit of their respective successors and assigns (including, without limitation, any subsequent holder of a Note) whether so expressed or not. Section 22.2. Payments Due on Non-Business Days. Anything in this Agreement or the Notes to the contrary notwithstanding, any payment of principal of or Make-Whole Amount or interest on any Note that is due on a date other than a Business Day shall be made on the next succeeding Business Day without including the additional days elapsed in the computation of the interest payable on such next succeeding Business Day. Section 22.3. Severability. Any provision of this Agreement that is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall (to the full extent permitted by law) not invalidate or render unenforceable such provision in any other jurisdiction. Section 22.4. Construction. Each covenant contained herein shall be construed (absent express provision to the contrary) as being independent of each other covenant contained herein, so that compliance with any one covenant shall not (absent such an express contrary provision) be deemed to excuse compliance with any other covenant. Where any provision herein refers to action to be taken by any Person, or which such Person is prohibited from taking, such provision shall be applicable whether such action is taken directly or indirectly by such Person. Section 22.5. Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be an original but all of which together shall constitute one instrument. Each counterpart may consist of a number of copies hereof, each signed by fewer than all, but together signed by all, of the parties hereto. SECTION 22.6. GOVERNING LAW. THIS AGREEMENT SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, AND THE RIGHTS OF THE PARTIES SHALL BE GOVERNED BY, THE LAW OF THE STATE OF NEW YORK EXCLUDING CHOICE-OF-LAW PRINCIPLES OF THE LAW OF SUCH STATE THAT WOULD REQUIRE THE APPLICATION OF THE LAWS OF A JURISDICTION OTHER THAN SUCH STATE. -39- Lincoln Electric Holdings, Inc. Note Purchase Agreement The Lincoln Electric Company Section 22.7. Consent to Jurisdiction and Service of Process. (a) To the extent permitted by applicable law, each Obligor (i) hereby irrevocably submits to the nonexclusive jurisdiction of the Supreme Court of the State of New York, New York County (without prejudice to the rights of any holder of a Note to remove to the United States District Court for the Southern District of New York) and to the nonexclusive jurisdiction of the United States District Court for the Southern District of New York, for the purposes of any suit, action or other proceeding arising out of this Agreement, or the subject matter hereof or any of the transactions contemplated hereby or thereby brought by any holder of the Notes, (ii) hereby irrevocably agrees that all claims in respect of such action or proceeding may be heard and determined in such New York State court or, to the fullest extent permitted by applicable law, in such federal court, and (iii) hereby irrevocably waives, and agrees not to assert, by way of motion, as a defense, or otherwise, in any such suit, action or proceeding any claim that is not personally subject to the jurisdiction of the above-named courts, that the suit, action or proceeding is improper or that this Agreement, or the subject matter hereof may not be enforced in or by such court. (b) A final judgment obtained in respect of any action, suit or proceeding referred to in this Section 22.7 shall be conclusive and may be enforced in other jurisdictions by suit or judgment or in any manner as provided by applicable law. Each Obligor hereby consents to service of process by registered mail, Federal Express, or similar courier at its address set forth in Section 18, it being agreed that service in such manner shall constitute valid service upon or its respective successors or assigns in connection with any such action or proceeding only; provided, however, that nothing in this Section 22.7 shall affect the right of any holder of the Notes to serve legal process in any other manner permitted by applicable law. * * * * * -40- Lincoln Electric Holdings, Inc. Note Purchase Agreement The Lincoln Electric Company The execution hereof by the Purchasers shall constitute a contract among the Obligors and the Purchasers for the uses and purposes hereinabove set forth. Very truly yours, LINCOLN ELECTRIC HOLDINGS, INC. By _______________________________ Title: By Title: THE LINCOLN ELECTRIC COMPANY By _______________________________ Title: By ______________________________ Title The foregoing is hereby agreed to as of the date thereof. STATE FARM LIFE INSURANCE COMPANY By _______________________________ Its By _______________________________ Its -41- Lincoln Electric Holdings, Inc. Note Purchase Agreement The Lincoln Electric Company The foregoing is hereby agreed to as of the date thereof. THE PRUDENTIAL INSURANCE COMPANY OF AMERICA By _________________________________ Its The foregoing is hereby agreed to as of the date thereof. MEDICA HEALTH PLAN By: Prudential Private Placement Investors, L.P., as Investment Advisor By: Prudential Private Placement Investors, Inc., General Partner By ________________________ Its Vice President The foregoing is hereby agreed to as of the date thereof. HARTFORD LIFE INSURANCE COMPANY By: Prudential Private Placement Investors, L.P., as Investment Advisor By: Prudential Private Placement Investors, Inc., General Partner By ________________________ Its Vice President -42- Lincoln Electric Holdings, Inc. Note Purchase Agreement The Lincoln Electric Company The foregoing is hereby agreed to as of the date thereof. CONNECTICUT GENERAL LIFE INSURANCE COMPANY By: CIGNA Investments, Inc. (authorized agent) By ______________________________ Its The foregoing is hereby agreed to as of the date thereof. CONNECTICUT GENERAL LIFE INSURANCE COMPANY, on behalf of one or more separate accounts By: CIGNA Investments, Inc. (authorized agent) By ____________________________ Its The foregoing is hereby agreed to as of the date thereof. NATIONWIDE LIFE INSURANCE COMPANY By _________________________________ Its -43- Lincoln Electric Holdings, Inc. Note Purchase Agreement The Lincoln Electric Company The foregoing is hereby agreed to as of the date thereof. NATIONWIDE LIFE AND ANNUITY INSURANCE COMPANY By _________________________________ Its The foregoing is hereby agreed to as of the date thereof. THE LINCOLN NATIONAL LIFE INSURANCE COMPANY By Delaware Lincoln Investment Advisers, a series of Delaware Management Business Trust, Attorney-In-Fact By _________________________________ Its The foregoing is hereby agreed to as of the date thereof. MODERN WOODMEN OF AMERICA By _________________________________ Its -44- Lincoln Electric Holdings, Inc. Note Purchase Agreement The Lincoln Electric Company The foregoing is hereby agreed to as of the date thereof. AMERICAN UNITED LIFE INSURANCE COMPANY By _________________________________ Its The foregoing is hereby agreed to as of the date thereof. PIONEER MUTUAL LIFE INSURANCE COMPANY By: American United Life Insurance Company, Its Agent By:_______________________________ Its: The foregoing is hereby agreed to as of the date thereof. THE STATE LIFE INSURANCE COMPANY By: American United Life Insurance Company, Its Agent By:_______________________________ Its: -45- Lincoln Electric Holdings, Inc. Note Purchase Agreement The Lincoln Electric Company The foregoing is hereby agreed to as of the date thereof. WEST AMERICAN INSURANCE COMPANY By _________________________________ Its The foregoing is hereby agreed to as of the date thereof. THE OHIO CASUALTY INSURANCE COMPANY By _________________________________ Its The foregoing is hereby agreed to as of the date thereof. CLARICA LIFE INSURANCE COMPANY-U.S. By _________________________________ Its -46- DEFINED TERMS GENERAL PROVISIONS Where the character or amount of any asset or liability or item of income or expense is required to be determined or any consolidation or other accounting computation is required to be made for the purposes of this Agreement, the same shall be done in accordance with GAAP, to the extent applicable, except where such principles are inconsistent with the express requirements of this Agreement. DEFINITIONS As used herein, the following terms have the respective meanings set forth below or set forth in the Section hereof following such term: "Affiliate" means, at any time, and with respect to any Person, (a) any other Person that at such time directly or indirectly through one or more intermediaries Controls, or is Controlled by, or is under common Control with, such first Person. As used in this definition, "Control" means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of voting securities, by contract or otherwise. Unless the context otherwise clearly requires, any reference to an "Affiliate" is a reference to an Affiliate of Holdings. "Attributable Debt" means, as to any particular lease relating to a Sale-and-Leaseback Transaction, the present value of all Lease Rentals required to be paid by the Holdings or any Restricted Subsidiary under such lease during the remaining term thereof (determined in accordance with generally accepted financial practice using a discount factor equal to the interest rate implicit in such lease if known or, if not known, of 7% per annum). "Business Day" means (a) for the purposes of Section 8.7 only, any day other than a Saturday, a Sunday or a day on which commercial banks in New York City are required or authorized to be closed, and (b) for the purposes of any other provision of this Agreement, any day other than a Saturday, a Sunday or a day on which commercial banks in New York, New York, or Cleveland, Ohio are required or authorized to be closed. "Capital Lease" means, at any time, a lease with respect to which the lessee is required concurrently to recognize the acquisition of an asset and the incurrence of a liability in accordance with GAAP. "Capital Lease Obligation" means, with respect to any Person and a Capital Lease, the amount of the obligation of such Person as the lessee under such Capital Lease which would, in accordance with GAAP, appear as a liability on a balance sheet of such Person. "Cash Equivalents" means investments in (i) United States Governmental Securities maturing within 365 days from the date of acquisition thereof; (ii) negotiable certificates of deposit and bankers' acceptances maturing within 365 days from the date of acquisition thereof SCHEDULE B (to Note Purchase Agreement) issued by any commercial bank or trust company organized under the laws of the United States or any state thereof or the District of Columbia, having at any date of determination combined capital and surplus and retained earnings of not less than $100,000,000, provided, that the long-term unsecured debt obligations of such bank or trust company (or the long-term unsecured debt obligations of the bank holding company owning all of the capital stock of such bank or trust company) shall have been given a rating of "A" or better by S&P or an equivalent rating by any other credit rating agency of recognized national standing, and (iii) commercial paper maturing not more than 270 days from the date of issuance thereof which has a rating, at the time of acquisition by Holdings or such Restricted Subsidiary, of "A-1" or better by S&P or an equivalent rating by any other credit rating agency of recognized national standing. "Closing" is defined in Section 3. "Code" means the Internal Revenue Code of 1986, as amended from time to time, and the rules and regulations promulgated thereunder from time to time. "Company" means The Lincoln Electric Company, an Ohio corporation. "Competitor" shall mean any Person directly or indirectly through its Affiliates has substantial operations related to the welding and cutting industry, including the manufacture and sale of welding and cutting equipment and related consummables, industrial gases and gas apparatus, lasers and robotics for welding applications, and the engineered adhesives and industrial fastener industries, provided that: (a) the provision of investment advisory services by a Person to a Plan which is owned or controlled by a Person which would otherwise be a Competitor shall not of itself cause the Person providing such services to be deemed to be a Competitor; and (b) in no event shall an Institutional Investor be deemed a Competitor unless such Institutional Investor controls, or is controlled by, or is under common control with, a Person that is substantially engaged in the welding and cutting industry, including the manufacture and sale of welding and cutting equipment and related consummables, industrial gases and gas apparatus, lasers and robotics for welding applications, and the engineered adhesives and industrial fastener industries. "Confidential Information" is defined in Section 20. "Consolidated Debt" means, as of any date of determination, the sum of all Debt of Holdings and its Restricted Subsidiaries outstanding on such date, after eliminating all offsetting debits and credits between Holdings and its Restricted Subsidiaries and all other items required to be eliminated in the course of the preparation of consolidated financial statements of Holdings and its Restricted Subsidiaries in accordance with GAAP. "Consolidated EBITDA" for any period means the sum of (a) Consolidated Net Income during such period plus (to the extent deducted in determining Consolidated Net Income for such period), (b) all provisions for any Federal, state or local income taxes made by Holdings and its B-2 Restricted Subsidiaries during such period, (c) all provisions for depreciation and amortization (other than amortization of debt discount) made by Holdings and its Restricted Subsidiaries during such period, and (d) Interest Charges during such period. "Consolidated Fixed Charges" means, with respect to any period, on a consolidated basis the sum of (a) Interest Charges for such period and (b) Lease Rentals for such period. "Consolidated Funded Debt" means, as of any date of determination, the sum of all Funded Debt of Holdings and its Restricted Subsidiaries outstanding on such date, after eliminating all offsetting debits and credits between Holdings and its Restricted Subsidiaries and all other items required to be eliminated in the course of the preparation of consolidated financial statements of Holdings and its Restricted Subsidiaries in accordance with GAAP. "Consolidated Income Available for Fixed Charges" means, with respect to any period, Consolidated Net Income for such period plus all amounts deducted in the computation thereof on account of (a) Consolidated Fixed Charges and (b) taxes imposed on or measured by income or excess profits. "Consolidated Net Income" means, with reference to any period, the net income (or loss) of Holdings and its Restricted Subsidiaries for such period (taken as a cumulative whole), as determined in accordance with GAAP, after eliminating all offsetting debits and credits between Holdings and its Restricted Subsidiaries and all other items required to be eliminated in the course of the preparation of consolidated financial statements of Holdings and its Restricted Subsidiaries in accordance with GAAP, provided that there shall be excluded: (a) the income (or loss) of any Person accrued prior to the date it becomes a Restricted Subsidiary or is merged into or consolidated with Holdings or a Restricted Subsidiary, and the income (or loss) of any Person, substantially all of the assets of which have been acquired in any manner, realized by such other Person prior to the date of acquisition, (b) the income (or loss) of any Person (other than a Restricted Subsidiary) in which Holdings or any Restricted Subsidiary has an ownership interest, except to the extent that any such income has been actually received by Holdings or such Restricted Subsidiary in the form of cash dividends or similar cash distributions, (c) the undistributed earnings of any Restricted Subsidiary to the extent that, to the best of the knowledge of the Obligors, the declaration or payment of dividends or similar distributions by such Restricted Subsidiary is (i) not at the time permitted by the terms of its charter or any agreement, instrument, judgment, decree, order, statute, rule or governmental regulation applicable to such Restricted Subsidiary, or (ii) otherwise unavailable for payment, (d) any aggregate net gain (but not any aggregate net loss) during such period arising from the sale, conversion, exchange or other disposition of Investments or capital assets (such term to include, without limitation, the following, whether or not current: all B-3 fixed assets, whether tangible or intangible, and all inventory sold in conjunction with the disposition of fixed assets), and any taxes on such net gain (or net loss), (e) any gains resulting from any write-up or reappraisal of any assets (but not any losses resulting from any write-down or reappraisal of any assets), (f) any net gain from the collection of the proceeds of life insurance policies, (g) any gain arising from the acquisition of any Security, or the extinguishment, under GAAP, of any Debt, of Holdings or any Restricted Subsidiary, (h) any deferred or other credit representing the excess of equity in any Restricted Subsidiary at the date of acquisition over the cost of the investment in such Restricted Subsidiary; and (i) any non-cash charges related to the implementation by Holdings and its Restricted Subsidiaries of FASB Statement 142. "Consolidated Net Worth" means, at any time, (a) the sum (adjusted for any non-cash charges related to the implementation by Holdings and its Restricted Subsidiaries of FASB Statement 142) of (i) the par value (or value stated on the books of the corporation) of the capital stock (but excluding treasury stock and capital stock subscribed and unissued) of Holdings and its Restricted Subsidiaries plus (ii) the amount of the paid-in capital and retained earnings of Holdings and its Restricted Subsidiaries, in each case as such amounts would be shown on a consolidated balance sheet of Holdings and its Restricted Subsidiaries as of such time prepared in accordance with GAAP, minus (b) to the extent included in clause (a), all amounts properly attributable to minority interests, if any, in the stock and surplus of Restricted Subsidiaries. "Consolidated Senior Funded Debt" means (a) all Debt evidenced by the Notes, and (b) all other Consolidated Funded Debt ranking pari passu or senior in right of payment with the Debt evidenced by the Notes. "Consolidated Total Assets" means, at any time, (a) total assets of Holdings and its Restricted Subsidiaries determined as of the end of the most recently ended Fiscal Year on a consolidated basis in accordance with GAAP, minus (b) to the extent included in clause (a), all amounts properly attributable to minority interests, if any, in the stock and surplus of such Restricted Subsidiaries. B-4 "Current Maturities of Funded Debt" means, at any time and with respect to any item of Funded Debt, the portion of such Funded Debt outstanding at such time which by the terms of such Funded Debt or the terms of any instrument or agreement relating thereto is due on demand or within one year from such time (whether by sinking fund, other required prepayment or final payment at maturity) and is not directly or indirectly renewable, extendible or refundable at the option of the obligor under an agreement or firm commitment in effect at such time to a date one year or more from such time. "Debt" means, with respect to any Person, without duplication, (a) its liabilities for borrowed money; (b) its liabilities for the deferred purchase price of property acquired by such Person (excluding accounts payable arising in the ordinary course of business but including, without limitation, all liabilities created or arising under any conditional sale or other title retention agreement with respect to any such property); (c) its Capital Lease Obligations; (d) all liabilities for borrowed money secured by any Lien with respect to any property owned by such Person (whether or not it has assumed or otherwise become liable for such liabilities); and (e) any Guaranty of such Person with respect to liabilities of a type described in any of clauses (a) through (d) hereof. Debt of any Person shall include all obligations of such Person of the character described in clauses (a) through (e) to the extent such Person remains legally liable in respect thereof notwithstanding that any such obligation is deemed to be extinguished under GAAP. "Default" means an event or condition the occurrence or existence of which would, with the lapse of time or the giving of notice or both, become an Event of Default. "Default Rate" with respect to a Series means that rate of interest that is the greater of (i) 2% per annum above the rate of interest stated in clause (a) of the first paragraph of the Notes of such Series or (ii) 2% over the rate of interest publicly announced by The Bank of New York in New York, New York as its "base" or "prime" rate. "Disposition Value" means, at any time, with respect to any property (a) in the case of property that does not constitute Subsidiary Stock, the book value thereof, valued at the time of such disposition in good faith by Holdings, and (b) in the case of property that constitutes Subsidiary Stock, an amount equal to that percentage of book value of the assets of the Subsidiary that issued such stock as is equal to the percentage that the book value of such Subsidiary Stock represents of the B-5 book value of all of the outstanding capital stock of such Subsidiary (assuming, in making such calculations, that all Securities convertible into such capital stock are so converted and giving full effect to all transactions that would occur or be required in connection with such conversion) determined at the time of the disposition thereof, in good faith by Holdings. "Environmental Laws" means any and all Federal, state, local, and foreign statutes, laws, regulations, ordinances, rules, judgments, orders, decrees, permits, concessions, grants, franchises, licenses, agreements or governmental restrictions relating to pollution and the protection of the environment or the release of any materials into the environment, including but not limited to those related to hazardous substances or wastes, air emissions and discharges to waste or public systems. "ERISA" means the Employee Retirement Income Security Act of 1974, as amended from time to time, and the rules and regulations promulgated thereunder from time to time in effect. "ERISA Affiliate" means any trade or business (whether or not incorporated) that is treated as a single employer together with Holdings under section 414 of the Code. "Event of Default" is defined in Section 11. "Exchange Act" means the Securities Exchange Act of 1934, as amended. "Fair Market Value" means, at any time and with respect to any property, the sale value of such property that would be realized in an arm's-length sale at such time between an informed and willing buyer and an informed and willing seller (neither being under a compulsion to buy or sell). "Fiscal Quarter" means the three month fiscal period of Holdings beginning on each January 1, April 1, July 1 and October 1 of each year and ending on the succeeding March 31, June 30, September 30 and December 31, respectively. "Fiscal Year" means the fiscal year of Holdings beginning on January 1 of each year and ending on the succeeding December 31. "Fixed Charges Coverage Ratio" means, at any time, the ratio of (a) Consolidated Income Available for Fixed Charges for the period of four consecutive fiscal quarters ending as of the most recent fiscal quarter ended prior to such time to (b) Consolidated Fixed Charges for such period. "Funded Debt" means, with respect to any Person, all Debt of such Person which by its terms or by the terms of any instrument or agreement relating thereto matures, or which is otherwise payable or unpaid, one year or more from, or is directly or indirectly renewable or extendible at the option of the obligor in respect thereof to a date one year or more (including, without limitation, an option of such obligor under a revolving credit or similar agreement B-6 obligating the lender or lenders to extend credit over a period of one year or more) from, the date of the creation thereof, provided that Funded Debt shall include, as at any date of determination, Current Maturities of Funded Debt. "GAAP" means generally accepted accounting principles as in effect from time to time in the United States of America. "Governmental Authority" means (a) the government of (i) the United States of America or any State or other political subdivision thereof, or (ii) any jurisdiction in which either Obligor or any Restricted Subsidiary conducts all or any part of its business, or which asserts jurisdiction over any properties of either Obligor or any Restricted Subsidiary, or (b) any entity exercising executive, legislative, judicial, regulatory or administrative functions of, or pertaining to, any such government. "Guaranty" means, with respect to any Person, any obligation (except the endorsement in the ordinary course of business of negotiable instruments for deposit or collection) of such Person guaranteeing or in effect guaranteeing any indebtedness, dividend or other obligation of any other Person in any manner, whether directly or indirectly, including (without limitation) obligations incurred through an agreement, contingent or otherwise, by such Person: (a) to purchase such indebtedness or obligation or any property constituting security therefor; (b) to advance or supply funds (i) for the purchase or payment of such indebtedness or obligation, or (ii) to maintain any working capital or other balance sheet condition or any income statement condition of any other Person or otherwise to advance or make available funds for the purchase or payment of such indebtedness or obligation; (c) to lease properties or to purchase properties or services primarily for the purpose of assuring the owner of such indebtedness or obligation of the ability of any other Person to make payment of the indebtedness or obligation; or (d) otherwise to assure the owner of such indebtedness or obligation against loss in respect thereof. In any computation of the indebtedness or other liabilities of the obligor under any Guaranty, the indebtedness or other obligations that are the subject of such Guaranty shall be assumed to be direct obligations of such obligor. B-7 "holder" means, with respect to any Note, the Person in whose name such Note is registered in the register maintained by Holdings pursuant to Section 13.1. "Holdings" means Lincoln Electric Holdings, Inc., an Ohio corporation. "Indebtedness" with respect to any Person means, at any time, without duplication, (a) its liabilities for borrowed money and its redemption obligations in respect of mandatorily redeemable Preferred Stock; (b) its liabilities for the deferred purchase price of property acquired by such Person (excluding accounts payable arising in the ordinary course of business but including all liabilities created or arising under any conditional sale or other title retention agreement with respect to any such property); (c) all liabilities appearing on its balance sheet in accordance with GAAP in respect of Capital Leases; (d) all liabilities for borrowed money secured by any Lien with respect to any property owned by such Person (whether or not it has assumed or otherwise become liable for such liabilities); (e) all its liabilities in respect of letters of credit or instruments serving a similar function issued or accepted for its account by banks and other financial institutions (whether or not representing obligations for borrowed money); (f) Swaps of such Person; and (g) any Guaranty of such Person with respect to liabilities of a type described in any of clauses (a) through (f) hereof. "Institutional Investor" means (a) any original purchaser of a Note, (b) any holder of a Note holding more than 5% of the aggregate principal amount of the Notes then outstanding, and (c) any bank, trust company, savings and loan association or other financial institution, any pension plan, any investment company, any insurance company, any broker or dealer, or any other similar financial institution or entity, regardless of legal form. "Interest Charges" means, with respect to any period, the sum (without duplication) of the following (in each case, eliminating all offsetting debits and credits between Holdings and its Restricted Subsidiaries and all other items required to be eliminated in the course of the preparation of consolidated financial statements of Holdings and its Restricted Subsidiaries in accordance with GAAP): (a) all interest in respect of Indebtedness of Holdings and its Restricted Subsidiaries (including imputed interest on Capital Lease Obligations) deducted in determining Consolidated Net Income for such period, and (b) all debt discount and expense amortized or required to be amortized in the determination of Consolidated Net Income for such period. B-8 "Investment" means any investment, made in cash or by delivery of property, by Holdings or any of its Restricted Subsidiaries (i) in any Person, whether by acquisition of stock, indebtedness or other obligation or Security, or by loan, Guaranty, advance, capital contribution or otherwise, or (ii) in any property. "Lease Rentals" means, with respect to any period, the sum of the rental and other obligations required to be paid during such period by Holdings or any Restricted Subsidiary as lessee under all leases of real or personal property (other than Capital Leases), excluding any amount required to be paid by the lessee (whether or not therein designated as rental or additional rental) on account of maintenance and repairs, insurance, taxes, assessments, water rates and similar charges, provided that, if at the date of determination, any such rental or other obligations (or portion thereof) are contingent or not otherwise definitely determinable by the terms of the related lease, the amount of such obligations (or such portion thereof) (i) shall be assumed to be equal to the amount of such obligations for the period of 12 consecutive calendar months immediately preceding the date of determination or (ii) if the related lease was not in effect during such preceding 12-month period, shall be the amount estimated by a Senior Financial Officer of Holdings on a reasonable basis and in good faith. "Leverage Ratio" means, at any time, the ratio of (a) Consolidated Debt at such time to (b) Consolidated EBITDA for the period of four consecutive fiscal quarters ending as of the most recent fiscal quarter ended prior to such time. "Lien" means, with respect to any Person, any mortgage, lien, pledge, charge, security interest or other encumbrance, or any interest or title of any vendor, lessor, lender or other secured party to or of such Person under any conditional sale or other title retention agreement or Capital Lease, upon or with respect to any property or asset of such Person (including in the case of stock, stockholder agreements, voting trust agreements and all similar arrangements). "Make-Whole Amount" is defined in Section 8.7. "Material" means material in relation to the business, operations, affairs, financial condition, assets, or properties of Holdings and its Restricted Subsidiaries taken as a whole. "Material Adverse Effect" means a material adverse effect on (a) the business, operations, affairs, financial condition, assets or properties of Holdings and its Restricted Subsidiaries taken as a whole, or (b) the ability of the Obligors to perform their obligations under this Agreement and the Notes, or (c) the validity or enforceability of this Agreement or the Notes. "Memorandum" is defined in Section 5.3. "Multiemployer Plan" means any Plan that is a "multiemployer plan" (as such term is defined in section 4001(a)(3) of ERISA). "Notes" is defined in Section 1. B-9 "Officer's Certificate" of an Obligor means a certificate of a Senior Financial Officer of such Obligor or of any other officer of such Obligor whose responsibilities extend to the subject matter of such certificate. "PBGC" means the Pension Benefit Guaranty Corporation referred to and defined in ERISA or any successor thereto. "Person" means an individual, partnership, corporation, limited liability company, association, trust, unincorporated organization, or a government or agency or political subdivision thereof. "Plan" means an "employee benefit plan" (as defined in section 3(3) of ERISA) that is or, within the preceding five years, has been established or maintained, or to which contributions are or, within the preceding five years, have been made or required to be made, by Holdings or any ERISA Affiliate or with respect to which Holdings or any ERISA Affiliate may have any liability. "Preferred Stock" means any class of capital stock of a corporation that is preferred over any other class of capital stock of such corporation as to the payment of dividends or the payment of any amount upon liquidation or dissolution of such corporation. "Priority Debt" means the sum of (a) all Debt of the Obligors secured by Liens, (b) all Debt of Restricted Subsidiaries (other than the Company) and (c) all Attributable Debt of Holdings and its Restricted Subsidiaries. "property" or "properties" means, unless otherwise specifically limited, real or personal property of any kind, tangible or intangible, choate or inchoate. "QPAM Exemption" means Prohibited Transaction Class Exemption 84-14 issued by the United States Department of Labor. "Qualifying Securitization Transaction" means a bona fide securitization transaction effected under terms and conditions customary in the capital markets and consisting of sales of Trade Receivables by Holdings or a Restricted Subsidiary to a Special Purpose Company which in turn either sells or pledges such Trade Receivables (or undivided interests therein) to a commercial paper conduit or other financing source (whether with or without recourse to the Special Purpose Company), and as to which each of the following conditions shall be satisfied: (i) such sales to the Special Purpose Company are not accounted for under GAAP as secured loans, (ii) such transactions are, in the good faith opinion of a Senior Financial Officer of Holdings, for fair value and in the best interests of Holdings and its Restricted Subsidiaries, and (iii) recourse to the Obligors or any Restricted Subsidiary in connection with any such sale of Trade Receivables is limited to repurchase, substitution or indemnification obligations customarily provided for in asset securitization transactions and arising from breaches of representations or warranties made by Holdings or such Restricted Subsidiary in connection with such sale. B-10 "Related Industries" means the welding and cutting industry, including the manufacture and sale of welding and cutting equipment and related consummables, industrial gases and gas apparatus, laser and robotics for welding applications, and the engineered adhesives and industrial fastener industries. "Required Holders" means, at any time, the holders of a majority in principal amount of each Series of the Notes at the time outstanding (exclusive of Notes then owned by either or both of the Obligors or any of their Affiliates). "Responsible Officer" of an Obligor means any Senior Financial Officer of such Obligor and any other officer of such Obligor with responsibility for the administration of the relevant portion of this agreement. "Restricted Subsidiary" means at any time any Subsidiary (a) of which at least a majority (by number of votes) of the Voting Stock is beneficially owned, directly or indirectly, by Holdings or one or more Wholly-Owned Restricted Subsidiaries; and (b) which is (i) not designated as an Unrestricted Subsidiary in the most recent notice, if any, with respect thereto delivered pursuant to Section 9.8, or (ii) which is designated a Restricted Subsidiary in the most recent notice, if any, with respect thereto delivered pursuant to Section 9.8. "Restricted Subsidiary Stock" means the stock (or any options or warrants to purchase stock or other Securities exchangeable for or convertible into stock) of any Restricted Subsidiary (other than the Company). "Sale-and-Leaseback Transaction" means a transaction or series of transactions pursuant to which Holdings or any Restricted Subsidiary shall sell or transfer to any Person (other than Holdings or a Restricted Subsidiary) any property, whether now owned or hereafter acquired, and, as part of the same transaction or series of transactions, Holdings or any Restricted Subsidiary shall rent or lease as lessee (other than pursuant to a Capital Lease), or similarly acquire the right to possession or use of, such property or one or more properties which it intends to use for the same purpose or purposes as such property. "SEC" means the Securities and Exchange Commission or any Governmental Authority succeeding to any of its functions. "Securities Act" means the Securities Act of 1933, as amended from time to time. "Security" shall have the same meaning as in Section 2(1) of the Securities Act. "Senior Financial Officer" of an Obligor means the chief financial officer, principal accounting officer, treasurer or comptroller of such Obligor. "Series" is defined in Section 1. "Series A Notes" is defined in Section 1. B-11 "Series B Notes" is defined in Section 1. "Series C Notes" is defined in Section 1. "S&P" means Standard & Poor's Ratings Group, a division of McGraw Hill, Inc. "Special Purpose Company" means any Person created in connection with a Qualifying Securitization Transaction, provided, that any Special Purpose Company shall not own any property or conduct any activities other than those properties and activities which are reasonably required to be owned and conducted in connection with the involvement of such Person in Qualifying Securitization Transactions. "Subsidiary" means, as to any Person, any corporation, association or other business entity in which such Person or one or more of its Subsidiaries or such Person and one or more of its Subsidiaries owns sufficient equity or voting interests to enable it or them (as a group) ordinarily, in the absence of contingencies, to elect a majority of the directors (or Persons performing similar functions) of such entity, and any partnership or joint venture if more than a 50% interest in the profits or capital thereof is owned by such Person or one or more of its Subsidiaries or such Person and one or more of its Subsidiaries (unless such partnership or joint venture can and does ordinarily take major business actions without the prior approval of such Person or one or more of its Subsidiaries). Unless the context otherwise clearly requires, any reference to a "Subsidiary" is a reference to a Subsidiary of Holdings. "Subsidiary Stock" means, with respect to any Person, the stock (or any options or warrants to purchase stock or other Securities exchangeable for or convertible into stock) of any Subsidiary of such Person. "Swaps" means, with respect to any Person, payment obligations with respect to interest rate swaps, currency swaps and similar obligations obligating such Person to make payments, whether periodically or upon the happening of a contingency. For the purposes of this Agreement, the amount of the obligation under any Swap shall be the amount determined in respect thereof as of the end of the then most recently ended fiscal quarter of such Person, based on the assumption that such Swap had terminated at the end of such fiscal quarter, and in making such determination, if any agreement relating to such Swap provides for the netting of amounts payable by and to such Person thereunder or if any such agreement provides for the simultaneous payment of amounts by and to such Person, then in each such case, the amount of such obligation shall be the net amount so determined. "Trade Receivables" means indebtedness and other obligations owed to Holdings or any Restricted Subsidiary, whether constituting accounts, chattel paper, instruments or general intangibles, arising in connection with the sale of goods and services by Holdings or such Restricted Subsidiary to commercial customers, including, without limitation, the obligation to pay any finance charges with respect thereto, and agreements relating thereto, collateral securing the foregoing, books and records relating thereto and all proceeds thereof. B-12 "United States Governmental Security" means any direct obligation of, or obligation guaranteed by, the United States of America, or any agency controlled or supervised by or acting as an instrumentality of the United States of America pursuant to authority granted by the Congress of the United States of America, so long as such obligation or guarantee shall have the benefit of the full faith and credit of the United States of America which shall have been pledged pursuant to authority granted by the Congress of the United States of America. "Unrestricted Subsidiary" means any Subsidiary that is not a Restricted Subsidiary. "Voting Stock" means Securities of any class or classes, the holders of which are ordinarily, in the absence of contingencies, entitled to elect a majority of the corporate directors (or Persons performing similar functions). "Wholly-Owned Restricted Subsidiary" means, at any time, any Restricted Subsidiary one hundred percent (100%) of all of the equity interests (except directors' qualifying shares) and voting interests of which are owned by any one or more of the Obligors and Holdings' other Wholly-Owned Restricted Subsidiaries at such time. B-13 EX-10.R 4 l94043aex10-r.txt EX-10(R) - CREDIT AGREEMENT Exhibit 10(R) CREDIT AGREEMENT THIS CREDIT AGREEMENT is made as of the 24th day of April, 2002 by and among: (i) LINCOLN ELECTRIC HOLDINGS, INC., an Ohio corporation ("Holdings"), THE LINCOLN ELECTRIC COMPANY, an Ohio corporation ("Lincoln"), LINCOLN ELECTRIC INTERNATIONAL HOLDING COMPANY, a Delaware corporation ("International"), HARRIS CALORIFIC, INC., a Delaware corporation ("Harris"), and LINCOLN GLOBAL, INC., a Delaware corporation ("Global" and with Harris, International, Lincoln and Holdings, each an "Borrower" and, collectively, the "Borrowers"); (ii) The financial institutions named in Annex A attached hereto and made a part hereof and their successors and assigns (hereinafter sometimes collectively called the "Lenders" and each individually a "Lender"); and (iii) KEYBANK NATIONAL ASSOCIATION, a national banking association, Cleveland, Ohio, in its capacity as letter of credit issuer and its successors and assigns (the "Letter of Credit Issuer"); and (iv) KEYBANK NATIONAL ASSOCIATION, a national banking association, Cleveland, Ohio, as Administrative Agent for the Lenders under this Agreement (hereinafter sometimes called the "Agent"). RECITALS: The Borrowers are indebted to certain banks or lending institutions under and pursuant to the Existing Credit Agreement (defined below). The Borrowers have requested the Lenders to extend credit to the Borrowers in order to enable the Borrowers to borrow on a revolving credit basis and to have letters of credit issued at their request, on and after the date hereof and at any time and from time to time during the Commitment Period (defined below), in an aggregate principal amount not in excess of $125,000,000 at any time outstanding. The proceeds of such loans and credits are to be used (a) to repay sums owing under and pursuant to the Existing Credit Agreement, (b) for the general corporate working capital purposes of Holdings and its Subsidiaries and (c) for other general corporate purposes, including, without limitation, but subject to the terms and conditions hereinafter set forth, the acquisition of other businesses. The Lenders are willing to extend such credit to the Borrowers on the terms and subject to the conditions herein set forth. AGREEMENTS: NOW, THEREFORE, in consideration of the foregoing Recitals and the mutual agreements hereinafter set forth, the Borrowers, the Lenders and the Agent hereby agree as follows: ARTICLE 1 DEFINITIONS SECTION 1.1 DEFINITIONS. As used in this Agreement, the following capitalized terms shall have the following meanings: "ACCRUAL PERIOD" shall mean (i) the period commencing with the first day of the Commitment Period and ending on the close of business May 31, 2002, and (ii) thereafter, each of the following successive periods during the Commitment Period commencing with each, as the case may be, Fee Adjustment Date or Interest Adjustment Date during the Commitment Period, commencing with the Fee Adjustment Date and Interest Adjustment Date which are June 1, 2002: June 1 through August 31, inclusive September 1 through November 30, inclusive December 1 through March 31, inclusive April 1 through May 31, inclusive. "ACQUISITION" shall mean and include (i) any acquisition on a going concern basis (whether by purchase, lease or otherwise) of any facility and/or business operated by any Person who is not a Subsidiary of Holdings, and (ii) any acquisition of a majority of the outstanding equity or other similar interests in any such Person (whether by merger, stock purchase or otherwise). "ADJUSTED LIBOR" shall mean a rate per annum equal to the quotient obtained (rounded upwards, if necessary, to the nearest 1/100th of 1%) by DIVIDING (i) the applicable LIBOR rate by (ii) 1.00 MINUS the Reserve Percentage, and which Adjusted LIBOR shall be automatically adjusted on and as of the effective date of any change in the Reserve Percentage. "ADVANTAGE" shall mean any payment (whether made voluntarily or involuntarily, by offset of any deposit or other indebtedness or otherwise) received by any Lender in respect of the Obligations owing by the Borrowers to the Lenders if such payment results in that Lender having a lesser share (based upon its Ratable Share) of such Obligations to the Lenders than was the case immediately before such payment. "AFFECTED LENDER" has the meaning assigned to such term in Section 3.8. "AFFILIATE" shall mean, with respect to any Person, any other person directly or indirectly controlling, controlled by, or under direct or indirect common control with such Person. A 2 Person shall be deemed to control a second Person if such first Person possesses, directly or indirectly, the power (i) to vote 50% or more of the securities having ordinary voting power for the election of directors or managers of such second Person or (ii) to direct or cause the direction of the management and policies of such second Person, whether through the ownership of voting securities, by contract or otherwise. Notwithstanding the foregoing, (x) a director, officer or employee of a Person shall not, solely by reason of such status, be considered an Affiliate of such Person; and (y) none of the Lenders, the Agent, or the Letter of Credit Issuer shall in any event be considered to be an Affiliate of Holdings or any of its Subsidiaries. "AGENT" has the meaning assigned to such term in the preamble of this Agreement and any successor thereto pursuant to Section 13. "AGREEMENT" shall mean this Credit Agreement, as the same may from time to time be amended, supplemented, restated or otherwise modified. "ANNIVERSARY DATE" shall mean the date which is one (1) year after the Closing Date (which Closing Date the Agent shall confirm to the Borrowers in writing, and which the Borrowers shall acknowledge in writing) occurs and each successive anniversary of such date thereafter. "APPLICABLE FEE PERCENTAGE" shall mean, on each day of any Accrual Period, with respect to any Facility Fee, (i) commencing on the first day of the Commitment Period and continuing through and including May 31, 2002, twelve and one-half (12.50) Basis Points per annum, and (ii) effective on the Fee Adjustment Date which is June 1, 2002 and on each Fee Adjustment Date thereafter, the Basis Points per annum indicated in the following table corresponding to Holdings' Total Leverage Ratio as of the Fee Determination Date for each such Fee Adjustment Date:

Total Leverage Ratio: Applicable Fee Percentage (in Basis Points): -------------------- ------------------------------------------- Equal to or greater than 2.50 to 1 Twenty-five (25) Less than 2.50 to 1, but equal to or greater than 2.00 to 1 Twenty (20) Less than 2.00 to 1, but equal to or greater than 1.50 to 1 Eighteen and three-fourths (18.75) Less than 1.50 to 1, but equal to or greater than 1.00 to 1 Fifteen (15) Less than 1.00 to 1 Twelve and one-half (12.50);

3 provided, however, that, (a) at any and all times during which the Borrowers are in default of the timely delivery of (1) the financial statements required by Section 8.1(a) or Section 8.1(b), as the case may be, for any period or (2) the certificate complying with Section 8.1(c)(ii) certifying the Total Leverage Ratio, the Applicable Fee Percentage shall be twenty-five (25) Basis Points, and (b) the accrual of fees based upon the Applicable Fee Percentage pursuant to clause (a) of this proviso shall not be construed to waive any Event of Default which may exist by reason of such failure or limit any right or remedy of the Agent or the Lenders. "APPLICABLE LIBOR PERCENTAGE" shall mean, on each day of any Accrual Period with respect to any LIBOR Loans comprising a Revolving Credit Borrowing, (i) commencing on the first day of the Commitment Period and continuing through and including May 31, 2002, forty (40) Basis Points per annum, and (ii) effective on the Interest Adjustment Date which is June 1, 2002 and on each Interest Adjustment Date thereafter, the Basis Points per annum indicated in the applicable table below corresponding to Holdings' Total Leverage Ratio as of the Interest Determination Date for each such Interest Adjustment Date:

Applicable LIBOR Total Leverage Ratio: Percentage (in Basis Points): -------------------- ---------------------------- Equal to or greater than 2.50 to 1 One Hundred Twelve and one-half (112.50) Less than 2.50 to 1, but equal to or greater than 2.00 to 1 Ninety (90) Less than 2.00 to 1, but equal to or greater than 1.50 to 1 Sixty-seven and one-half (67.50) Less than 1.50 to 1, but equal to or greater than 1.00 to 1 Fifty (50) Less than 1.00 to 1 Forty (40)

provided, however, that, (a) at any and all times during which the Borrowers are in default of the timely delivery of (1) the financial statements required by Section 8.1(a) or Section 8.1(b), as the case may be, for any period or (2) the certificate complying with Section 8.1(c)(ii) certifying the Total Leverage Ratio, the Applicable LIBOR Percentage shall be one hundred twelve and one-half (112.50) Basis Points, and (b) the accrual of interest based upon the Applicable LIBOR Percentage pursuant to clause (a) of this proviso shall not be construed to waive any Event of Default which may exist by reason of such failure or limit any right or remedy of the Agent or the Lenders. "BANKING DAY" shall mean a day of the year on which banks are not required or authorized to close in Cleveland, Ohio and New York, New York; provided, however, that, when 4 used in connection with a LIBOR Loan, "Banking Day" shall mean any such day on which banks are open for dealings in or quoting deposit rates for dollar deposits in the London interbank market. "BASIS POINT" shall mean one one-hundredth of one percent (0.01%). "BORROWER" and "BORROWERS" has the meaning assigned to such term in the preamble of this Agreement. "BORROWER PROPERTY" shall mean any real property and improvements owned, leased, used, operated or occupied by any Borrower or any of their respective corporate predecessors, including any soil, surface water or groundwater on or under such real property and improvements. "CAPITALIZED LEASES" shall mean, in respect of any Person, any lease of property imposing obligations on such Person, as lessee of such property, which are required in accordance with GAAP to be capitalized on a balance sheet of such Person. "CASH EQUIVALENTS" shall mean investments in (i) United States Governmental Securities maturing within 365 days from the date of acquisition thereof; (ii) negotiable certificates of deposit and bankers' acceptances maturing within 365 days from the date of acquisition thereof issued by any commercial bank or trust company organized under the laws of the United States or any state thereof or the District of Columbia, having at any date of determination combined capital and surplus and retained earnings of not less than $100,000,000, PROVIDED, that the long-term unsecured debt obligations of such bank or trust company (or the long-term unsecured debt obligations of the bank holding company owning all of the capital stock of such bank or trust company) shall have been given a rating of "A" or better by the Standard & Poor's Ratings Group division of McGraw Hill, Inc. ("S&P") or an equivalent rating by any other credit rating agency of recognized national standing, and (iii) commercial paper maturing not more than 270 days from the date of issuance thereof which has a rating, at the time of acquisition by a Lincoln Party, of "A-1" or better by S&P or an equivalent rating by any other credit rating agency of recognized national standing. "CHANGE OF CONTROL" shall mean and include any of the following: (i) during any period of twelve (12) consecutive calendar months, individuals who at the beginning of such period constituted any Holdings' Board of Directors (together with any new directors (x) whose election by Holdings' Board of Directors was, or (y) whose nomination for election by Holdings' shareholders was (prior to the date of the proxy or consent solicitation relating to such nomination), approved by a vote of at least two-thirds of the directors then still in office who either were directors at the beginning of such period or whose election or nomination for election was previously so approved), shall cease for any reason to constitute a majority of the directors then in office; 5 (ii) any person or group (as such term is defined in section 13(d)(3) of the 1934 Act) shall acquire, directly or indirectly, beneficial ownership (within the meaning of Rule 13d-3 and 13d-5 of the 1934 Act) of more than 50%, on a fully diluted basis, of the economic or voting interest in Holdings' capital stock; (iii) the shareholders of Holdings approve a merger or consolidation of such with any other person, other than a merger or consolidation which would result in the voting securities of Holdings outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted or exchanged for voting securities of the surviving or resulting entity) more than 50% of the combined voting power of the voting securities of Holdings or such surviving or resulting entity outstanding after such merger or consolidation; (iv) the shareholders of Holdings approve a plan of complete liquidation of Holdings or an agreement or agreements for the sale or disposition by Holdings of all or substantially all of Holdings' assets; and/or (v) Holdings ceases to own one hundred percent (100%) of the issued and outstanding capital stock of a Borrower, except as a result of a transaction expressly permitted in Section 9.3, below. "CLOSING DATE" shall mean April 24, 2002 or such other date which is acceptable to the Agent and the Lenders. "CODE" shall mean the Internal Revenue Code of 1986, as amended from time to time, and the rules and regulations promulgated thereunder from time to time. "COMMITMENT" shall mean, with respect to each Lender, the obligation hereunder of such Lender to make Loans and to participate in the risks of all Letters of Credit issued by the Letter of Credit Issuer at Holdings' request on behalf of the Borrowers, up to the amount set forth opposite such Lender's name under the column headed "Commitments" as set forth in Annex A hereof during the Commitment Period as such Commitment may be reduced in accordance with a reduction in the Total Commitment Amount pursuant to Section 3.2 hereof. "COMMITMENT PERIOD" shall mean the period FROM (i) the Closing Date TO (ii) the third (3rd) Anniversary Date, or such earlier date on which the Commitments are terminated pursuant to the terms hereof. "CONSOLIDATED" shall mean Holdings and its Subsidiaries, taken as a whole in accordance with GAAP. "CONSOLIDATED FIXED CHARGES" shall mean, with respect to any period, the sum of (a) Consolidated Interest Expense for such period and (b) Consolidated Lease Rentals for such period. 6 "CONSOLIDATED INCOME AVAILABLE FOR FIXED CHARGES" shall mean, with respect to any period, Consolidated Net Income for such period, PLUS all amounts deducted in the computation thereof on account of (a) Consolidated Fixed Charges and (b) taxes imposed on or measured by income or excess profits. "CONSOLIDATED INTEREST EXPENSE" shall mean, for any period, Interest Expense of Holdings and its Subsidiaries on a Consolidated basis. "CONSOLIDATED LEASE RENTALS" shall mean, with respect to any period, the sum of the rental and other obligations required to be paid during such period by Holdings and its Subsidiaries as lessee under all leases of real or personal property (other than Capitalized Leases), on a Consolidated basis, excluding any amount required to be paid by the lessee (whether or not therein designated as rental or additional rental) on account of maintenance and repairs, insurance, taxes, assessments, water rates and similar charges, PROVIDED that, if at the date of determination, any such rental or other obligations (or portion thereof) are contingent or not otherwise definitely determinable by the terms of the related lease, the amount of such obligations (or such portion thereof) (i) shall be assumed to be equal to the amount of such obligations for the period of 12 consecutive calendar months immediately preceding the date of determination or (ii) if the related lease was not in effect during such preceding 12-month period, shall be the amount estimated by a responsible officer of Holdings on a reasonable basis and in good faith. "CONSOLIDATED NET INCOME" shall mean, with reference to any period, the net income (or loss) of Holdings and its Subsidiaries for such period, on a Consolidated basis, as determined in accordance with GAAP, after eliminating all offsetting debits and credits between Holdings and its Subsidiaries and all other items required to be eliminated in the course of the preparation of consolidated financial statements of Holdings and its Subsidiaries in accordance with GAAP, PROVIDED that there shall be excluded: (a) the income (or loss) of any Person accrued prior to the date it becomes a Subsidiary or is merged into or consolidated with Holdings or a Subsidiary, and the income (or loss) of any Person, substantially all of the assets of which have been acquired in any manner, realized by such other Person prior to the date of acquisition, (b) the income (or loss) of any Person (other than a Subsidiary) in which Holdings or any Subsidiary has an ownership interest, except to the extent that any such income has been actually received by Holdings or such Subsidiary in the form of cash dividends or similar cash distributions, (c) the undistributed earnings of any Subsidiary to the extent that, to the best of the knowledge of the Holdings, the declaration or payment of dividends or similar distributions by such Subsidiary is (i) not at the time permitted by the terms of its charter or any agreement, instrument, judgment, decree, order, statute, rule or governmental regulation applicable to such Subsidiary, or (ii) otherwise unavailable for payment, 7 (d) any aggregate net gain (but not any aggregate net loss) during such period arising from the sale, conversion, exchange or other disposition of Investments or capital assets (such term to include, without limitation, the following, whether or not current: all fixed assets, whether tangible or intangible, and all inventory sold in conjunction with the disposition of fixed assets), and any taxes on such net gain (or net loss), (e) any gains resulting from any write-up or reappraisal of any assets (but not any losses resulting from any write-down or reappraisal of any assets), (f) any net gain from the collection of the proceeds of life insurance policies, (g) any gain arising from the acquisition of any security (as defined in the Securities Act of 1933), or the extinguishment, under GAAP, of any Indebtedness, of Holdings or any Subsidiary, (h) any deferred or other credit representing the excess of equity in any Subsidiary at the date of acquisition over the cost of the investment in such Subsidiary; and (i) any non-cash charges related to the implementation by Holdings and its Subsidiaries of FASB Statement 142. "CONSOLIDATED NET WORTH" shall mean, at any time, (a) the sum (adjusted for any non-cash charges related to the implementation by Holdings and its Subsidiaries of FASB Statement 142) of (i) the par value (or value stated on the books of the corporation) of the capital stock (but excluding treasury stock and capital stock subscribed and unissued) of Holdings and its Subsidiaries, PLUS (ii) the amount of the paid-in capital and retained earnings of Holdings and its Subsidiaries, in each case as such amounts would be shown on a Consolidated balance sheet of Holdings and its Subsidiaries as of such time prepared in accordance with GAAP, MINUS (b) to the extent included in clause (a), all amounts properly attributable to minority interests, if any, in the stock and surplus of Subsidiaries. "CONTROLLED GROUP" shall mean a controlled group of corporations as defined in Section 1563 of the Code of 1986, of which any Borrower is a part. "CREDIT EVENT" shall mean (a) the obligation of (i) each Lender to make a Loan on the occasion of each Revolving Credit Borrowing, (ii) the Letter of Credit Issuer to issue any Letter of Credit, or (iii) any Lender to participate in the risk of any Letter of Credit, (b) the making of a Loan by any Lender, (c) the delivery by Holdings on behalf of the Borrowers of (i) a Notice of Borrowing requesting a Revolving Credit Borrowing or a Letter of Credit or (ii) a Rate Conversion/Continuation Request requesting the conversion or continuation of Revolving Credit Loans, (d) a Rate Conversion or Rate Continuation, or (e) the acceptance by any Borrower of proceeds of any Revolving Credit Borrowing. 8 "DEFAULT UNDER ERISA" shall mean (a) the occurrence or existence of a material "accumulated funding deficiency" (as defined in ERISA) in respect of any Plan within the scope of Section 302(a) of ERISA or (b) any failure by any Borrower to make a full and timely payment of premiums required by Section 4001 of ERISA in respect of any Plan, or (c) the occurrence or existence of any material liability under Section 4062, 4063, 4064, 4069, 4201, 4217 or 4243 of ERISA in respect of any Plan, or (d) the occurrence or existence of any material breach of any other Law or regulation in respect of any such Plan, or (e) the institution or existence of any action for the forcible termination of any such Plan which is within the scope of Section 4001(a)(3) or (15) or ERISA. "DISTRIBUTION" shall mean any payment made, liability incurred and other consideration (other than any stock dividend, or stock split or similar distributions payable only in capital stock of a Borrower) given (i) for the purchase, acquisition, redemption or retirement of any capital stock of a Borrower or (ii) as a dividend, return of capital or other distribution of any kind in respect of a Borrower's capital stock outstanding at any time. "DOMESTIC SUBSIDIARY" means any Subsidiary which is incorporated or organized in the United States or any state or territory thereof. "EBITDA" shall mean, for any period, the sum of the amounts of (i) Consolidated Net Income, (ii) Consolidated Interest Expense for such period, (iii) depreciation for such period on a Consolidated basis, as determined in accordance with GAAP, (iv) amortization for such period on a Consolidated basis, as determined in accordance with GAAP, and (v) all provisions for any taxes imposed on or measured by income or excess profits made by Holdings and its Subsidiaries during such period. "ENVIRONMENTAL LAWS" shall mean any federal, state or local Law, regulation, ordinance, or order pertaining to the protection of the environment and the health and safety of the public, including (but not limited to) the Comprehensive Environmental Response, Compensation and Liability Act ("CERCLA"), 42 USC secs. 9601 ET SEQ.; the Resource Conservation and Recovery Act ("RCRA"), 42 USC secs. 6901 ET SEQ., the Hazardous Materials Transportation Act, 49 USC secs. 1801 ET SEQ., the Federal Water Pollution Control Act (33 USC secs. 1251 ET SEQ.), the Toxic Substances Control Act (15 USC secs. 2601 ET SEQ.) and the Occupational Safety and Health Act (29 USC secs. 651 ET SEQ.), and all similar state, regional or local Laws, treaties, regulations, statutes or ordinances, common Law, civil Laws, or any case precedents, rulings, requirements, directives or requests having the force of Law of any foreign or domestic governmental authority, agency or tribunal, and all foreign equivalents thereof, as the same have been or hereafter may be amended, and any and all analogous future Laws, treaties, regulations, statutes or ordinances, common Law, civil Laws, or any case precedents, rulings, requirements, directives or requests having the force of Law of any foreign or domestic governmental authority, agency or tribunal and the regulations promulgated pursuant thereto, which governs: (i) the existence, cleanup and/or remedy of contamination on property; (ii) the emission or discharge of Hazardous Materials into the environment; (iii) the control of hazardous wastes; (iv) the use, generation, transport, treatment, storage, disposal, removal or recovery of Hazardous Materials; or (v) the maintenance and development of wetlands. 9 "ERISA" shall mean the Employee Retirement Income Security Act of 1974 (Public Law 93406), as amended, and in the event of any amendment affecting any section thereof referred to in this Agreement, that reference shall be reference to that section as amended, supplemented, replaced or otherwise modified. "ERISA AFFILIATE" of any Person shall mean any other Person that for purposes of Title IV of ERISA is a member of such Person's Controlled Group, or under common control with such Person, within the meaning of Section 414 of the Code. "ERISA REGULATOR" shall mean any governmental agency (such as the Department of Labor, the Internal Revenue Service and the Pension Benefit Guaranty Corporation) having any regulatory authority over any Plan. "EUROCURRENCY LIABILITIES" has the meaning assigned to that term in Regulation D of the Board of Governors of the Federal Reserve System, as in effect from time to time. "EVENT OF DEFAULT" has the meaning assigned to such term in Article 11. "EXEMPTION CERTIFICATE" has the meaning assigned to such term in Section 3.9(f). "EXISTING CREDIT AGREEMENT" shall mean the Credit Agreement dated December 20, 1995, as amended, among Lincoln and others, as borrowers, KeyBank (as successor by merger to Society National Bank), as agent, and various lenders party thereto. "FACILITY FEE" has the meaning assigned to such term in Section 3.4(a). "FED FUNDS RATE" shall mean, for any period, a fluctuating interest rate per annum equal for each day during such period to the weighted average of the rates on overnight Federal funds transactions with members of the Federal Reserve System arranged by federal funds brokers, as published for such day (or, if such day is not a Banking Day, for the next preceding Banking Day) by the Federal Reserve Bank of New York, or, if such rate is not so published for any day which is a Banking Day, the average of the quotations for such day on such transactions received by the Agent from three (3) federal funds brokers of recognized standing selected by it. "FEE ADJUSTMENT DATE" shall mean each April 1, June 1, September 1 and December 1 during the Commitment Period, commencing with June 1, 2002. "FEE DETERMINATION DATE" shall mean, as to each Fee Adjustment Date, the last day of the Fiscal Quarter most recently ended prior to such Fee Adjustment Date. By way of example, the Fee Determination Date for the Fee Adjustment Date on June 1, 2002 shall be March 31, 2002, which is the last day of the Fiscal Quarter most recently ended prior to such Fee Adjustment Date. "FISCAL QUARTER" shall mean any of the four consecutive three-month fiscal accounting periods collectively forming a Fiscal Year of Holdings consistent with Holdings' past practice. 10 "FISCAL YEAR" shall mean Holdings' regular annual accounting period which shall end December 31, 2002, in respect of Holdings' current annual accounting period, and which thereafter shall end on December 31 of each succeeding calendar year. "FIXED CHARGES COVERAGE RATIO" shall mean, at any time, the ratio of (a) Consolidated Income Available for Fixed Charges for the period of four consecutive fiscal quarters ending as of the most recent fiscal quarter ended prior to such time to (b) Consolidated Fixed Charges for such period. "FORMER AGENT" has the meaning assigned to such term in Section 13.13. "FORMER LC BANK" has the meaning assigned to such term in Section 5.3. "FUNDED DEBT" shall mean (a) Indebtedness, other than Indebtedness of the types described in clauses (ix), (x), (xii) and (xiii) of the definition of such term, below, and (b) all guaranty obligations of such Person in respect of any Indebtedness of the type described in clause (a) of this definition. "GAAP" shall mean generally accepted accounting principles in the United States of America as in effect from time to time; it being understood and agreed that determinations in accordance with GAAP for purposes of Sections 8.16 through 8.20, inclusive, including defined terms as used therein, are subject (to the extent provided therein) to Sections 1.1 and 1.3. "GUARANTOR" shall mean one who pledges his, her or its credit or property in any manner for the payment or other performance of the Indebtedness, contract or other obligation of another and includes (without limitation) any guarantor (whether of collection or payment), any obligor in respect of a standby letter of credit or surety bond issued for the obligor's account, and surety, any co-maker, any endorser, and anyone who agrees conditionally or otherwise to make any loan, purchase or investment in order thereby to enable another to prevent or correct a default of any kind. "GUARANTY" shall mean the obligation of a Guarantor. "HAZARDOUS MATERIAL" shall mean and include (i) any asbestos or other material composed of or containing asbestos which is, or may become, even if properly managed, friable, (ii) petroleum and any petroleum product, including crude oil or any fraction thereof, and natural gas or synthetic natural gas liquids or mixtures thereof, (iii) any hazardous, toxic or dangerous waste, substance or material defined as such in (or for purposes of) CERCLA or RCRA, any so-called "Superfund" or "Superlien" law, or any other applicable Environmental Laws, and (iv) any other substance whose generation, handling, transportation, treatment or disposal is regulated pursuant to any Environmental Laws. "INCIPIENT DEFAULT" shall mean an event, condition or thing which constitutes, or which with the lapse of any applicable grace period or the giving of notice or both would constitute, any 11 Event of Default and which has not been appropriately waived by the Lenders in writing or fully corrected prior to becoming an actual Event of Default. "INCREASED RATE" shall mean, at any time and from time to time, a rate of interest per annum which (i) as to any LIBOR Loan, is Three Hundred (300) Basis Points in excess of the rate of interest otherwise accruing on such Loan at such time, and (ii) as to other Obligations, including, without limitation Prime Rate Loans, One Hundred (100) Basis Points in excess of the Prime Rate. "INDEBTEDNESS" means, with respect to any Person, without duplication, (i) all indebtedness for money borrowed of such Person; (ii) all bonds, notes, debentures and similar debt securities of such Person; (iii) the deferred purchase price of capital assets or services which in accordance with GAAP would be shown on the liability side of the balance sheet of such Person; (iv) the face amount of all letters of credit issued for the account of such Person and, without duplication, all drafts drawn thereunder; (v) all obligations, contingent or otherwise, of such Person in respect of bankers' acceptances; (vi) all Indebtedness of a second Person secured by any Lien on any property owned by such first Person, whether or not such Indebtedness has been assumed; (vii) all Capitalized Lease obligations of such Person and all Indebtedness of such Person secured by purchase money Liens; (viii) the present value, determined on the basis of the implicit interest rate, of all basic rental obligations under all "synthetic" leases (i.e. leases accounted for by the lessee as operating leases under which the lessee is the "owner" of the leased property for Federal income tax purposes); (ix) all obligations of such Person to pay a specified purchase price for goods or services whether or not delivered or accepted, i.e., take-or-pay and similar obligations; (x) all net obligations of such Person under any so-called `hedge', `swap', `collar', `cap' or similar interest rate or currency fluctuation protection agreements; (xi) the full outstanding balance of trade receivables, notes or other instruments sold with full recourse (and the portion thereof subject to potential recourse, if sold with limited recourse), including, without limitation, in connection with a Qualifying Securitization Transaction, other than in any such case any thereof sold solely for purposes of collection of delinquent accounts; (xii) the stated value, or liquidation value if higher, of all redeemable stock (or other equity interest) of such Person; and (xiii) all guaranty obligations of such Person; provided that (a) neither trade payables nor other similar accrued expenses, in each case arising in the ordinary course of business, unless evidenced by a note, shall constitute Indebtedness; and (b) the Indebtedness of any Person shall in any event include (without duplication) the Indebtedness of any other entity (including any general partnership in which such Person is a general partner) to the extent such Person is liable thereon as a result of such Person's ownership interest in or other relationship with such entity, except to the extent the terms of such Indebtedness provide expressly that such Person is not liable thereon. "INITIAL CREDIT EVENT" shall mean the first Credit Event hereunder to occur. "INTEREST ADJUSTMENT DATE" shall mean each April 1, June 1, September 1 and December 1 during the Commitment Period, commencing with June 1, 2002. "INTEREST DETERMINATION DATE" shall mean, as to each Interest Adjustment Date, the last day of the Fiscal Quarter most recently ended prior to such Interest Adjustment Date. By way of 12 example, the Interest Determination Date for the Interest Adjustment Date on June 1, 2002 shall be March 31, 2002, which is the last day of the Fiscal Quarter most recently ended prior to such Interest Adjustment Date. "INTEREST EXPENSE" shall mean, for any fiscal period, all expense of Holdings or any of its Subsidiaries for such fiscal period classified as interest expense for such period, including capitalized interest and interest under "synthetic" leases, in accordance with GAAP. "INTEREST PERIOD" shall mean, for each of the LIBOR Loans comprising a Revolving Credit Borrowing, the period commencing on the date of such Loans or the date of the Rate Conversion or Rate Continuation of any Loans into such LIBOR Loans and ending on the numerically corresponding day of the period selected by Holdings on behalf of the Borrowers pursuant to the provisions hereof and each subsequent period commencing on the last day of the immediately preceding Interest Period in respect of such Loans and ending on the last day of the period selected by Holdings on behalf of the Borrowers pursuant to the provisions hereof. The duration of each such Interest Period shall be one (1), two (2), three (3) or six (6) months, in each case as Holdings on behalf of the Borrowers may select, upon delivery to the Agent of a Notice of Borrowing therefor in accordance with Section 3.l(d) hereof; provided, however, that: (i) Interest Periods for Loans comprising part of the same Revolving Credit Borrowing shall be of the same duration; (ii) no Interest Period may end on a date later than the last day of the Commitment Period; (iii) if there is no such numerically corresponding day in the month that is such, as the case may be, first, second, third or sixth month after the commencement of an Interest Period, such Interest Period shall end on the last day of such month; (iv) whenever the last day of any Interest Period in respect of LIBOR Loans would otherwise occur on a day other than a Banking Day, the last day of such Interest Period shall be extended to occur on the next succeeding Banking Day; provided, however, that if such extension would cause the last day of such Interest Period to occur in the next following calendar month, the last day of such Interest Period shall occur on the immediately preceding Banking Day; and (v) Holdings, on behalf of the Borrowers, may not select any Interest Period ending after the date of any reduction in the Total Commitment Amount unless, after giving effect to such selection, the aggregate unpaid principal amount of any then outstanding Prime Rate Loans taken together with the principal amount of any then outstanding LIBOR Loans having Interest Periods ending on or prior to the date of such reduction shall be at least equal to the principal amount of the Revolving Credit Loans due and payable on or prior to such date. "INVESTMENT" means any investment, made in cash, by undertaking or by delivery of property, by Holdings or any of its Subsidiaries (i) in any Person, whether by acquisition of stock 13 or other equity interest, joint venture or partnership, Indebtedness or other obligation or security, or by loan, Guaranty, advance, capital contribution or otherwise, or (ii) in any property. "KEYBANK" shall mean KeyBank National Association, a national banking association, its successors and assigns. "LC SUBLIMIT" shall mean the amount Five Million Dollars ($5,000,000). "LAW" shall mean any law, treaty, regulation, statute or ordinance, common law, civil law, or any case precedent, ruling, requirement, directive or request having the force of law of any foreign or domestic governmental authority, agency or tribunal. "LENDER" or "LENDERS" has the meaning assigned to such term in the preamble of this Agreement. "LENDER DEBT" shall mean, collectively, every Indebtedness and liability now or hereafter owing by any Borrower to the Lenders or any thereof, whether owing absolutely or contingently, whether created by loan, overdraft, guaranty of payment or other contract or by quasi-contract, tort, statute or other operation of Law, whether incurred directly to the Lenders or any thereof or acquired by any or all thereof by purchase, pledge or otherwise, and whether participated to or from the Lenders or any thereof in whole or in part. "LENDING OFFICE" shall mean, with respect to any Lender, the office of such Lender specified as its "Lending Office" below its name on the signature pages hereto, or such other office of such Lender as such Lender may from time to time specify in writing to the Borrowers and the Agent as the office at which Loans are to be made and maintained. "LETTER OF CREDIT" shall mean any standby letter of credit issued by the Letter of Credit Issuer on a risk-participated basis with the other Lenders pursuant to the provisions of this Agreement. "LETTER OF CREDIT ISSUER" shall mean KeyBank and any successor thereto pursuant to Section 5.3. "LIBOR" shall mean, with respect to any LIBOR Loan for any Interest Period, the per annum rate of interest, determined by the Agent in accordance with its usual procedures (which determination shall be conclusive and binding absent manifest error) as of approximately 11:00 A.M. (London time) two (2) Banking Days prior to the beginning of such Interest Period pertaining to such LIBOR Loan, appearing on page 3750 of the Dow Jones Telerate Service (or any successor to or substitute page of such Service, or any successor to or substitute for such Service providing rate quotations comparable to those currently provided on such page of such Service, as determined by the Agent from time to time for purposes of providing quotations of interest rates applicable to dollar deposits in the London interbank market) as the rate in the London interbank market for dollar deposits in immediately available funds with a maturity comparable to such Interest Period. In the event that such a rate quotation is not available for any reason, then the rate shall be the rate, determined by the Agent as of approximately 11:00 14 A.M. (London time) two (2) Banking Days prior to the beginning of such Interest Period pertaining to such LIBOR Loan, to be the average (rounded upwards, if necessary, to the nearest one sixteenth of one percent (1/16th of 1%)) of the per annum rates of interest at which dollar deposits in immediately available funds approximately equal in principal amount to such LIBOR Loan and for a maturity comparable to the Interest Period are offered to KeyBank by prime banks in the London interbank market. "LIBOR LOANS" shall mean those Loans described in Section 3.1 hereof on which the Borrowers shall pay interest at a rate based on LIBOR. "LIEN" shall mean any lien, security interest or other charge or encumbrance of any kind, or any other type of preferential arrangement, including, without limitation, the lien or retained security title of a conditional vendor and any easement, right of way or other encumbrance on title to real property. "LINCOLN PARTY" shall mean any of the Borrowers or any other direct or indirect Subsidiary of any of them from time to time, collectively, the "Lincoln Parties". "LOAN" shall mean a Revolving Credit Loan made by a Lender to or for the account of the Borrowers pursuant to Article 3 and refers to a Prime Rate Loan or a LIBOR Loan. "LOAN DOCUMENT" shall mean this Agreement, any assignment, note (including the Notes), guaranty, subordination agreement (including, without limitation, subordination provisions contained in documents evidencing or governing Subordinated Indebtedness), Reimbursement Agreement, financial statement, certificate, audit report or other writing furnished by the Borrowers, or any of their officers to the Lenders pursuant to or otherwise in connection with this Agreement. "MAJORITY LENDERS" shall mean, at any time of determination, one or more Lenders having Commitments in the aggregate of at least fifty-one percent (51%) of the Total Commitment Amount or, in the event that the Commitments of the Lenders shall have been terminated, the Lenders holding fifty-one percent (51%) of the amount of the outstanding Revolving Credit Loans. "MATERIAL ADVERSE EFFECT" shall mean the occurrence or existence of (a) a material adverse effect on the business, results of operations or financial condition of a Borrower, or (b) a material adverse effect on the ability of a Borrower to perform its Obligations under this Agreement or any of the other Loan Documents, or (c) a material adverse effect on the legality, validity or enforceability of a Borrower's Obligations under this Agreement or any of the other Loan Documents. "MULTIEMPLOYER PLAN" shall mean any Plan that is a "multiemployer plan" (as such term is defined in section 4001(a)(3) of ERISA). "NOTE" or "NOTES" shall mean a note or notes executed and delivered pursuant to Section 3.1(c) hereof. 15 "NOTICE OF BORROWING" shall have the meaning assigned to such term in Section 3.1(d). "OBLIGATIONS" shall mean the obligations of the Borrowers under this Agreement and the other Loan Documents, including, without limitation, the outstanding principal and accrued interest in respect of any Revolving Credit Loans, the outstanding principal and accrued interest in respect of Letters of Credit, all Facility Fees, Risk Participation Fees, fees owing to the Lenders or the Agent, reimbursement obligations under Letters of Credit, any indebtedness or obligations under any so-called `hedge', `swap', `collar', `cap' or similar interest rate or currency fluctuation protection agreements hereafter constituting one or more of the Loan Documents pursuant to a writing signed by the Borrowers, the Agent and the Majority Lenders, and any expenses, taxes, compensation or other amounts owing under this Agreement, the Notes, any Reimbursement Agreement, including, without limitation, pursuant to Sections 3.3, 3.4, 3.7, 3.8, 3.9 or 15.4 and any and all other amounts owed by any Borrower to the Agent or the Lenders pursuant to this Agreement, the Notes or any other Loan Document. "OTHER TAXES" has the meaning assigned to such term in Section 3.9. "PAYMENT OFFICE" shall mean such office of the Agent as set forth below the Agent's name on the signature pages hereof or such offices as may be from time to time selected by the Agent and notified in writing by the Agent to the Borrowers and the Lenders as the office to which payments are to be made by the Borrowers or the Lenders, as the case may be. "PERMITTED ACQUISITION" shall mean any Acquisition as to which all of the following conditions are satisfied: (i) such Acquisition involves a line or lines of business in a Related Industry; (ii) such Acquisition is not actively opposed by the Board of Directors (or similar governing body) of the selling Person or the Person whose equity interests are to be acquired; (iii) no Event of Default or Incipient Default then exists or would exist after giving effect to such Acquisition; and (iv) at least ten (10) Banking Days prior to the completion of any such Acquisition involving aggregate consideration, including the principal amount of any assumed Indebtedness and (without duplication) any Indebtedness of any acquired Person or Persons, in excess of $10,000,000, Holdings shall have delivered to the Agent and the Lenders a certificate of a responsible financial or accounting officer of Holdings demonstrating, in reasonable detail, the computation of the ratios referred to in Sections 9.7 and 9.8 on a pro forma basis (which pro forma basis shall be satisfactory to the Agent); 16 provided, that the term Permitted Acquisition specifically excludes any loans, advances or minority investments otherwise permitted pursuant to Section 9.2. "PERMITTED HOLDINGS MERGER" shall mean a merger between Holdings and another Person as to which all of the following conditions are satisfied: (i) Holdings is the surviving corporation under such merger; (ii) no Event of Default or Incipient Default then exists or would exist after giving effect to such merger; (iii) without limiting the generality of clause (ii), above, no Change of Control would occur by reason of such merger; and (iv) at least 20 Banking Days prior to the completion of any such merger, Holdings shall have delivered to the Agent and the Lenders (A) audited financial statements for the other merger party (unless audited financial statements are unavailable, in which case, unaudited financial statements shall be delivered) for the three most recent fiscal years of such Person and (B) a certificate of a responsible officer of Holdings demonstrating, in reasonable detail, the computation of the ratios referred to in Sections 9.7 and 9.8 hereof on a pro forma basis (which pro forma basis shall be satisfactory to the Agent). "PERMITTED PURCHASE MONEY SECURITY INTEREST" shall mean any Lien which is created or assumed in purchasing, constructing or improving any real or personal property (other than inventory) in the ordinary course of business, or to which any such property is subject when so purchased, including, without limitation, Capitalized Leases, provided, that (i) such lien shall be confined to the aforesaid property, (ii) the Indebtedness secured thereby does not exceed the total cost of the purchase, construction or improvement, (iii) any refinancing of such indebtedness does not increase the amount of indebtedness owing as of the date of such refinancing. "PERSON" shall mean an individual, partnership, limited liability company, corporation (including a business trust), joint stock company, trust, unincorporated association, joint venture or other entity, or a government or any political subdivision or agency thereof. "PLAN" shall mean any employee pension benefit plan subject to Title IV of the Employee Retirement Income Security Act of 1974, as amended, established or maintained by Holdings, any Subsidiary, or any member of the Controlled Group, or any such Plan to which Holdings, any Subsidiary, or any member of the Controlled Group is required to contribute on behalf of any of its employees (other than a Multi-Employer Plan, as that term is defined in Section 414(f) of the Code). "PREPAYMENT LIBOR" has the meaning assigned to such term in Section 3.3(d). "PRIME RATE" shall mean the higher of (i) the per annum rate equal to the Fed Funds Rate PLUS one and one-half percent (1.5%) or (ii) that interest rate established from time to time by KeyBank as its so-called "prime" rate (or equivalent rate otherwise named), whether or not such 17 rate is publicly announced; the Prime Rate may not necessarily be the lowest interest rate charged by KeyBank for commercial or other extensions of credit. "PRIME RATE LOANS" shall mean those loans described in Section 3.1(b) hereof on which the Borrowers shall pay interest at the rate based on the Prime Rate. "PURCHASE DATE" shall have the meaning assigned to such term in Section 3.1(i). "QUALIFYING SECURITIZATION TRANSACTION" shall mean a bona fide securitization transaction effected under terms and conditions customary in the capital markets and consisting of sales of Trade Receivables by a Lincoln Party to a Special Purpose Company which in turn either sells or pledges such Trade Receivables (or undivided interests therein) to a commercial paper conduit or other financing source (whether with or without recourse to the Special Purpose Company), and as to which each of the following conditions shall be satisfied: (i) such sales to the Special Purpose Company are not accounted for under GAAP as secured loans, (ii) such transactions are, in the good faith opinion of a responsible officer of Holdings, for fair value and in the best interests of such Lincoln Party, and (iii) recourse to any Lincoln Party in connection with any such sale of Trade Receivables is limited to repurchase, substitution or indemnification obligations customarily provided for in asset securitization transactions and arising from breaches of representations or warranties made by any Lincoln Party in connection with such sale. "QUARTERLY PAYMENT DATE" shall mean each March 31, June 30, September 30 and December 31 during the Commitment Period, commencing with June 30, 2002. "QUOTED RATE" shall have the meaning assigned to such term in Section 3.1(i). "RATABLE PORTION" or "RATABLE SHARE" shall mean, in respect of any Lender, the quotient (expressed as a percentage) obtained at any time by dividing such Lender's Commitment at such time by the Total Commitment Amount. "RATE CONTINUATION" shall mean a continuation of LIBOR Loans having a particular Interest Period as LIBOR Loans having an Interest Period of the same duration pursuant to Section 3.1(h). "RATE CONVERSION" refers to a conversion pursuant to Section 3.1(h) of Loans of one Type into Loans of another Type and, with respect to LIBOR Loans, from one permissible Interest Period to another permissible Interest Period. "RATE CONVERSION/CONTINUATION REQUEST" shall have the meaning assigned to such term in Section 3.l(h). "REDUCTION NOTICE" shall mean a notice for a request for the reduction in the Total Commitment Amount pursuant to Section 3.2 in the form of Exhibit D hereto. 18 "REGULATORY CHANGE" shall mean, as to any Lender, any change in United States federal, state or foreign Laws or regulations or the adoption or making of any interpretations, directives or requests of or under any United States federal, state or foreign Laws or regulations (whether or not having the force of Law) by any court or governmental authority charged with the interpretation or administration thereof. "REIMBURSEMENT AGREEMENT" shall mean any reimbursement agreement in respect of any Letter of Credit. "RELATED INDUSTRIES" means the welding and cutting industry, including the manufacture and sale of welding and cutting equipment and related consummables, industrial gases and gas apparatus, laser and robotics for welding applications, and the engineered adhesives and industrial fastener industries. "REPORTABLE EVENT" shall mean a reportable event as that term is defined in Title IV of the Employee Retirement Income Security Act of 1974, as amended, except actions of general applicability by the Secretary of Labor under Section 110 of such Act. "RESERVE PERCENTAGE" shall mean for any day that percentage (expressed as a decimal) which is in effect on such day, as prescribed by the Board of Governors of the Federal Reserve System (or any successor) for determining the maximum reserve requirement (including, without limitation, all basic, supplemental, marginal and other reserves and taking into account any transitional adjustments or other scheduled changes in reserve requirements) for a member bank of the Federal Reserve System in Cleveland, Ohio, in respect of "Eurocurrency Liabilities". "REVOLVING CREDIT BORROWING" shall mean a group of Revolving Credit Loans of a single Type, made by the Lenders on a single date and as to which, as to LIBOR Loans, a single Interest Period is in effect (I.E. any group of Revolving Credit Loans made by the Lenders having a different Type, or, as to LIBOR Loans, having a different Interest Period [regardless of whether such Interest Period commences on the same date as another Interest Period], or made on a different date shall be considered to comprise a different Revolving Credit Borrowing). "REVOLVING CREDIT FACILITY" shall mean the revolving credit established by the Lenders in favor of the Borrowers hereby in the maximum principal amount of the Total Commitment Amount. "REVOLVING CREDIT LOAN" shall mean a Loan by a Lender to the Borrowers pursuant to Section 3.1(a), and refers to a Prime Rate Loan or a LIBOR Loan. "REVOLVING CREDIT NOTE" shall mean a note executed and delivered pursuant to Section 3.l(c) hereof. "RISK PARTICIPATION EXPOSURE" shall mean, with respect to any Lender, at any time of determination, such Lender's Ratable Portion of the sum of (a) the aggregate entire Stated Amount of all such Letters of Credit outstanding at such time, and (b) the aggregate amount that 19 has been drawn under such Letters of Credit but for which the Letter of Credit Issuer or the Lenders, as the case may be, have not at such time been reimbursed by the Borrowers. "RISK PARTICIPATION FEE" shall mean the fee payable to the Lenders pursuant to Section 3.4(c). "SEC" shall mean the Securities and Exchange Commission. "SIGNIFICANT SUBSIDIARY" shall mean any Domestic Subsidiary that is a "significant subsidiary" as defined in Regulation S-X, Rule 1-02(w) of the SEC, as such Regulation and Rule are in effect on the date hereof. "SPECIAL PURPOSE COMPANY" shall mean any Person created in connection with a Qualifying Securitization Transaction, PROVIDED, that any Special Purpose Company shall not own any property or conduct any activities other than those properties and activities which are reasonably required to be owned and conducted in connection with the involvement of such Person in Qualifying Securitization Transactions. "STATED AMOUNT" of each Letter of Credit shall mean the maximum available to be drawn thereunder (regardless of whether any conditions or other requirements for drawing could then be met). "SUBORDINATED INDEBTEDNESS" shall mean any Indebtedness which has been subordinated to the Obligations in right and time of payment upon terms which are satisfactory to the Majority Lenders, which terms may, in the Majority Lenders' determination, include (without limitation) limitations or restrictions on the right of the holder of such Indebtedness to receive payments and exercise remedies. "SUBSIDIARY" shall mean, as to any Person, (i) any corporation more than 50% of whose stock of any class or classes having by the terms thereof ordinary voting power to elect a majority of the directors of such corporation (irrespective of whether or not at the time stock of any class or classes of such corporation shall have or might have voting power by reason of the happening of any contingency) is at the time owned by such Person directly or indirectly through Subsidiaries and (ii) any partnership, limited liability company, association, joint venture or other entity in which such Person directly or indirectly through Subsidiaries, has more than a 50% equity interest at the time. Unless otherwise expressly provided in this Agreement, all references herein to "Subsidiary" shall mean a Subsidiary (direct or indirect) of Holdings. "TAXES" has the meaning assigned to such term in Section 3.9(a). "TOTAL COMMITMENT AMOUNT" shall mean the amount One Hundred Twenty-five Million Dollars ($125,000,000), as such amount may be reduced pursuant to the provisions of this Agreement. "TOTAL FUNDED DEBT" shall mean, as at the date of any determination, and on a Consolidated basis, the principal amount of any and all outstanding Funded Debt of Holdings 20 and its Subsidiaries at such date, including, without limitation, the outstanding Obligations of the Borrowers to the Lenders under this Agreement at such date and any other Lender Debt at such date. "TOTAL LEVERAGE RATIO" shall mean, as of the end of any Fiscal Quarter, the ratio of (i) Total Funded Debt outstanding on such Fiscal Quarter end to (ii) Trailing EBITDA as of such Fiscal Quarter end. "TRADE RECEIVABLES" shall mean indebtedness and other obligations owed to Holdings or any other Lincoln Party, whether constituting accounts, chattel paper, instruments or general intangibles, arising in connection with the sale of goods and services by Holdings or such Lincoln Party to commercial customers, including, without limitation, the obligation to pay any finance charges with respect thereto, and agreements relating thereto, collateral securing the foregoing, books and records relating thereto and all proceeds thereof. "TRAILING EBITDA" shall mean, as of the end of any Fiscal Quarter, EBITDA for such Fiscal Quarter, plus EBITDA for the three (3) immediately preceding Fiscal Quarters "TYPE" shall mean, when used in respect of any Revolving Credit Loan, LIBOR or Prime Rate as applicable to such Loan. "UTILIZATION FEE" has the meaning assigned to such term in Section 3.4(f). The foregoing definitions shall be applicable to the singular and plurals of the foregoing defined terms. SECTION 1.2 COMPUTATION OF TIME PERIODS. In this Agreement in the computation of periods of time from a specific date to a later specified date, the word "from" means "from and including" and the words "to" and "until" each means "to but excluding". SECTION 1.3 ACCOUNTING TERMS. Except as otherwise expressly provided herein, all terms of an accounting or financial nature shall be construed in accordance with GAAP; provided, however, that, for purposes of determining satisfaction of the financial tests set forth in the definitions of Applicable LIBOR Percentage, and Applicable Fee Percentage, and Consolidated Net Pre-Tax Earnings and compliance with the covenants set forth in Article 9, all terms of an accounting or financial nature shall be construed in accordance with generally accepted accounting principles as in effect on the date of this Agreement and in all cases shall be applied on a basis consistent with those applied in the preparation of the audited financial statements referred to in Section 10.5. 21 ARTICLE 2 AMOUNT AND NATURE OF CREDIT SECTION 2.1 AMOUNT AND NATURE OF CREDIT. Subject to the terms and conditions set forth in this Agreement, each of the Lenders hereby establishes a facility pursuant to which Revolving Credit Loans shall be available to the Borrowers on a revolving credit basis in an amount, in the aggregate as to all of the Lenders, not to exceed the Total Commitment Amount, of which an amount not to exceed the LC Sublimit shall be available for the issuance of Letters of Credit. SECTION 2.2 PURPOSE OF FACILITY. The Borrowers shall use the proceeds of Revolving Credit Loans hereunder (a) to repay sums owing to the "Lenders" and the "Agent" under and pursuant to the Existing Credit Agreement, including, without limitation, obligations in respect of letters of credit outstanding thereunder, and (b) for other general corporate purposes. The Borrowers shall use the Letters of Credit for the purposes set forth in Article 5 and for general corporate purposes of the Lincoln Parties. ARTICLE 3 LOANS SECTION 3.1 REVOLVING CREDIT LOANS. (a) REVOLVING CREDIT LOANS. Subject to the terms and provisions of this Agreement, each Lender severally agrees to make Revolving Credit Loans to the Borrowers in respect of the Revolving Credit Facility from time to time during the Commitment Period up to such Lender's respective Commitment; provided, however, that in no event at any time shall the aggregate principal amount of all Revolving Credit Loans then outstanding, PLUS the aggregate Risk Participation Exposure then existing, be in excess of the Total Commitment Amount. Within the limits set forth herein, the Borrowers may borrow, prepay and reborrow Revolving Credit Loans. (b) REVOLVING CREDIT BORROWINGS. (i) Subject to the terms and conditions set forth in this Agreement, the Borrowers shall have the option to request Revolving Credit Borrowings in respect of the Revolving Credit Facility, comprised of (A) Prime Rate Loans maturing on or before the last day of the Commitment Period, in aggregate amounts of not less than Five Hundred Thousand Dollars ($500,000) or additional increments of One Hundred Thousand Dollars ($100,000) or any integral multiple thereof or (B) LIBOR Loans maturing on the last day of the Interest Period applicable thereto in aggregate amounts of not less than Three Million Dollars ($3,000,000), or additional increments of One Million Dollars ($1,000,000) or any integral multiple thereof. (ii) The Borrowers may request more than one Revolving Credit Borrowing on any Banking Day; provided, however, that if on the same Banking Day the Borrowers request two or more Revolving Credit Borrowings which are comprised of LIBOR Loans, each such Revolving Credit Borrowing of LIBOR Loans shall have an Interest Period which is different in duration 22 from the Interest Periods in respect of the other such Revolving Credit Borrowings of LIBOR Loans. (iii) The Borrowers shall not request a Revolving Credit Borrowing consisting of LIBOR Loans if, after giving effect to such request, there would be outstanding more than ten (10) Revolving Credit Borrowings consisting of LIBOR Loans. (c) NOTES. (i) The obligation of the Borrowers to repay Revolving Credit Loans made by each Lender in respect of the Revolving Credit Facility and to pay interest thereon shall be evidenced by a Revolving Credit Note of the Borrowers substantially in the form of Exhibit A hereto, with appropriate insertions, dated the date of this Agreement and payable to the order of such Lender on the last day of the Commitment Period, in the principal amount of its Commitment. (ii) The principal amount of the Revolving Credit Loans made by each Lender, and all prepayments thereof and the applicable dates with respect thereto shall be recorded by such Lender from time to time on any ledger or other record of such Lender or such Lender shall record such information by such other method as such Lender may generally employ; provided, however, that failure to make any such record shall in no way detract from each Borrower's obligations under any Note. The aggregate unpaid amount of the Revolving Credit Loans shown on the records of such Lender shall be rebuttably presumptive evidence of the principal amount owing and unpaid on such Revolving Credit Note, as the case may be. (d) NOTICE OF BORROWING. The obligation of each Lender to make Revolving Credit Loans comprising a Revolving Credit Borrowing under the Revolving Credit Facility is conditioned upon receipt by the Agent of a request by Holdings on behalf of the Borrowers not later than 12:00 noon (Cleveland, Ohio time) (i) on the Banking Day which is the requested date of a proposed Revolving Credit Borrowing comprised of Prime Rate Loans and (ii) on a day which is three (3) Banking Days prior to the Banking Day which is the requested date of a proposed Revolving Credit Borrowing comprised of LIBOR Loans (except that the Revolving Credit Borrowing requested on the Closing Date may be comprised of LIBOR Loans so long as each of the Lenders shall have agreed to make LIBOR Loans on the Closing Date without the notice required by this Section 3.l(d) and the Borrowers shall have agreed in a writing satisfactory in form and substance to the Agent to indemnify the Lenders in respect of any loss suffered by reason of such accommodation). Each such request (a "Notice of Borrowing") shall be transmitted by Holdings on behalf of the Borrowers to the Agent by telecopier or such other means as the Agent agrees to in writing, substantially in the form of Exhibit B, specifying therein the requested (A) date of the Revolving Credit Loans comprising such Revolving Credit Borrowing, (B) Type of Revolving Credit Loans comprising such Revolving Credit Borrowing, (C) aggregate amount of such Revolving Credit Loans and (D) in the case of a proposed Revolving Credit Borrowing comprised of LIBOR Loans, the initial Interest Period for such Revolving Credit Loans. The Borrowers may give a Notice of Borrowing telephonically so long as written confirmation of such Revolving Credit Borrowing by delivery of written Notice of Borrowing is received by the Agent by 1:00 p.m. (Cleveland, Ohio time) on the same day such telephonic Notice of Borrowing is given. The Agent may rely on such telephonic Notice of 23 Borrowing to the same extent that the Agent may rely on a written Notice of Borrowing. Each Notice of Borrowing and telephonic Notice of Borrowing shall be irrevocable and binding on the Borrowers and subject to the indemnification provisions of this Article 3. The Borrowers shall bear all risks related to the giving of a Notice of Borrowing telephonically or by such other method of transmission as Holdings on behalf of the Borrowers shall elect. The Agent shall give to each Lender reasonably prompt notice by telecopier on the day received of each such Notice of Borrowing. (e) LENDERS TO FUND AGENT. Each Lender shall, before the later of one (1) hour after the Agent issues its notice to such Lender of a Notice of Borrowing or 2:00 P.M. (Cleveland, Ohio time) on the date of each Revolving Credit Borrowing, make available to the Agent, in immediately available funds at the account of the Agent maintained at the Payment Office as specified by the Agent to the Lenders prior to such date, such Lender's Ratable Portion of the Revolving Credit Loans comprising such Revolving Credit Borrowing. On the date requested by Holdings on behalf of the Borrowers for a Revolving Credit Borrowing, after the Agent's receipt of the funds representing a Lender's Ratable Portion of such Revolving Credit Borrowing and upon the Borrowers' fulfillment of the applicable conditions set forth in this Article 3, the Agent will make the funds of such Lender available to the Borrowers at the aforesaid applicable Payment Office. (f) AVAILABILITY OF FUNDS. Unless the Agent shall have received notice from a Lender prior to the date (except in the case of Prime Rate Loans, in which case prior to the time) of any Revolving Credit Borrowing that such Lender will not make available to the Agent such Lender's Ratable Portion of the Revolving Credit Borrowing, the Agent may assume that such Lender has made its Ratable Portion of the Revolving Credit Borrowing available to the Agent on the date of the Revolving Credit Borrowing in accordance with Section 3.1(e). In reliance upon such assumption, the Agent may, but shall not be obligated to, make available to the Borrowers on such date a corresponding portion of the Revolving Credit Borrowing. If and to the extent that such Lender shall not have made available to the Agent its Ratable Portion of the Loans to be made as to the Revolving Credit Borrowing, such Lender and the Borrowers severally agree to repay to the Agent, immediately upon demand, the corresponding portion of the Revolving Credit Borrowing, together with interest thereon, for each day from the date such amount is made available to the Borrowers until the date such amount is repaid to the Agent (i) in the case of the Borrowers, at the interest rate applicable at the time to the Revolving Credit Loans comprising such Revolving Credit Borrowing and (ii) in the case of such Lender, at the Fed Funds Rate. If such Lender shall repay to the Agent such corresponding portion of the Revolving Credit Borrowing, the amount so repaid shall constitute such Lender's Ratable Portion as part of such Revolving Credit Borrowing. (g) FAILURE OF LENDER TO LOAN. The failure of any Lender to make the Loan to be made by it as its Ratable Portion of any Revolving Credit Borrowing shall not relieve any other Lender of its obligation hereunder to make its Loan on the date of such Revolving Credit Borrowing. No Lender shall be responsible for the failure of any other Lender to make the Loan to be made by such other Lender on the date of any Revolving Credit Borrowing. 24 (h) RATE CONVERSION AND CONTINUATION. The Borrowers shall have the right to cause a Rate Conversion or Rate Continuation in respect of Revolving Credit Loans then outstanding, upon request delivered by Holdings on behalf of the Borrowers to the Agent not later than 12:00 noon (Cleveland, Ohio time) (i) on the day which is the Banking Day that the Borrowers desire to convert any LIBOR Loans comprising a Revolving Credit Borrowing into Prime Rate Loans so as to comprise a Revolving Credit Borrowing, (ii) on the day that is three (3) Banking Days prior to the Banking Day upon which the Borrowers desire to convert any Prime Rate Loans comprising a Revolving Credit Borrowing into LIBOR Loans for a given Interest Period so as to comprise a Revolving Credit Borrowing, (iii) on the day which is three (3) Banking Days prior to the Banking Day upon which the Borrowers desire to continue any LIBOR Loans comprising a given Revolving Credit Borrowing as LIBOR Loans for an additional Interest Period of the same duration so as to comprise a Revolving Credit Borrowing, (iv) on the day which is three (3) Banking Days prior to the Banking Day upon which the Borrowers desire to convert any LIBOR Loans having a particular Interest Period comprising a Revolving Credit Borrowing into LIBOR Loans having a different permissible Interest Period so as to comprise a Revolving Credit Borrowing, provided, however, that each such Rate Conversion or Rate Continuation shall be subject to the following: (A) each Rate Conversion or Rate Continuation shall be funded among the Lenders based upon each Lender's Ratable Portion of such converted or continued Revolving Credit Loans comprising a Revolving Credit Borrowing; (B) if less than all the outstanding principal amount of the Revolving Credit Loans comprising a Revolving Credit Borrowing is converted or continued, the aggregate principal amount of such Revolving Credit Loans converted or continued shall be (1) in the case of LIBOR Loans, not less than Three Million Dollars ($3,000,000) or additional increments of One Million Dollars ($1,000,000) in excess thereof, and (2) in the case of Prime Rate Loans, not less than Five Hundred Thousand Dollars ($500,000) or additional increments of One Hundred Thousand Dollars ($100,000) in excess thereof; (C) each Rate Conversion or Rate Continuation shall be effected by each Lender by applying the proceeds of the Loan resulting from such Rate Conversion or Rate Continuation to the Loan of such Lender being converted or continued, as the case may be, and the accrued interest on any such Loan (or portion thereof) being converted or continued shall be paid to the Agent on behalf of each Lender by the Borrowers at the time of such Rate Conversion or Rate Continuation; (D) LIBOR Loans may not be converted or continued at a time other than the end of the Interest Period applicable thereto unless the Borrowers shall pay, upon demand, any amounts due to the Lenders pursuant to Section 3.3(d); (E) Revolving Credit Loans comprising a Revolving Credit Borrowing may not be converted into or continued as LIBOR Loans less than one month prior to the last day of the Commitment Period or for an Interest Period which would continue after the last day of the Commitment Period; 25 (F) LIBOR Loans comprising a Revolving Credit Borrowing that cannot be converted into or continued as LIBOR Loans by reason of clause (E) shall be automatically converted at the end of the Interest Period in effect for such LIBOR Loans into Prime Rate Loans comprising a Revolving Credit Borrowing; and (G) in connection with any Rate Conversion or Rate Continuation, no Interest Period can be selected which ends after the date of any reduction in the Total Commitment Amount unless, after giving effect to such selection, the aggregate unpaid principal amount of any then outstanding Prime Rate Loans taken together with the principal amount of any then outstanding LIBOR Loans having Interest Periods ending on or prior to the date of such reduction shall be at least equal to the principal amount of the Revolving Credit Loans due and payable on or prior to such reduction date. Each such request for a conversion or continuation (a "Rate Conversion/Continuation Request") in respect of Revolving Credit Loans comprising a Revolving Credit Borrowing shall be transmitted by Holdings on behalf of the Borrowers to the Agent, by telecopier, telex or cable (in the case of telex or cable, confirmed in writing prior to the effective date of the Rate Conversion or Rate Continuation requested), in substantially the form of Exhibit C hereto, specifying (A) the identity and amount of the Revolving Credit Loans comprising a Revolving Credit Borrowing that the Borrowers request be converted or continued, (B) the Type of Revolving Credit Loans into which such Revolving Credit Loans are to be converted or continued, (C) if such notice requests a Rate Conversion, the date of the Rate Conversion (which shall be a Banking Day) and (D) in the case of Revolving Credit Loans comprising a Revolving Credit Borrowing being converted into or continued as LIBOR Loans, the Interest Period for such LIBOR Loans. The Borrowers may make Rate Conversion/Continuation Requests telephonically so long as written confirmation of such Revolving Credit Borrowing is received by the Agent by 1:00 p.m. (Cleveland, Ohio time) on the same day of such telephonic Rate Conversion/Continuation Request. The Agent may rely on such telephonic Rate Conversion/Continuation Request to the same extent that the Agent may rely on a written Rate Conversion/Continuation Request. Each Rate Conversion/Continuation Request, whether telephonic or written, shall be irrevocable and binding on the Borrowers and subject to the indemnification provisions of this Article 3. The Borrowers shall bear all risks related to its giving any Rate Conversion/Continuation Request telephonically or by such other method of transmission as Holdings on behalf of the Borrowers shall elect. The Agent shall promptly deliver on the day received a copy of each such Rate Conversion/Continuation Request to the Lenders by telecopier. SECTION 3.2 OPTIONAL REDUCTIONS; TERMINATION OF COMMITMENTS. The Borrowers may, at any time and without payment of premium or penalty except as set forth in Section 3.3, terminate in whole or from time to time in part reduce the Total Commitment Amount of the Lenders by delivering to the Agent, not later than 12:00 noon (Cleveland, Ohio time) three (3) Banking Days immediately preceding the effective date of the reduction, a notice of such reduction (a "Reduction Notice"), stating the amount by which the Total Commitment Amount is to be reduced and the effective date of such reduction. Each reduction shall be subject to the following: (i) each such reduction shall be in an aggregate principal amount of not less than Five Million Dollars ($5,000,000) or any integral multiple of $1,000,000 in excess thereof and (ii) each such reduction shall be in an amount such that the Total Commitment Amount, as so 26 reduced, is not less than an amount equal to the aggregate of (A) the aggregate principal amount of the Revolving Credit Loans then outstanding hereunder, PLUS (B) the aggregate Risk Participation Exposure. The Borrowers shall not be permitted to reduce the Total Commitment Amount unless, concurrently with any reduction, the Borrowers shall make a principal payment on each Lender's then outstanding Revolving Credit Loans in an amount equal to the excess, if any, of such Revolving Credit Loans, PLUS the aggregate Risk Participation Exposure, OVER the Commitment of such Lender as so reduced. The Agent shall promptly notify each Lender of its proportionate amount and the date of each such reduction. From and after each such reduction, the Facility Fees payable hereunder shall be calculated upon the Commitments of the Lenders as so reduced. Each reduction of the aggregate Commitments shall be made among the Lenders in accordance with their respective Ratable Portions and shall be allocated ratably to the Total Commitment Amount. Any partial reduction in the Total Commitment Amount shall be irrevocable and effective during the remainder of the Commitment Period. If the Borrowers terminate in whole the Commitments of the Lenders, on the effective date of such termination (the Borrowers having prepaid in full the unpaid principal balance, if any, of the Notes outstanding, together with all interest (if any) and Facility Fees and Utilization Fees accrued and unpaid and all other amounts due to the Agent or the Lenders hereunder, including, without limitation, the satisfaction of all Obligations in respect of Letters of Credit), all of the Notes outstanding shall be delivered to the Agent marked "Canceled" and redelivered to the Borrowers. SECTION 3.3 REPAYMENTS AND PREPAYMENTS; PREPAYMENT COMPENSATION. (a) PRINCIPAL REPAYMENT. The Borrowers shall repay to the Agent for the account of the Lenders the outstanding principal amount of the Revolving Credit Loans under the Revolving Credit Facility (together with all accrued and unpaid interest, Facility Fees, Utilization Fees and any other amounts owing to the Lenders, or any thereof, under this Agreement) on the last day of the Commitment Period (or in the case of a termination of the Commitment Period pursuant to Section 3.3(e), below, on the date that is 30 days thereafter) or upon acceleration pursuant to Section 12.1 or 12.2. (b) PERMITTED PREPAYMENTS. Except as set forth in Section 3.3(d), the Borrowers may prepay, without penalty or premium, not later than 12:00 noon (Cleveland, Ohio time): (i) in the case of any LIBOR Loan, at least three (3) Banking Days' notice to the Agent prior to the date fixed for such prepayment; and (ii) in the case of any Prime Rate Loan, upon notice to the Agent not later than 12:00 noon (Cleveland, Ohio time) on the date fixed for such prepayment, in each case stating the proposed date and aggregate principal amount of the prepayment, and, upon such notice, shall prepay the outstanding aggregate principal amount of the Revolving Credit Loans comprising part of the same Revolving Credit Borrowing in whole or ratably in part, together with accrued interest to the date of such prepayment on the principal amount prepaid; provided, however, that (A) each partial prepayment of LIBOR Loans shall be in an aggregate principal amount of Three Million Dollars ($3,000,000) or additional increments of One Million Dollars ($1,000,000) in excess thereof, and (B) each partial prepayment of Prime Rate Loans shall be in an aggregate principal amount of Five Hundred Thousand Dollars ($500,000) or additional increments of One Hundred Thousand Dollars ($100,000) in excess thereof. Any prepayment of any LIBOR Loans made on other than the last day of an Interest Period shall obligate the Borrowers to reimburse the Lenders in respect thereof pursuant to Section 3.3(d). Upon receipt 27 by the Agent of a notice pursuant to this Section 3.3(b), the Agent shall promptly forward a copy of such notice, by telecopier in the case of a prepayment of LIBOR Loans comprising Revolving Credit Borrowing, to each of the Lenders. (c) MANDATORY PREPAYMENTS. If on any Banking Day the aggregate outstanding amount of the Revolving Credit Loans under the Revolving Credit Facility PLUS the aggregate Risk Participation Exposures exceeds the Total Commitment Amount then in effect, the Borrowers shall on such day prepay an aggregate principal amount of the related Revolving Credit Loans in an amount at least equal to such excess, together with accrued interest to the date of such prepayment on the principal amount prepaid, to the Agent for the account of each of the Lenders ratably in accordance with their Commitments. Any prepayment of any LIBOR Loans made pursuant to this Section 3.3(c) on other than the last day of an Interest Period shall obligate the Borrowers to reimburse the Lenders in respect thereof pursuant to Section 3.3(d). (d) BREAKAGE COMPENSATION. The Borrowers shall compensate each applicable Lender, upon its written request (which request shall set forth the detailed basis for requesting and the method of calculating such compensation), for all reasonable losses (including loss of profits), expenses and liabilities (including, without limitation, any loss, expense or liability incurred by reason of the liquidation or reemployment of deposits or other funds required by such Lender to fund its LIBOR Loans) which such Lender may sustain: (i) if for any reason (other than a default by such Lender or the Agent), a Credit Event of LIBOR Loans does not occur on a date specified therefor in a Notice of Borrowing or Rate Conversion/Continuation Request (whether or not rescinded or withdrawn by or on behalf of the Borrowers or deemed rescinded or withdrawn pursuant to this Agreement); (ii) if any repayment, prepayment, Rate Continuation or Rate Conversion of any of its LIBOR Loans occurs on a date which is not the last day of an Interest Period applicable thereto; (iii) if any prepayment of any of its LIBOR Loans is not made on any date specified in a notice of prepayment given by the Borrowers; (iv) if such Lender transfers its LIBOR Loans pursuant to a request by the Borrowers under Section 3.9(d) hereof; or (vi) as a consequence of any other default by the Borrowers to repay its LIBOR Loans when required by the terms of this Agreement or any other election by the Borrowers pursuant to the terms hereof. (e) PREPAYMENT OF OBLIGATIONS UPON CHANGE OF CONTROL. (i) In the event that any Change of Control shall occur or Holdings shall have knowledge of any proposed Change of Control, Holdings shall give written notice (the "Borrower Notice") of such fact to the Agent and each Lender. The Borrower Notice shall be delivered promptly upon receipt of such knowledge by Holdings and in any event no later than three (3) Banking Days following the occurrence of any Change of Control. The Borrower Notice shall (A) describe the facts and circumstances of such Change of Control in reasonable detail, (B) make reference to this Section 3.3(e) and the right of the Majority Lenders to require prepayment and discharge in full of the Loans and all of the other Obligations on the terms and conditions provided for in this Section 3.3(e), and (C) offer in writing to prepay in full, no later than the Acceptance Prepayment Date (defined below), the outstanding principal of the Loans, together with accrued interest to the date of prepayment and all of the other Obligations, including, without limitation, the cancellation of all outstanding Letters of Credit (or, at the option of the Borrowers, the deposit with the Letter of Credit Issuer, on terms satisfactory to the Letter of Credit Issuer, of cash collateral in an amount equal the 28 aggregate of the respective Stated Amounts of all such Letters of Credit) and any breakage compensation under Section 3.3(d), above. The Agent (at the instruction of the Majority Lenders) shall have the right to accept such offer on behalf of all of the Lenders and require the prepayment and discharge in full of the outstanding principal of all of the Loans, together with accrued interest to the date of prepayment and all of the other Obligations, including, without limitation, the cancellation of all outstanding Letters of Credit (or, at the option of the Borrowers, the deposit with the Letter of Credit Issuer, on terms satisfactory to the Letter of Credit Issuer, of cash collateral in an amount equal the aggregate of the respective Stated Amounts of all such Letters of Credit) and any breakage compensation under Section 3.3(d), above, by written notice to Holdings (the "Acceptance Notice") given not later than twenty (20) days after the Agent's receipt of the Borrower Notice. If the Agent (at the instruction of the Majority Lenders) accepts such offer, (1) the Borrowers shall, no later than the date (the "Acceptance Prepayment Date") that is thirty (30) days after the date on which the Agent delivers the Acceptance Notice to Holdings, prepay and discharge in full the outstanding principal of all of the Loans, together with accrued interest to the date of prepayment and all of the other Obligations, including, without limitation, the cancellation of all outstanding Letters of Credit (or, at the option of the Borrowers, the deposit with the Letter of Credit Issuer, on terms satisfactory to the Letter of Credit Issuer, of cash collateral in an amount equal the aggregate of the respective Stated Amounts of all such Letters of Credit) and any breakage compensation under Section 3.3(d), above, and (2) on the date on which the Agent delivers the Acceptance Notice to Holdings, the Commitment of each Lender shall terminate in full. (ii) Without limiting the provisions of paragraph (i), above, if Holdings fails to give the Borrower Notice required by paragraph (i), above, upon and after the occurrence of a Change of Control, the Agent shall have the right (at the instruction of the Majority Lenders), by delivery of written notice to Holdings (the "Demand Notice"), to require the Borrowers to prepay and discharge, and the Borrowers shall prepay and discharge, in full the outstanding principal of all of the Loans, together with accrued interest to the date of prepayment and all of the other Obligations, including, without limitation, the cancellation of all outstanding Letters of Credit (or, at the option of the Borrowers, the deposit with the Letter of Credit Issuer, on terms satisfactory to the Letter of Credit Issuer, of cash collateral in an amount equal the aggregate of the respective Stated Amounts of all such Letters of Credit) and any breakage compensation under Section 3.3(d), above. The Demand Notice shall be delivered by the Agent (upon instruction of the Majority Lenders) to Holdings at any time after the Agent or any Lender has knowledge of such Change of Control. Upon delivery of the Demand Notice to Holdings, (1) the Borrowers shall, no later than the date (the "Demand Prepayment Date") that is thirty (30) days after the date on which the Agent delivers the Demand Notice to Holdings, prepay and discharge in full the outstanding principal of all of the Loans, together with accrued interest to the date of prepayment and all of the other Obligations, including, without limitation, the cancellation of all outstanding Letters of Credit (or, at the option of the Borrowers, the deposit with the Letter of Credit Issuer, on terms satisfactory to the Letter of Credit Issuer, of cash collateral in an amount equal the aggregate of the respective Stated Amounts of all such Letters of Credit) and any breakage compensation under Section 3.3(d), above, and (2) on the date on which the Agent delivers the Demand Notice to Holdings, the Commitment of each Lender shall terminate in full. 29 (iii) Compliance with the provisions of paragraph (ii) of this Section 3.3(e) shall not be deemed to constitute a waiver of, or consent to, any Incipient Default or Event of Default caused by any breach of the obligations of Holdings under paragraph (i) of this Section 3.3(e); and, without limiting the generality of the provisions of Section 11.1, below, the failure of the Borrowers timely to prepay and discharge in full all of the Obligations if required under and pursuant to either of paragraph (i) or (ii), above, shall constitute an Event of Default under said Section 11.1. SECTION 3.4 FEES. (a) FACILITY FEE. The Borrowers agree during the Commitment Period to pay to each Lender, through the Agent, at the dates specified herein, a facility fee (the "Facility Fee") at a rate per annum equal to the Applicable Fee Percentage from time to time in effect for Facility Fees, as determined pursuant to Section 3.4(b), on the Commitment of such Lender. Such Facility Fee shall be payable in arrears on each Quarterly Payment Date, commencing June 30, 2002, for the calendar quarter year, or portion thereof, then ending and on the earlier date on which the Commitment of such Lender shall be terminated or assigned in whole (or in the case of a termination of the Commitment of such Lender pursuant to Section 3.3(e), above, on the date that is 30 days thereafter). (b) DETERMINATION OF APPLICABLE FEE PERCENTAGE. The Applicable Fee Percentage shall be adjusted as herein specified as of the first day of the Commitment Period and thereafter as of each Fee Adjustment Date, commencing with the Fee Adjustment Date on June 1, 2002, by reference to (A) the financial statements required by Section 8.1(a) or Section 8.1(b), as the case may be, for the period ending as of the Fee Determination Date for such Fee Adjustment Date and (B) a certificate complying with Section 8.1(c)(ii) certifying the Total Leverage Ratio as of such Fee Determination Date. As of any such Fee Adjustment Date and during the Accrual Period commencing on such date, the Applicable Fee Percentage for Facility Fees shall be the Applicable Fee Percentage therefor indicated in the definition of the term "Applicable Fee Percentage" corresponding to the Total Leverage Ratio as of the Fee Determination Date for such Fee Adjustment Date. Any such adjustment of the Applicable Fee Percentage shall cease to be effective from the next Fee Adjustment Date. (c) RISK PARTICIPATION FEE. The Borrowers shall pay to the Letter of Credit Issuer, and the Letter of Credit Issuer shall share with the Lenders, on a pro rata basis based on their respective Ratable Portions, a risk participation fee (the "Risk Participation Fee") in an amount equal to the per annum rate equal to the Applicable LIBOR Percentage in effect pursuant to Section 3.5(b), TIMES the Stated Amount of each Letter of Credit as of the date on which payment of the Risk Participation Fee is due and payable. The Borrowers shall pay the Risk Participation Fee to the Letter of Credit Issuer in advance on the date of issuance and, for Letters of Credit having a term longer than one (1) year, on each anniversary of such date of issuance thereafter during the term of such Letter of Credit, computed at the Applicable LIBOR Percentage in effect on the date of issuance and, as applicable, each such subsequent anniversary payment date. Upon receipt of any Risk Participation Fee, the Letter of Credit Issuer shall pay such Risk Participation Fees to the Agent for the account of the Lenders. 30 (d) FRONTING FEE. The Borrowers shall pay to the Letter of Credit Issuer for its own account a fronting fee in an amount equal to the Stated Amount of each Letter of Credit issued by the Letter of Credit Issuer TIMES twelve and one-half (12.50) Basis Points, which fee shall be payable on the date of such issuance. (e) UP FRONT FEE. The Borrowers shall pay to the Agent, for the ratable benefit of the Lenders, on the Closing Date a fee in the amount set forth in a separate letter and term sheet between the Agent and Holdings dated April 5, 2002, which fee shall be deemed fully earned on the Closing Date. (f) UTILIZATION FEE. The Borrowers shall (through the Agent) pay to the Banks on the dates specified herein, a utilization fee (the "Utilization Fee") at a rate of Ten (10) Basis Points per annum, computed on the entire unpaid balance of the Revolving Credit Loans and the aggregate of the Stated Amounts of all outstanding Letters of Credit for each day on which the sum of (i) the aggregate outstanding principal balance of the Revolving Credit Loans on such day, PLUS (ii) the aggregate of the Stated Amounts of all Letters of Credit then outstanding, exceeds an amount equal to one-third (1/3) of the Commitment of such Lender on such day. Such Utilization Fee shall be payable in arrears on each Quarterly Payment Date, commencing June 30, 2002, in respect of the calendar quarter year then ending and on the earlier date on which the Commitment of such Lender shall be terminated or assigned in whole (or in the case of a termination of the Commitment of such Lender pursuant to Section 3.3(e), above, on the date that is 30 days thereafter). (g) AGENCY FEE. The Borrowers shall pay to the Agent in advance on the Closing Date and on each anniversary thereof during the Commitment Period an agency fee in the amount set forth in a separate fee letter between the Agent and Holdings dated April 5, 2002, which fee shall be deemed fully earned on each such date (h) FEES NONREFUNDABLE. All fees set forth in this Section 3.4 and closing fees payable pursuant to Sections 6.1 and 6.2 shall be paid on the date due, in immediately available funds, to the Agent for distribution, if and as appropriate, to the Lenders and, once paid, none of such fees shall be refundable under any circumstances. SECTION 3.5 INTEREST. (a) REGULAR INTEREST. The Borrowers shall pay interest on the unpaid principal amount of each Loan made by each Lender from the date of such Loan until such principal amount shall be paid in full at the following times and rates per annum: (i) PRIME RATE LOANS. During such periods as a Revolving Credit Loan is a Prime Rate Loan, a rate per annum equal at all times to the Prime Rate in effect from time to time, payable quarterly, in arrears, on each Quarterly Payment Date and on the date such Prime Rate Loan shall be converted or paid in full and at maturity (whether by reason of acceleration or otherwise). 31 (ii) LIBOR LOANS. During such periods as a Revolving Credit Loan is a LIBOR Loan, a rate per annum equal to the sum of the Adjusted LIBOR for the Interest Period of such LIBOR Loan, PLUS the Applicable LIBOR Percentage in effect from time to time during the Interest Period of such LIBOR Loan, in accordance with Section 3.1(h), payable (A) on the last day of each Interest Period and (B) if such Interest Period has a duration of more than three months, three months after the first day of such Interest Period and (C) on the date such LIBOR Loan shall be converted to a Prime Rate Loan or to a LIBOR Loan of a different Interest Period or paid in full and at maturity (whether by reason of acceleration or otherwise). (b) APPLICABLE LIBOR PERCENTAGE; TERMS OF ADJUSTMENT. (i) COMMENCEMENT; CONDITIONS. The Applicable LIBOR Percentage shall be adjusted as herein specified as of the first day of the Commitment Period and thereafter as of each Interest Adjustment Date, commencing with the Interest Adjustment Date on June 1, 2002, by reference to (A) the financial statements required by Section 8.1(a) or Section 8.1(b) for the period ending as of the Interest Determination Date for such Interest Adjustment Date and (B) a certificate complying with Section 8.l(c)(ii) certifying the Total Leverage Ratio as of such Interest Determination Date. (ii) CALCULATION AND DURATION OF ADJUSTMENT. On each Interest Adjustment Date and during the Accrual Period commencing on such date, the Applicable LIBOR Percentage shall be the percent per annum in Basis Points indicated in the definitions of the term "Applicable LIBOR Percentage" corresponding to the Total Leverage Ratio as of the Interest Determination Date for such Interest Adjustment Date. (c) INTEREST ON UNPAID OBLIGATIONS; INTEREST UPON EVENT OF DEFAULT. If any principal, interest or fees or other sum due under this Agreement shall not be paid when due, or if any Revolving Credit Note shall not be paid at maturity, whether such maturity occurs by reason of lapse of time or by operation of any provision of acceleration of maturity therein contained (and without waiving any Event of Default resulting therefrom or limiting any right or remedy of the Lenders or the Agent in respect thereof), the principal thereof and the unpaid interest and fees thereon, or such fees or other sum shall bear interest, payable on demand, at the Increased Rate from time to time in effect in respect of such Loan or other Obligation. The Borrowers acknowledge that this calculation will result in the accrual of interest on interest and the Borrowers expressly consent and agree to this provision. In addition, notwithstanding anything to the contrary contained in this Agreement, upon and during the continuance of an Event of Default, but without waiving such Event of Default or limiting any right or remedy of the Lenders or the Agent in respect thereof, all of the Obligations shall bear interest at the Increased Rate. (d) INTEREST RATE DETERMINATION. (i) AGENT DETERMINATION; NOTICE. The Agent shall determine the Prime Rate and Adjusted LIBOR in accordance with the definitions of Prime Rate, LIBOR Rate and Adjusted LIBOR set forth in Section 1.1. The Agent shall give prompt notice to the 32 Borrowers and the Lenders of the applicable interest rate determined by the Agent for purposes of Section 3.5(a)(i) or (ii). (ii) FAILURE OF BORROWERS TO ELECT. If no Interest Period is specified in any Notice of Borrowing for any LIBOR Rate Loans comprising a Revolving Credit Borrowing, the Borrowers shall be deemed to have selected instead Prime Rate Loans. If Holdings, on behalf of the Borrowers, shall not have given notice in accordance with Section 3.1(h) to continue any LIBOR Rate Loans comprising a Revolving Credit Borrowing into a subsequent Interest Period (and shall not have otherwise delivered a Rate Conversion/Continuation Request in accordance with Section 3.1(h) to convert such Loans), subject to the limitations set forth in Section 3.1(h), such LIBOR Rate Loans shall, at the end of the Interest Period applicable thereto (unless repaid pursuant to the terms hereof), automatically shall be converted to (or, as the case may be, continued as) LIBOR Rate Loans having an Interest Period of one (1) month, provided that if such limitations of Section 3.1(h) would not be complied with, such LIBOR Rate Loans automatically shall be converted to Prime Rate Loans. SECTION 3.6 PAYMENTS AND COMPUTATIONS. (a) PAYMENTS. The Borrowers shall make each payment hereunder and under the Notes with respect to principal of, interest on, and other amounts relating to Revolving Credit Loans, not later than 11:00 A.M. (Cleveland, Ohio time) on the day when due in dollars to the Agent in immediately available funds by deposit of such funds to the Agent's account maintained at the Payment Office. Payments received after 12:00 noon (Cleveland, Ohio time) on any day shall be deemed to have been received on the next succeeding Banking Day. The Agent will promptly thereafter, on the same Banking Day, cause to be distributed like funds relating to the payment of principal, interest, Facility Fees, Utilization Fees or other fees or other amounts which may be received in respect of the Obligations of the Borrowers under this Agreement ratably (other than amounts payable pursuant to the express terms of this Agreement solely to the Agent or the Letter of Credit Issuer, as the case may be) to each of the Lenders for the account of its respective Lending Office, and like funds relating to the payment of any other amount payable to any Lender to such Lender for the account of its Lending Office. The funds so distributed to each Lender shall in each case be applied by such Lender in accordance with the terms of this Agreement. (b) AUTHORIZATION TO CHARGE ACCOUNT. If and to the extent payment owed to any Lender is not made when due hereunder or under the Note held by such Lender, each Borrower hereby authorizes such Lender to charge from time to time against any or all of such Borrower's general deposit accounts with such Lender any amount so due. Any Lender exercising the foregoing authorization will endeavor to advise such Borrower of such exercise reasonably promptly thereafter; provided, however, that such Lender's failure to do so shall not subject such Lender, the Agent or any other Lender to liability or claim of any nature whatsoever and shall not create in any Borrower any set-off, defense or other claim of any nature whatsoever. (c) COMPUTATIONS OF INTEREST AND FEES. All computations of interest, Facility Fees, Utilization Fees and Risk Participation Fees and all other fees shall be made by the Agent, (i) in the case of LIBOR Loans, Risk Participation Fees, Facility Fees and Utilization Fees, on the 33 basis of a year of 360 days, and (ii) in the case of Prime Rate Loans, on the basis of a year of 365/366 days, in each case for the actual number of days (including the first day but excluding the last day) occurring in the period for which such interest or fees are payable. Each determination by the Agent (or, in the case of Section 3.7, by a Lender) of an interest rate hereunder shall be conclusive and binding for all purposes, absent manifest error. (d) PAYMENT NOT ON BANKING DAY. Whenever any payment hereunder or under the Notes shall be stated to be due on a day other than a Banking Day, such payment shall be made on the next succeeding Banking Day, except, that, if such extension would cause payment of interest on or principal of LIBOR Loans to be made in the next following calendar month, such payment shall be made on the immediately preceding Banking Day. Any such extension or reduction of time shall in such case be included in the computation of payment of interest or Facility Fee or Utilization Fee, as the case may be. (e) PRESUMPTION OF PAYMENT IN FULL BY BORROWERS. Unless the Agent shall have received notice from Holdings, on behalf of the Borrowers, prior to the date on which any payment is due to the Lenders hereunder that the Borrowers will not make such payment in full, the Agent may assume that the Borrowers will make or have made such payment in full to the Agent on such date. In reliance upon such assumption, the Agent may, but shall not be obligated to, distribute to each Lender on such due date the amount then due such Lender. If and to the extent the Borrowers shall not have made such payment in full to the Agent, each Lender shall repay to the Agent promptly upon demand the amount distributed to such Lender together with interest thereon, for each day from the date such amount is distributed to such Lender until the date such Lender repays such amount to the Agent, at the Federal Funds Rate plus the amount of any costs, expenses, liabilities or losses incurred by the Agent in connection with its distribution of such funds, unless such costs, expenses, liabilities or losses are the result of the gross negligence or wilful misconduct of the Agent. SECTION 3.7 RESERVES; TAXES; INDEMNITIES. (a) RESERVES OR DEPOSIT REQUIREMENTS. If at any time any Law, treaty or regulation (including, without limitation, Regulation D of the Board of Governors of the Federal Reserve System) or the interpretation thereof by any governmental authority charged with the administration thereof or any central bank or other fiscal, monetary or other authority shall impose (whether or not having the force of Law), modify or deem applicable any reserve and/or special deposit requirement (other than reserves included in the Reserve Percentage, the effect of which is reflected in the interest rate(s) of the LIBOR Loan(s) in question) against assets held by, or deposits in or for the amount of any loans by, any Lender, and the result of the foregoing is to increase the cost (whether by incurring a cost or adding to a cost) to such Lender of making or maintaining hereunder LIBOR Loans or to reduce the amount of principal or interest received by such Lender with respect to such LIBOR Loans, then upon demand by such Lender the Borrowers shall pay to such Lender from time to time on Interest Adjustment Dates with respect to such loans, as additional consideration hereunder, additional amounts sufficient to fully compensate and indemnify such Lender for such increased cost or reduced amount, assuming (which assumption such Lender need not corroborate) such additional cost or reduced amount was allocable to such LIBOR Loans. A certificate as to the increased cost or reduced amount as 34 a result of any event mentioned in this Section 3.7(a), setting forth the calculations therefor, shall be promptly submitted by such Lender to the Borrowers and shall be rebuttably presumptive evidence as to the amount thereof. Notwithstanding any other provision of this Agreement, after any such demand for compensation by any Lender, the Borrowers, upon at least three (3) Banking Days' prior written notice to such Lender through the Agent, may prepay the affected LIBOR Loans in full or convert all LIBOR Loans to Prime Rate Loans regardless of the Interest Period of any thereof. Any such prepayment or conversion shall entitle the Lenders to the prepayment compensation provided for in Section 3.3 hereof. Each Lender will notify the Borrowers as promptly as practicable (with a copy thereof delivered to the Agent) of the existence of any event which will likely require the payment by the Borrowers of any such additional amount under this Section. (b) IMPOSITION OF TAXES. In the event that by reason of any Law, regulation or requirement or in the interpretation thereof by an official authority, or the imposition of any requirement of any central bank whether or not having the force of Law, any Lender shall, with respect to this Agreement or any transaction under this Agreement, be subjected to any tax, levy, impost, charge, fee, duty, deduction or withholding of any kind whatsoever (other than any tax imposed upon the total net income of such Lender) and if any such measures or any other similar measure shall result in an increase in the cost to such Lender of making or maintaining any LIBOR Loan or in a reduction in the amount of principal, interest or commitment fee receivable by such Lender in respect thereof, then such Lender shall promptly notify the Borrowers in writing stating the reasons therefor. The Borrowers shall thereafter pay to such Lender upon demand from time to time on Interest Adjustment Dates with respect to such LIBOR Loans, as additional consideration hereunder, such additional amounts as will fully compensate such Lender for such increased cost or reduced amount. A certificate as to any such increased cost or reduced amount, setting forth the calculations therefor, shall be submitted by such Lender to the Borrowers and shall be rebuttably presumptive evidence of the amount thereof. Notwithstanding any other provision of this Agreement, after any such demand for compensation by any Lender, the Borrowers, upon at least three (3) Banking Days prior written notice to such Lender through the Agent, may prepay the affected LIBOR Loans in full or convert all LIBOR Loans to Prime Rate Loans regardless of the Interest Period of any thereof. Any such prepayment or conversion shall entitle the Lenders to prepayment compensation provided for in Section 3.3 hereof. (c) EURODOLLAR DEPOSIT UNAVAILABLE OR INTEREST RATE UNASCERTAINABLE. In respect of any LIBOR Loans, in the event that the Agent or any Lender shall have determined that, by reason of circumstances affecting such market, adequate and reasonable means do not exist for ascertaining the LIBOR rate applicable to such Interest Period, as the case may be, the Agent or such Lender shall promptly give notice of such determination to the Borrowers and (i) any notice of new LIBOR Loans (or conversion of existing loans to LIBOR Loans) previously given by the Borrowers and not yet borrowed (or converted, as the case may be) shall be deemed a notice to make Prime Rate Loans, and (ii) the Borrowers shall be obligated either to prepay or to convert any outstanding LIBOR Loans on the last day of the then current Interest Period or Periods with respect thereto. Any such prepayment or conversion shall entitle the Lenders to prepayment compensation provided for in Section 3.3 hereof. 35 (d) INDEMNITY. Without prejudice to any other provisions of this Article 3, the Borrowers hereby agree to indemnify each Lender against any loss or expense which such Lender may sustain or incur as a consequence of any failure by the Borrowers to accept the proceeds of any LIBOR Loan, or otherwise consummate a Revolving Credit Borrowing in respect of LIBOR Loans, requested by the Borrowers pursuant to the provisions of this Agreement and of any default by the Borrowers in payment when due of any amount due hereunder in respect of any LIBOR Loan, including, but not limited to, any loss of profit, premium or penalty incurred by such Lender in respect of funds borrowed by it for the purpose of making or maintaining such LIBOR Loan, as determined by such Lender in the exercise of its sole but reasonable discretion. A certificate as to any such loss or expense shall be promptly submitted by such Lender to the Borrowers and shall be rebuttably presumptive evidence of the amount thereof. (e) CHANGES IN LAW RENDERING LIBOR LOANS UNLAWFUL. If at any time any new Law, treaty or regulation, or any change in any existing Law, treaty or regulation, or any interpretation thereof by any governmental or other regulatory authority charged with the administration thereof, shall make it unlawful for any Lender to fund any LIBOR Loans which it is committed to make hereunder with moneys obtained in the Eurodollar market, the commitment of such Lender to fund LIBOR Loans shall, upon the happening of such event, forthwith be suspended for the duration of such illegality, and such Lender shall by written notice to the Borrowers and the Agent declare that its Commitment with respect to such Loans has been so suspended and, if and when such illegality ceases to exist, such suspension shall cease and such Lender shall similarly notify the Borrowers and the Agent. If any such change shall make it unlawful for any Lender to continue in effect the funding in the applicable Eurodollar market of any LIBOR Loan previously made by it hereunder, such Lender shall, upon the happening of such event, notify the Borrowers, the Agent and the other Lenders thereof in writing stating the reasons therefor, and the Borrowers shall, on the earlier of (i) the last day of the then current Interest Period or (ii) if required by such Law, regulation or interpretation, on such date as shall be specified in such notice, either convert all LIBOR Loans to Prime Rate Loans to the extent permissible under this Agreement or prepay all LIBOR Loans to the Lenders in full. Any such prepayment or conversion shall entitle the Lenders to prepayment compensation as provided in Section 3.3 hereof. SECTION 3.8 CAPITAL ADEQUACY. If any Lender shall have determined, that, whether in effect at the date of this Agreement or hereafter in effect, any applicable Law, rule, regulation or guideline regarding capital adequacy, or any change therein, or any change in the interpretation or administration thereof by any governmental authority, central bank or comparable agency charged with the interpretation or administration thereof, or compliance by any Lender (or its Lending Office) with any request or directive regarding capital adequacy (whether or not having the force of Law) of any such authority, central bank or comparable agency, has or would have the effect of reducing the rate of return on such Lender's capital allocated to the transactions contemplated by this Agreement (or the capital of its holding company) as a consequence of its obligations hereunder to a level below that which such Lender (or its holding company) could have achieved but for such adoption, change or compliance (taking into consideration such Lender's policies or the policies of its holding company with respect to capital adequacy) by an amount deemed by such Lender to be material, then from time to time, within 15 days after demand by such Lender (with a copy to the Agent), the Borrowers shall pay to such Lender such 36 additional amount or amounts as will compensate such Lender (or its holding company) for such reduction. Each Lender will designate a different lending office if such designation will avoid the need for, or reduce the amount of, such compensation and will not, in the judgment of such Lender, be otherwise disadvantageous to such Lender. A certificate of any Lender claiming compensation under this section and setting forth the additional amount or amounts to be paid to it hereunder shall be conclusive and binding in the absence of manifest error. In determining such amount, such Lender may use any reasonable averaging and attribution methods. Within four (4) months following the date such certificate is furnished claiming compensation by any such Lender (the "Affected Lender"), the Borrowers may replace the Affected Lender with a lending institution satisfactory to the Agent (the consent to which may not be unreasonably withheld by the Agent), upon payment to the Affected Lender of all principal of and interest on all of its then outstanding Revolving Credit Loans and of all Facility Fees, Utilization Fees and other Obligations then owing to it and upon such other terms and conditions as are satisfactory to the Majority Lenders. The protection of this Section 3.8 shall be available to each Lender regardless of any possible contention of the invalidity or inapplicability of the Law, regulation or other condition which shall have been imposed. SECTION 3.9 TAXES. (a) TAXES; WITHHOLDING. Any and all payments by the Borrowers hereunder, under the Notes or the other Loan Documents shall be made, in accordance with the provisions of Article 3, free and clear of and without deduction for any and all present or future taxes, levies, imposts, deductions, charges or withholdings, and all liabilities with respect thereto, excluding, in the case of each Lender, taxes imposed on its income, and franchise taxes imposed on it, by the jurisdiction under the Laws of which such Lender is organized or any political subdivision thereof (all such non-excluded taxes, levies, imposts, deductions, charges, withholdings and liabilities being hereinafter referred to as "Taxes"). If the Borrowers shall be required by Law to deduct any Taxes from or in respect of any sum payable hereunder or under any Note to any Lender or the Agent, (i) the sum payable shall be increased as may be necessary so that after making all required deductions (including deductions applicable to additional sums payable under this Section 3.9) such Lender (as the case may be) receives an amount equal to the sum it would have received had no such deductions been made, (ii) the Borrowers shall make such deductions, and (iii) the Borrowers shall pay the full amount deducted to the relevant taxation authority or other authority in accordance with applicable Law. All such Taxes shall be paid by the Borrowers prior to the date on which penalties attach thereto or interest accrues thereon; provided, however, that, if any such penalties or interest become due, the Borrowers shall make prompt payment thereof to the appropriate governmental authority. The Borrowers shall indemnify each Lender for the full amount of such Taxes (including any Taxes on amounts payable under this Section 3.9) paid by the Lender and any liability (including penalties, interest and expenses) arising therefrom or with respect thereto, whether or not such Taxes were correctly or legally asserted. Any indemnification payment shall be made within thirty (30) days from the date the Lender makes written demand therefor. (b) STAMP TAXES. The Borrowers agree to pay, and will indemnify each Lender and the Agent for, any present or future stamp or documentary taxes or any other excise or property taxes, charges or similar levies which arise from any payment made hereunder or under the 37 Notes or from the execution, delivery or registration of, or otherwise with respect to, this Agreement or the Notes (hereinafter referred to as "Other Taxes"). (c) OTHER TAXES. The Borrowers shall indemnify each Lender and the Agent for the full amount of Taxes or Other Taxes (including, without limitation, any Taxes or Other Taxes imposed by any jurisdiction on amounts payable under this Section 3.9) paid by such Lender or the Agent (as the case may be) and any liability (including penalties, interest and expenses) arising therefrom or with respect thereto, whether or not such Taxes or Other Taxes were correctly or legally asserted. Any indemnification payment shall be made within thirty (30) days from the date such Lender or the Agent (as the case may be) makes written demand therefor. (d) REMOVAL OF LENDER. Within four (4) months following the date the Agent or a Lender shall make a written demand for Taxes or Other Taxes pursuant to this Section 3.9, the Borrowers may replace the Affected Lender with a lending institution satisfactory to the Agent (the consent to which may not be unreasonably withheld by the Agent), upon payment to the Affected Lender of all principal of and interest on all of its then outstanding Revolving Credit Loans and of all Facility Fees, Utilization Fees and other Obligations then owing to it and upon such other terms and conditions as are satisfactory to the Majority Lenders (exclusive of each Affected Lender and be computed without consideration of the Commitment of each such Affected Lender). The protection of this Section shall be available to each Lender regardless of any possible contention of the invalidity or inapplicability of the law, regulation or other condition which shall have been imposed. (e) REQUEST FOR REFUND. At the reasonable request of Holdings, on behalf of the Borrowers, a Lender or the Agent shall apply at the Borrowers' expense for a refund in respect of Taxes or Other Taxes previously paid by the Borrowers pursuant to this Section 3.9. Notwithstanding the foregoing, none of the Lenders or the Agent shall be obligated to pursue such refund if, in its sole good faith judgment, such action would be disadvantageous to it. If any Lender subsequently receives from a taxing authority a refund of any Tax previously paid by the Borrowers and for which the Borrowers have indemnified the Lender pursuant to this Section 3.9, such Lender shall within thirty (30) days after receipt of such refund, and to the extent permitted by applicable Law, pay to the Borrowers the net amount of any such recovery after deducting taxes and reasonable expenses attributable thereto. (f) EXEMPTION CERTIFICATE. Not later than the commencement of the Commitment Period or, in the case of any bank or financial institution that becomes a Lender after such date, pursuant to Article 14, the date of the instrument of assignment pursuant to which such bank or financial institution became a Lender, and annually on each Anniversary Date thereafter or at such other times as the Agent or the Borrowers may request, each Lender organized under the Laws of a jurisdiction outside the United States shall provide the Agent and the Borrowers with duly completed copies of Form 1001 or Form 4224 or any successor form prescribed by the Internal Revenue Service of the United States certifying that such Lender is exempt from United States withholding taxes with respect to all payments to be made to such Lender hereunder or other document satisfactory to Holdings, on behalf of the Borrowers, and the Agent indicating that all payments to be made to such Lender hereunder are not subject to such taxes (each such certificate, an "Exemption Certificate"). Unless the Agent and Holdings have received an 38 Exemption Certificate from such Lender, the Borrowers, or the Agent if the Borrowers have not withheld, may withhold taxes from such payments at the applicable statutory rate (subject, in the case of the Borrowers to the requirements of Section 3.9(a)); provided, however, that if the Borrowers have withheld Holdings shall so notify the Agent. If the Borrowers are required to pay additional amounts to any Lender pursuant to this Section 3.9, such Lender shall use reasonable efforts to designate a different Lending Office if such designation will thereafter avoid the need for any additional payments under this Section 3.9 and will not, in the sole good faith judgment of such Lender, be otherwise disadvantageous to such Lender in any material respect. A Lender which ceases to be exempt from United States withholding taxes shall notify the Agent and the Borrowers promptly thereof. (g) FURNISHING OF CERTIFICATE. Within 30 days after the date of any payment of Taxes, the Borrowers will furnish to the Agent, at its address set forth on the signature page of the Agent to this Agreement or such other address as the Agent notifies the Lenders, the original or a certified copy of a receipt evidencing payment thereof. (h) SURVIVAL OF PROVISION. Without prejudice to the survival of any other agreement of the parties hereunder, but subject to Section 3.10, below, the respective agreements, rights and liabilities of the Borrowers, the Agent and the Lenders contained in this Section 3.9 shall survive the payment in full of the outstanding Revolving Credit Loans, Facility Fees, Utilization Fees, Risk Participation Fees, interest and termination of the Commitments hereunder. SECTION 3.10 NO WAIVER; REIMBURSEMENT LIMITATION. Failure on the part of any Lender to demand compensation, payment, or reimbursement of amounts under any of Sections 3.7, 3.8 and 3.9, above, with respect to any period shall not constitute a waiver of such Lender's rights to demand such compensation, payment, or reimbursement in such period or in any other period; PROVIDED, HOWEVER, that no Lender shall be entitled to compensation, payment, or reimbursement of amounts under any of Sections 3.7, 3.8 and 3.9 for any amounts incurred or accruing more than 270 days prior to the giving of notice to Holdings of any cost, reduction, Taxes or other amount of the nature described in any of such Sections, and PROVIDED FURTHER, HOWEVER, that, if such cost, reduction, Tax or other amount is owing by a Lender by reason of a an audit or assessment by governmental authority or change in law having effect on a date earlier than the date on which such Lender receives notice thereof, then the 270-day period referred to above shall be extended to include such period of retroactive effect. ARTICLE 4 PRO RATA TREATMENT SECTION 4.1 PRO RATA TREATMENT. Except as required by Section 3.7 or Section 12.4(b) or as permitted under Section 3.9, each Revolving Credit Borrowing, each participation in a Letter of Credit, each payment or prepayment of principal of any Revolving Credit Borrowing, each payment of interest on the Revolving Credit Loans, each payment of the Facility Fees, each payment of the Utilization Fees, each payment of Risk Participation Fees, each reduction of the Commitments, each Rate Conversion or Rate Continuation of Revolving Credit Loans comprising a Revolving Credit Borrowing shall be allocated among the Lenders in accordance 39 with each Lender's Ratable Portion of the Total Commitment Amount (or if the Commitments shall have expired or been terminated, in accordance with the respective principal amounts of each Lender's Revolving Credit Loans). ARTICLE 5 LETTERS OF CREDIT SECTION 5.1 LETTERS OF CREDIT. (a) ISSUANCE. Subject to the terms and conditions set forth this Agreement, upon written request from Holdings, on behalf of the Borrowers, a copy of which is delivered to the Agent, the Letter of Credit Issuer will issue, for the account of any Borrower, on or at any time after the commencement of the Commitment Period but prior to the earlier of (i) fifteen (15) days prior to the last day of the Commitment Period or (ii) the date on which the Lenders' Commitments are terminated in full, whether pursuant to Section 3.2 or Article 12 hereof or otherwise, Letters of Credit in such form as Holdings, on behalf of the Borrowers, and the Letter of Credit Issuer may agree, but in no case having a final expiry date later than fifteen (15) Banking Days prior to last day of the Commitment Period, and in all cases in compliance with all applicable provisions of Law; provided, however, that, in no event shall (x) the aggregate Risk Participation Exposure exceed the LC Sublimit or (y) the aggregate principal amount of all Revolving Credit Loans, PLUS the aggregate Risk Participation Exposure, exceed the Total Commitment Amount. The Agent shall advise the Lenders promptly following the issuance of a Letter of Credit or other event or condition which affects the Lenders' respective Risk Participation Exposures. (b) REIMBURSEMENT OBLIGATIONS. Each Letter of Credit issued by the Letter of Credit Issuer hereunder shall be issued pursuant to the Letter of Credit Issuer's standard and customary form of letter of credit application and/or Reimbursement Agreement (or equivalent agreement otherwise named) then in use under which the Borrowers are the reimbursement obligors and shall identify: (i) the respective dates of issuance and expiry of such Letter of Credit (which date of expiry shall not be later than fifteen (15) days prior to the last day of the Commitment Period), (ii) the amount of such Letter of Credit (which shall be a sum certain), (iii) the beneficiary and account party of such Letter of Credit and (iv) the drafts and other documents (if any) necessary to be presented to the Letter of Credit Issuer upon a drawing thereunder. To the extent that any of the terms of the above-referenced Reimbursement Agreement conflict with the terms of this Agreement, the terms of this Agreement shall control. (c) PAYMENT OF LETTER OF CREDIT OBLIGATIONS. The Borrowers hereby agree to pay the Letter of Credit Issuer, on demand, the amount of each drawing under any Letter of Credit issued by the Letter of Credit Issuer pursuant to this Section, plus interest from the date of such drawing until paid in full to the Letter of Credit Issuer by the Borrowers or pursuant to Section 5.2(b) hereof, at an annual rate equal to the Prime Rate from time to time in effect. 40 SECTION 5.2 LETTER OF CREDIT ISSUER RELATIONSHIP WITH LENDERS. (a) RISK PARTICIPATION. The Letter of Credit Issuer hereby agrees that it will sell simultaneously with the issuance of each Letter of Credit, and each other Lender hereby agrees that it will buy simultaneously with the issuance of each Letter of Credit (subject to the following sentence) a participation in any payment which the Letter of Credit Issuer makes for the account of the Borrowers under any such Letter of Credit for which payment the Letter of Credit Issuer is not otherwise immediately reimbursed by the Borrowers in an amount equal to such Lender's Ratable Portion. The aggregate principal amount of all outstanding Revolving Credit Loans of such Lender, PLUS such Lender's aggregate Risk Participation Exposure (after taking into effect such Lender's Ratable Portion of the risk participation created under this Section 5.2) shall not exceed such Lender's Commitment in effect from time to time. The sale of the risk participation by the Letter of Credit Issuer and the purchase thereof by each Lender, respectively, shall occur simultaneously with and shall be evidenced by each Letter of Credit. (b) REIMBURSEMENT OF LETTER OF CREDIT ISSUER. The Letter of Credit Issuer will notify the Agent, who will promptly notify each other Lender, if the Letter of Credit Issuer makes any payment under any Letter of Credit. Upon demand by the Agent each such other Lender shall pay to the Agent that Lender's Ratable Portion of each such payment made by the Letter of Credit Issuer. Each such payment shall for all purposes hereunder be deemed to be a Prime Rate Loan (it being understood that (i) each Lender's obligation to make such payment is absolute and unconditional and shall not be affected by any event or circumstance whatsoever, including the occurrence of any Incipient Default hereunder or the failure of any condition precedent set forth in Article 7 to be satisfied and (ii) each such payment shall be made without any offset, abatement, withholding or reduction whatsoever). In addition, upon demand by the Letter of Credit Issuer through the Agent, each other Lender will pay an amount equal to such Lender's Ratable Portion of all costs and expenses not reimbursed by the Borrowers which have been incurred or made by the Letter of Credit Issuer as the result of, or in connection with, any action including, but not limited to, legal action which may be taken by Agent to obtain reimbursement for payments made by Agent under any Letter of Credit, unless such costs and expenses are the result of the gross negligence or willful misconduct of, as the case may be, the Letter of Credit Issuer or the Agent. (c) RIGHTS AND OBLIGATIONS OF LETTER OF CREDIT ISSUER. Neither the Letter of Credit Issuer, nor any of its correspondents, shall be responsible, provided it has exercised reasonable care, as to any document presented under a Letter of Credit, or any renewal or extension thereof, which appears to be regular on its face and appears on its face to conform to the terms of the Letter of Credit and to make reasonable reference thereto, for the validity or sufficiency of any signature or endorsement, for delay in giving any notice or failure of any instrument to bear adequate reference to the Letter of Credit, or to any renewal or extension thereof, or failure of documents not clearly specified in the Letter of Credit to accompany any instrument at negotiation, or for failure of any person to note the amount of any draft on the reverse of the Letter of Credit or on any renewal or extension thereof. Any action, inaction or omission on the part of the Letter of Credit Issuer or any of its correspondents, under or in connection with any Letter of Credit or any renewal or extension thereof or the related instruments or documents, if in good faith and in conformity with such Laws, regulations or customs as are applicable and the terms of this 41 Section 5.2, shall be binding upon the Borrowers and shall not place the Letter of Credit Issuer or any of its correspondents under any liability to any Borrower, in the absence of negligence by the Letter of Credit Issuer or its correspondents. The Letter of Credit Issuer's rights, powers, privileges and immunities specified in or arising under this Agreement are in addition to any heretofore or at any time hereafter otherwise created or arising, whether by statute or rule of Law or contract. (d) EFFECT OF APPLICABLE LAW OR CUSTOM. All Letters of Credit issued hereunder will, except to the extent otherwise expressly provided, be governed by the International Standby Practices, as adopted by the International Chamber of Commerce at the time of issuance of the Letter of Credit. (e) TERMINATION OF LETTER OF CREDIT COMMITMENT. In the event that (i) any restriction is imposed on the Letter of Credit Issuer (including, without limitation, any legal lending or acceptance limits imposed by the United States of America or any political subdivision thereof) which in the reasonable judgment of the Letter of Credit Issuer would prevent the Letter of Credit Issuer from issuing Letters of Credit or maintaining its commitment to issue Letters of Credit or (ii) there shall have occurred, at any time during the term of this Agreement (A) any adverse change or a development involving a prospective adverse change affecting the condition of any of the Borrowers which would materially impair the ability of the Borrowers to meet their obligations under this Article 5, (B) any outbreak of hostilities or other national or international crisis or change in economic conditions if the effect of such outbreak, crisis or change would make the creation of Letters of Credit or the discount or sale thereof impracticable, or (C) the enactment, publication, decree or other promulgation of any statute, regulation, rule or order of any court or other governmental authority which would materially and adversely affect the ability of the Borrowers to perform their obligations under this Agreement, then the Letter of Credit Issuer, through the Agent, in the case of the occurrence of any event described above, shall give written notice of the occurrence of such event to the Borrowers and the Lenders, whereupon the commitment of the Letter of Credit Issuer to issue Letters of Credit shall terminate on the effective date of such notice. The Borrowers shall forthwith pay to the Letter of Credit Issuer all obligations in respect of Letters of Credit on the date of drawing of such Letter of Credit. SECTION 5.3 RESIGNATION AND REMOVAL OF LETTER OF CREDIT ISSUER. The Letter of Credit Issuer (or any successor) may at any time resign (so long as, at the same time, the institution then serving as the Letter of Credit Issuer also resigns as Agent in the manner provided in Section 13.13, below, unless Holdings, on behalf of the Borrowers, has waived in writing the requirements of this parenthetical) as such by giving thirty (30) days' prior written notice to the Agent, the Borrowers and each Lender; and the Majority Lenders may remove the Letter of Credit Issuer at any time with or without cause by giving written notice to the Agent, the Letter of Credit Issuer and the Borrowers. In any such case, the Majority Lenders may appoint a successor to the resigned or removed Letter of Credit Issuer (the "Former LC Bank"), which successor shall (unless waived by Holdings, on behalf of the Borrowers, in writing) also be successor Agent, provided that the Majority Lenders obtain the Borrowers' prior written consent to the successor (which consent shall not be unreasonably withheld), by giving written notice to the Agent, the Borrowers, the Former LC Bank and each Lender not participating in the 42 appointment; provided, however, that, if at the time of the proposed resignation or removal of a Letter of Credit Issuer, any Borrower is the subject of an action referred to in Section 11.7 or any other Event of Default shall have occurred and be continuing, the Borrowers' consent shall not be required. In the absence of a timely appointment, the Former LC Bank shall have the right (but not the duty) to make a temporary appointment of any Lender (but only with that Lender's consent) to act as its successor pending an appointment pursuant to the immediately preceding sentence. In either case, the successor Letter of Credit Issuer shall deliver its written acceptance of appointment to the Borrowers, the Agent, each Lender and the Former LC Bank, whereupon (a) the Former LC Bank shall execute and deliver such assignments and other writings as the successor Letter of Credit Issuer may reasonably require to facilitate its being and acting as the Letter of Credit Issuer, (b) the successor Letter of Credit Issuer shall in any event automatically acquire and assume all the rights and duties as those prescribed for the Letter of Credit Issuer by this Article 5 and (c) the Former LC Bank shall be discharged from its duties and obligations under this Agreement and the other Loan Documents. Notwithstanding anything to the contrary contained in the foregoing, the Former LC Bank shall continue to enjoy all of the rights and remedies (as against the Borrowers and the other Lenders) provided to the Letter of Credit Issuer hereunder with respect to any and all Letters of Credit which are outstanding on the effective date of its resignation or removal and which are not replaced by Letters of Credit issued by its successor or otherwise canceled. ARTICLE 6 OPENING COVENANTS; CONDITIONS TO INITIAL CREDIT EVENT SECTION 6.1 OPENING COVENANTS. Prior to or concurrently with the execution and delivery of this Agreement, Holdings shall, on behalf of the Borrowers, furnish to Agent originals or copies for delivery to each Lender and the Letter of Credit Issuer of the following: (a) BORROWER CERTIFICATES. A certificate executed by an authorized officer of Holdings and each other Borrower and a secretary or assistant secretary of Holdings and each other Borrower certifying (a) the resolutions of the Board of Directors of such Borrower authorizing the execution, performance and delivery of this Agreement, the Notes and all other Loan Documents, (b) the names and signatures of the officers of such Borrower executing or attesting to such documents, and (c) the absence of any Event of Default or Incipient Default; (b) GOOD STANDING CERTIFICATES. Certificates of good standing for Holdings and each other Borrower, certified by the office of the Secretary of State or other similar official of the state of incorporation of such entities, and certificates of qualification to transact business as a foreign corporation or other entity in every other State where such Borrower's failure so to qualify could have a Material Adverse Effect; (c) PAYMENT OF AGENT'S LEGAL FEES. Evidence of payment to the Agent, for its own account, of the legal fees and expenses of the Agent. 43 SECTION 6.2 PRIOR TO INITIAL CREDIT EVENT. Prior to or concurrently with the occurrence of the Initial Credit Event, Holdings shall, on behalf of the Borrowers, furnish to Agent originals or copies for delivery to each Lender and the Letter of Credit Issuer of the following: (a) REVOLVING CREDIT NOTES. Revolving Credit Notes, in favor of each of the Lenders, in the principal amount of such Lender's Commitment; (b) EXISTING CREDIT FACILITY. Contemporaneously with the Initial Credit Event hereunder, the Borrowers shall have terminated the commitments of the lenders under the Existing Credit Agreements and prepaid (with such exceptions as may be agreed to by the Agent and the Lenders) all borrowings thereunder, including letters of credit outstanding thereunder; (c) CREDIT REQUEST AND DISBURSEMENT DIRECTION LETTER. To the extent, if any, that an advance of Loans on such date is to be requested, a Notice of Borrowing and a letter from Holdings, on behalf of the Borrowers, directing the Agent to disburse the proceeds of the initial Revolving Credit Borrowing; (d) LEGAL OPINION. A favorable opinion of counsel for the Borrowers, all in form and substance reasonably acceptable to the Agent; (e) BORROWER CERTIFICATE. A certificate executed by an authorized officer of each Borrower and a secretary or assistant secretary of each Borrower certifying the absence of any Event of Default or Incipient Default; (f) LETTER OF CREDIT REIMBURSEMENT AGREEMENT. A Letter of Credit Reimbursement Agreement duly executed by the applicable Borrower with respect to any Letter of Credit issued on the Closing Date; (g) CLOSING FEES. The Borrowers shall have paid to each Lender the upfront fee provided for in Section 3.4(e); (h) OTHER MATTERS. Such other documents, certificates and other matters as the Agent may reasonably request of Holdings and any of the other Borrowers. ARTICLE 7 CONDITIONS TO ALL CREDIT EVENTS On the date of each Credit Event, such Credit Event shall constitute a representation and warranty by the Borrowers that the following are and will be true as of such date and after giving effect to such Credit Event, and each of the following shall be true as a condition precedent thereto: SECTION 7.1 REPRESENTATION BRINGDOWN. The representations and warranties contained in Article 10 are true and correct in all respects on and as of the date of such Credit Event with 44 the same effect as though made on and as of such date, except to the extent such representations and warranties expressly relate to an earlier date; SECTION 7.2 COMPLIANCE WITH AGREEMENT. The Borrowers shall be in compliance with all other terms and provisions set forth herein and in each other Loan Document on its part to be observed or performed, and at the time of and immediately after such Credit Event, no Event of Default or Incipient Default shall have occurred and be continuing; and SECTION 7.3 NO MATERIAL ADVERSE CHANGE. There has been no event since the date hereof which would or might reasonably be expected to have a Material Adverse Effect. ARTICLE 8 AFFIRMATIVE COVENANTS From and after the Closing Date through the commencement of the Commitment Period and for so long thereafter as any of the Obligations remain unpaid and outstanding, or any Lender shall have any Commitment outstanding, or any Loans shall remain unpaid, the Borrowers shall perform and observe, and shall cause all of the other Lincoln Parties to perform and observe, all of the following covenants: SECTION 8.1 FINANCIAL STATEMENTS. (a) QUARTERLY FINANCIAL STATEMENTS. Holdings shall furnish to each Lender promptly, and in any case within forty-five (45) days after the end of each of the first three (3) Fiscal Quarters of each of its Fiscal Years, unaudited Consolidated balance sheet of Holdings as at the end of that period and the related unaudited Consolidated statements of income and cash flows, and setting forth, in the case of such unaudited Consolidated statements of income and of cash flows, comparative figures for the related periods in the prior Fiscal Year, all prepared in accordance with GAAP and otherwise in form and detail satisfactory to each Lender and certified by a financial officer of Holdings. (b) ANNUAL FINANCIAL STATEMENTS. Holdings shall furnish to each Lender as soon as available and in any event within 90 days after the close of each Fiscal Year of Holdings, the Consolidated balance sheets of Holdings and its Subsidiaries as at the end of such Fiscal Year and the related Consolidated statements of income, of stockholders' equity and of cash flows for such Fiscal Year, in each case setting forth comparative figures for the preceding Fiscal Year, all in reasonable detail and accompanied by the opinion with respect to such Consolidated financial statements of independent public accountants of recognized national standing selected by Holdings, which opinion shall be unqualified and shall (A) state that such accountants audited such Consolidated financial statements in accordance with generally accepted auditing standards, that such accountants believe that such audit provides a reasonable basis for their opinion, and that in their opinion such Consolidated financial statements present fairly, in all material respects, the Consolidated financial position of Holdings and its Subsidiaries as at the end of such Fiscal Year and the Consolidated results of their operations and cash flows for such Fiscal Year in conformity with generally accepted accounting principles, or (B) contain such statements 45 as are customarily included in unqualified reports of independent accountants in conformity with the recommendations and requirements of the American Institute of Certified Public Accountants (or any successor organization). (c) OFFICER'S CERTIFICATES. Holdings shall furnish to each Lender the following: (i) concurrently with the financial statements delivered in connection with clauses (a) and (b) above, a certificate of a responsible financial officer of Holdings, certifying that (A) to his or her knowledge and belief, those financial statements fairly present in all material respects the financial condition and results of operations of Holdings and its Subsidiaries (subject, in the case of interim financial statements, to routine year-end audit adjustments) and (B) no Incipient Default or Event of Default then exists or if any does, a brief description thereof and of Holdings' intentions in respect thereof, and (ii) within forty-five (45) days after the end of each of the first three (3) Fiscal Quarters of any Fiscal Year and within ninety (90) days after the end of any Fiscal Year, a certificate of a responsible financial officer of Holdings, in the form of Exhibit E hereto, setting forth the calculations necessary to determine whether or not the Borrowers are in compliance with Sections 9.7 and 9.8 hereof. (d) SEC REPORTS AND REGISTRATION STATEMENTS. Promptly after transmission thereof or other filing with the SEC, copies of all registration statements (other than the exhibits thereto and any registration statement on Form S-8 or its equivalent) and all annual, quarterly or current reports that Holdings or any of its Subsidiaries files with the SEC on Form 10-K, 10-Q or 8-K (or any successor forms). (e) ANNUAL AND QUARTERLY REPORTS, PROXY STATEMENTS AND OTHER REPORTS DELIVERED TO STOCKHOLDERS Generally. Promptly after transmission thereof to its stockholders, copies of all annual, quarterly and other reports and all proxy statements that Holdings furnishes to its stockholders generally. (f) OTHER INFORMATION. With reasonable promptness, such other information or documents (financial or otherwise) relating to Holdings or any of its Subsidiaries as any Lender may reasonably request from time to time. (g) FISCAL YEAR. Holdings shall not change its Fiscal Year and shall not permit any of its Subsidiaries to change its respective fiscal year unless (i) Holdings has delivered to the Agent written notice thereof at least thirty (30) days prior to the effectiveness of such change, and (ii) the Borrowers have executed and delivered to the Agent and the Lenders such amendments to this Agreement and other Loan Documents as Agent or the Majority Lenders may reasonably require to cause the provisions of this Agreement and the other Loan Documents immediately after such change to have the same effect as that intended by the provisions of this Agreement and the other Loan Documents immediately prior to such change. 46 SECTION 8.2 NOTICE. (a) NOTICE OF DEFAULT; OTHER EVENTS. Holdings shall give each Lender prompt written notice as soon as possible, and in any event within five (5) Banking Days after any responsible officer of any Lincoln Party obtains knowledge thereof, of (i) the occurrence of any Incipient Default or Event of Default or of any development which in such officer's reasonable belief would or might reasonably be expected to result in a Material Adverse Effect, setting forth the details of such Incipient Default or such development and the action that such Lincoln Party has taken or proposes to take with respect thereto or (ii) any litigation or governmental or regulatory proceeding against any Lincoln Party which is likely to have a Material Adverse Effect. (b) NOTICE OF ERISA MATTERS. Promptly, and in any event within 10 days after receipt from any ERISA Regulator of notice of, or a responsible officer of any Borrower otherwise becoming aware of, any of the following, Holdings shall give the Agent written notice setting forth the nature thereof and the action, if any, that Holdings or an ERISA Affiliate proposes to take with respect thereto: (i) the occurrence of a Default under ERISA; (ii) with respect to any Plan, any Reportable Event; (iii) the taking by the Pension Benefit Guaranty Corporation of steps to institute, or the threatening by the Pension Benefit Guaranty Corporation of the institution of, proceedings under section 4042 of ERISA for the termination of, or the appointment of a trustee to administer, any Plan, or the receipt by Holdings or any ERISA Affiliate of a notice from a Multiemployer Plan that such action has been taken by the Pension Benefit Guaranty Corporation with respect to such Multiemployer Plan (including a copy of any notice thereof); or (iv) any event, transaction or condition that could result in the incurrence of any liability by Holdings or any ERISA Affiliate pursuant to Title I or IV of ERISA or the penalty or excise tax provisions of the Code relating to employee benefit plans (as defined in Section 3 of ERISA), or in the imposition of any Lien on any of the rights, properties or assets of Holdings or any ERISA Affiliate pursuant to Title I or IV of ERISA or such penalty or excise tax provisions, if such liability or Lien, taken together with any other such liabilities or Liens then existing, would reasonably be expected to have a Material Adverse Effect. (c) ENVIRONMENTAL REPORTING. Holdings shall give each Lender prompt, and in any event within ten (10) days of the date any Lincoln Party receives or transmits, as the case may be, copies of all material communications with any government or governmental agency relating to Environmental Laws. SECTION 8.3 INSURANCE. Each Lincoln Party shall keep itself and all of its insurable properties insured at all times to such extent, by such insurers, and against such hazards and liabilities as is customarily carried by prudent businesses of like size and enterprise; and promptly upon the Agent's written request upon and during the continuance of an Event of 47 Default, Holdings shall furnish to the Agent such information about any such insurance as the Agent may from time to time reasonably request, which information shall be prepared in form and detail satisfactory to the Agent and certified by an appropriate officer of Holdings. SECTION 8.4 MONEY OBLIGATIONS. Each Lincoln Party shall pay, in full (a) all taxes, assessments and governmental charges and levies (except only those so long as and to the extent that the same shall be contested in good faith by appropriate and timely proceedings) for which such Lincoln Party may be or become liable, or to which any or all of the properties of such Lincoln Party may be or become subject, prior to the date on which the failure to make such payment would reasonably be expected to have a Material Adverse Effect, and (b) all of its other obligations calling for the payment of money (except only those so long as and to the extent that the same shall be contested in good faith and except further trade accounts payable consistent with such Lincoln Party's past practice) before such payment becomes overdue where the failure to make such payment would reasonably be expected to have a Material Adverse Effect. SECTION 8.5 RECORDS. (a) Each Lincoln Party shall at all times maintain true and complete records and books of account and, without limiting the generality of the foregoing, maintain appropriate reserves for possible losses and liabilities, all in accordance with GAAP in all material respects. (b) If no Incipient Default or Event of Default then exists, the Borrowers shall permit the Agent, at the expense of the Lenders, and any Lender, at the expense of such Lender, and upon reasonable prior notice to Holdings, to visit the principal executive office of each Borrower, to discuss the affairs, finances and accounts of the Borrowers and the other Subsidiaries with each Borrower's officers and, with the consent of Holdings (which consent will not be unreasonably withheld), to visit the other offices and properties of the Borrowers and the Subsidiaries and to make copies and extracts from the books and records of such Borrowers and Subsidiaries, all at such reasonable times and as often as may be reasonably requested; and (c) If any Incipient Default or Event of Default then exists, the Borrowers shall permit the Agent and any Lender, at the expense of the Borrowers, to visit and inspect any of the offices or properties of each Borrower or any other Subsidiaries, to examine all their respective books of account, records, reports and other papers, to make copies and extracts therefrom, and to discuss their respective affairs, finances and accounts with their respective officers and independent public accountants (and by this provision each Borrower hereby authorizes said accountants to discuss the affairs, finances and accounts of such Borrower and its Subsidiaries), all at such times and as often as may be determined by the Agent or such Lender. SECTION 8.6 FRANCHISES. Each Lincoln Party shall preserve and maintain at all times its corporate existence, rights and franchises, except where the failure to maintain any such corporate right or franchise would reasonably not be expected to have a Material Adverse Effect; PROVIDED, HOWEVER, that this Section 8.6 shall not prevent any merger or consolidation permitted by Section 9.3 hereof. 48 SECTION 8.7 CERTAIN SUBSIDIARIES TO JOIN AS BORROWER. In the event that at any time after the Closing Date any Borrower directly or indirectly has any Significant Subsidiary that is not a Borrower, Holdings shall notify the Agent in writing of such event, identifying the Significant Subsidiary in question and referring specifically to the rights of the Agent and the Lenders under this Section 8.7. Holdings shall, within 30 days following request therefor from the Agent, cause such Significant Subsidiary to deliver to the Agent (i) a joinder to this Agreement and such other Loan Documents as the Agent reasonably requires to cause such Significant Subsidiary to be a Borrower hereunder and (ii) if such Significant Subsidiary is a corporation, resolutions of the Board of Directors of such Significant Subsidiary, certified by the Secretary or an Assistant Secretary of such Significant Subsidiary as duly adopted and in full force and effect, authorizing the execution and delivery thereof, or if such Significant Subsidiary is not a corporation, such other evidence of the authority of such Significant Subsidiary to execute such joinder and other Loan Documents, as the Agent may reasonably request. SECTION 8.8 MOST FAVORED COVENANT STATUS. If any one or more of the Borrowers at any time after the Closing Date, issues or guarantees any unsecured Indebtedness denominated in Dollars for money borrowed or represented by bonds, notes, debentures or similar securities in an aggregate amount exceeding $25,000,000, to any lender or group of lenders acting in concert with one another, or one or more institutional investors, pursuant to a loan agreement, credit agreement, note purchase agreement, indenture, guaranty or other similar instrument, which agreement, indenture, guaranty or instrument, includes affirmative or negative business or financial covenants (or any events of default or other type of restriction which would have the practical effect of any affirmative or negative business or financial covenant, including, without limitation, any "put" or mandatory prepayment of such Indebtedness upon the occurrence of a "change of control") which are applicable to such Borrower or Borrowers, other than those set forth herein or in any of the other Loan Documents, Holdings shall promptly so notify the Agent and the Lenders and, if the Agent shall, at the instruction of the Majority Lenders, so request by written notice to Holdings, the Borrowers, the Agent and the Lenders shall promptly amend this Agreement to incorporate some or all of such provisions, in the discretion of the Majority Lenders, into this Agreement and, to the extent necessary and reasonably desirable to the Majority Lenders, into any of the other Loan Documents. SECTION 8.9 COMPLIANCE WITH LAWS. Each Lincoln Party shall comply in all respects with its Articles of Incorporation or Certificate of Incorporation(or equivalent organization documentation), as the case may be, and Regulations or By-laws, as the case may be (or equivalent organization documentation), and all applicable occupational safety and health Laws, federal and state securities Laws, product safety Laws, Environmental Laws and every other Law, treaty, rule, regulation, determination of an arbitrator, and every lawful governmental order or determination if non-compliance with such Law or order would have or might reasonably be expected to have a Material Adverse Effect; provided, however, that this Section 8.9 shall not apply to any noncompliance if and to the extent that the same is being contested in good faith by timely and appropriate proceedings which are effective to stay enforcement thereof and against which appropriate reserves have been established. 49 SECTION 8.10 PROPERTIES. Each Lincoln Party shall maintain all assets in any material respect necessary to its continuing operations in good working order and condition, ordinary wear and tear excepted. SECTION 8.11 USE OF PROCEEDS. The Borrowers shall use the proceeds of the Loans and the Letters of Credit only for the purposes specified in Section 2.2. ARTICLE 9 NEGATIVE COVENANTS From and after the Closing Date through the commencement of the Commitment Period and for so long thereafter as any of the Obligations remain unpaid and outstanding, or any Lender shall have any Commitment outstanding, or any Loans shall remain unpaid, the Borrowers shall perform and observe, and shall cause all of the other Lincoln Parties to perform and observe, all of the following covenants: SECTION 9.1 ERISA COMPLIANCE. The Borrowers shall not permit (i) any Plan to fail to satisfy the minimum funding standards of ERISA or the Code, for any plan year or part thereof or a waiver of such standards or extension of any amortization period is sought or granted under section 412 of the Code, (ii) the aggregate "amount of unfunded benefit liabilities" (within the meaning of section 4001(a)(18) of ERISA) under all Plans, determined in accordance with Title IV of ERISA, to exceed $50,000,000, (iii) Holdings or any ERISA Affiliate to incur any liability pursuant to Title I or IV of ERISA or the penalty or excise tax provisions of the Code relating to employee benefit plans (as defined in Section 3 of ERISA), or (iv) Holdings or any Subsidiary to establish or amend any employee welfare benefit plan (as defined in Section 3 of ERISA) that provides post-employment welfare benefits in a manner that would increase the liability of Holdings or any Subsidiary thereunder, unless any such event or events described in clauses (i) through (iv), above, either individually or together with any other such event or events, would reasonably not be expected to have a Material Adverse Effect. SECTION 9.2 INVESTMENTS. No Lincoln Party shall make or have outstanding any Investment, other than: (a) Investments by a Lincoln Party in and to its Subsidiaries on the date hereof, and after the date hereof, (i) any Investment in assets that is a Permitted Acquisition and (ii) any Investment in any Person which, after giving effect to such Investment, becomes a Subsidiary of such Lincoln Party under a Permitted Acquisition, so long as such Lincoln Party causes such Subsidiary to comply with the requirements of Section 8.7, above; (b) Investments of the Lincoln Parties existing as of the Closing Date and described on Schedule 9.2 hereto; (c) Investments in Cash Equivalents; (d) Investments in mutual funds registered under the Investment Company Act of 1940, as amended, which invest only in either money market securities or United States 50 Governmental Securities, in either case, maturing within three years from the date of acquisition thereof by such mutual fund; (e) Subject to the limitations provided for under Section 9.3(c) hereof, Investments in Special Purpose Companies incidental to the consummation of Qualifying Securitization Transactions; (f) Investments in property to be used in the ordinary course of business of the Borrowers and their Subsidiaries; (g) Investments in current assets arising from the sale of goods and services in the ordinary course of business of the Borrowers and their Subsidiaries; and (h) Investments of the Lincoln Parties not described in the foregoing clauses (a) through (g); PROVIDED that the aggregate amount of all such Investments, on a Consolidated basis, outstanding under this clause (h) shall not at any time exceed an amount equal to fifteen (15%) of Consolidated Net Worth at such time. SECTION 9.3 MERGERS; ACQUISITIONS; BULK TRANSFERS. No Lincoln Party shall: (a) be a party to any consolidation, control share acquisition, majority share acquisition or other business combination or merger, other than: (i) a Permitted Holdings Merger, (ii) a Permitted Acquisition, or (iii) a merger of a Subsidiary into another Subsidiary, PROVIDED that (A) if either such Subsidiary is a Borrower: (1) Holdings shall deliver to the Agent written notice thereof at least five (5) Banking Days prior to the effective date of such merger, (2) such merging Subsidiaries (and any other Borrowers requested by the Agent or the Lenders) shall execute and deliver to the Agent and the Lenders such assumptions, confirmations, and other Loan Documents as the Agent or the Lenders may require to protect their interests under this Agreement and the other Loan Documents, and (3) after giving effect to such merger, no Event of Default or Incipient Default shall exist, and (B) as to all other mergers of a Subsidiary into another Subsidiary, Holdings shall advise the Agent in writing of such merger contemporaneously with its effectiveness, or 51 (b) purchase all or a substantial part of the outstanding securities or assets of any corporation or other business enterprise, except Permitted Acquisitions, or (c) other than Holdings, issue any of its own stock (or any options or warrants to purchase stock or other securities exchangeable for or convertible into such stock) to any Person other than another Lincoln Party, except (i) to qualify directors, in the minimum amount required for such qualification, (ii) stock issued, in the minimum amount required by law, to comply with laws requiring multiple shareholders, or (iii) in connection with an issuance of such stock whereby such Lincoln Party maintains its same direct or indirect proportionate interest in such Subsidiary, unless (A) such issuance is for cash consideration or Cash Equivalents and after giving effect to such issuance of such stock, such Lincoln Party shall continue to be a Subsidiary of Holdings; (B) in the opinion of a responsible officer of Holdings (and the Board of Directors of such Lincoln Party to the extent Board approval is required), that the sale is for fair value and in the best interests of such Lincoln Party; (C) said stock issued to a Person on terms reasonably deemed by the responsible officer of Holdings (or the Board of Directors of such Lincoln Party to the extent Board approval is required) to be adequate and satisfactory; (D) for the purposes of measuring compliance with Section 9.3(d), below, such issuance shall be treated as a disposition of assets by such Lincoln Party proportionately equal to the increase in the minority interests in the stock and surplus of such Lincoln Party; and (E) no Event of Default or Incipient Default then exists or would exist after giving effect to such issuance. (d) lease, sell or otherwise transfer any material assets (other than such personal property, if any, as may have become obsolete or no longer useful in the continuance of its present business) except (i) in the normal course of its present business, (ii) the sale or other transfer of Trade Receivables to a Special Purpose Company pursuant to one or more Qualifying Securitization Transactions, to the extent that the aggregate amount outstanding under all financing facilities relating to such Qualifying Securitization Transactions shall not exceed $75,000,000 at any time of determination, and (iii) any lease, sale or transfer by a Lincoln Party to another Lincoln Party, which, as to leases, sales and transfers by Borrowers to Lincoln Parties that are not Borrowers, do not exceed in the aggregate $10,000,000 on a Consolidated basis in any Fiscal Year; PROVIDED that the foregoing restrictions shall not apply to the sale of assets for cash to a Person other than an Affiliate, if all of the following conditions are met: (A) the aggregate book value of such assets, together with all other assets of the Lincoln Parties previously disposed of (other than pursuant to clauses (i), (ii) and (iii) above) during any Fiscal Year on a Consolidated basis does not exceed fifteen percent (15%) of Consolidated Net Worth as of the end of the Fiscal Year then most recently ended; 52 (B) in the opinion of a responsible officer and the Board of Directors of such Lincoln Party (to the extent Board approval is required), the sale is for fair value and in the best interests of such Lincoln Party; and (C) no Event of Default or Incipient Default then exists or would exist after giving effect to such sale. SECTION 9.4 LIENS. No Lincoln Party shall (a) acquire any property subject to any inventory consignment, lease, land contract or other title retention contract (this section shall not apply to true leases, consignments, tolling or other possessory agreements in respect of the property of others whereby such Lincoln Party does not have legal or beneficial title to such property and which, pursuant to GAAP, are not required to be capitalized), (b) sell or otherwise transfer any Trade Receivables, whether with or without recourse, or (c) suffer or permit any property now owned or hereafter acquired by it to be or become encumbered by any mortgage, security interest, financing statement or Lien of any kind or nature; PROVIDED, that this Section shall not apply to: (i) any lien for a tax, assessment or governmental charge or levy which is not yet due and payable or which is being contested in good faith and as to which such Lincoln Party shall have made appropriate reserves, (ii) any lien securing only its workers' compensation, unemployment insurance and similar obligations, (iii) any mechanics, carrier's or similar common law or statutory lien incurred in the normal course of business, (iv) any transfer of a check or other medium of payment for deposit or collection through normal banking channels or any similar transaction in the normal course of business, (v) Permitted Purchase Money Security Interests, (vi) any mortgage, security interest or lien (other than Permitted Purchase Money Security Interests) securing only indebtedness incurred to any Lender, so long as the aggregate unpaid principal balance of all such Indebtedness secured by all such mortgages, security interests and liens does not at any time exceed Twenty-five Million Dollars ($25,000,000) on a Consolidated basis, (vii) any financing statement perfecting only a security interest permitted by this Section, (viii) easements, restrictions, minor title irregularities and similar matters having no adverse effect as a practical matter on the ownership or use of any Borrower's or any Subsidiary's real property, (ix) liens on assets acquired pursuant to a Permitted Acquisition or a Permitted Holdings Merger, 53 (x) any attachment or judgment Lien, but only so long as (A) the judgment it secures shall, within thirty (30) days after the entry thereof, have been discharged or execution thereof stayed pending appeal, or shall have been discharged within thirty (30) days after the expiration of any such stay and (B) the judgment it secures, when taken together with all other judgments related to attachment and judgment Liens under this clause (x), does not exceed $5,000,000 in the aggregate, (xi) Liens incurred in the ordinary course of business to secure (A) the non-delinquent performance of bids, trade contracts, leases (other than Capital Leases) and statutory obligations, (B) contingent obligations on surety bonds and appeal bonds, and (C) other similar non-delinquent obligations, in each case, not incurred or made in connection with the obtaining of advances or credit, the payment of the deferred purchase price of property or the incurrence of other Indebtedness, PROVIDED that such Liens, taken as a whole, would not, even if enforced, have a Material Adverse Effect, (xii) leases or subleases granted to others, easements, rights-of-way, restrictions and other similar charges or encumbrances in the ordinary course of business, in each case incidental to, and not interfering in any material respect with, the ordinary conduct of the business of such Lincoln Party, and which do not in the aggregate materially impair the use of such property in the operation of the business of such Lincoln Party or the value of such property for the purposes of such business, (xiii) any other liens existing on the date hereof which are identified on Schedule 9.4 hereto, (xiv) any extension, renewal or refunding of any Lien permitted by the preceding clauses (vii), (ix), (xii) and (xiii) of this Section 9.4 in respect of the same property theretofore subject to such Lien in connection with the extension, renewal or refunding of the Indebtedness secured thereby; PROVIDED that (A) such extension, renewal or refunding shall be without increase in the principal amount remaining unpaid as of the date of such extension, renewal or refunding, (B) such Lien shall attach solely to the same such property, (C) the principal amount remaining unpaid as of the date of such extension, renewal or refunding is less than or equal to the fair market value of the property (determined in good faith by the Board or Directors of Holdings) to which such Lien is attached, (D) at the time of such extension, renewal or refunding and after giving effect thereto, no Event of Default would exist, or (xv) liens (other than liens on Trade Receivables unless in connection with a Qualifying Securitization Transactions complying with the limitations contained in Section 9.3(d)(ii), above) not otherwise permitted in the foregoing clauses (i) through (xiv), above, securing Indebtedness that does not exceed at any time an amount equal to ten percent (10%) of Consolidated Net Worth. SECTION 9.5 TRANSACTIONS WITH AFFILIATES. No Lincoln Party shall enter into any transaction or series of transactions with any Affiliate other than in the ordinary course of 54 business of and pursuant to the reasonable requirements of such Lincoln Party's business and upon fair and reasonable terms no less favorable to such Lincoln Party than would obtain in a comparable arm's-length transaction with a person other than an Affiliate. SECTION 9.6 CHANGE IN NATURE OF BUSINESS, NAME. No Lincoln Party shall make any material change in the nature of its business as carried on at the date hereof; and no Borrower make, any change in its corporate or other entity name, except upon sixty (60) days' prior written notice to the Agent. SECTION 9.7 FIXED CHARGES COVERAGE. Holdings shall not permit the Fixed Charges Coverage Ratio as of the end of any Fiscal Quarter to be less than 1.75 to 1.00. SECTION 9.8 TOTAL LEVERAGE RATIO. Holdings shall not suffer or permit the Total Leverage Ratio as of the end of any Fiscal Quarter to be equal to or greater than 3.00 to 1. SECTION 9.9 DISTRIBUTIONS. Holdings shall not declare or pay any dividend or other Distribution in cash, property or obligations (other than in shares of capital stock of Holdings or in options, warrants or other rights to acquire any such capital stock or in other securities convertible into any such capital stock) on any shares of capital stock of Holdings of any class; and Holdings shall not purchase, redeem or otherwise acquire for any consideration any shares of capital stock Holdings of any class or any option, warrant or other right to acquire any such capital stock, unless, as to any of the foregoing, no Event of Default or Incipient Default then exists or would exist after giving effect thereto. ARTICLE 10 REPRESENTATIONS AND WARRANTIES Each Borrower jointly and severally represents and warrants to each of the Lenders as follows: SECTION 10.1 EXISTENCE; SUBSIDIARIES. (a) Each Borrower is a corporation duly organized and validly existing and in good standing under the Laws of the state of its incorporation or organization and is duly qualified and authorized to do business wherever it owns any real estate or personal property or transacts any substantial business (except in jurisdictions in which failure to so qualify would not have a Material Adverse Effect). (b) Except as set forth on Schedule 10.1 hereto, no Lincoln Party has any Subsidiaries. SECTION 10.2 POWER, AUTHORIZATION AND CONSENT. The execution, delivery and performance of this Agreement and the Notes by a Borrower, and of all Loan Documents to which any of them is party (a) are within Holdings' or such other Borrower's legal power and authority, (b) have been duly authorized by all necessary or proper action of Holdings or such other Borrower, (c) do not require the consent or approval of any governmental body, agency, 55 authority or any other Person which has not been obtained and (d) will not violate (i) any provision of Law applicable to Holdings or such other Borrower, (ii) any provision of Holdings' or such other Borrower's, as the case may be, certificate or articles of incorporation, by-laws or regulations, or operating agreement, or (iii) any material agreement or material indenture by which Holdings or such other Borrower or the property of Holdings or such other Borrower is bound, except where such violation specified in this clause (iii) would not have a Material Adverse Effect, or (e) will not result in the creation or imposition of any lien or encumbrance on any property or assets of Holdings or such other Borrower except as provided herein. SECTION 10.3 LITIGATION; PROCEEDINGS. Except as set forth on Schedule 10.3 hereto, no action, suit, investigation or proceeding is now pending or, to the knowledge of Holdings, threatened, against Holdings or any Subsidiary, at Law, in equity or otherwise, or with respect to this Agreement or any other Loan Document, before any court, board, commission, agency or instrumentality of any federal, state, local or foreign government or of any agency or subdivision thereof, or before any arbitrator or panel of arbitrators which would or might reasonably be expected to have a Material Adverse Effect. SECTION 10.4 ERISA COMPLIANCE. (a) Holdings and each ERISA Affiliate have operated and administered each Plan in compliance with all applicable Laws except for such instances of noncompliance as have not resulted in and could not reasonably be expected to result in a Material Adverse Effect. Neither Holdings nor any ERISA Affiliate has incurred any liability pursuant to Title I or IV of ERISA or the penalty or excise tax provisions of the Code relating to employee benefit plans (as defined in Section 3 of ERISA), and no event, transaction or condition has occurred or exists that would reasonably be expected to result in the incurrence of any such liability by Holdings or any ERISA Affiliate, or in the imposition of any Lien on any of the rights, properties or assets of Holdings or any ERISA Affiliate, in either case pursuant to Title I or IV of ERISA or to such penalty or excise tax provisions or to Section 401(a)(29) or 412 of the Code, other than such liabilities or Liens as would not be individually or in the aggregate material in relation to the business, operations, affairs, financial condition, assets, or properties of Holdings and its Subsidiaries taken as a whole. (b) On the Closing Date, the present value of the aggregate benefit liabilities under each of the Plans (other than Multiemployer Plans), determined as of January 1, 2001 on the basis of the actuarial assumptions specified for funding purposes in such Plan's most recent actuarial valuation report, did not exceed the aggregate current value of the assets of such Plan allocable to such benefit liabilities by more than $60,000 in the case of any single Plan and by more than $0 in the aggregate for all Plans, PROVIDED that Holdings' Annual Report on Form 10-K for the Fiscal Year ended December 31, 2001 indicated that, as of December 31, 2001, the projected benefit obligation under all such Plans exceeds the plan assets of such Plan by not more than $47,000,000. The term "benefit liabilities" has the meaning specified in Section 4001 of ERISA and the terms "current value" and "present value" have the meanings specified in Section 3 of ERISA. 56 (c) Holdings and its ERISA Affiliates have not incurred withdrawal liabilities (and are not subject to contingent withdrawal liabilities) under section 4201 or 4204 of ERISA in respect of Multiemployer Plans that individually or in the aggregate are material in relation to the business, operations, affairs, financial condition, assets, or properties of Holdings and its Subsidiaries taken as a whole. (d) The expected post-retirement benefit obligation (determined as of the last day of Holdings' most recently ended Fiscal Year in accordance with Financial Accounting Standards Board Statement No. 106, without regard to liabilities attributable to continuation coverage mandated by section 4980B of the Code) of Holdings and its Subsidiaries is not material in relation to the business, operations, affairs, financial condition, assets, or properties of Holdings and its Subsidiaries taken as a whole. (e) The execution and delivery of this Agreement and the occurrence of any Credit Event hereunder will not involve any transaction that is subject to the prohibitions of section 406 of ERISA or in connection with which a tax could be imposed pursuant to section 4975(c)(1)(A)-(D) of the Code. SECTION 10.5 FINANCIAL CONDITION. The Consolidated audited financial statements of Holdings and its Subsidiaries for the Fiscal Year ending December 31, 2001, previously delivered to the Lenders, are true and complete (including, without limiting the generality of the foregoing, a disclosure of all material contingent liabilities), have been prepared in accordance with GAAP applied on a basis consistent with those used during their next preceding Fiscal Year (except as noted therein) and fairly present their then financial condition and operations for the Fiscal Year then ending. There has been no material change in Holdings' or any Subsidiary's financial condition, properties or business since that date. SECTION 10.6 SOLVENCY. Each Borrower has received consideration which is the reasonable equivalent value of the obligations and liabilities that such Borrower has incurred to the Lenders. No Borrower is insolvent as defined by any applicable state or federal Law, nor will any Borrower be rendered insolvent by the execution and delivery of this Agreement or any Note or Guaranty to the Lenders. No Borrower is engaged or about to engage in any business or transaction for which the assets retained by it shall be an unreasonably small capital, taking into consideration the obligations to the Lenders incurred hereunder. No Borrower intends to, nor does it believe that it will, incur debts beyond its ability to pay them as they mature. SECTION 10.7 DEFAULT. No Incipient Default exists hereunder, nor will any begin to exist immediately after the execution and delivery hereof. SECTION 10.8 LAWFUL OPERATIONS. The operations of Holdings, the operations of each of the Subsidiaries and all Borrower Property are in full compliance with all requirements imposed by Law or regulation, whether federal, state or local including (without limitation) all Environmental Laws, occupational safety and health Laws and zoning ordinances except where the noncompliance with any such Laws could not be reasonably expected to result in a Material Adverse Effect; PROVIDED, HOWEVER, that this Section 10.8 shall not apply to any noncompliance if and to the extent that the same is being contested in good faith by timely and appropriate 57 proceedings which are effective to stay enforcement thereof and against which appropriate reserves have been established. SECTION 10.9 INVESTMENT COMPANY ACT STATUS. No Borrower is an "investment company" or an "affiliated person" of, or "promoter" or "principal underwriter" for, an "investment company", as such terms are defined in the Investment Company Act of 1940, as amended (15 U.S.C. sec. 80(a)(1), et seq.). SECTION 10.10 REGULATION G/REGULATION U/REGULATION X COMPLIANCE. No Borrower is engaged principally, or as one of its important activities, in the business of extending credit for the purpose of purchasing or carrying "margin stock", (as defined by Regulation U of the Board of Governors of the Federal Reserve System of the United States (as amended from time to time)) and all official rulings and interpretations thereunder or thereof and at no time shall more than 25% of the value of the assets of Holdings and its Consolidated Subsidiaries that are subject to any "arrangement" (as such term is used in section 221.2(g) of Regulation U) be represented by "margin stock". No part of the proceeds of any Loan will be used, whether directly or indirectly, and whether immediately, incidentally or ultimately, (i) to purchase or to extend credit to others for the purpose of purchasing "margin stock" or to carry or to extend credit to others for the purpose of carrying stock which will be "margin stock" after giving effect to the Loans or (ii) for any purpose that entails a violation of, or is inconsistent with, the provisions of the Regulations of the Board of Governors of the Federal Reserve System of the United States, including Regulation G, U or X. SECTION 10.11 TITLE TO PROPERTIES. Each Lincoln Party has good and marketable title to all assets reflected in such entity's most recent financial statements referred to in Section 10.5, except for assets disposed of in the ordinary course of business since the date of such financial statements. All such assets are free and clear of any mortgage, security interest or other Lien of any kind, other than any Liens permitted by this Agreement, except for those defects in title (as distinct from Liens) that, individually or in the aggregate, would not reasonably be expected to have a Material Adverse Effect. SECTION 10.12 INTELLECTUAL PROPERTY. Each Lincoln Party owns or has the legal and valid right to use all intellectual property necessary for the operation of its business as presently conducted, free from any Lien not permitted under this Agreement and free of any restrictions material to the operation of its business as presently conducted. SECTION 10.13 FULL DISCLOSURE. No information, exhibits or reports furnished by Holdings or any other Borrower to the Agent or any Lender omits to state any fact necessary to make the statements contained therein not materially misleading in light of the circumstances and purposes for which such information was provided. Holdings and each of the other Borrowers has provided all information requested by the Agent or any Lender and all such information is complete and accurate in all material respects. ARTICLE 11 EVENTS OF DEFAULT 58 Each of the following shall constitute an event of default (an "Event of Default") hereunder: SECTION 11.1 PAYMENTS. If the principal of or interest on any Note, any Letter of Credit reimbursement obligation not reimbursed pursuant to Section 5.1, any reimbursement, payment or amount due the Agent or any of the Lenders, any amendment fee or administrative fee imposed by any of the Lenders, any Letter of Credit fees or any Facility Fee, any Utilization Fee, the Risk Participation Fee or other fee or amount owing to the Lenders or the Agent under this Agreement or under any other Loan Document shall not be paid in full punctually when due and payable. SECTION 11.2 COVENANTS. If any Borrower shall fail or omit to perform and observe (i) any covenant or agreement contained in any of Sections 8.4, 8.5, 8.8, 8.9 and 8.10 hereof and such failure or omission is not cured within 30 days following the earlier of a Borrower's actual knowledge thereof or written notice thereof from the Agent or any Lender or (ii) any other covenant or agreement or other provision (other than those referred to in Section 11.1 hereof or clause (i) of this Section 11.2) contained or referred to in this Agreement or any other Loan Document (after giving effect to any required notice, grace period or both in such other Loan Document) that is on such Borrower's part to be complied with. SECTION 11.3 WARRANTIES. If any representation, warranty or statement made in or pursuant to this Agreement or any other Loan Document or any other material information furnished by Holdings or any Subsidiary to the Lenders or any thereof or any other holder of any Note shall be false or erroneous in any material respect when furnished or made or deemed furnished or made hereunder. SECTION 11.4 CROSS DEFAULT. If Holdings or any Subsidiary, after any applicable notice or grace period or both, (i) defaults in the payment of any principal or interest due and owing upon any other Indebtedness or Indebtednesses in excess of Ten Million Dollars ($10,000,000) in aggregate principal amount or (ii) defaults in the performance of any other agreement, term or condition contained in any promissory note, agreement or other instrument under which such Indebtedness or Indebtednesses in excess of $10,000,000 in the aggregate are evidenced, created, constituted, secured or governed, and by reason of such default the holder or holders of such Indebtedness or Indebtednesses have accelerated the maturity thereof. SECTION 11.5 TERMINATION OF PLAN OR CREATION OF WITHDRAWAL LIABILITY. If (a) any Reportable Event occurs and the Majority Lenders, in their sole determination, deem such Reportable Event to constitute grounds (i) for the termination of any Plan by the Pension Benefit Guaranty Corporation or (ii) for the appointment by the appropriate United States district court of a trustee to administer any Plan and such Reportable Event shall not have been fully corrected or remedied to the full satisfaction of the Majority Lenders within thirty (30) days after giving of written notice of such determination to the Borrowers by any Lender or (b) any Plan shall be terminated within the meaning of Title IV of ERISA (other than a Standard Termination, as that term is defined in Section 4041(b) of ERISA), or (c) a trustee shall be appointed by the appropriate United States district court to administer any Plan, or (d) the Pension Benefit Guaranty Corporation shall institute proceedings to terminate any Plan or to appoint a trustee to 59 administer any Plan or (e) there occurs a withdrawal by Holdings or any Subsidiary from a Multi-Employer Plan which results or may result in a withdrawal liability in an amount that is material in relation to the business, operations, affairs, financial condition, assets, or properties of Holdings and its Subsidiaries taken as a whole. SECTION 11.6 VALIDITY OF AGREEMENTS. If this Agreement, the Notes, any Reimbursement Agreement, or any other Loan Document shall for any reason cease to be, or be asserted by Holdings, any other Borrower or any other party intended to be bound thereby (other than a Lender or the Agent) not to be, a legal, valid and binding obligation of any party thereto (other than the Agent, the Letter of Credit Issuer or any Lender) enforceable in accordance with its terms. SECTION 11.7 SOLVENCY OF BORROWERS. If any Borrower shall (a) discontinue business (except in connection with a transaction expressly permitted under Section 9.3, above), or (b) generally not pay its debts as such debts become due, or (c) make a general assignment for the benefit of creditors, or (d) apply for or consent to the appointment of a receiver, a custodian, a trustee, an interim trustee or liquidator of all or a substantial part of its assets, or (e) be adjudicated a debtor or have entered against it an order for relief under Title 11 of the United States Code, as the same may be amended from time to time, or (f) file a voluntary petition in bankruptcy or file a petition or an answer seeking reorganization or an arrangement with creditors or seeking to take advantage of any other Law (whether federal or state) relating to relief of debtors, or admit by any answer, by default or otherwise) the material allegations of a petition filed against it in any bankruptcy, reorganization, insolvency or other proceeding (whether federal or state) relating to relief of debtors, or (g) suffer or permit to continue unstayed and in effect for thirty (30) consecutive days any judgment, decree or order entered by a court or governmental commission of competent jurisdiction, which assumes custody or control of such Borrower approves a petition seeking reorganization of such Borrower or any other judicial modification of the rights of its creditors, or appoints a receiver, custodian, trustee, interim trustee or liquidator for such Borrower or of all or a substantial part of its assets, or (h) take, or omit to take, any action in order thereby to effect any of the foregoing. SECTION 11.8 JUDGMENTS. If (a) one or more judgments for the payment of money in an aggregate amount in excess of Five Million Dollars ($5,000,000)(unless, in the determination of the Majority Lenders, the Borrowers shall have made adequate provision for the prompt payment thereof) shall be rendered against one or more Borrowers, and the same shall remain undischarged for a period of 30 consecutive days during which execution shall not be effectively stayed, or (b) any action shall be legally taken by a judgment creditor to levy upon assets or properties of a Borrower to enforce any judgment. ARTICLE 12 REMEDIES UPON DEFAULT Notwithstanding any contrary provision or inference herein or elsewhere, 60 SECTION 12.1 OPTIONAL DEFAULTS. If any Event of Default referred to in any of Sections 11.1 through and including 11.6, in clause (b) of Section 11.7, or in Section 11.8 shall occur, the Majority Lenders, shall have the right in their discretion, (i) by directing the Agent, on behalf of the Lenders, to give written notice to the Borrowers, to: (1) terminate the Commitments hereby established, if not theretofore terminated, and forthwith upon such election the obligations of the Lenders, and each thereof, to make any further loan or loans hereunder and to risk participate in Letters of Credit hereunder or otherwise effect any Credit Event, and the obligation of the Letter of Credit Issuer to issue Letters of Credit, immediately shall be terminated, and/or (2) accelerate the maturity of all of the Borrowers' Obligations to the Lenders and the Agent (if not already due and payable), whereupon all of the Obligations to the Lenders and the Agent shall become and (including but not limited to the Notes and all reimbursement obligations under Letters of Credit) thereafter be immediately due and payable in full without any presentment or demand and without any further or other notice of any kind, all of which are hereby waived by each Borrower, and the Borrowers shall immediately deposit with the Agent as cash collateral an amount equal to the aggregate Stated Amounts of all Letters of Credit then outstanding, and (ii) to exercise (or cause the Agent to exercise) such other rights and remedies as may be available hereunder, under the other Loan Documents, at law or in equity. SECTION 12.2 AUTOMATIC DEFAULTS. If any Event of Default referred to in Section 11.7 (other than clause (b) thereof) shall occur: (1) all of the Commitments and the credits hereby established shall automatically and forthwith terminate, if not theretofore terminated, and no Lender thereafter shall be under any obligation to grant any further loan or loans hereunder or otherwise effect any Credit Event, nor shall the Letter of Credit Issuer be under any obligation to issue any Letter of Credit hereunder, and (2) the principal of and interest on any Notes and all reimbursement obligations with respect to Letters of Credit then outstanding, all of the Borrowers' other Lender Debt, and the Agent shall thereupon become and thereafter be immediately due and payable in full (if not already due and payable), all without any presentment, demand or notice of any kind, which are hereby waived by each Borrower, and the Borrowers shall immediately deposit with the Agent as cash collateral an amount equal to the aggregate Stated Amounts of all Letters of Credit then outstanding, and (3) subject to any applicable automatic stay or other restriction of Law, the Agent and the Lenders may exercise such other rights and remedies as may be available hereunder, under the other Loan Documents, at law or in equity. SECTION 12.3 OFFSETS. If there shall occur or exist any Event of Default or if the maturity of the Notes or any Letter of Credit is accelerated pursuant to Section 12.1 or 12.2, each 61 Lender shall have the right at any time to set off against, and to appropriate and apply toward the payment of, any and all Indebtedness then owing by any Borrowers to that Lender (including, without limitation, any participation purchased or to be purchased pursuant to Section 12.4), whether or not the same shall then have matured, any and all deposit balances and all other indebtedness then held or owing by that Lender to or for the credit or account of any Borrowers, all without notice to or demand upon the Borrowers or any other person, all such notices and demands being hereby expressly waived by the Borrowers. SECTION 12.4 EQUALIZATION OF ADVANTAGE. Each Lender agrees with the other Lenders that if it at any time shall obtain any Advantage over the other Lenders in respect of the Obligations to the Lenders (except under Section 3.7, 3.8, 3.9 or 15.4), it will purchase from the other Lenders, for cash and at par, such additional participation in the Obligations to the Lenders as shall be necessary to nullify the Advantage. If any Advantage so resulting in the purchase of an additional participation shall be recovered in whole or in part from the Lender receiving the Advantage, each such purchase shall be rescinded, and the purchase price restored (but without interest unless the Lender receiving the Advantage is required to pay interest on the Advantage to the person recovering the Advantage from such Lender) ratably to the extent of the recovery. Each Lender further agrees with the other Lenders that if it at any time shall receive any payment for or on behalf of any Borrowers on any indebtedness owing by the Borrowers to that Lender by reason of offset of any deposit or other indebtedness, it will apply such payment first to any and all indebtedness owing by such Borrowers to that Lender pursuant to this Agreement (including, without limitation, any participation purchased or to be purchased pursuant to this Section 12.4) until the Obligations have been paid in full. The Borrowers agree that any Lender so purchasing a participation from the other Lenders pursuant to this Section may exercise all its rights of payment (including the right of set-off) with respect to such participation as fully as if such Lender were a direct creditor of any Borrowers in the amount of such participation. SECTION 12.5 APPLICATION OF REMEDY PROCEEDS. All monies received by the Agent and the Lenders from the exercise of remedies hereunder or under the other Loan Documents or under any other documents relating to this Agreement or at Law shall, unless otherwise required by the terms of the other Loan Documents or by applicable Law, be applied as follows: FIRST, to the payment of all expenses (to the extent not paid by the Borrowers) incurred by the Agent or the Lenders in connection with the exercise of such remedies, including, without limitation, all reasonable costs and expenses of collection, attorneys' fees, court costs and any foreclosure expenses; SECOND, to the payment of any fees then accrued and payable to the Lenders, the Letter of Credit Issuer or the Agent under this Agreement in respect of the Loans or the Letters of Credit outstanding; THIRD, to the payment of interest then accrued on the outstanding Loans; FOURTH, to the payment of the principal balance then owing on the outstanding Loans and the stated amounts of the Letters of Credit then outstanding (to be held and applied by the Agent as security for the Reimbursement Agreement Obligations in respect thereof); 62 FIFTH, to the payment of all other amounts owed by the Borrowers to the Agent or the Lenders under this Agreement or any other Loan Document; and FINALLY, any remaining surplus after all of the Obligations have been paid in full, to the Borrowers or to whomsoever shall be lawfully entitled thereto. ARTICLE 13 THE AGENT SECTION 13.1 THE AGENT. Each Lender irrevocably appoints KeyBank to be its Agent with full authority to take such actions, and to exercise such powers, on behalf of the Lenders in respect of this Agreement and the other Loan Documents as are therein respectively delegated to the Agent or as are reasonably incidental to those delegated powers. KeyBank in such capacity shall be deemed to be an independent contractor of the Lenders. For the purposes of this Article 13, "Lender" shall include any Lender. SECTION 13.2 NATURE OF APPOINTMENT. The Agent shall have no fiduciary relationship with any Lender by reason of this Agreement and the other Loan Documents. The Agent shall not have any duty or responsibility whatsoever to any Lender except those expressly set forth in this Agreement and the other Loan Documents. Without limiting the generality of the foregoing, each Lender acknowledges that the Agent is acting as such solely as a convenience to the Lenders and not as a manager of the commitments or the Obligations evidenced by the Notes. This Article 13 does not confer any rights upon the Borrowers or anyone else (except the Lenders), whether as a third party beneficiary or otherwise. SECTION 13.3 KEYBANK AS A LENDER; OTHER TRANSACTIONS. KeyBank's rights as a Lender under this Agreement and the other Loan Documents shall not be affected by its serving as the Agent. KeyBank and its affiliates may generally transact any banking, financial, trust, advisory or other business with Holdings or its Subsidiaries (including, without limitation, the acceptance of deposits, the extension of credit and the acceptance of fiduciary appointments) without notice to the Lenders, without accounting to the Lenders, and without prejudice to KeyBank's rights as a Lender under this Agreement and the other Loan Documents except as may be expressly required under this Agreement. SECTION 13.4 INSTRUCTIONS FROM LENDERS. The Agent shall not be required to exercise any discretion or take any action as to matters not expressly provided for by this Agreement and the other Loan Documents (including, without limitation, collection and enforcement actions in respect of any Obligations under the Notes or this Agreement and any collateral therefor) EXCEPT that the Agent shall take such action (or omit to take such action) other than actions referred to in Section 15.1, as may be reasonably requested of it in writing by the Majority Lenders with instructions and which actions and omissions shall be binding upon all the Lenders; PROVIDED, HOWEVER, that the Agent shall not be required to act (or omit any act) if, in its judgment, any such 63 action or omission might expose the Agent to personal liability or might be contrary to this Agreement, any other Loan Documents or any applicable Law. SECTION 13.5 LENDERS' DILIGENCE. Each Lender (a) represents and warrants that it has made its decision to enter into this Agreement and the other Loan Documents and (b) agrees that it will make its own decision as to taking or not taking future actions in respect of this Agreement and the other Loan Documents; in each case without reliance on the Agent or any other Lender and on the basis of its independent credit analysis and its independent examination of and inquiry into such documents and other matters as it deems relevant and material. SECTION 13.6 NO IMPLIED REPRESENTATIONS. The Agent shall not be liable for any representation, warranty, agreement or obligation of any kind of any other party to this Agreement or anyone else, whether made or implied by Holdings or any other Borrower in this Agreement or any other Loan Document or by a Lender in any notice or other communication or by anyone else or otherwise. SECTION 13.7 SUB-AGENTS. The Agent may employ agents and shall not be liable (except as to money or property received by it or its agents) for any negligence or misconduct of any such agent selected by it with reasonable care. The Agent may consult with legal counsel, certified public accountants and other experts of its choosing (including, without limitation, KeyBank's salaried employees or any otherwise not independent) and shall not be liable for any action or inaction taken or suffered in good faith by it in accordance with the advice of any such counsel, accountants or other experts which shall have been selected by it with reasonable care. SECTION 13.8 AGENT'S DILIGENCE. The Agent shall not be required (a) to keep itself informed as to anyone's compliance with any provision of this Agreement or any other Loan Document, (b) to make any inquiry into the properties, financial condition or operation of Holdings or any of its Subsidiaries or any other matter relating to this Agreement or any other Loan Document, (c) to report to any Lender any information (other than which this Agreement or any other Loan Document expressly requires to be so reported) that the Agent or any of its affiliates may have or acquire in respect of the properties, business or financial condition of Holdings or any of its Subsidiaries or any other matter relating to this Agreement or any other Loan Document or (d) to inquire into the validity, effectiveness or genuineness of this Agreement or other Loan Document. SECTION 13.9 NOTICE OF DEFAULT. The Agent shall not be deemed to have knowledge of any Incipient Default or Event of Default unless and until it shall have received a written notice describing it and citing the relevant provision of this Agreement or any other Loan Document. The Agent shall give each Lender reasonably prompt notice of any such written notice except to any Lender that shall have given the written notice. SECTION 13.10 AGENT'S LIABILITY. Neither the Agent nor any of its directors, officers, employees, attorneys, and other agents shall be liable for any action or omission on their respective parts except for gross negligence or willful misconduct. Without limitation of the generality of the foregoing, the Agent: (i) may treat the payee of any Revolving Credit Note as the holder thereof until the Agent receives a fully executed copy of the assignment agreement 64 required by Section 14.1(b) signed by such payee and in form satisfactory to the Agent and the fee required by Section 14.1(c); (ii) may consult with legal counsel, independent public accountants and other experts selected by it and shall not be liable for any action taken or omitted to be taken in good faith by it in accordance with the advice or such counsel, accountants or experts which have been selected by the Agent with reasonable care; (iii) makes no warranty or representation to any Lender and shall not be responsible to any Lender for any statements, warranties or representations made in or in connection with this Agreement or any other Loan Document, including, without limitation, the truth of the statements made in any certificate delivered by or on behalf of the Borrowers under Article 6 or any Notice of Borrowing, Rate Continuation/Conversion Request, Reimbursement Agreement or any other similar notice or delivery, the Agent being entitled for the purposes of determining fulfillment of the conditions set forth therein to rely conclusively upon such certificates; (iv) shall not have any duty to ascertain or to inquire as to the performance or observance of any of the terms, covenants or conditions of this Agreement, the Notes or any other Loan Document or to inspect the property (including the books and records) of Holdings or any Subsidiaries; (v) shall not be responsible to any Lender for the due execution, legality, validity, enforceability, genuineness, sufficiency or value of this Agreement, any collateral covered by any agreement or any other Loan Document and (vi) shall incur no liability under or in respect of this Agreement, the Notes or any other Loan Document by acting upon any notice, consent, certificate or other instrument or writing (which may be by telegram, telecopy, cable or telex) believed by it in good faith to be genuine and correct and signed or sent by the proper party or parties. Neither the Agent nor any of its directors, officers, employees or agents shall have any responsibility to the Borrowers on account of the failure of or delay in performance or breach by any Lender of any of its obligations hereunder or to any Lender on account of the failure of or delay in performance or breach by any other Lender or the Borrowers of any of their respective obligations hereunder or under any other Loan Document or in connection herewith or therewith. The Lenders each hereby acknowledge that the Agent shall be under no duty to take any discretionary action permitted to be taken by it pursuant to the provisions of this Agreement, the Notes or any other Loan Document unless it shall be requested in writing to do so by the Majority Lenders. SECTION 13.11 COMPENSATION. The Agent shall receive no compensation for its services as agent of the Lenders in respect of this Agreement and the other Loan Document, except as otherwise expressly agreed between the Borrowers and the Agent, but the Borrowers shall reimburse the Agent periodically on its demand for out-of-pocket expenses, if any, reasonably incurred by it as such and as to which Agent has delivered to the Borrowers' reasonable substantiation. SECTION 13.12 AGENT'S INDEMNITY. The Lenders shall indemnify the Agent (to the extent the Agent is not reimbursed by the Borrowers) from and against (a) any loss or liability (other than any caused by the Agent's gross negligence or willful misconduct and other than any loss to the Agent resulting from the Borrowers' non-payment of agency fees owed solely to the Agent) incurred by the Agent as such in respect of this Agreement, the Notes, the Letters of Credit, or other Loan Document (as the Agent) and (b) any out-of-pocket expenses incurred in 65 defending itself or otherwise related to this Agreement, the Notes, any Letter of Credit, or other Loan Documents (other than any caused by the Agent's gross negligence or willful misconduct) including, without limitation, reasonable fees and disbursements of legal counsel of its own selection (including, without limitation, the reasonable interdepartmental charges of its salaried attorneys) in the defense of any claim against it or in the prosecution of its rights and remedies as the Agent (other than the loss, liability or costs incurred by the Agent in the defense of any claim against it by the Lenders arising in connection with its actions in its capacity as Agent); PROVIDED, HOWEVER, that each Lender shall be liable for only its Ratable Portion of the whole loss or liability. SECTION 13.13 RESIGNATION. The Agent (or any successor) may at any time resign as such by giving thirty (30) days' prior written notice to the Borrowers and to each Lender; and the Majority Lenders may remove the Agent at any time with or without cause by giving written notice to the Agent and the Borrowers. In either case, resignation or removal, the institution then serving as Agent shall also resign as Letter of Credit Issuer in the manner provided in Section 5.3, above, unless Holdings, on behalf of the Borrowers, has waived in writing the requirements of this sentence. In any such case, the Majority Lenders shall appoint a successor to the resigned or removed agent (the "Former Agent"), which shall also serve as successor Letter of Credit Issuer, provided that the Majority Lenders obtain the Borrowers' prior written consent to the successor (which consent shall not be unreasonably withheld), by giving written notice to the Borrowers, the Former Agent and each Lender not participating in the appointment; PROVIDED, HOWEVER, that, if at the time of the proposed resignation or removal of an Agent, any Borrower is the subject of an action referred to in Section 11.7 or any other Event of Default shall have occurred and be continuing, the Borrowers' consent shall not be required. In the absence of a timely appointment, the Former Agent shall have the right (but not the duty) to make a temporary appointment of any Lender (but only with that Lender's consent) to act as its successor (and as successor Letter of Credit Issuer) pending an appointment pursuant to the immediately preceding sentence. In either case, the successor Agent and Letter of Credit Issuer shall deliver its written acceptance of appointment to the Borrowers, to each Lender and to the Former Agent, whereupon (a) the Former Agent shall execute and deliver such assignments and other writings as the successor Agent may reasonably require to facilitate its being and acting as the Agent and Letter of Credit Issuer, (b) the successor Agent (and successor Letter of Credit Issuer) shall in any event automatically acquire and assume all the rights and duties as those prescribed for the Agent by this Article 13 and, subject to the provisions of Section 5.3, above, for the Letter of Credit Issuer by Article 5, above, and (c) the Former Agent shall be discharged from its duties and obligations under this Agreement and the other Loan Documents. SECTION 13.14 LENDER PURPOSE. Each Lender represents and warrants to the Agent, the other Lenders and the Borrowers that such Lender is familiar with the Securities Act of 1933, as amended, and the rules and regulations thereunder and is not entering into this Agreement with any intention to violate such Act or any rule or regulation thereunder. Subject to the provisions of Sections 14.1, 14.2 and 14.3, each Lender shall at all times retain full control over the disposition of its assets subject only to this Agreement and to all applicable Law. 66 ARTICLE 14 ASSIGNMENTS AND PARTICIPATIONS SECTION 14.1 ASSIGNMENTS. (a) ASSIGNMENTS BY BORROWERS PROHIBITED. Whenever in this Agreement any of the parties hereto is referred to, such reference shall be deemed to include the successors and assigns of such party; PROVIDED, HOWEVER, that no Borrower shall assign or transfer any of its rights or obligations hereunder or under any Note without the prior written consent of all of the Lenders and the Agent. (b) ASSIGNMENTS BY LENDERS. Each Lender may assign all or any part of any of its Revolving Credit Loans, its Note, its Commitment and its participation in the Letters of Credit with the consent of Holdings and the Agent, which consent shall not be unreasonably withheld; PROVIDED that (i) no such consent by Holdings shall be required (A) for any such assignment by any Lender to an Affiliate of such Lender or to another Lender or an Affiliate of another Lender, or (B) if, at the time of such assignment, an Event of Default or Incipient Default has occurred and is continuing; (ii) any such partial assignment shall be in an amount at least equal to $5,000,000, unless such partial assignment is to another Lender; (iii) each such assignment shall be made by a Lender in such manner that the same portion of its Revolving Credit Loans, its Note, its Commitment and its participation in the Letters of Credit is assigned to the assignee; and (iv) the assignee, if not already a Lender, shall agree to become a party to this Agreement pursuant to an Assignment Agreement in the form of Exhibit F hereto, including, without limitation, an Administrative Questionnaire as a supplement thereto in the form of Exhibit G hereto. Upon execution and delivery by the assignor and the assignee to the Borrowers and the Agent of an instrument in writing pursuant to which such assignee agrees to become a "Lender" hereunder (if not already a Lender) having the share of the Total Commitment Amount, Loans and Letters of Credit specified in such instrument, and upon consent thereto by the Agent and Holdings (to the extent, if any, required), the assignee shall have, to the extent of such assignment (unless otherwise provided in such assignment with the consent of the Agent), the obligations, rights and benefits of a Lender hereunder holding the share of the Total Commitment Amount, Loans and Letters of Credit (or portions thereof) assigned to it (in addition to the share of the Total Commitment Amount, Loans and Letters of Credit, if any, theretofore held by such assignee); and the assigning Lender shall, to the extent of such assignment, be released from the share of the Total Commitment Amount, Loans and Letters of Credit and the obligations hereunder so assigned. (c) PROCEDURES. Upon its receipt of an assignment pursuant to Section 14.1(b) above duly executed by an assigning Lender and the assignee, together with any Note subject to such assignment and a processing and recordation fee of $3,500, the Agent shall, if such assignment has been completed, accept such assignment. Within five (5) business days after receipt of such notice, the Borrowers, at the Borrowers' expense, shall execute and deliver to the Agent in exchange for each surrendered Note a new Note to the order of the assignee in an amount equal to the Commitment assumed by the assignee and, if the assigning Lender has retained a portion of its Commitment, a new Note to the order of the assigning Lender in an amount equal to the share of its Commitment retained by it hereunder. Such new Notes shall be in an aggregate 67 principal amount equal to the aggregate principal amount of such surrendered Notes, shall be dated the effective date of such assignment, shall otherwise be in substantially the form of Exhibit A hereto, and, upon such execution and delivery shall be a "Note" under this Agreement. Canceled Notes shall be returned to Holdings on behalf of the Borrowers. (d) ADDITIONAL RESTRICTION ON ASSIGNMENT. Anything in this Section 14.1 to the contrary notwithstanding, except pursuant to this Agreement, no Lender may assign or participate any interest in any Loan held by it hereunder to Holdings or any of its Subsidiaries or other Affiliates without the prior written consent of each Lender. SECTION 14.2 PARTICIPATIONS. A Lender may sell or agree to sell to one or more other Persons (each a "Participant") a participation in all or any part of any Revolving Credit Loans held by it, or in its Commitment or its participation in the Letters of Credit. Except as otherwise provided in the last sentence of this Section 14.2, no Participant shall have any rights or benefits under this Agreement or any Note or any other Loan Documents (the Participant's rights against such Lender in respect of such participation to be those set forth in the agreements executed by such Lender in favor of the Participant). All amounts payable by the Borrowers to any Lender under this Agreement, and in respect of its Commitment, shall be determined as if such Lender had not sold or agreed to sell any participations in such Revolving Credit Loans and share of Commitment, and as if such Lender were funding each of such Revolving Credit Loans and its share of such Commitment in the same way that it is funding the portion of such Revolving Credit Loans and its Commitment in which no participations have been sold. In no event shall a Lender that sells a participation agree with the Participant (other than an Affiliate of such Lender) to take or refrain from taking any action hereunder or under any other Loan Document, except that such Lender may agree with the Participant that it will not, without the consent of the Participant, agree to any modification, supplement or waiver hereof or of any of the Loan Documents to the extent that the same, under Section 15.1 hereof, requires the consent of each Lender. The Borrowers agree that each Participant shall be entitled to the benefits of Sections 3.7 through 3.9, inclusive, and Section 12.3 (but, (i) only to the extent that the selling Lender is entitled to such benefits and (ii) as to any sums realized thereunder, subject to Section 12.4) with respect to its participating interest. SECTION 14.3 PERMITTED PLEDGES. In addition to the assignments and participations permitted under the foregoing provisions of this Article 13, any Lender may assign and pledge all or any portion of its Revolving Credit Loans and its Note to any Federal Reserve Bank as collateral security pursuant to Regulation A of the Board of Governors of the Federal Reserve System and any Operating Circular issued by such Federal Reserve Bank. No such assignment shall release the assigning Lender from its obligations hereunder. SECTION 14.4 FURNISHING OF BORROWER INFORMATION. A Lender may furnish any information concerning Holdings and its Subsidiaries in the possession of such Lender from time to time to assignees and participants (including, with the prior written consent of Holdings, which consent shall not be unreasonably withheld or delayed, prospective assignees and participants, PROVIDED that no such consent shall be required upon and during the continuance of an Event of Default). 68 ARTICLE 15 MISCELLANEOUS SECTION 15.1 AMENDMENTS, CONSENTS. No amendment, modification, termination, or waiver of any provision of this Agreement or of the Notes, nor consent to any variance therefrom, shall be effective unless the same shall be in writing and signed by the Majority Lenders (and then such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given); provided, however, that the unanimous consent of all Lenders shall be required with respect to any amendment, modification, termination, or waiver which would effect (i) the extension of maturity of any Note, or of the payment date of interest, principal and/or fees thereunder or hereunder, or (ii) any reduction in the rate of interest on the Notes, or in any amount of principal or interest due on any Note or in the rate or amount of fees payable pursuant to Section 3.4, or any change in the manner of pro rata application of any payments made by the Borrowers to the Lenders hereunder, or (iii) any change in any percentage voting requirement in this Agreement, or (iv) any change in the dollar amount or percentage of the Lenders' Commitments or any Lender's Commitment (provided that this clause shall not be construed to limit the right of the Borrowers to reduce the Total Commitment Amount pursuant and subject to the provisions of Section 3.2, above), or (v) any change in amount or timing of any fees payable under this Agreement, or (vi) any release of any portion of collateral, if any, or any release of any Borrower from its obligations under Article 5, or (vii) any change in any provision of this Agreement which requires all of the Lenders to take any action under such provision or (viii) any change in Section 12.4, Article 14 or this Section 15.1 itself. Notice of amendments or consents ratified by the Lenders hereunder shall immediately be forwarded by the Borrowers to all Lenders. Each Lender or other holder of a Note shall be bound by any amendment, waiver or consent obtained as authorized by this section, regardless of its failure to agree thereto. SECTION 15.2 NO WAIVER; CUMULATIVE REMEDIES. No omission or course of dealing on the part of Agent, any Lender or the holder of any Note in exercising any right, power or remedy hereunder shall operate as a waiver thereof; nor shall any single or partial exercise of any such right, power or remedy preclude any other or further exercise thereof or the exercise of any other right, power or remedy hereunder. The remedies herein provided are cumulative and in addition to any other rights, powers or privileges held by operation of Law, by contract or otherwise. SECTION 15.3 NOTICES. All notices, requests, demands and other communications provided for hereunder to a party hereto shall be in writing and shall be mailed or delivered to such party (including, without limitation, delivery by facsimile transmission), addressed to such party at its address specified on the signature pages of this Agreement or at such other address as such party may from time to time specify in writing to the other parties hereto. All notices, statements, requests, demands and other communications provided for hereunder shall be deemed to be given or made when delivered or forty-eight (48) hours after being deposited in the mails with postage prepaid by registered or certified mail or delivered to a telegraph company, addressed as aforesaid, except that notices from the Borrowers to Agent or the Lenders pursuant to any of the provisions hereof, including, without limitation, Articles 3, 4, 5 and 6 hereof, shall not be effective until received by Agent or the Lenders. 69 SECTION 15.4 COSTS AND EXPENSES. The Borrowers agree to pay on demand all reasonable costs and expenses of (i) the Agent in connection with the syndication of the Obligations pursuant to the letter of the Agent to Holdings dated April 5, 2002 and (ii) the Agent in connection with the preparation, execution, delivery, filing for record, modification, administration and amendment of this Agreement (including, without limitation, any amendment), the Notes, the Letters of Credit, and the other Loan Documents and the other documents to be delivered hereunder, including, without limitation, the reasonable fees and out-of-pocket expenses of counsel for the Agent with respect thereto and with respect to advising the Agent as to its rights and responsibilities under this Agreement. Without limiting the generality of the foregoing, such costs and expenses shall include: (a) reasonable attorneys' and paralegals' costs, expenses and disbursements of counsel to the Agent; (b) extraordinary expenses of Agent in connection with the administration of this Agreement, the Notes, Letters of Credit, any other Loan Document and the other instruments and documents to be delivered hereunder; (c) the reasonable fees and out-of-pocket expenses of special counsel for the Agent or the Agent for the benefit of the Lenders, with respect thereto and of local counsel, if any, who may be retained by said special counsel with respect thereto; (d) costs and expenses (including reasonable attorneys and paralegal costs, expenses and disbursements) for any amendment, supplement, waiver, consent, or subsequent closing in connection with this Agreement, the Notes, any Letters of Credit or any other Loan Document and the transactions contemplated thereby; (e) sums paid or incurred to pay any amount or take any action required of the Borrowers under this Agreement, the Notes or any Loan Document that the Borrowers fail to pay or take; (f) the cost of any appraisal, survey, environmental audit or the retention of any other professional service or consultant commenced after the occurrence and continuation of an Event of Default and deemed reasonably necessary by the Agent; (g) costs of inspections and periodic review of the records of Holdings or any of its Subsidiaries, including, without limitation, travel, lodging, and meals for inspections of Holdings' and its Subsidiaries' operations by the Agent at any time after the occurrence and during the continuation of an Event of Default; (h) as specified in the letter of the Agent to Holdings dated April 5, 2002, costs and expenses of forwarding loan proceeds, fees, interest and other payments to the Lenders; and (i) costs and expenses (including, without limitation, attorneys' fees) paid or incurred to obtain payment of the Obligations (including the Obligations arising under this Section 15.4), enforce the provisions of the Credit Agreement, the Notes, or any other Loan Document, or to defend any claims made or threatened against the Agent arising out of the transactions contemplated hereby (including without limitation, preparations for and consultations concerning any such matters). The Borrowers further agree to pay on demand all costs and expenses of each Lender, if any (including reasonable counsel fees and expenses), in connection with the restructuring or the enforcement (whether through negotiations, legal proceedings or otherwise) of this Agreement, the Notes, any other Loan Document and the other documents to be delivered hereunder, including, without limitation, reasonable counsel fees and expenses in connection with the enforcement of rights under this Section 15.4. The foregoing shall not be construed to limit any other provisions of this Agreement, the Notes, or any other Loan Documents regarding costs and expenses to be paid by the Borrowers. All of the foregoing costs and expenses may be charged, in the Agent's sole discretion, to the Borrowers' loan accounts as Revolving Credit Loans (notwithstanding existence of any Incipient Default or Event of Default or the failure of the conditions of Article 7 to have been satisfied). 70 SECTION 15.5 OBLIGATIONS SEVERAL. The obligations of the Lenders hereunder are several and not joint. Nothing contained in this Agreement and no action taken by Agent or the Lenders pursuant hereto shall be deemed to constitute the Lenders to be a partnership, association, joint venture or other entity. No default by any Lender hereunder shall excuse the other Lenders from any obligation under this Agreement; but no Lender shall have or acquire any additional obligation of any kind by reason of such default. SECTION 15.6 EXECUTION IN COUNTERPARTS. This Agreement may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which when so executed and delivered shall be deemed to be an original and all of which taken together shall constitute but one and the same agreement. SECTION 15.7 BINDING EFFECT; ASSIGNMENT. This Agreement shall become effective when it shall have been executed by the Borrowers, Agent and by each Lender and thereafter shall be binding upon and inure to the benefit of the Borrowers and each of the Lenders and their respective successors and permitted assigns, except that the Borrowers shall not have the right to assign their rights hereunder or any interest herein without the prior written consent of all of the Lenders. No person, other than the Lenders, shall have or acquire any obligation to grant the Borrowers any Loans hereunder. Any Lender may at any time sell, assign, transfer, grant a participation pursuant to Article 14 hereof. SECTION 15.8 GOVERNING LAW. This Agreement, each of the Notes and any other Loan Documents shall be governed by and construed in accordance with the Laws of the State of Ohio and the respective rights and obligations of the Borrowers and the Lenders shall be governed by Ohio Law. SECTION 15.9 SEVERABILITY OF PROVISIONS; CAPTIONS. Any provision of this Agreement which is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof or affecting the validity or enforceability of such provision in any other jurisdiction. The several captions to sections and subsections herein are inserted for convenience only and shall be ignored in interpreting the provisions of this Agreement. SECTION 15.10 ENTIRE AGREEMENT. This Agreement and the other Loan Documents referred to in or otherwise contemplated by this Agreement set forth the entire agreement of the parties as to the transactions contemplated by this Agreement. SECTION 15.11 CONFIDENTIALITY. The Agent and the Lenders hereby acknowledge that Holdings and its Subsidiaries have financial and other data and information the confidentiality of which is important to their business. The Agent and the Lenders agree to use all reasonable efforts to keep confidential any such confidential information conveyed to them and appropriately designated in writing by Holdings on behalf of the Borrowers as being confidential information, EXCEPT that this Section shall not be binding on the Agent or the Lenders after the expiration of three (3) years after the termination of this Agreement and shall not preclude the Agent and the Lenders from furnishing any such confidential information: (i) subject to 71 Holdings' receipt of prior notice from the Agent or a Lender, if permitted under applicable law and such legal proceedings, to the extent which may be required by subpoena or similar order of any court of competent jurisdiction (which notice, if so permitted under applicable law and such legal proceedings, shall advise Holdings of the information required by such subpoena or order, the party to whom such subpoena or order requires such information to be delivered and the court of other tribunal that issued such subpoena or order), (ii) to the extent such information is required to be disclosed to any authority over the Agent or a Lender or its securities, (iii) to any other party to this Agreement, (iv) to any Affiliate of the Agent or a Lender so long as such Affiliate agrees in writing to Holdings to be bound by the provisions of this Section 15.11, (v) to any actual or prospective successor Agent and to any actual or prospective transferee, participant or subparticipant of all or part of a Lender's rights arising out of or in connection with this Agreement or any thereof so long as such prospective transferee, participant or subparticipant to whom disclosure is made agrees in writing to Holdings to be bound by the provisions of this Section 15.11, (vi) to anyone if it shall have been already publicly disclosed (other than by the Agent or a Lender in contravention of this Section 15.11), (vii) to the extent reasonably required in connection with the exercise of any right or remedy under this Agreement or any other Loan Document, (viii) to the Agent's or a Lender's legal counsel, auditors, professional advisors and consultants, and accountants and (ix) in connection with any legal proceedings instituted by or against the Agent or a Lender in its capacity as the Agent or a Lender under this Agreement. SECTION 15.12 JURY TRIAL WAIVER. EACH BORROWER, EACH LENDER, THE AGENT AND THE LETTER OF CREDIT ISSUER HEREBY IRREVOCABLY AGREE TO WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS AGREEMENT, THE NOTES, OR ANY OTHER LOAN DOCUMENT OR ANY DEALINGS BETWEEN THEM RELATING TO THE SUBJECT MATTER OF THIS AGREEMENT, THE NOTES, OR ANY OTHER LOAN DOCUMENT AND THE RELATIONSHIPS THEREBY ESTABLISHED. The scope of this waiver is intended to be all-encompassing of any and all disputes that may be filed in any court and that relate to the subject matter of this transaction, including, without limitation, contract claims, tort claims, breach of duty claims, and all other statutory and common law claims. THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS OF THIS AGREEMENT. In the event of litigation, this provision may be filed as a written consent to a trial by the court. SECTION 15.13 JURISDICTION; VENUE; INCONVENIENT FORUM. (a) JURISDICTION. EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY AND UNCONDITIONALLY SUBMITS, FOR ITSELF AND ITS PROPERTY, TO THE NONEXCLUSIVE JURISDICTION OF ANY OHIO STATE COURT OR FEDERAL COURT OF THE UNITED STATES OF AMERICA SITTING IN CUYAHOGA COUNTY, OHIO, AND ANY APPELLATE COURT FROM ANY THEREOF, IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT, THE NOTES OR ANY OTHER LOAN DOCUMENT, OR FOR RECOGNITION OR ENFORCEMENT OF ANY JUDGMENT, AND EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY AND UNCONDITIONALLY AGREES THAT ALL CLAIMS IN RESPECT OF ANY SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN ANY SUCH OHIO 72 STATE OR, TO THE EXTENT PERMITTED BY LAW, IN SUCH FEDERAL COURT. EACH OF THE PARTIES HERETO AGREES THAT A FINAL JUDGMENT IN ANY SUCH ACTION OR PROCEEDING SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN OTHER JURISDICTIONS BY SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER PROVIDED BY LAW. NOTHING IN THIS AGREEMENT SHALL AFFECT ANY RIGHT THAT ANY PARTY MAY OTHERWISE HAVE TO BRING ANY ACTION OR PROCEEDING RELATING TO THIS AGREEMENT, THE NOTES OR ANY OTHER LOAN DOCUMENT IN THE COURTS OF ANY JURISDICTION. (b) VENUE; INCONVENIENT FORUM. EACH OF THE PARTIES HERETO IRREVOCABLY AND UNCONDITIONALLY WAIVES, TO THE FULLEST EXTENT IT MAY LEGALLY AND EFFECTIVELY DO SO, ANY OBLIGATION THAT IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT, THE NOTES OR ANY OTHER LOAN DOCUMENT IN ANY OHIO STATE OR FEDERAL COURT SITTING IN OHIO. EACH OF THE PARTIES HERETO HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, THE DEFENSE OF AN INCONVENIENT FORUM TO THE MAINTENANCE OF SUCH ACTION OR PROCEEDING IN ANY SUCH COURT. THE BORROWER CONFIRMS THAT THE FOREGOING WAIVERS ARE INFORMED AND FREELY MADE. ARTICLE 16 JOINT AND SEVERAL SECTION 16.1 JOINT AND SEVERAL. The Borrowers agree and acknowledge that their liability to pay all Loans and to perform all other Obligations under this Agreement and each other Loan Document to which they are a party is and shall be joint and several. No Borrower shall have any right of subrogation, reimbursement or similar right in respect of its payment of any sum or its performance of any other obligation hereunder unless and until all Obligations have been paid in full and the Lenders, the Letter of Credit Issuer and the Agent have no further obligation hereunder. In addition, each Borrower confirms that upon each Credit Event, it will have received adequate consideration and reasonably equivalent value for the Indebtedness incurred and other agreements made in the Loan Documents. No Borrower could reasonably expect to obtain financing separately on terms as favorable as those provided for herein. SECTION 16.2 OBLIGATIONS ABSOLUTE. The Obligations of each Borrower hereunder shall be valid and enforceable and, except as expressly provided herein, shall not be subject to limitation, impairment or discharge for any reason (other than the payment in full of the Obligations), including, without limitation, the occurrence of any failure to assert or enforce or agreement not to assert or enforce any claim or demand of any right power or remedy with respect to the Obligations or any agreement relating thereto, or with respect to any guaranty thereof or security therefor or any other act or thing or omission which may or might in any manner or to any extent vary the risk of such Borrower as an obligor in respect of the Obligations; and each Borrower hereby waives (i) any defense based upon any statute or rule of law or equity to the effect that the obligation of a surety must be neither larger in amount nor in 73 other respects more burdensome than that of the principal, and (ii) to the fullest extent permitted by law, any defenses or benefits which may be derived from or afforded by law or equity which limit the liability of or exonerate guarantors or sureties, or which may conflict with terms of this Agreement or the other Loan Documents. SECTION 16.3 LIMITATIONS. (a) If the Obligations of a Borrower would be held or determined by a court or tribunal having competent jurisdiction to be void, invalid or unenforceable on account of the amount of its aggregate liability under this Agreement or the Notes, then, notwithstanding any other provision of this Agreement or the Notes to the contrary, the aggregate amount of the liability of such Borrower under this Agreement and the Notes shall, without any further action by such Borrower, the Lenders, the Agent, the Letter of Credit Issuer or any other person, be automatically limited and reduced to an amount which is valid and enforceable. (b) Without limiting the generality of paragraph (a), above, each Borrower and the Agent, the Letter of Credit Issuer and each Lender, hereby confirms that it is the intention of all such parties that none of this Agreement, the Notes or any other Loan Document constitute a fraudulent transfer or conveyance under the federal Bankruptcy Code, the Uniform Fraudulent Conveyances Act, the Uniform Fraudulent Transfer Act or similar state statute applicable to the Loan Documents. Therefore, such parties agree that the Obligations of a Borrower shall be limited to such maximum amount as will, after giving effect to such maximum amount and other contingent and fixed liabilities of such Borrower that are relevant under such laws, and after giving effect to any collections from, rights to receive contribution from or payments made by or on behalf of the other Borrowers and any other obligor, result in the Obligations not constituting a fraudulent transfer or conveyance. (c) The provisions of this Section 16.3 are intended solely to preserve the rights of Lenders, the Letter of Credit Issuer and the Agent hereunder to the maximum extent permitted by applicable Law, and neither a Borrower nor any other Person shall have any right or claim under such provisions that would not otherwise be available under applicable Law. [No additional provisions on this page; this page followed by signature pages] 74 IN WITNESS WHEREOF, the parties hereto have hereunto set their hands as of the date first above written.

BORROWERS Address - --------- ------- LINCOLN ELECTRIC HOLDINGS, INC. 22801 St. Clair Avenue Cleveland, Ohio 44117-1199 By________________________________________ Attention: Chief Financial Officer Anthony A. Massaro, Chairman, Telecopy: (216) 486-6476 President and Chief Executive Officer And_______________________________________ H. Jay Elliot, Senior Vice President, Chief Financial Officer and Treasurer THE LINCOLN ELECTRIC COMPANY 22801 St. Clair Avenue Cleveland, Ohio 44117-1199 By________________________________________ Attention: Treasurer Anthony A. Massaro, Chairman, Telecopy: (216) 486-6476 President and Chief Executive Officer And_______________________________________ Paul R. Klingensmith, Treasurer LINCOLN ELECTRIC INTERNATIONAL 22801 St. Clair Avenue HOLDING COMPANY Cleveland, Ohio 44117-1199 Attention: Treasurer Telecopy: (216) 486-6476 By________________________________________ H. Jay Elliott, Treasurer HARRIS CALORIFIC, INC. 22801 St. Clair Avenue Cleveland, Ohio 44117-1199 Attention: Treasurer By________________________________________ Telecopy: (216) 486-6476 Vincent K. Petrella, Treasurer LINCOLN GLOBAL, INC. 22801 St. Clair Avenue Cleveland, Ohio 44117-1199 Attention: Treasurer By________________________________________ Telecopy: (216) 486-6476 Vincent K. Petrella, Treasurer

75 AGENT - ----- KEYBANK NATIONAL ASSOCIATION, 127 Public Square AS AGENT Cleveland, Ohio 44114-1306 Attention: Large Corporate Telecopy: (216) 689-4981 By_________________________________________ Daniel W. Lally, Assistant Vice President 76

LENDERS Address - ------- ------- BANK OF AMERICA, N.A. Mail Code IL1-231-10-10 231 South LaSalle Street Chicago, Illinois 60697 By________________________________ Attention: Lorraine Johnson _______________, _______________ Telecopy: 312.828-5140 BANK ONE, NA 611 Woodward Avenue Detroit, Michigan 48226 Attention: Large Corporate By________________________________ Telecopy: (313) 225-1671 __________________,_____________ JPMORGAN CHASE BANK 270 Park Avenue, 47th Floor New York, New York 10017-2070 Attention: Tina Ruyter By________________________________ Telecopy: 212-270-5120 __________________,_____________ KEYBANK NATIONAL ASSOCIATION 127 Public Square Cleveland, Ohio 44114-1306 Attention: Large Corporate By________________________________ Telecopy: (216) 689-4981 Daniel W. Lally, Assistant Vice President NATIONAL CITY BANK 1900 East 9th Street, Locator 2083 Cleveland, Ohio 44114-3484 Attention: Anthony J. DiMare By________________________________ Telecopy: (216) 222-9396 __________________,_____________ PNC BANK, NATIONAL ASSOCIATION 1375 East 9th Street, Suite 1250 Cleveland, Ohio 44114 Attention: Joseph G. Moran By________________________________ Telecopy: (216) 348-8594 __________________,_____________

77 List of Exhibits ---------------- Exhibit A - Form of Revolving Credit Note Exhibit B - Form of Notice of Borrowing Exhibit C - Form of Rate Conversion/Continuation Request Exhibit D - Form of Reduction Notice Exhibit E - Form of Certificate of Financial Officer Exhibit F - Form of Assignment Agreement Exhibit G Form of Administrative Questionnaire 78 List of Schedules ----------------- Schedule 9.2 Existing Investments Schedule 9.4 - Existing Liens Schedule 10.1 - Existing Subsidiaries Schedule 10.3 Litigation 79 ANNEX A ------- To Credit Agreement dated April 24, 2002 among Lincoln Electric Holdings, ------------------------------------------------------------------------- Inc., et al. ------------ Lender Amount of Commitment - ------ -------------------- Bank of America, N.A. $23,000,000 Bank One, NA $23,000,000 JPMorgan Chase Bank $23,000,000 Keybank National Association $23,000,000 National City Bank $10,000,000 PNC Bank, National Association $23,000,000 80 EX-10.S 5 l94043aex10-s.txt EX-10(S) - AMENDED DEFERRED COMPENSATION PLAN Exhibit 10(s) LINCOLN ELECTRIC HOLDINGS, INC. DEFERRED COMPENSATION PLAN (AS AMENDED AND RESTATED AS OF JANUARY 1, 2002) LINCOLN ELECTRIC HOLDINGS, INC. DEFERRED COMPENSATION PLAN (as amended and restated as of January 1, 2002)

TABLE OF CONTENTS PAGE ARTICLE I PURPOSE...............................................................1 ARTICLE II DEFINITIONS AND CONSTRUCTION..........................................1 Section 2.1 Definitions......................................................1 Section 2.2 Construction.....................................................4 ARTICLE III PARTICIPATION AND DEFERRALS...........................................4 Section 3.1 Eligibility and Participation....................................4 Section 3.2 Ineligible Participant...........................................4 Section 3.3 Amount of Deferral...............................................5 Section 3.4 Modification of Deferral Commitments.............................5 ARTICLE IV PARTICIPANTS' ACCOUNTS................................................5 Section 4.1 Establishment of Accounts........................................5 Section 4.2 Elective Deferred Compensation; Employment Agreement Contributions.................................................5 Section 4.3 Determination of Accounts........................................5 Section 4.4 Adjustments to Accounts..........................................6 Section 4.5 Statement of Accounts............................................6 Section 4.6 Vesting of Accounts..............................................6 ARTICLE V FINANCING OF BENEFITS.................................................6 Section 5.1 Financing of Benefits............................................6 Section 5.2 Security For Benefits............................................6 Section 5.3 Investments......................................................7 ARTICLE VI DISTRIBUTION OF BENEFITS..............................................7 Section 6.1 Settlement Date..................................................7 Section 6.2 Amount to be Distributed.........................................7 Section 6.3 In-Service Distribution..........................................7 Section 6.4 Form of Distribution.............................................7 Section 6.5 Beneficiary Designation..........................................8

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TABLE OF CONTENTS (continued) PAGE Section 6.6 Facility of Payment..............................................9 Section 6.7 Hardship Distributions...........................................9 Section 6.8 Special Distributions............................................9 Section 6.9 Coordination with Other Benefits.................................9 Section 6.10 Offset...........................................................9 ARTICLE VII ADMINISTRATION, AMENDMENT AND TERMINATION............................10 Section 7.1 Administration..................................................10 Section 7.2 Plan Administrator..............................................10 Section 7.3 Amendment, Termination and Withdrawal...........................10 Section 7.4 Successors......................................................10 Section 7.5 Claims..........................................................11 Section 7.6 Expenses........................................................11 ARTICLE VIII MISCELLANEOUS........................................................11 Section 8.1 No Guarantee of Employment......................................11 Section 8.2 Applicable Law..................................................11 Section 8.3 Interests Not Transferable......................................11 Section 8.4 Severability....................................................11 Section 8.5 Withholding of Taxes............................................11 Section 8.6 Top-Hat Plan....................................................12

-ii- LINCOLN ELECTRIC HOLDINGS, INC. DEFERRED COMPENSATION PLAN The Lincoln Electric Holdings, Inc. Deferred Compensation Plan is amended and restated effective as of January 1, 2002. ARTICLE I PURPOSE THE LINCOLN ELECTRIC HOLDINGS, INC. DEFERRED COMPENSATION PLAN (the "Plan"), was established by The Lincoln Electric Company effective as of November 15, 1994 to allow designated management and highly compensated employees to defer a portion of their current salary. The Plan is hereby assumed by Lincoln Electric Holdings, Inc. and amended and restated as of January 1, 2002. It is intended that the Plan will aid in attracting and retaining employees of exceptional ability by providing these benefits. The terms and conditions of the Plan are set forth below. ARTICLE II DEFINITIONS AND CONSTRUCTION Section 2.1 DEFINITIONS. Whenever the following terms are used in this Plan they shall have the meanings specified below unless the context clearly indicates to the contrary: (a) "Account": The bookkeeping account maintained for each Participant showing his interest under the Plan. (b) "Accounting Date": December 31 of each year and the last day of any calendar quarter in which a Participant's Settlement Date occurs. (c) "Accounting Period": The period beginning on the day immediately following an Accounting Date and ending on the next following Accounting Date. (d) "Administrator": The committee established pursuant to the provisions of Section 7.1. (e) "Base Salary": The base earnings earned by a Participant and payable to him by the Corporation with respect to a Plan Year without regard to any increases or decreases in base earnings as a result of an election to defer base earnings under this Plan, or an election between benefits or cash provided under a plan of the Corporation maintained pursuant to Section 125 or 401(k) of the Code. (f) "Beneficiary": The person or persons (natural or otherwise), within the meaning of Section 6.5, who are entitled to receive distribution of the Participant's Account balance in the event of the Participant's death. (g) "Board": The Board of Directors of Holdings. (h) "Bonus": Any annual bonus earned by a Participant and payable to him by the Corporation with respect to any single bonus plan year ending within a Plan Year without regard to any decreases as a result of an election to defer all or any portion of a bonus under this Plan, or an election between benefits or cash provided under a plan of the Corporation maintained pursuant to Section 125 or 401(k) of the Code. (i) "Change in Control": A Change in Control as defined in the Executive Benefit Plan, as it may be amended from time to time. Such definition is hereby incorporated by reference in the Plan, and an amendment to such definition shall be deemed an amendment to the Plan. (j) "Code": The Internal Revenue Code of 1986, as amended from time to time; any reference to a provision of the Code shall also include any successor provision thereto. (k) "Committee": The Compensation Committee of the Board. (l) "Compensation": The amount of Base Salary plus Bonuses earned by a Participant and payable to him by the Corporation with respect to a Plan Year. (m) "Corporation": Holdings and any Participating Employer or any successor or successors thereto. (n) "Deferral Commitment": An agreement by a Participant to have a specified percentage or dollar amount of his Compensation deferred under the Plan for a specified period in the future. (o) "Deferral Period": Means the Plan Year for which a Participant has elected to defer a portion of his Compensation. (p) "Disability": The occurrence, while a Participant is an Employee, of a physical or mental incapacity which is likely to be permanent and which prevents a Participant from engaging in any occupation or performing any work for compensation or profit for which he is qualified by education, training or experience, as determined by the Administrator in its sole discretion on the basis of medical evidence certified by a physician or physicians designated by it. (q) "Effective Date": November 15, 1994. (r) "Employee": Any employee of the Corporation who is, as determined by the Committee, a member of a "select group of management or highly compensated employees" of the Corporation, within the meaning of Sections 201, 301 and 401 of ERISA, and who is designated by the Committee as an Employee eligible to participate in the Plan. (s) "Employment Agreement": A written agreement between the Corporation and an Employee that provides for the deferral of compensation, and that may also provide for vesting, the crediting of earnings and other terms and conditions with respect to such deferred compensation. 2 (t) "Employment Agreement Contribution": Any amount contributed to the Plan by the Corporation pursuant to an Employment Agreement. (u) "ERISA": The Employee Retirement Income Security Act of 1974, as amended from time to time; any reference to a provision of ERISA shall also include any successor provision thereto. (v) "Executive Benefit Plan": The Lincoln Electric Company Executive Benefit Plan effective November 1, 1997. (w) "Financial Hardship": An unforeseeable financial emergency of the Participant, determined by the Administrator on the basis of information supplied by the Participant, arising from an illness, disability, casualty loss, sudden financial reversal or other such unforeseeable occurrence, but not including foreseeable events such as the purchase of a house or education expenses for children. (x) "Participant": An Employee participating in the Plan in accordance with the provisions of Section 3.1 or a former Employee retaining benefits under the Plan that have not been fully paid. (y) "Participating Employer": The Lincoln Electric Company, and any other subsidiary or affiliate of Holdings that adopts the Plan with the consent of the Committee. Any Participating Employer that adopts the Plan and thereafter ceases to exist, ceases to be a subsidiary or affiliate or Holdings or withdraws from the Plan shall no longer be considered a Participating Employer unless otherwise determined by the Committee. (z) "Participation Agreement": The Agreement submitted by a Participant to the Administrator with respect to one or more Deferral Commitments. (aa) "Plan": The Plan set forth in this instrument as it may, from time to time, be amended. (bb) "Plan Year": The 12-month period beginning January 1 through December 31; provided that the first plan year began on November 15, 1994 and ended on December 31, 1994. (cc) "Retirement": Termination of employment with the Corporation on or after attainment of age sixty (60), or early termination of employment with the Corporation on or after attainment of age fifty-five (55) and completion of twenty-five (25) years of service. (dd) "Settlement Date": The date on which a Participant terminates employment with the Corporation. Leaves of absence granted by the Corporation will not be considered as termination of employment during the term of such leave. Settlement Date shall also include (I) with respect to any deferral date selected by a Participant pursuant to Section 6.3 for distribution of the amounts deferred during such Deferral Period, and (II) a date selected by the Participant pursuant to Section 6.4. 3 Section 2.2 CONSTRUCTION. The masculine gender, where appearing in the Plan, shall be deemed to include the feminine gender, and the singular may include the plural, unless the context clearly indicates to the contrary. The words "hereof," "herein," "hereunder," and other similar compounds of the word "here" shall mean and refer to the entire Plan, and not to any particular provision or Section. ARTICLE III PARTICIPATION AND DEFERRALS Section 3.1 ELIGIBILITY AND PARTICIPATION. (a) ELIGIBILITY. Eligibility to participate in the Plan for any Deferral Period is limited to those management and/or highly compensated Employees of the Corporation (i) who are designated, from time to time, by the Committee, and (ii) who have elected to make the maximum elective contributions permitted them under the terms of the Corporation's Employee Savings Plan for such Deferral Period. (b) PARTICIPATION. An eligible Employee may elect to participate in the Plan with respect to any Deferral Period by submitting a Participation Agreement to the Administrator by the last business day immediately preceding the applicable Deferral Period. (c) INITIAL YEAR OF PARTICIPATION. In the event that an individual first becomes eligible to participate during a Deferral Period and wishes to elect a Deferral Commitment with respect to the Compensation earned by and payable to the individual during such Deferral Period, a Participation Agreement must be submitted to the Administrator no later than 30 days following such individual's initial eligibility. Any Deferral Commitments elected in such Participation Agreement shall be effective only with regard to Compensation earned following the submission of the Participation Agreement to the Administrator. If an eligible Employee does not submit a Participation Agreement within such period of time, such individual will not be eligible to participate in the Plan until the first day of a Deferral Period subsequent to the Deferral Period in which the individual initially became eligible to participate. (d) TERMINATION OF PARTICIPATION. Participation in the Plan shall continue as long as the Participant is eligible to receive benefits under the Plan. Section 3.2 INELIGIBLE PARTICIPANT. Notwithstanding any other provisions of this Plan to the contrary, if the Administrator determines that any Participant may not qualify as a "management or highly compensated employee" within the meaning of ERISA, or regulations thereunder, the Administrator may determine, in its sole discretion, that such Participant shall cease to be eligible to participate in this Plan. Upon such determination, the Corporation shall make an immediate lump sum payment to the Participant equal to the amount credited to his Account. Upon such payment no benefit shall thereafter be payable under this Plan either to the Participant or any Beneficiary of the Participant, and all of the Participant's elections as to the time and manner of payment of his Account will be deemed to be cancelled. Section 3.3 AMOUNT OF DEFERRAL. With respect to each Plan Year, a Participant may elect to defer a specified dollar amount or percentage of his or her Compensation, provided 4 the amount the Participant elects to defer under this Plan and the Corporation's Employee Savings Plan shall not exceed the sum of 75% of his or her Base Salary plus 100% of his or her Bonus with respect to such Plan Year. A Participant may choose to have amounts deferred under this Plan deducted from his or her Base Salary, Bonus or a combination of both. For the first Plan Year, a Participant may elect to defer all or any portion of his or her Base Salary and/or Bonus earned or payable after the later of the effective date of the Participation Agreement or the date of filing the Participation Agreement with the Administrator, provided the total deferred amount for such Plan Year does not exceed the annual limitations under this Section 3.3 computed for the calendar year. A Participant may change the dollar amount or percentage of his or her Compensation to be deferred by filing a written notice thereof with the Administrator. Any such change shall be effective as of the first day of the Plan Year immediately succeeding the Plan Year in which such notice is filed with the Administrator. Notwithstanding the foregoing, any Employment Agreement Contribution shall be deferred in accordance with the terms of the Employment Agreement. Section 3.4 MODIFICATION OF DEFERRAL COMMITMENTS. A Deferral Commitment shall be irrevocable, except that the Administrator may, in its sole discretion, permit a Participant to terminate, prospectively, any Deferral Commitment for a Deferral Period. If a Participant terminates a Deferral Commitment during a Deferral Period, such Participant will not be permitted to enter into a new Deferral Commitment until the following Deferral Period. ARTICLE IV PARTICIPANTS' ACCOUNTS Section 4.1 ESTABLISHMENT OF ACCOUNTS. The Corporation, through its accounting records, shall establish an Account for each Participant. In addition, the Corporation may establish one or more subaccounts of a Participant's Account, if the Corporation determines that such subaccounts are necessary or appropriate in administering the Plan. Section 4.2 ELECTIVE DEFERRED COMPENSATION; EMPLOYMENT AGREEMENT CONTRIBUTIONS. A Participant's Compensation that is deferred pursuant to a Deferral Commitment shall be credited to the Participant's Account within thirty days following the date the corresponding non-deferred portion of his Compensation would have been paid to the Participant. The amount of the Employment Agreement Contribution contributed for a Participant (if any) shall be credited by the Corporation to the Participant's Account in accordance with the terms of the Employment Agreement. Any withholding of taxes or other amounts with respect to Deferred Compensation or with respect to an Employment Agreement which is required by state, federal or local laws shall be withheld from the Participant's Deferred Compensation or Employment Agreement Contribution. Section 4.3 DETERMINATION OF ACCOUNTS. (a) DETERMINATION OF ACCOUNTS. The amount credited to each Participant's Account as of a particular date shall equal the deemed balance of such Account as of such date. The balance in the Account shall equal the amount credited pursuant to Section 4.2, and shall be adjusted in the manner provided in Section 4.4. 5 (b) ACCOUNTING. The Corporation, through its accounting records, shall maintain a separate and distinct record of the amount in each Account as adjusted to reflect income, gains, losses, withdrawals and distributions. Section 4.4 ADJUSTMENTS TO ACCOUNTS. (a) Each Participant's Account shall be debited with the amount of any distributions under the Plan to or on behalf of the Participant or, in the event of his death, his Beneficiary during the Accounting Period ending on such Accounting Date. (b) The Participant's Account shall next be credited or debited, as the case may be, with an income (loss) factor equal to an amount determined by multiplying (i) the balance credited to the Participant's Account as of the immediately preceding Accounting Date (as adjusted pursuant to Section 4.3(a) for the current Accounting Date) by (ii) the rate of return for the Accounting Period ending on such Accounting Date on deemed investments provided for in Section 5.3. Section 4.5 STATEMENT OF ACCOUNTS. As soon as practicable after the end of each Plan Year, a statement shall be furnished to each Participant or, in the event of his death, to his Beneficiary showing the status of his Account as of the end of the Plan Year, any changes in his Account since the end of the immediately preceding Plan Year, and such other information as the Administrator shall determine. Section 4.6 VESTING OF ACCOUNTS. Subject to Section 5.1, each Participant shall at all times have a nonforfeitable interest in his Account balance. ARTICLE V FINANCING OF BENEFITS Section 5.1 FINANCING OF BENEFITS. Benefits payable under the Plan to a Participant or, in the event of his death, to his Beneficiary shall be paid by the Corporation from its general assets. The payment of benefits under the Plan represents an unfunded, unsecured obligation of the Corporation. Notwithstanding the fact that the Participants' Accounts may be adjusted by an amount that is measured by reference to the performance of any deemed investments as provided in Section 5.3, no person entitled to payment under the Plan shall have any claim, right, security interest or other interest in any fund, trust, account, insurance contract, or asset of the Corporation which may be responsible for such payment. Section 5.2 SECURITY FOR BENEFITS. Notwithstanding the provisions of Section 5.1, nothing in this Plan shall preclude the Corporation from setting aside amounts in trust (the "Trust") pursuant to one or more trust agreements between a trustee and the Corporation. However, no Participant or Beneficiary shall have any secured interest or claim in any assets or property of the Corporation or the Trust and all funds contained in the Trust shall remain subject to the claims of the Corporation's general creditors. Section 5.3 INVESTMENTS. The Committee may designate one or more separate investment funds or vehicles, including, without limitation, certificates of deposit, mutual funds, money market accounts or funds, limited partnerships, or debt or equity securities, including equity securities of the Corporation (measured by market value, book value or any formula 6 selected by the Committee), in which the amount credited to a Participant's Account will be deemed to be invested. Each Participant shall file an investment preference request ("Request") to be effective as of the date of such Request with respect to the amounts credited to his Account as of such date and amounts subsequently credited to his Account. A Request will advise the Administrator as to the Participant's preference with respect to investment vehicles for all or some portion of the amounts credited to a Participant's Account in specified multiples of 5%. A Request may be changed prospectively by a Participant as of the first day of any calendar month by giving the Administrator prior written notice. The Administrator may, but is under no obligation to, deem the amounts credited to a Participant's Account to be invested in accordance with the Request made by the Participant, or the Committee may, instead, in its sole discretion, deem such Account to be invested in any deemed investment funds selected by the Committee. Earnings on any amounts deemed to have been invested in any deemed investment fund shall be deemed to have been reinvested in such fund. ARTICLE VI DISTRIBUTION OF BENEFITS Section 6.1 SETTLEMENT DATE. A Participant or, in the event of his death, his Beneficiary shall be entitled to distribution of the balance of his Account, as provided in this Article VI, following his Settlement Date or Dates. Section 6.2 AMOUNT TO BE DISTRIBUTED. The amount to which a Participant or, in the event of his death, his Beneficiary is entitled in accordance with the following provisions of this Article shall be based on the Participant's adjusted account balance determined as of the Accounting Date coincident with or next following his Settlement Date or Dates. Section 6.3 IN-SERVICE DISTRIBUTION. A Participant may elect to receive an in-service distribution of his or her deferred Compensation for any Deferral Period in a single lump sum payment on a date which is at least two years after the end of such Deferral Period. A Participant's election of an in-service distribution shall be filed in writing with the Administrator at the same time as is filed his election to participate as provided in Section 3.1. Any benefits paid to the Participant as an in-service distribution shall reduce the Participant's Account. Section 6.4 FORM OF DISTRIBUTION. As soon as practicable after the end of the Accounting Period in which a Participant's Settlement Date occurs, but in no event later than thirty days following the end of such Accounting Period, the Corporation shall commence distribution or cause distribution to be commenced, to the Participant or, in the event of his death, to his Beneficiary, of the balance of the Participant's Account, as determined under Section 6.2, under one of the forms provided in this Section. Notwithstanding the foregoing, if elected by the Participant, the distribution of the balance of the Participant's Account may commence on (i) a date between a Settlement Date following his or her Retirement and the date the Participant attains age sixty-five or (ii) the beginning of the second calendar year commencing after the Participant's Retirement. Anything in this Plan to the contrary notwithstanding, if a Participant terminates employment with the Corporation prior to his Retirement, the balance of his or her Account shall be distributed in a single lump sum payment. Distribution of a Participant's Account following his or her Retirement or death shall be made in one of the following forms as elected by the Participant: 7 (a) by payment in cash in five (5) annual installments; or (b) by payment in cash in ten (10) annual installments; or (c) by payment in cash in fifteen (15) annual installments; or (d) by payment in a single lump sum; provided, however, that in the event of a Participant's death, if the balance in his or her Account is then less than $35,000, such balance shall be distributed in a single lump sum payment. The Participant's election of the form of distribution shall be made by written notice filed with the Administrator at least six (6) months prior to the Participant's voluntary termination of employment with, or Retirement from, the Corporation. Any such election may be changed by the Participant without the consent of any other person by filing a later signed written election with the Administrator; provided that any election made less than six (6) months prior to the Participant's voluntary termination of employment or Retirement shall not be valid, and in such case payment shall be made in accordance with the Participant's prior election. The amount of each installment shall be equal to the quotient obtained by dividing the Participant's Account balance as of the date of such installment payment by the number of installment payments remaining to be made to or in respect of such Participant at the time of calculation. If a Participant fails to make an election in a timely manner as provided in this Section 6.4, distribution shall be made in cash in ten (10) annual installments. Section 6.5 BENEFICIARY DESIGNATION. As used in the Plan the term "Beneficiary" means: (a) The last person designated as Beneficiary by the Participant in a written notice on a form prescribed by the Administrator; (b) If there is no designated Beneficiary or if the person so designated shall not survive the Participant, such Participant's spouse; or (c) If no such designated Beneficiary and no such spouse is living upon the death of a Participant, or if all such persons die prior to the full distribution of the Participant's Account balance, then the legal representative of the last survivor of the Participant and such persons, or, if the Administrator shall not receive notice of the appointment of any such legal representative within one year after such death, the heirs-at-law of such survivor (in the proportions in which they would inherit his intestate personal property) shall be the Beneficiaries to whom the then remaining balance of the Participant's Account shall be distributed. Any Beneficiary designation may be changed from time to time by like notice similarly delivered. No notice given under this Section shall be effective unless and until the Administrator actually receives such notice. 8 Section 6.6 FACILITY OF PAYMENT. Whenever and as often as any Participant or his Beneficiary entitled to payments hereunder shall be under a legal disability or, in the sole judgment of the Administrator, shall otherwise be unable to apply such payments to his own best interests and advantage, the Administrator in the exercise of its discretion may direct all or any portion of such payments to be made in any one or more of the following ways: (i) directly to him; (ii) to his legal guardian or conservator; or (iii) to his spouse or to any other person, to be expended for his benefit; and the decision of the Administrator, shall in each case be final and binding upon all persons in interest. Section 6.7 HARDSHIP DISTRIBUTIONS. Upon a finding by the Administrator that a Participant has suffered a Financial Hardship, the Administrator may, in its sole discretion, distribute, or direct the Trustee to distribute, to the Participant an amount which does not exceed the amount required to meet the immediate financial needs created by the Financial Hardship and not reasonably available from other sources of the Participant; provided, however, that in no event shall any amount attributable to a Deferral Commitment be distributed less than six months after the date of the applicable Participation Agreement. No distributions pursuant to this Section 6.4 may be made in excess of the value of the Participant's Account at the time of such distribution. Section 6.8 SPECIAL DISTRIBUTIONS. Notwithstanding any other provision of this Article VI, a Participant, whether or not currently receiving a distribution, may elect to receive a lump sum distribution of all or a portion of the remaining balance of his Account if (and only if) the amount in such Account subject to such distribution is reduced by ten percent (10%); provided, however, that no such election may be made by a Participant who has an account in the Executive Benefit Plan during any period commencing 90 days prior to a Change in Control and ending on the date benefits, if any, are paid to participants in the Executive Benefit Plan following a Change in Control. Any distribution made pursuant to such an election shall be made within 30 days of the date such election is submitted to the Administrator. The remaining ten percent (10%) of the portion of the electing Participant's Account subject to such distribution shall be forfeited. Section 6.9 COORDINATION WITH OTHER BENEFITS. Except as provided in Section 6.10, the benefits provided for a Participant and Participant's Beneficiary under the Plan are in addition to any other benefits available to such Participant under any other plan or program for employees of the Corporation. The Plan shall supplement and shall not supersede, modify or amend any other such plan or program except as may otherwise be expressly provided. Section 6.10 OFFSET. In the event a Participant receives or becomes entitled to receive a benefit under the Executive Benefit Plan, as it may be amended from time to time, the benefits to be received under this Plan shall be offset and reduced dollar for dollar (but not below zero) by the benefits paid under the Executive Benefit Plan. In determining the amount that should offset and reduce benefits under this Plan, the Participant's (or Beneficiary's) Account hereunder at the time of distribution commencement shall be reduced by an amount equal to the amount paid or to be paid under the Executive Benefit Plan increased by earnings on such amount, if any, accruing from the time of distribution from the Executive Benefit Plan through the time of the commencement of distribution hereunder at an earnings rate corresponding to 9 one-half of the Moody's Corporate Average Bond Yield adjusted on the first business day of each January, April, July and October. ARTICLE VII ADMINISTRATION, AMENDMENT AND TERMINATION Section 7.1 ADMINISTRATION. The Plan shall be administered by an Administrator consisting of one or more persons who shall be appointed by and serve at the pleasure of the Board. The Administrator shall have such powers as may be necessary to discharge its duties hereunder, including, but not by way of limitation, to construe and interpret the Plan and determine the amount and time of payment of any benefits hereunder. The Administrator may, from time to time, employ agents and delegate to them such administrative duties as it sees fit, and may from time to time consult with legal counsel who may be counsel to the Corporation. The Administrator shall have no power to add to, subtract from or modify any of the terms of the Plan, or to change or add to any benefits provided under the Plan, or to waive or fail to apply any requirements of eligibility for a benefit under the Plan. No member of the Administrator shall act in respect of his own Account. All decisions and determinations by the Administrator shall be final and binding on all parties. All decisions of the Administrator shall be made by the vote of the majority, including actions in writing taken without a meeting. All elections, notices and directions under the Plan by a Participant shall be made on such forms as the Administrator shall prescribe. Section 7.2 PLAN ADMINISTRATOR. The Corporation shall be the "administrator" under the Plan for purposes of ERISA. Section 7.3 AMENDMENT, TERMINATION AND WITHDRAWAL. The Plan may be amended from time to time or may be terminated at any time by the Board. No amendment or termination of the Plan, however, may adversely affect the amount or timing of payment of any person's benefits accrued under the Plan to the date of amendment or termination without such person's written consent. Section 7.4 SUCCESSORS. The Corporation shall require any successor (whether direct or indirect, by purchase, merger, consolidation, reorganization or otherwise) to all or substantially all of the business and/or assets of the Corporation expressly to assume and to agree to perform this Plan in the same manner and to the same extent the Corporation would be required to perform if no such succession had taken place. This Plan shall be binding upon and inure to the benefit of the Corporation and any successor of or to the Corporation, including without limitation any persons acquiring directly or indirectly all or substantially all of the business and/or assets of the Corporation whether by sale, merger, consolidation, reorganization or otherwise (and such successor shall thereafter be deemed the "Corporation" for the purposes of this Plan), and the heirs, beneficiaries, executors and administrators of each Participant. Section 7.5 CLAIMS. The Administrator will provide to any Participant or Beneficiary whose claim for benefits under the Plan has been fully or partially denied a written notice setting forth (i) the specific reasons for such denial, (ii) a designation of any additional material or information required and (iii) an explanation of the Plan's claim review procedure. Such notice shall state that the Participant or Beneficiary is entitled to request a review in writing, by the Administrator, of the decision denying the claim. The claim will be reviewed by 10 the Administrator who may, but need not, grant the claimant a hearing. On review, the claimant may have legal representation, examine pertinent documents and submit issues and comments in writing. The decision on review will be made within 120 days following the request, will be provided in writing to the claimant and will be final and binding on all parties concerned. Section 7.6 EXPENSES. All expenses of the Plan shall be paid by the Corporation from funds other than those deemed investments as provided in Section 5.3, except that brokerage commissions and other transaction fees and expenses relating to the investment of deemed assets and investment fees attributable to commingled investment of such assets shall be paid from or charged to such assets or earnings thereon. ARTICLE VIII MISCELLANEOUS Section 8.1 NO GUARANTEE OF EMPLOYMENT. Nothing contained in the Plan shall be construed as a contract of employment between the Corporation and any Employee, or as a right of any Employee, to be continued in the employment of the Corporation, or as a limitation of the right of the Corporation to discharge any of its Employees, with or without cause. Section 8.2 APPLICABLE LAW. All questions arising in respect of the Plan, including those pertaining to its validity, interpretation and administration, shall be governed, controlled and determined in accordance with the applicable provisions of federal law and, to the extent not preempted by federal law, the laws of the State of Ohio. Section 8.3 INTERESTS NOT TRANSFERABLE. No person shall have any right to commute, encumber, pledge or dispose of any interest herein or right to receive payments hereunder, nor shall such interests or payments be subject to seizure, attachment or garnishment for the payments of any debts, judgments, alimony or separate maintenance obligations or be transferable by operation of law in the event of bankruptcy, insolvency or otherwise, all payments and rights hereunder being expressly declared to be nonassignable and nontransferable. Section 8.4 SEVERABILITY. Each section, subsection and lesser section of this Plan constitutes a separate and distinct undertaking, covenant and/or provision hereof. Whenever possible, each provision of this Plan shall be interpreted in such manner as to be effective and valid under applicable law. In the event that any provision of this Plan shall finally be determined to be unlawful, such provision shall be deemed severed from this Plan, but every other provision of this Plan shall remain in full force and effect, and in substitution for any such provision held unlawful, there shall be substituted a provision of similar import reflecting the original intention of the parties hereto to the extent permissible under law. Section 8.5 WITHHOLDING OF TAXES. The Corporation may withhold or cause to be withheld from any amounts payable under this Plan all federal, state, local and other taxes as shall be legally required. Section 8.6 TOP-HAT PLAN. The Plan is intended to be a plan which is unfunded and maintained primarily for the purpose of providing deferred compensation for a select group of management or highly compensated employees within the meaning of Sections 201, 301 and 401 of ERISA, and therefore to be exempt from the provisions of Parts 2, 3 and 4 of Title I of ERISA. Accordingly, notwithstanding any other provision of the Plan, the Plan will terminate 11 and no further benefits will accrue hereunder in the event it is determined by a court of competent jurisdiction or by an opinion of counsel based upon a change in law that the Plan constitutes an employee pension benefit plan within the meaning of Section 3(2) of ERISA, which is not so exempt. In addition and notwithstanding any other provision of the Plan, in the absolute discretion of the Committee, the amount credited to each Participant's Account under the Plan as of the date of termination, which shall be an Accounting Date for purposes of the Plan, will be paid immediately to such Participant in a single lump sum cash payment. IN WITNESS WHEREOF, Lincoln Electric Holdings, Inc. has caused this amendment and restatement of the Lincoln Electric Holdings, Inc. Deferred Compensation Plan to be executed in its name as of January 1, 2002. LINCOLN ELECTRIC HOLDINGS, INC. By:_____________________________________ Its: Chairman, Chief Executive Officer Date:__________________, 2002 12 EX-10.T 6 l94043aex10-t.txt EX-10(T) - AMENDMENT #1 BENEFIT PLAN Exhibit 10(t) AMENDMENT NO. 1 TO THE LINCOLN ELECTRIC COMPANY EXECUTIVE BENEFIT PLAN The Lincoln Electric Company (the "Company") hereby amends The Lincoln Electric Company Executive Benefit Plan (the "Plan") pursuant to Section 6.1 thereof, as follows: 1. Section 3.1 of the Plan is hereby amended by adding thereto the following: For purposes of the Plan, the term "involuntary Termination of Employment" shall include an event described in Section 3(b) of the Severance Agreement, if any, entered into between a Participant and Lincoln Electric Holdings. Inc., the parent of the Company. 2. Section 3.3 of the Plan is hereby amended to read as follows: 3.3. ACCOUNT BALANCE. The Administrator may, from time to time, provide a Participant with a statement setting forth the balance of his or her Participant's Account as of a given date. IN WITNESS WHEREOF, the Company, by its Compensation Committee, has signed this Amendment No. 1, effective as of the 1st day of January, 2002. THE LINCOLN ELECTRIC COMPANY Compensation Committee _____________________________________ _____________________________________ _____________________________________ _____________________________________ _____________________________________ EX-10.U 7 l94043aex10-u.txt EX-10(U) - AMENDED SUPPLEMENTAL RETIREMENT PLAN Exhibit 10(u) LINCOLN ELECTRIC HOLDINGS, INC. SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN (as amended and restated as of March 1, 2002) LINCOLN ELECTRIC HOLDINGS, INC. SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN (as amended and restated as of March 1, 2002) TABLE OF CONTENTS

PAGE ARTICLE I GENERAL.............................................................1 Section 1.1 Effective Date...............................................1 Section 1.2 Intent.......................................................1 ARTICLE II DEFINITIONS AND USAGE...............................................1 Section 2.1 Definitions..................................................1 Section 2.2 Usage........................................................5 ARTICLE III ELIGIBILITY AND PARTICIPATION.......................................5 Section 3.1 Eligibility..................................................5 Section 3.2 Participation................................................5 ARTICLE IV RETIREMENT BENEFIT..................................................5 Section 4.1 Retirement Benefit...........................................5 Section 4.2 Early Retirement Benefit.....................................6 Section 4.3 Vesting......................................................6 Section 4.4 Other Retirement Benefits....................................7 Section 4.5 Maximum Retirement Benefit...................................7 ARTICLE V PAYMENT OF RETIREMENT BENEFIT.......................................7 Section 5.1 Payment of Retirement Benefits...............................7 Section 5.2 Form of Retirement Benefits..................................7 Section 5.3 Payment Procedure............................................8 Section 5.4 Special Distributions........................................8 ARTICLE VI PAYMENT OF BENEFIT ON OR AFTER DEATH OR DISABILITY..................8 Section 6.1 Commencement of Benefit Payments Before Vesting..............8 Section 6.2 Commencement of Benefit Payments After Vesting...............8 Section 6.3 Form of Payment..............................................8 Section 6.4 Committee Action.............................................8 ARTICLE VII ADMINISTRATION......................................................9

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TABLE OF CONTENTS (continued) PAGE Section 7.1 General...................................................9 Section 7.2 Administrative Rules......................................9 Section 7.3 Duties....................................................9 Section 7.4 Fees......................................................9 Section 7.5 Limitation of Actions.....................................9 ARTICLE VIII CLAIMS PROCEDURE................................................10 Section 8.1 General.................................................10 Section 8.2 Denials.................................................10 Section 8.3 Appeals Procedure.......................................10 Section 8.4 Review..................................................10 ARTICLE IX MISCELLANEOUS PROVISIONS........................................11 Section 9.1 Amendment and Termination...............................11 Section 9.2 No Assignment...........................................11 Section 9.3 Successors and Assigns..................................11 Section 9.4 Governing Law...........................................11 Section 9.5 No Guarantee of Employment..............................11 Section 9.6 Severability............................................11 Section 9.7 Notification of Addresses...............................12 Section 9.8 Bonding.................................................12 Section 9.9 Withdrawal of Employer..................................12 Section 9.10 Coordination with Other Benefits........................12 Section 9.11 Offset..................................................12 ARTICLE X FUNDING.........................................................12

-ii- LINCOLN ELECTRIC HOLDINGS, INC. SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN (as amended and restated as of March 1, 2002) PREAMBLE WHEREAS, Lincoln Electric Holdings, Inc. (the "Company") or an Employer has established one or more qualified retirement plans that place limitations on the amount of retirement benefits available to certain key management or highly compensated employees; and WHEREAS, the Company recognizes the unique qualifications of such employees and the valuable services they provide and desires to establish an unfunded plan to provide retirement benefits to eligible key employees that supplement what is available under such qualified plans and Social Security; and WHEREAS, the Company has determined that the implementation of such a plan will best serve its interest in retaining key employees and ensuring benefit equity among all employees; NOW, THEREFORE, the Company hereby assumes and amends and restates the Lincoln Electric Holdings, Inc. Supplemental Executive Retirement Plan as hereinafter provided: ARTICLE I GENERAL SECTION 1.1 EFFECTIVE DATE. This Plan was originally established by The Lincoln Electric Company, a wholly-owned subsidiary of the Company, effective as of January 1, 1994. This amended and restated Plan shall be effective as of March 1, 2002. The rights, if any, of any person whose status as an employee of an Employer has terminated shall be determined pursuant to the Plan as in effect on the date such employee terminated, unless a subsequently adopted provision of the Plan is made specifically applicable to such person. SECTION 1.2 INTENT. The Plan is intended to be an unfunded plan primarily for the purpose of providing deferred compensation to a select group of management or highly compensated employees, as such group is described under Sections 201(2), 301(a)(3), and 401(a)(1) of ERISA. ARTICLE II DEFINITIONS AND USAGE SECTION 2.1 DEFINITIONS. Wherever used in the Plan, the following words and phrases, when capitalized, shall have the meaning set forth below unless the context plainly requires a different meaning: "ACCOUNT" means the account established on behalf of the Participant as described in Section 5.3. "ACTUARIAL EQUIVALENT" or "ACTUARIALLY EQUIVALENT" means a benefit of actuarial equivalence determined using the Applicable Mortality Table, the Interest Rate and other factors then in effect for the Company's qualified defined benefit pension plan applicable to Participants. "ADMINISTRATOR" means the committee established by the Company pursuant to Section 7.1 to administer the Plan. "APPLICABLE MORTALITY TABLE" means the 1994 Group Annuity Reserving Table (94 GAR) based on a fixed blend of 50% of the unloaded male mortality rates and 50% of the unloaded female mortality rates, projected to 2002 or such subsequent applicable mortality table used from time to time under Section 417(e) of the Code. "BOARD" means the Board of Directors of the Company. "CODE" means the Internal Revenue Code of 1986, as amended from time to time. Any reference to a particular Code section shall include any provision that modifies, replaces or supersedes it. "COMMITTEE" means the Compensation Committee of the Board. "COMPANY" means Lincoln Electric Holdings, Inc., a corporation organized under the laws of the state of Ohio, and any successor thereto. "COMPENSATION" means the amount of a Participant's regular base salary paid by the Controlled Group during a Plan Year and annual bonus accrued by the Controlled Group and approved by the Board or a committee thereof with respect to a Plan Year, excluding, however, any compensation related to equity securities of the Company (including compensation resulting from Section 83(b) elections under the Code) and excluding any special payments or multi-year incentive programs, but including any salary reduction contributions that are excluded from his gross income under Sections 125, 129 or 402(a)(8) of the Code, and including any compensation which the Participant defers under any nonqualified deferred compensation plan of the Controlled Group. "CONTROLLED GROUP" OR "CONTROLLED GROUP MEMBER" means the Company and any and all other corporations, trades or businesses the employees of which are required by Section 414 of the Code to be treated as a single employer. An entity will only be considered as a Controlled Group Member during the period that it is or was a member of the Company's Controlled Group. "DISABILITY" or "DISABLED" means a physical or mental condition of a Participant resulting from a bodily injury, disease or mental disorder that renders him incapable of continuing his position of employment with the Employer. Such Disability shall be determined by the Committee based upon appropriate medical advice and examination, and taking into account the ability of the Participant to continue in his same, or similar, position with his Employer. "EARLY RETIREMENT DATE" means the date the Participant has both attained age fifty-five (55) and completed twenty-five (25) Years of Service. "EMPLOYER" means the Company, The Lincoln Electric Company and any other Controlled Group Member that adopts the Plan with the Committee's consent. Any Controlled Group Member that adopts the Plan and thereafter ceases to exist, ceases to be a member of the 2 Controlled Group or withdraws from the Plan shall no longer be considered an Employer unless otherwise determined by the Committee. "ERISA" means the Employee Retirement Income Security Act of 1974, as amended from time to time. Any reference to a particular ERISA section shall include any provision that modifies, replaces, or supersedes it. "FINAL AVERAGE PAY" means, with respect to any Participant, the average of his annual Compensation over the three (3) full Years of Service within his final consecutive full Years of Service (not to exceed seven (7) Years) that produce the highest such average; provided, however, that if a Participant has fewer than three (3) full Years of Service, "Final Average Compensation" shall mean the average of his annual Compensation during all his Years of Service. "FOREIGN PLAN BENEFIT" means the annual benefit, expressed in the form of a single life annuity that can be derived from the sum of all non-U.S. employer-provided benefits and non-U.S. state, national, government instrumentality and government-provided benefits of every kind and nature under all plans, programs and arrangements that are maintained or contributed to, directly or indirectly, by contribution, tax or otherwise, by any Controlled Group Member. The amount of the single life annuity determined for any such plan, program or arrangement which does not provide for annuity payments shall be determined using the Actuarial Equivalents provided for herein. For purposes of this definition, non-U.S. employer and non-U.S. state, national, government instrumentality or government-provided "benefits" means all retirement benefits funded, directly or indirectly, by contribution, tax or otherwise, in part or exclusively, by employer contributions, payments, taxes or otherwise (and earnings thereon), and shall include any previous distribution of such benefits made prior to a Participant's attainment of age 65 or the actual retirement date, if earlier, including, but not limited to, in-service withdrawals, retirement and disability benefits, or distributions pursuant to any domestic relations order or similar order of any non-U.S. jurisdiction. "INTEREST RATE" means the Moody's AA Corporate Bond rate for a calendar year. The rate for a calendar year shall be the Moody's AA Corporate Bond rate on the date used by the Company's Chief Financial Officer for setting the Company's corporate discount rate for financial reporting purposes for such calendar year. "NORMAL RETIREMENT DATE" means the date a Participant attains age sixty (60). "PARTICIPANT" means an eligible employee of an Employer who is participating in the Plan in accordance with Section 3.2. "PARTICIPATION FACTOR" means the ratio determined based on active participation under the Plan. Each employee, upon becoming a Participant, shall be credited with a Participation Factor of two-tenths (.20) or such greater factor for such Participant determined by the Committee, in its sole discretion. Thereafter, a Participant will be credited with an additional one-tenth (.10) Participation Factor for each Year of Service earned while an active Participant; fractional credits shall apply for partial Years of Service. Notwithstanding the foregoing, no Participation Factor shall exceed one (1.00), and Years of Service earned after the last day of the Plan Year in 3 which a Participant attains age sixty-seven (67) shall be disregarded for purposes of determining his Participation Factor. The Committee may, in its sole discretion, increase or authorize an increase in a Participant's Participation Factor for any reason deemed appropriate by the Committee (including, but not limited to, in consideration of the Participant's execution of a release of all claims against the Company and its affiliates in a form satisfactory to the Committee). "PLAN" means The Lincoln Electric Holdings, Inc. Supplemental Executive Retirement Plan, as it may be amended from time to time. "PLAN YEAR" means the calendar year. "QUALIFIED PLAN BENEFIT" means the annual benefit, expressed in the form of a single life annuity that can be derived from the sum of all employer-provided benefits under all plans intended to be qualified under Section 401(a) of the Code that are maintained by the Controlled Group. The amount of the single life annuity determined for any such plan which does not provide for annuity payments shall be determined using the Actuarial Equivalents provided for herein. For purposes of this definition, "employer-provided benefits" means all qualified retirement benefits funded exclusively by employer contributions (and earnings thereon), and shall include any previous distribution of such benefits made prior to a Participant's attainment of age 65 or the actual retirement date, if earlier, including, but not limited to, in-service withdrawals, retirement and disability benefits, or distributions pursuant to any domestic relations order. However, Participants' salary-reduction contributions described in Section 402(a)(8) of the Code (and any earnings thereon) shall not be treated as benefits funded exclusively by Employer contributions. Notwithstanding the foregoing, if the Committee grants additional Years of Service to a Participant for purposes of determining his Retirement Benefit, "Qualified Plan Benefit" shall also include the annual benefit, determined as above, to which such Participant is entitled from all previous employers. "RETIREMENT BENEFIT" or "BENEFIT" means the vested benefit determined under Article IV. "SOCIAL SECURITY BENEFIT" means the maximum annual benefit payable under the Social Security Act, relating to Old-Age and Disability benefits, determined as of a Participant's Normal Retirement Date, or upon his actual retirement date, if later. "SPOUSE" means the person to whom a Participant is legally married at the specified time. "TERMINATION FOR CAUSE" means the termination of a Participant's employment due to any act by the Participant which the Committee, in its complete discretion, determines to be inimical to the best interests of the Controlled Group, including, but not limited to: (i) serious, willful misconduct in respect of his duties for his Employer, (ii) conviction of a felony or perpetration of a common law fraud, (iii) willful failure to comply with applicable laws with respect to the execution of his Employer's business operations, (iv) theft, fraud, embezzlement, dishonesty or other conduct that has resulted or is likely to result in material economic damage to the Controlled Group, or (v) failure to comply with requirements of his Employer's drug and alcohol abuse policies, if any. 4 "YEARS OF SERVICE" means each full and partial calendar-year (in increments of one-twelfth (1/12th) for each full month) of active employment with the Controlled Group during which substantial services were rendered as an employee, commencing on the date the Participant was first employed by the Controlled Group and ending on the date he ceases to perform services for the Controlled Group. At the discretion of the Committee, a Participant may be granted additional Years of Service for purposes of determining his Retirement Benefit. SECTION 2.2 USAGE. Except where otherwise indicated by the context, any masculine terminology used herein shall also include the feminine and vice versa, and the definition of any term herein in the singular shall also include the plural and vice versa. ARTICLE III ELIGIBILITY AND PARTICIPATION SECTION 3.1 ELIGIBILITY. An employee of an Employer shall be eligible to participate in the Plan only to the extent, and for the period, that he is a member of a select group of management or highly compensated employees, as such group is described under Sections 201(2), 301(a)(3), and 401(a)(1) of ERISA. SECTION 3.2 PARTICIPATION. An employee who is eligible to participate in the Plan pursuant to Section 3.1 shall become a Participant at such time and for such period he is designated as such by the Committee. ARTICLE IV RETIREMENT BENEFIT SECTION 4.1 RETIREMENT BENEFIT. Except for Participants described in Section 4.4, the Retirement Benefit for a Participant who retires from the employ of his Employer and all Controlled Group Members on or after his Normal Retirement Date shall be an annual benefit, expressed as a single life annuity payable over the Participant's life, in an amount equal to (a) minus (b), multiplied by the Participant's Participation Factor, where: (a) = one and four hundred forty-five thousandths percent (1.445%) of such Participant's Final Average Pay multiplied by his Years of Service, but not greater than sixty-five percent (65%) of the Participant's Final Average Pay; and (b) = (i) the Social Security Benefit; plus (ii) the Participant's Foreign Plan Benefit determined as of the valuation date(s) under the applicable plans and programs that immediately precede the date the Participant retires and becomes entitled to the distribution of his Benefit under Article V or Article VI; plus (iii) the Participant's Qualified Plan Benefit, determined as of the valuation date(s) under the applicable plans that immediately precede the date the Participant retires and becomes entitled to the distribution of his Benefit under Article V or Article VI. 5 For purposes of making the calculation in Subsection (a) of this Section, Years of Service earned after the last day of the Plan Year in which the Participant attains age sixty-five (65) shall not be counted. SECTION 4.2 EARLY RETIREMENT BENEFIT. Except for Participants described in Section 4.4, the Retirement Benefit for a Participant who retires from the employ of his Employer and all Controlled Group Members on or after his Early Retirement Date (but prior to his Normal Retirement Date) shall be the annual benefit computed under Section 4.1, but based on a projected Social Security Benefit equal to the maximum annual benefit payable under the provisions of the Social Security Act as in effect on the date of such retirement indexed forward to the Participant's Normal Retirement Date, and the annual Benefit so computed shall be reduced based on the Participant's attained age when his Benefit hereunder commences, according to the following table: Participant's Attained Age Percent Reduction at Benefit Commencement in Benefit ----------------------- ---------- 55 36% 56 30% 57 24% 58 17% 59 9% 60 or later 0% SECTION 4.3 Vesting. (a) Except as provided below or as otherwise provided in Section 4.4, a Participant who is in the active employ of an Employer shall have a vested right to his Benefit only upon the occurrence of any of the following: (i) with approval by the Committee, the attainment of his Early Retirement Date; (ii) the attainment of his Normal Retirement Date; (iii) his death prior to actual retirement; or (iv) his Disability prior to actual retirement. (b) Notwithstanding the preceding, a Participant's Benefits hereunder shall be forfeited, and no Benefits shall be payable hereunder with respect to him or his beneficiaries, in the event of: (i) his Termination for Cause prior to receiving all or a portion of his Benefit; or 6 (ii) his termination of employment with all Controlled Group Members prior to satisfying the requirements for vesting set forth in Subsection (a) of this Section. SECTION 4.4 OTHER RETIREMENT BENEFITS. In lieu of or in addition to the Benefit provided under Section 4.1 or 4.2, the Committee may, in its discretion, determine to provide, a Participant with an alternative or an additional supplemental pension benefit under this Plan, provided that the Company and such Participant negotiate or have previously negotiated a supplemental pension arrangement that provides for amounts to be paid other than or in addition to the Benefits otherwise provided pursuant to the other terms hereof. The amount of such Participant's supplemental pension, the manner of payment thereof and any other terms or conditions applicable thereto shall be as set forth herein and in the agreement between the Company and the Participant with respect to such arrangement. Articles VII, VIII and IX of the Plan shall apply to the supplemental pension payable pursuant to any such arrangement to the extent such Articles do not conflict with the provisions of such agreement. SECTION 4.5 MAXIMUM RETIREMENT BENEFIT. Anything in this Plan to the contrary notwithstanding, the maximum annual Retirement Benefit determined for a Participant under Section 4.1 shall not exceed $300,000, expressed as a single life annuity, unless otherwise determined by the Committee. ARTICLE V PAYMENT OF RETIREMENT BENEFIT SECTION 5.1 PAYMENT OF RETIREMENT BENEFITS. A Participant who retires under this Plan from the employ of his Employer and all Controlled Group Members on or after his Normal Retirement Date or Early Retirement Date shall then be entitled to, and shall receive, a Retirement Benefit, determined in accordance with Section 4.1 or 4.2, as applicable. Such Benefit shall commence not later than ninety (90) days following the date the Participant's retirement from his Employer becomes effective; provided, however, that if a Participant elects a single lump sum as provided in Section 5.2, such Participant may elect that such payment be made at the beginning of the second calendar year commencing after the Participant's retirement. SECTION 5.2 FORM OF RETIREMENT BENEFITS. Except as otherwise provided herein, to the extent a Benefit is payable to a Participant under Section 5.1, it shall be paid in the form of a single life annuity, or any Actuarially Equivalent survivor annuity. Notwithstanding the foregoing, a Participant may elect to have his Benefit paid in the form of a single lump sum that is Actuarially Equivalent to such single life annuity. Unless otherwise determined by the Committee, the Participant's election of the form of distribution shall be made by written notice filed with the Administrator at six (6) months prior to the Participant's voluntary termination of employment with, or retirement from, the Company. Any such election may be changed by the Participant without the consent of any other person by filing a later signed written election with the Administrator; provided that any election made less than six (6) months prior to the Participant's voluntary termination of employment or retirement shall not be valid, and in such case payment shall be made in accordance with the Participant's prior election. If a Participant fails to make an election in a timely manner as provided in this Section 5.2, his Benefit shall be paid in the form 7 of a single life annuity if he is an unmarried Participant or a 100% pre-retirement spouse annuity if he is a married Participant at the time such payment is made, as determined in this Section 5.2. SECTION 5.3 PAYMENT PROCEDURE. The Employer shall establish and maintain an Account for each Participant and beneficiary who is receiving a Benefit under the Plan. Immediately prior to any distribution hereunder to any Participant or beneficiary, the Employer shall credit the amount of such distribution to such Account and then immediately distribute or commence to distribute the amount so credited to the Participant, or as applicable, to his beneficiary. Neither the Participant nor his beneficiary(s) shall have any interest or right in any such Account at any time. All amounts credited to the Accounts established under the Plan shall be credited solely for the purpose of effecting distributions hereunder and shall remain assets of the Employer subject to the claims of such Employer's general creditors. SECTION 5.4 SPECIAL DISTRIBUTIONS. Notwithstanding Section 5.2, to the extent a Benefit is being paid to a Participant under Section 5.1 (other than in a lump sum), a Participant may elect to receive all or a portion of the then balance of such Benefit in the form of a single lump sum distribution that is Actuarially Equivalent to the then value of the benefit form pursuant to which such Benefit is being paid if (and only if) the Actuarially Equivalent value (as so computed) of the balance of such Benefit is reduced by ten percent (10%). Any distribution made pursuant to such an election shall be made within 30 days of the date such election is submitted to the Administrator. The remaining ten percent (10%) of the portion of the electing Participant's Benefit subject to such distribution shall be forfeited. ARTICLE VI PAYMENT OF BENEFIT ON OR AFTER DEATH OR DISABILITY SECTION 6.1 COMMENCEMENT OF BENEFIT PAYMENTS BEFORE VESTING. If a Participant dies or becomes Disabled while employed by his Employer but prior to becoming entitled to a Retirement Benefit under Section 5.1, the Committee may provide that the Participant or his surviving Spouse shall receive a Benefit computed under Section 4.2, as if the Participant had retired immediately prior to his death or Disability and, if such death or Disability occurred prior to his attainment of age fifty-five (55), as if he had attained such age. SECTION 6.2 COMMENCEMENT OF BENEFIT PAYMENTS AFTER VESTING. If a Participant dies or becomes Disabled while employed by his Employer after becoming entitled to a Retirement Benefit under Section 5.1 but prior to commencing the receipt of his Benefit, he or his surviving Spouse shall receive a Benefit computed under Section 4.2 as if the Participant had retired immediately prior to his death or Disability at his then attained age. SECTION 6.3 FORM OF PAYMENT. Any Benefit payable under this Article VI to a Participant who is Disabled shall be paid in any form permitted under and determined in accordance with Section 5.2. Any Benefit payable under this Article to the Spouse of a Participant who has died prior to commencing the receipt of his Benefit shall be paid in the form of a 100% pre-retirement spouse annuity based upon the Participant's Benefit as though he had retired the day before his death and elected a 100% joint and survivor annuity form of benefit with his Spouse as the survivor beneficiary and determined in accordance with Section 5.2. 8 SECTION 6.4 COMMITTEE ACTION. The Committee may, in its sole discretion, provide that the amount of the Retirement Benefit payable on death or Disability shall be enhanced (including, but limited to, an enhancement that takes into account projected additional Years of Service or increases in Compensation that would have occurred absent the Participant's death or Disability). ARTICLE VII ADMINISTRATION SECTION 7.1 GENERAL. The Company shall appoint the Administrator, consisting of two or more individuals who have accepted appointment thereto. The members of the Administrator shall serve at the discretion of the Company and may resign by written notice to the Company. Vacancies in the Administrator shall be filled by the Company. Except as otherwise specifically provided in the Plan, the Administrator shall be responsible for administration of the Plan. The Administrator shall be the "named fiduciary" within the meaning of Section 402(c)(2) of ERISA. SECTION 7.2 ADMINISTRATIVE RULES. The Administrator may adopt such rules of procedure as it deems desirable for the conduct of its affairs, except to the extent that such rules conflict with the provisions of the Plan. SECTION 7.3 DUTIES. The Administrator shall have the following rights, powers and duties: (a) The decision of the Administrator in matters within its jurisdiction shall be final, binding and conclusive upon the Employers and upon any other person affected by such decision, subject to the claims procedure hereinafter set forth. (b) The Administrator shall have the sole and absolute duty and authority to interpret and construe the provisions of the Plan, to determine eligibility for Benefits and the appropriate amount of any Benefits, to decide any question (including any factual question) which may arise regarding the rights of employees, Participants and beneficiaries and the amounts of their respective interests, to construe any ambiguous provision of the Plan, to correct any defect, supply any omission or reconcile any inconsistency, to adopt such rules and to exercise such powers as the Administrator may deem necessary for the administration of the Plan, and to exercise any other rights, powers or privileges granted to the Administrator by the terms of the Plan. (c) The Administrator may appoint such agents, counsel, accountants, consultants and other persons as it deems necessary to assist in the administration of the Plan, including, without limitation, employees of an Employer. (d) The Administrator shall periodically report to the Board with respect to the status of the Plan. SECTION 7.4 FEES. No fee or compensation shall be paid to any person for services as the Administrator. 9 SECTION 7.5 LIMITATION OF ACTIONS. No individual acting on behalf of the Administrator pursuant to this Article shall have any right to vote upon or decide any matters relating solely to his own rights under the Plan. ARTICLE VIII CLAIMS PROCEDURE SECTION 8.1 GENERAL. Any claim for Benefits under the Plan shall be filed by the Participant or beneficiary ("claimant") on the form prescribed for such purpose with the Administrator. A decision on a claim shall be made within ninety (90) days after receipt of the claim by the Administrator, unless special circumstances require an extension of time for processing, in which case a decision shall be rendered within a reasonable period of time, but not later than one hundred and eighty (180) days after receipt of the claim. SECTION 8.2 DENIALS. If a claim under the Plan is wholly or partially denied, written notice of the decision shall be furnished to the claimant by the Administrator. Such notice shall be written in a manner calculated to be understood by the claimant and shall set forth: (a) the specific reason or reasons for the denial; (b) specific reference to the pertinent provision of the Plan upon which the denial is based; (c) a description of any additional material or information necessary for the claimant to perfect the claim; and (d) an explanation of the claim review procedure under Sections 8.3 and 8.4. SECTION 8.3 APPEALS PROCEDURE. In order that a claimant may appeal a denial of a claim, the claimant or the claimant's duly authorized representative may: (a) request a review by written application to the Administrator, or its designate, no later than sixty (60) days after receipt by the claimant of written notification of denial of a claim; (b) review pertinent documents; and (c) submit issues and comments in writing. SECTION 8.4 REVIEW. A decision on review of a denied claim shall be made not later than sixty (60) days after receipt of a request for review, unless special circumstances require an extension of time for processing, in which case a decision shall be rendered within a reasonable period of time, but not later than one hundred and twenty (120) days after receipt of a request for review. The decision on review shall be in writing, shall be written in a manner calculated to be understood by the claimant, shall include the specific reason(s) for the decision and the specific reference(s) to the pertinent provisions of the Plan on which the decision is based and shall, to the extent permitted by law, be final and binding on all interested persons. 10 ARTICLE IX MISCELLANEOUS PROVISIONS SECTION 9.1 AMENDMENT AND TERMINATION. The Company reserves the right to amend or terminate the Plan in any manner that it deems advisable and at any time, by a resolution of the Board. Notwithstanding the preceding, no amendment or termination of the Plan shall reduce the accrued Benefit of any Participant determined as of the day immediately preceding the effective date of such amendment or termination. SECTION 9.2 NO ASSIGNMENT. A Participant shall not have the power, without the consent of the Administrator, to pledge, transfer, assign, anticipate, mortgage or otherwise encumber or dispose of in advance any interest in amounts payable hereunder or any of the payments provided for herein, nor shall any interest in amounts payable hereunder or in any payments be subject to seizure for payments of any debts, judgments, alimony or separate maintenance, or be reached or transferred by operation of law in the event of bankruptcy, insolvency or otherwise. If a Participant (or beneficiary) attempts to pledge, transfer, assign, anticipate, mortgage or otherwise encumber or dispose of in advance any interest in a Participant's (or beneficiary's) Benefit, or if by reason of his bankruptcy or other event that would permit any other individual to obtain his right to his Benefit, he would not be able to enjoy his Benefit, the Administrator may, in its sole discretion, terminate the Participant's (or beneficiary's) interest in any Benefit to the extent the Administrator considers it necessary or advisable to prevent or limit the effects of such occurrence. Such termination shall be effected by filing a declaration with the Company and delivering a copy of such declaration to the Participant (or beneficiary). Any Benefit affected by such termination of interests shall be retained by the Company and, in the Administrator's sole discretion, may be paid or expended for the benefit of the affected Participant (or beneficiary), his spouse, his children or any other person dependent upon him, in such manner as the Administrator determines is proper. SECTION 9.3 SUCCESSORS AND ASSIGNS. The provisions of the Plan are binding upon and inure to the benefit of each Employer, its successors and assigns, and the Participant, his beneficiaries, heirs, legal representatives and assigns. SECTION 9.4 GOVERNING LAW. The Plan shall be subject to and construed in accordance with the laws of the State of Ohio, except to the extent pre-empted by applicable Federal law. SECTION 9.5 NO GUARANTEE OF EMPLOYMENT. Nothing contained in the Plan shall be construed as a contract of employment or deemed to give any Participant the right to be retained in the employ of any Controlled Group Member or any equity or other interest in the assets, business or affairs of a Controlled Group Member. No Participant hereunder shall have a security interest in assets of an Employer used to make contributions or pay benefits. SECTION 9.6 SEVERABILITY. If any provision of the Plan shall be held illegal or invalid for any reason, such illegality or invalidity shall not affect the remaining provisions of the Plan, but the Plan shall be construed and enforced as if such illegal or invalid provision had never been included herein. 11 SECTION 9.7 NOTIFICATION OF ADDRESSES. Each Participant and each beneficiary shall file with the Administrator, from time to time, in writing, the post office address of the Participant, the post office address of each beneficiary, and each change of post office address. Any communication, statement or notice addressed to the last post office address filed with the Administrator (or if no address was filed, then to the last post office address of the Participant or beneficiary as shown on the Employer's records) shall be binding on the Participant and each beneficiary for all purposes of the Plan and neither the Administrator nor any Employer shall be obligated to search for or ascertain the whereabouts of any Participant or beneficiary. SECTION 9.8 BONDING. The Administrator and all agents and advisors employed by it shall not be required to be bonded. SECTION 9.9 WITHDRAWAL OF EMPLOYER. An Employer (other than the Company) may withdraw from participation in the Plan and such withdrawal shall constitute a termination of the Plan as to that Employer; provided, however, that the Employer shall continue to be treated as an Employer under the Plan with respect to those Participants (and beneficiaries) to whom the Employer owes a continuing obligation under the Plan. An Employer may withdraw by executing a written instrument of withdrawal, approved by its board of directors, and such withdrawal shall be effective on the date designated in the instrument or, if no date is specified, on the date of execution of the instrument. SECTION 9.10 COORDINATION WITH OTHER BENEFITS. Except as provided in Section 9.11, the benefits provided for a Participant and Participant's Spouse under the Plan are in addition to any other benefits available to such Participant under any other plan or program for employees of the Participant's Employer. The Plan shall supplement and shall not supersede, modify or amend any other plan or program except as may otherwise be expressly provided. SECTION 9.11 OFFSET. In the event a Participant receives or becomes entitled to receive a benefit under The Lincoln Electric Company Executive Benefit Plan, as it may be amended from time to time ("EBP"), the Benefits to be received under this Plan shall be offset and reduced dollar for dollar (but not below zero) by the benefits paid under the EBP and not otherwise the subject of an offset pursuant to Section 6.10 of The Lincoln Electric Holdings, Inc. Deferred Compensation Plan ("DCP"). In determining the amount that should offset and reduce Benefits under this Plan, the Participant's (or Spouse's) Benefit hereunder at the time of distribution commencement shall be reduced by an amount Actuarially Equivalent to the amount paid or to be paid under the EBP and not otherwise the subject of an offset pursuant to Section 6.10 of the DCP, increased by interest on such amount, if any, accruing from the time of distribution from the EBP through the time of the commencement of distribution hereunder at an interest rate of four percent (4%). ARTICLE X FUNDING The entire cost of this Plan shall be paid from the general assets of the Employer. No liability for the payment of benefits under the Plan shall be imposed upon any officer, trustee, employee, or agent of an Employer. ************ 12 IN WITNESS WHEREOF, Lincoln Electric Holdings, Inc. has caused this amendment and restatement of the Lincoln Electric Holdings, Inc. 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EX-10.Q

                                                                   Exhibit 10(q)


================================================================================











                         LINCOLN ELECTRIC HOLDINGS, INC.
                          THE LINCOLN ELECTRIC COMPANY


          $40,000,000 5.58% Senior Notes, Series A, due March 12, 2007

          $30,000,000 5.89% Senior Notes, Series B, due March 12, 2009

                                       and

          $80,000,000 6.36% Senior Notes, Series C, due March 12, 2012





                                ----------------


                             NOTE PURCHASE AGREEMENT

                                ----------------




                           Dated as of March 12, 2002






================================================================================












                                TABLE OF CONTENTS

                                                                                  
SECTION                                            HEADING                                  PAGE

SECTION 1.                 AUTHORIZATION OF NOTES..............................................1


SECTION 2.                 SALE AND PURCHASE OF NOTES..........................................2


SECTION 3.                 CLOSING.............................................................2


SECTION 4.                 CONDITIONS TO CLOSING...............................................2

       Section 4.1.        Representations and Warranties......................................2
       Section 4.2.        Performance; No Default.............................................3
       Section 4.3.        Compliance Certificates.............................................3
       Section 4.4.        Opinions of Counsel.................................................3
       Section 4.5.        Purchase Permitted by Applicable Law, etc...........................3
       Section 4.6.        Sale of Other Notes.................................................3
       Section 4.7.        Payment of Special Counsel Fees.....................................4
       Section 4.8.        Private Placement Number............................................4
       Section 4.9.        Changes in Corporate Structure......................................4
       Section 4.10.       Proceedings and Documents...........................................4
       Section 4.11.       Funding Instructions................................................4

SECTION 5.                 REPRESENTATIONS AND WARRANTIES OF THE OBLIGORS......................4

       Section 5.1.        Organization; Power and Authority...................................4
       Section 5.2.        Authorization, etc..................................................5
       Section 5.3.        Disclosure..........................................................5
       Section 5.4.        Organization and Ownership of Shares of Subsidiaries................5
       Section 5.5.        Financial Statements................................................6
       Section 5.6.        Compliance with Laws, Other Instruments, etc........................6
       Section 5.7.        Governmental Authorizations, etc....................................6
       Section 5.8.        Litigation; Observance of Statutes and Orders.......................6
       Section 5.9.        Taxes...............................................................7
       Section 5.10.       Title to Property; Leases...........................................7
       Section 5.11.       Licenses, Permits, etc..............................................7
       Section 5.12.       Compliance with ERISA...............................................7
       Section 5.13.       Private Offering by the Obligors....................................8
       Section 5.14.       Use of Proceeds; Margin Regulations.................................9
       Section 5.15.       Existing Indebtedness...............................................9
       Section 5.16.       Foreign Assets Control Regulations, etc.............................9
       Section 5.17.       Status under Certain Statutes.......................................9
       Section 5.18.       Existing Investments...............................................10

SECTION 6.                 REPRESENTATIONS OF THE PURCHASER...................................10




                                      -i-



                                                                                   
       Section 6.1.        Purchase for Investment............................................10
       Section 6.2.        Source of Funds....................................................10

SECTION 7.                 INFORMATION AS TO OBLIGORS.........................................11

       Section 7.1.        Financial and Business Information.................................11
       Section 7.2.        Officer's Certificate..............................................15
       Section 7.3.        Inspection.........................................................15

SECTION 8.                 PREPAYMENT OF THE NOTES............................................16

       Section 8.1.        Required Prepayments...............................................16
       Section 8.2.        Optional Prepayments with Make-Whole Amount........................16
       Section 8.3.        Prepayment of Notes upon Change of Control.........................16
       Section 8.4.        Allocation of Partial Prepayments..................................18
       Section 8.5.        Maturity; Surrender, etc...........................................18
       Section 8.6.        Purchase of Notes..................................................18
       Section 8.7.        Make-Whole Amount..................................................18

SECTION 9.                 AFFIRMATIVE COVENANTS..............................................20

       Section 9.1.        Compliance with Law................................................20
       Section 9.2.        Insurance..........................................................20
       Section 9.3.        Maintenance of Properties..........................................20
       Section 9.4.        Payment of Taxes...................................................21
       Section 9.5.        Corporate Existence, etc...........................................21
       Section 9.6.        Notes to Rank Pari Passu...........................................21
       Section 9.7.        Ownership of the Company...........................................21
       Section 9.8.        Changes in Status of Subsidiaries..................................21

SECTION 10.                NEGATIVE COVENANTS.................................................22

       Section 10.1.       Transactions with Affiliates.......................................22
       Section 10.2.       Fixed Charges Coverage Ratio.......................................22
       Section 10.3.       Leverage Ratio.....................................................22
       Section 10.4.       Priority Debt......................................................23
       Section 10.5.       Investments........................................................23
       Section 10.6.       Mergers, Consolidations and Sales of Assets........................24
       Section 10.7.       Limitation on Liens................................................28
       Section 10.8.       Sale-and-Leaseback Transactions....................................30

SECTION 11.                EVENTS OF DEFAULT..................................................30


SECTION 12.                REMEDIES ON DEFAULT, ETC...........................................32

       Section 12.1.       Acceleration.......................................................32
       Section 12.2.       Other Remedies.....................................................33
       Section 12.3.       Rescission.........................................................33





                                      -ii-


                                                                                    
       Section 12.4.       No Waivers or Election of Remedies, Expenses, etc..................34

SECTION 13.                REGISTRATION; EXCHANGE; SUBSTITUTION OF NOTES......................34

       Section 13.1.       Registration of Notes..............................................34
       Section 13.2.       No Transfers of Notes to Competitors; Transfer and
                                Exchange of Notes.............................................34
       Section 13.3.       Replacement of Notes...............................................35

SECTION 14.                PAYMENTS ON NOTES..................................................35

       Section 14.1.       Place of Payment...................................................35
       Section 14.2.       Home Office Payment................................................35

SECTION 15.                EXPENSES, ETC......................................................36

       Section 15.1.       Transaction Expenses...............................................36
       Section 15.2.       Survival...........................................................36

SECTION 16.                SURVIVAL OF REPRESENTATIONS AND WARRANTIES; ENTIRE AGREEMENT.......36


SECTION 17.                AMENDMENT AND WAIVER...............................................37

       Section 17.1.       Requirements.......................................................37
       Section 17.2.       Solicitation of Holders of Notes...................................37
       Section 17.3.       Binding Effect, etc................................................38
       Section 17.4.       Notes Held by the Obligors, etc....................................38

SECTION 18.                NOTICES............................................................38


SECTION 19.                REPRODUCTION OF DOCUMENTS..........................................39


SECTION 20.                CONFIDENTIAL INFORMATION...........................................39


SECTION 21.                SUBSTITUTION OF PURCHASER..........................................40


SECTION 22.                MISCELLANEOUS......................................................40

       Section 22.1.       Successors and Assigns.............................................40
       Section 22.2.       Payments Due on Non-Business Days..................................40
       Section 22.3.       Severability.......................................................41
       Section 22.4.       Construction.......................................................41
       Section 22.5.       Counterparts.......................................................41
       Section 22.6.       Governing Law......................................................41
       Section 22.7.       Consent to Jurisdiction and Service of Process.....................41




                                     -iii-







SCHEDULE A                --     INFORMATION RELATING TO PURCHASERS

SCHEDULE B                --     DEFINED TERMS

SCHEDULE 5.3              --     Disclosure Materials

SCHEDULE 5.4              --     Subsidiaries of the Obligors and Ownership of
                                 Subsidiary Stock

SCHEDULE 5.5              --     Financial Statements

SCHEDULE 5.8              --     Certain Litigation

SCHEDULE 5.11             --     Patents, etc.

SCHEDULE 5.14             --     Use of Proceeds

SCHEDULE 5.15             --     Existing Indebtedness

SCHEDULE 5.18             --     Existing Investments

EXHIBIT 1-A               --     Form of 5.58% Senior Note, Series A, due
                                 March 12, 2007

EXHIBIT 1-B               --     Form of 5.89% Senior Note, Series B, due
                                 March 12, 2009

EXHIBIT 1-C               --     Form of 6.36% Senior Note, Series C, due
                                 March 12, 2012

EXHIBIT 4.4(a)            --     Description of Opinion of Counsel to the
                                 Obligors

EXHIBIT 4.4(b)            --     Description of Opinion of Special Counsel to
                                 the Purchasers


                                      -iv-





                         LINCOLN ELECTRIC HOLDINGS, INC.
                          THE LINCOLN ELECTRIC COMPANY
                            22801 SAINT CLAIR AVENUE
                            CLEVELAND, OH 44117-1199



          $40,000,000 5.58% Senior Notes, Series A, due March 12, 2007

          $30,000,000 5.89% Senior Notes, Series B, due March 12, 2009

                                       and

          $80,000,000 6.36% Senior Notes, Series C, due March 12, 2012



                                                                     Dated as of
                                                                  March 12, 2002

TO EACH OF THE PURCHASERS LISTED IN
      THE ATTACHED SCHEDULE A:

Ladies and Gentlemen:

         LINCOLN ELECTRIC HOLDINGS, INC., an Ohio corporation ("Holdings") and
THE LINCOLN ELECTRIC COMPANY, an Ohio corporation (the "Company", and together
with Holdings are each hereinafter referred to as an "Obligor" and collectively
as the "Obligors"), jointly and severally agree with the Purchasers named on
Schedule A hereto as follows:

SECTION 1.           AUTHORIZATION OF NOTES.

         The Obligors will authorize the issue and sale of (i) $40,000,000
aggregate principal amount of their 5.58% Senior Notes, Series A, due March 12,
2007, (ii) $30,000,000 aggregate principal amount of their 5.89% Senior Notes,
Series B, due March 12, 2009, and (iii) $80,000,000 aggregate principal amount
of their 6.36% Senior Notes, Series C, due March 12, 2012 (respectively, the
"Series A Notes", "Series B Notes" and the "Series C Notes", each being a
"Series" of Notes and collectively the "Notes", such term to include any such
notes issued in substitution therefor pursuant to Section 13 of this Agreement).
The Series A Notes shall be substantially in the form set out in Exhibit 1-A,
the Series B Notes shall be substantially in the form set out in Exhibit 1-B and
the Series C Notes shall be substantially in the form set out in Exhibit 1-C, in
each case, with such changes therefrom, if any, as may be approved by each of
the Purchasers and the Obligors.

         Certain capitalized terms used in this Agreement are defined in
Schedule B; references to a "Schedule" or an "Exhibit" are, unless otherwise
specified, to a Schedule or an Exhibit attached to this Agreement.





Lincoln Electric Holdings, Inc.                          Note Purchase Agreement
The Lincoln Electric Company



SECTION 2.           SALE AND PURCHASE OF NOTES.

         Subject to the terms and conditions of this Agreement, the Obligors
will issue and sell to each Purchaser and such Purchaser will purchase from the
Obligors, at the Closing provided for in Section 3, Notes in the principal
amount and of the Series specified opposite such Purchaser's name in Schedule A
at the purchase price of 100% of the principal amount thereof. The obligations
of each of the Purchasers under this Agreement are several and not joint
obligations and no Purchaser shall have any obligation under this Agreement nor
any liability to any Person for the performance or nonperformance by any other
Purchaser hereunder.

SECTION 3.           CLOSING.

         The sale and purchase of the Notes to be purchased by the Purchasers
shall occur at the offices of Chapman and Cutler, 111 West Monroe Street,
Chicago, Illinois 60603, at 10:00 A.M. Chicago time, at a closing (the
"Closing") on March 12, 2002 or on such other Business Day thereafter on or
prior to March 29, 2002 as may be agreed upon by the Obligors and each of the
Purchasers. At the Closing the Obligors will deliver to each Purchaser the Notes
of each Series to be purchased by such Purchaser in the form of a single Note of
such Series (or such greater number of Notes in denominations of at least
$100,000 as such Purchaser may request) dated the date of the Closing and
registered in such Purchaser's name (or in the name of its nominee), against
delivery by such Purchaser to the Obligors or their order of immediately
available funds in the amount of the purchase price therefor by wire transfer of
immediately available funds for the account of the Obligors. If at the Closing
the Obligors shall fail to tender such Notes to any Purchaser as provided above
in this Section 3, or any of the conditions specified in Section 4 shall not
have been fulfilled to any Purchaser's satisfaction, such Purchaser shall, at
its election, be relieved of all further obligations under this Agreement,
without thereby waiving any rights it may have by reason of such failure or such
nonfulfillment.

SECTION 4.           CONDITIONS TO CLOSING.

         Each Purchaser's obligation to purchase and pay for the Notes to be
sold to such Purchaser at the Closing is subject to the fulfillment to such
Purchaser's reasonable satisfaction, prior to or at the Closing, of the
following conditions:

         Section 4.1. Representations and Warranties. The representations and
warranties of the Obligors in this Agreement shall be correct when made and at
the time of the Closing (or if such representation or warranty is expressly
stated to have been made as of a specific date, at such specific date).

         Section 4.2. Performance; No Default. Each of the Obligors shall have
performed and complied with all agreements and conditions contained in this
Agreement required to be performed or complied with by it prior to or at the
Closing, and after giving effect to the issue and sale of the Notes (and the
application of the proceeds thereof as contemplated by Schedule 5.14), no
Default or Event of Default shall have occurred and be continuing.




                                      -2-

Lincoln Electric Holdings, Inc.                          Note Purchase Agreement
The Lincoln Electric Company


         Section 4.3.    Compliance Certificates.

                   (a) Officer's Certificate. Each of the Obligors shall have
         delivered to such Purchaser an Officer's Certificate, dated the date of
         the Closing, certifying that the conditions specified in Sections 4.1,
         4.2 and 4.9 have been fulfilled.

                   (b) Secretary's Certificate. Each of the Obligors shall have
         delivered to such Purchaser a certificate certifying as to the
         resolutions attached thereto and other corporate proceedings relating
         to the authorization, execution and delivery of the Notes and this
         Agreement.

         Section 4.4. Opinions of Counsel. Such Purchaser shall have received
opinions in form and substance reasonably satisfactory to such Purchaser, dated
the date of the Closing (a) from Jones, Day, Reavis & Pogue, special counsel for
the Obligors, and from Frederick G. Stueber, Esq., Senior Vice President,
General Counsel and Secretary of each of the Obligors, collectively covering the
matters set forth in Exhibit 4.4(a) (and the Obligors hereby instruct their
counsel to deliver such opinions to such Purchaser) and (b) from Chapman and
Cutler, the Purchasers' special counsel in connection with such transactions,
substantially in the form set forth in Exhibit 4.4(b) and covering such other
matters incident to such transactions as such Purchaser may reasonably request.

         Section 4.5. Purchase Permitted by Applicable Law, etc. On the date of
the Closing such Purchaser's purchase of Notes shall (i) be permitted by the
laws and regulations of each jurisdiction to which such Purchaser is subject,
without recourse to provisions (such as Section 1405(a)(8) of the New York
Insurance Law) permitting limited investments by insurance companies without
restriction as to the character of the particular investment, (ii) not violate
any applicable law or regulation (including, without limitation, Regulation T, U
or X of the Board of Governors of the Federal Reserve System) and (iii) not
subject such Purchaser to any tax, penalty or liability under or pursuant to any
applicable law or regulation, which law or regulation was not in effect on the
date hereof.

         Section 4.6. Sale of Other Notes. Contemporaneously with the Closing,
the Obligors shall sell to each of the Purchasers, and each of the Purchasers
shall purchase, the Notes to be purchased by it at the Closing as specified in
Schedule A.

         Section 4.7. Payment of Special Counsel Fees. Without limiting the
provisions of Section 15.1, the Obligors shall have paid on or before the
Closing the fees, charges and disbursements of Purchasers' special counsel
referred to in Section 4.4 to the extent reflected in a statement of such
counsel rendered to the Obligors at least one Business Day prior to the Closing.

         Section 4.8. Private Placement Number. A Private Placement number
issued by Standard & Poor's CUSIP Service Bureau (in cooperation with the
Securities Valuation Office of the National Association of Insurance
Commissioners) shall have been obtained for each Series of Notes.




                                      -3-

Lincoln Electric Holdings, Inc.                          Note Purchase Agreement
The Lincoln Electric Company

         Section 4.9. Changes in Corporate Structure. No Obligor shall have
changed its jurisdiction of incorporation or been a party to any merger or
consolidation and no Obligor shall have succeeded to all or any substantial part
of the liabilities of any other entity, at any time following the date of the
most recent financial statements referred to in Schedule 5.5.

        Section 4.10. Proceedings and Documents. All corporate and other
proceedings in connection with the transactions contemplated by this Agreement
and all documents and instruments incident to such transactions shall be
satisfactory to such Purchaser and Purchasers' special counsel, and such
Purchaser and Purchasers' special counsel shall have received all such
counterpart originals or certified or other copies of such documents as such
Purchaser or such Purchaser's special counsel may reasonably request.

        Section 4.11. Funding Instructions. At least three Business Days prior
to the date of such Closing, such Purchaser shall have received written
instructions executed by a Responsible Officer of each of the Obligors directing
the manner of the payment of funds and setting forth (a) the name and address of
the transferee bank, (b) such transferee bank's ABA number, (c) the account name
and number into which the purchase price for the Notes is to be deposited, and
(d) the name and telephone number of the account representative responsible for
verifying receipt of such funds.

SECTION 5.           REPRESENTATIONS AND WARRANTIES OF THE OBLIGORS.

         Each Obligor, jointly and severally, represents and warrants to each of
the Purchasers that:

         Section 5.1. Organization; Power and Authority. Each Obligor is a
corporation duly organized, validly existing and in good standing under the laws
of its jurisdiction of incorporation, and is duly qualified as a foreign
corporation and is in good standing in each jurisdiction in which such
qualification is required by law, other than those jurisdictions as to which the
failure to be so qualified or in good standing would not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect. Each
Obligor has the corporate power and authority to own or hold under lease the
properties it purports to own or hold under lease, to transact the business it
transacts and proposes to transact, to execute and deliver this Agreement and
the Notes and to perform the provisions hereof and thereof.

         Section 5.2. Authorization, etc. This Agreement and the Notes have been
duly authorized by all necessary corporate action on the part of each Obligor,
and this Agreement constitutes, and upon execution and delivery thereof each
Note will constitute, a legal, valid and binding obligation of each Obligor
enforceable against such Obligor in accordance with its terms, except as such
enforceability may be limited by (i) applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting the enforcement of
creditors' rights generally and (ii) general principles of equity (regardless of
whether such enforceability is considered in a proceeding in equity or at law).



                                      -4-

Lincoln Electric Holdings, Inc.                          Note Purchase Agreement
The Lincoln Electric Company


         Section 5.3. Disclosure. The Obligors, through their agent, PNC Capital
Markets, Inc., have delivered to each of the Purchasers a copy of a Confidential
Offering Memorandum, dated January, 2002 (the "Memorandum"), relating to the
transactions contemplated hereby. Except as disclosed in Schedule 5.3, this
Agreement, the Memorandum, the documents, certificates or other writings
identified in Schedule 5.3 and the financial statements listed in Schedule 5.5,
taken as a whole, do not contain any untrue statement of a material fact or omit
to state any material fact necessary to make the statements therein not
misleading in light of the circumstances under which they were made. Except as
disclosed in the Memorandum or as expressly described in Schedule 5.3, or in the
financial statements listed in Schedule 5.5, since December 31, 2001, there has
been no change in the financial condition, operations, business or properties of
Holdings or any of its Restricted Subsidiaries except changes that individually
or in the aggregate would not reasonably be expected to have a Material Adverse
Effect.

         Section 5.4. Organization and Ownership of Shares of Subsidiaries. (a)
Schedule 5.4 is (except as noted therein) a complete and correct list of each
Obligor's Subsidiaries, showing, as to each Subsidiary (i) the correct name
thereof, (ii) the jurisdiction of its organization and (iii) the percentage of
shares of each class of its capital stock or similar equity interests
outstanding owned by each Obligor and each other Subsidiary. All Subsidiaries of
the Obligors on the date of the Closing are Restricted Subsidiaries.

         (b) All of the outstanding shares of capital stock or similar equity
interests of each Subsidiary shown in Schedule 5.4 as being owned by the
Obligors and their Subsidiaries have been validly issued, are fully paid and
nonassessable and are owned by the Obligors or another Subsidiary free and clear
of any Lien (except as otherwise disclosed in Schedule 5.4).

         (c) Each Subsidiary identified in Schedule 5.4 is a corporation or
other legal entity duly organized, validly existing and in good standing under
the laws of its jurisdiction of organization, and is duly qualified as a foreign
corporation or other legal entity and is in good standing in each jurisdiction
in which such qualification is required by law, other than those jurisdictions
as to which the failure to be so qualified or in good standing would not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect. Each such Subsidiary has the corporate or other power and
authority to own or hold under lease the properties it purports to own or hold
under lease and to transact the business it transacts and proposes to transact.

         Section 5.5. Financial Statements. The Obligors have delivered to each
Purchaser copies of the financial statements listed on Schedule 5.5 of Holdings
and its Restricted Subsidiaries on a consolidated basis. The financial
statements (including in each case the related schedules and notes) fairly
present in all material respects the consolidated financial position of Holdings
and its Restricted Subsidiaries as of the respective dates specified in such
Schedule and the consolidated results of their operations and cash flows for the
respective periods so specified and have been prepared in accordance with GAAP
consistently applied throughout the periods involved except as set forth in the
notes thereto (subject, in the case of any interim financial statements, to
normal year-end adjustments).




                                      -5-

Lincoln Electric Holdings, Inc.                          Note Purchase Agreement
The Lincoln Electric Company

         Section 5.6. Compliance with Laws, Other Instruments, etc. The
execution, delivery and performance by the Obligors of this Agreement and the
Notes will not (i) contravene, result in any breach of, or constitute a default
under, or result in the creation of any Lien in respect of any property of
either Obligor or any Restricted Subsidiary under, any indenture, mortgage, deed
of trust, loan, purchase or credit agreement, lease, corporate charter or
by-laws, or any other Material agreement or instrument to which either Obligor
or any Restricted Subsidiary is bound or by which either Obligor or any
Restricted Subsidiary or any of their respective properties may be bound or
affected, (ii) conflict with or result in a breach of any of the terms,
conditions or provisions of any order, judgment, decree, or ruling of any court,
arbitrator or Governmental Authority applicable to either Obligor or any
Restricted Subsidiary or (iii) violate any provision of any statute or other
rule or regulation of any Governmental Authority applicable to either Obligor or
any Restricted Subsidiary which violation or violations under this clause (iii),
individually or in the aggregate, would reasonably be expected to have a
Material Adverse Effect.

         Section 5.7. Governmental Authorizations, etc. No consent, approval or
authorization of, or registration, filing or declaration with, any Governmental
Authority is required in connection with the execution, delivery or performance
by either Obligor of this Agreement or the Notes.

         Section 5.8. Litigation; Observance of Statutes and Orders. (a) Except
as disclosed in Schedule 5.8, there are no actions, suits or proceedings pending
or, to the knowledge of either Obligor, threatened against or affecting either
Obligor or any Restricted Subsidiary or any property of either Obligor or any
Restricted Subsidiary in any court or before any arbitrator of any kind or
before or by any Governmental Authority that, individually or in the aggregate,
would reasonably be expected to have a Material Adverse Effect.

         (b) Neither Obligor nor any Restricted Subsidiary is in default under
any order, judgment, decree or ruling of any court, arbitrator or Governmental
Authority or is in violation of any applicable law, ordinance, rule or
regulation (including without limitation Environmental Laws) of any Governmental
Authority, which default or violation, individually or in the aggregate, would
reasonably be expected to have a Material Adverse Effect.

         Section 5.9. Taxes. The Obligors and all Restricted Subsidiaries have
filed all income tax returns that are required to have been filed in any
jurisdiction, and have paid all taxes shown to be due and payable on such
returns and all other taxes and assessments payable by them, to the extent such
taxes and assessments have become due and payable and before they have become
delinquent, except for any taxes and assessments (i) the amount of which is not
individually or in the aggregate Material or (ii) the amount, applicability or
validity of which is currently being contested in good faith by appropriate
proceedings and with respect to which an Obligor or a Restricted Subsidiary, as
the case may be, has established adequate reserves in accordance with GAAP. The
Federal income tax liabilities of the Obligors and their Restricted Subsidiaries
have been determined by the Internal Revenue Service and paid for all fiscal
years up to and including the fiscal year ended December 31, 1996.




                                      -6-

Lincoln Electric Holdings, Inc.                          Note Purchase Agreement
The Lincoln Electric Company

        Section 5.10. Title to Property; Leases. The Obligors and the Restricted
Subsidiaries have good and sufficient title to their respective Material
properties, including all such properties reflected in the most recent audited
balance sheet referred to in Section 5.5 or purported to have been acquired by
an Obligor or any Restricted Subsidiary after said date (except as sold or
otherwise disposed of in the ordinary course of business), in each case free and
clear of Liens prohibited by this Agreement, except for those defects in title
and Liens that, individually or in the aggregate, would not reasonably be
expected to have a Material Adverse Effect. All Material leases are valid and
subsisting and are in full force and effect in all material respects.

        Section 5.11. Licenses, Permits, etc. Except as disclosed in Schedule
5.11, the Obligors and the Restricted Subsidiaries own or possess all licenses,
permits, franchises, authorizations, patents, copyrights, service marks,
trademarks and trade names, or rights thereto, that are Material, without known
conflict with the rights of others, except for those conflicts that,
individually or in the aggregate, would not reasonably be expected to have a
Material Adverse Effect.

        Section 5.12. Compliance with ERISA. (a) Holdings and each ERISA
Affiliate have operated and administered each Plan in compliance with all
applicable laws except for such instances of noncompliance as have not resulted
in and could not reasonably be expected to result in a Material Adverse Effect.
Neither Holdings nor any ERISA Affiliate has incurred any liability pursuant to
Title I or IV of ERISA or the penalty or excise tax provisions of the Code
relating to employee benefit plans (as defined in Section 3 of ERISA), and no
event, transaction or condition has occurred or exists that would reasonably be
expected to result in the incurrence of any such liability by Holdings or any
ERISA Affiliate, or in the imposition of any Lien on any of the rights,
properties or assets of Holdings or any ERISA Affiliate, in either case pursuant
to Title I or IV of ERISA or to such penalty or excise tax provisions or to
Section 401(a)(29) or 412 of the Code, other than such liabilities or Liens as
would not be individually or in the aggregate Material.

         (b) The present value of the aggregate benefit liabilities under each
of the Plans (other than Multiemployer Plans), determined as of January 1, 2001
on the basis of the actuarial assumptions specified for funding purposes in such
Plan's most recent actuarial valuation report, did not exceed the aggregate
current value of the assets of such Plan allocable to such benefit liabilities
by more than $60,000 in the case of any single Plan and by more than $0 in the
aggregate for all Plans, provided that Holdings' Annual Report on Form 10-K for
the Fiscal Year ended December 31, 2001 indicated that, as of December 31, 2001,
the projected benefit obligation under all such Plans exceeds the plan assets of
such Plan by not more than $47,000,000. The term "benefit liabilities" has the
meaning specified in Section 4001 of ERISA and the terms "current value" and
"present value" have the meanings specified in Section 3 of ERISA.

         (c) Holdings and its ERISA Affiliates have not incurred withdrawal
liabilities (and are not subject to contingent withdrawal liabilities) under
section 4201 or 4204 of ERISA in respect of Multiemployer Plans that
individually or in the aggregate are Material.




                                      -7-

Lincoln Electric Holdings, Inc.                          Note Purchase Agreement
The Lincoln Electric Company

         (d) The expected post-retirement benefit obligation (determined as of
the last day of Holdings' most recently ended Fiscal Year in accordance with
Financial Accounting Standards Board Statement No. 106, without regard to
liabilities attributable to continuation coverage mandated by section 4980B of
the Code) of Holdings and its Restricted Subsidiaries is not Material.

         (e) The execution and delivery of this Agreement and the issuance and
sale of the Notes hereunder will not involve any transaction that is subject to
the prohibitions of section 406 of ERISA or in connection with which a tax could
be imposed pursuant to section 4975(c)(1)(A)-(D) of the Code. The representation
by each Obligor in the first sentence of this Section 5.12(e) is made in
reliance upon and subject to the accuracy of each Purchaser's representation in
Section 6.2 as to the sources of the funds to be used to pay the purchase price
of the Notes to be purchased by such Purchaser.

        Section 5.13. Private Offering by the Obligors. Neither Obligor nor PNC
Capital Markets, Inc. (the only Person authorized or employed by either Obligor
to act on its behalf in connection with the offer of the Notes or any similar
securities) has offered the Notes or any similar securities for sale to, or
solicited any offer to buy any of the same from, or otherwise approached or
negotiated in respect thereof with, any person other than the Purchasers and not
more than 35 other Institutional Investors, each of which has been offered the
Notes at a private sale for investment. Neither Obligor nor PNC Capital Markets,
Inc. (the only Person authorized or employed by either Obligor to act on its
behalf in connection with the offer of the Notes or any similar securities) has
taken, or will take, any action that would subject the issuance or sale of the
Notes to the registration requirements of Section 5 of the Securities Act.

        Section 5.14. Use of Proceeds; Margin Regulations. The Obligors will
apply the proceeds of the sale of the Notes as set forth in Schedule 5.14. No
part of the proceeds from the sale of the Notes hereunder will be used, directly
or indirectly, for the purpose of buying or carrying any margin stock within the
meaning of Regulation U of the Board of Governors of the Federal Reserve System
(12 CFR 221), or for the purpose of buying or carrying or trading in any
securities under such circumstances as to involve either Obligor in a violation
of Regulation X of said Board (12 CFR 224) or to involve any broker or dealer in
a violation of Regulation T of said Board (12 CFR 220). Margin stock does not
constitute more than 5% of the value of the consolidated assets of Holdings and
its Restricted Subsidiaries and the Obligors do not have any present intention
that margin stock will constitute more than 5% of the value of such assets. As
used in this Section, the terms "margin stock" and "purpose of buying or
carrying" shall have the meanings assigned to them in said Regulation U.

        Section 5.15. Existing Indebtedness. Schedule 5.15 sets forth a complete
and correct list of all outstanding Indebtedness of Holdings and its Restricted
Subsidiaries as of December 31, 2001, since which date there has been no
Material change in the amounts, interest rates, sinking funds, installment
payments or maturities of the Indebtedness of Holdings or its Restricted
Subsidiaries. Neither Obligor nor any Restricted Subsidiary is in default and no
waiver of default is currently in effect, in the payment of any principal or
interest on any Indebtedness of such Obligor or such Restricted Subsidiary and
no event or condition exists with respect to any





                                      -8-


Lincoln Electric Holdings, Inc.                          Note Purchase Agreement
The Lincoln Electric Company

Indebtedness of either Obligor or any Restricted Subsidiary that would permit
(or that with notice or the lapse of time, or both, would permit) one or more
Persons to cause such Indebtedness to become due and payable before its stated
maturity or before its regularly scheduled dates of payment.

        Section 5.16. Foreign Assets Control Regulations, etc. Neither the sale
of the Notes by the Obligors hereunder nor their use of the proceeds thereof
will violate the Trading with the Enemy Act, as amended, or any of the foreign
assets control regulations of the United States Treasury Department (31 CFR,
Subtitle B, Chapter V, as amended) or any enabling legislation or executive
order relating thereto. Without limiting the foregoing, neither the Obligors nor
any Subsidiary (i) is or will become a person whose property or interests in
property are blocked pursuant to Section 1 of Executive Order 13224 of September
23, 2001, Blocking Property and Prohibiting Transactions With Persons Who
Commit, Threaten to Commit, or Support Terrorism (66 Fed. Reg. 49079 (2001)) or
(ii) to its knowledge, after reasonable inquiry, engages or will engage in any
dealings or transactions, or be otherwise associated, with any such person.

        Section 5.17. Status under Certain Statutes. Neither Obligor nor any of
their Subsidiaries is subject to regulation under the Investment Company Act of
1940, as amended, the Public Utility Holding Company Act of 1935, as amended,
the ICC Termination Act of 1995, as amended, or the Federal Power Act, as
amended.

         Section 5.18. Existing Investments. Schedule 5.18 sets forth a complete
and correct list of all outstanding Investments of Holdings and each of its
Restricted Subsidiaries as of the date of the Closing.

SECTION 6.           REPRESENTATIONS OF THE PURCHASER.

         Section 6.1. Purchase for Investment. Each Purchaser represents that it
is a Person duly organized, validly existing and in good standing under the laws
of the jurisdiction of its organization. Such Purchaser is purchasing the Notes
for its own account or for one or more separate accounts maintained by it or for
the account of one or more pension or trust funds and not with a view to the
distribution or sale thereof, provided that (i) the disposition and sale of such
Purchaser's or their property shall at all times be within its or their control
and (ii) you and each such pension trust fund are "accredited investors" within
the meaning of Rule 501(a)(1), (2), (3) or (7) under the Securities Act. Each
Purchaser understands that the Notes have not been, and will not be, registered
under the Securities Act and may be resold only if an exemption from
registration is available, except under circumstances where neither such
registration nor such an exemption is required by law, and that the Obligors are
not required to register the Notes.

         Section 6.2. Source of Funds. Each Purchaser represents that at least
one of the following statements is an accurate representation as to each source
of funds (a "Source") to be used by such Purchaser to pay the purchase price of
the Notes to be purchased by it hereunder:





                                      -9-


Lincoln Electric Holdings, Inc.                          Note Purchase Agreement
The Lincoln Electric Company

                   (a) the Source is an "insurance company general account"
         within the meaning of Department of Labor Prohibited Transaction
         Exemption ("PTE") 95-60 (issued July 12, 1995) and there is no employee
         benefit plan, treating as a single plan, all plans maintained by the
         same employer or employee organization, with respect to which the
         amount of the general account reserves and liabilities for all
         contracts held by or on behalf of such plan, exceeds ten percent (10%)
         of the total reserves and liabilities of such general account
         (exclusive of separate account liabilities) plus surplus, as set forth
         in the NAIC Annual Statement filed with such Purchaser's state of
         domicile; or

                   (b) the Source is either (i) an insurance company pooled
         separate account, within the meaning of PTE 90-1 (issued January 29,
         1990), or (ii) a bank collective investment fund, within the meaning of
         the PTE 91-38 (issued July 12, 1991) and, except as such Purchaser has
         disclosed to the Obligors in writing pursuant to this paragraph (b), no
         employee benefit plan or group of plans maintained by the same employer
         or employee organization beneficially owns more than 10% of all assets
         allocated to such pooled separate account or collective investment
         fund; or

                   (c) the Source constitutes assets of an "investment fund"
         (within the meaning of Part V of the QPAM Exemption) managed by a
         "qualified professional asset manager" or "QPAM" (within the meaning of
         Part V of the QPAM Exemption), no employee benefit plan's assets that
         are included in such investment fund, when combined with the assets of
         all other employee benefit plans established or maintained by the same
         employer or by an affiliate (within the meaning of Section V(c)(1) of
         the QPAM Exemption) of such employer or by the same employee
         organization and managed by such QPAM, exceed 20% of the total client
         assets managed by such QPAM, the conditions of Part I(c) and (g) of the
         QPAM Exemption are satisfied, neither the QPAM nor a person controlling
         or controlled by the QPAM (applying the definition of "control" in
         Section V(e) of the QPAM Exemption) owns a 5% or more interest in
         either Obligor and (i) the identity of such QPAM and (ii) the names of
         all employee benefit plans whose assets are included in such investment
         fund have been disclosed to the Obligors in writing pursuant to this
         paragraph (c); or

                   (d) the Source is a governmental plan; or

                   (e) the Source is one or more employee benefit plans, or a
         separate account or trust fund comprised of one or more employee
         benefit plans, each of which has been identified to the Obligors in
         writing pursuant to this paragraph (e); or

                   (f) the Source does not include assets of any employee
         benefit plan, other than a plan exempt from the coverage of ERISA.

         If any Purchaser or any subsequent transferee of the Notes indicates
that such Purchaser or such transferee are relying on any representation
contained in paragraph (b), (c) or (e) above, the Obligors shall deliver a
certificate on the date of the Closing, with respect to such Purchaser and, on
or prior to the date of any transfer of the Notes, with respect to any such
transferee of the





                                      -10-

Lincoln Electric Holdings, Inc.                          Note Purchase Agreement
The Lincoln Electric Company

Notes, which certificate shall either state that (i) each Obligor is neither a
"party in interest" (as defined in Title I, Section 3(14) of ERISA) nor a
"disqualified person" (as defined in Section 4975(e)(2) of the Internal Revenue
Code of 1986, as amended), with respect to any plan identified pursuant to
paragraph (b) or (e) above, or (ii) with respect to any plan identified pursuant
to paragraph (c) above, neither Obligor nor any "affiliate" (as defined in
Section V(c) of the QPAM Exemption) has at such time, and during the immediately
preceding one year, exercised the authority to appoint or terminate said QPAM as
manager of the assets of any plan identified in writing pursuant to paragraph
(c) above or to negotiate the terms of said QPAM's management agreement on
behalf of any such identified plans.

As used in this Section 6.2, the terms "employee benefit plan", "governmental
plan", "party in interest" and "separate account" shall have the respective
meanings assigned to such terms in Section 3 of ERISA.

SECTION 7.           INFORMATION AS TO OBLIGORS.

         Section 7.1. Financial and Business Information. The Obligors shall
deliver to each holder of Notes that is an Institutional Investor:

                   (a) Quarterly Statements -- promptly, and in any event within
         60 days after the end of each Fiscal Quarter in each Fiscal Year (other
         than the last Fiscal Quarter of each such Fiscal Year),

                            (i) duplicate copies of Holdings' Quarterly Report
                  on Form 10-Q prepared in compliance with the requirements
                  therefor and filed with the SEC, together with:

                                     (1) a consolidated balance sheet of
                           Holdings and its Restricted Subsidiaries as at the
                           end of such Fiscal Quarter; and

                                     (2) consolidated statements of income and
                           cash flows of Holdings and its Restricted
                           Subsidiaries for such Fiscal Quarter and (in the case
                           of the second and third quarters) for the portion of
                           the Fiscal Year ending with such Fiscal Quarter, and

                  setting forth in each case in comparative form the figures for
                  the corresponding periods in the previous Fiscal Year, all in
                  reasonable detail, prepared in accordance with GAAP applicable
                  to quarterly financial statements generally, but excluding
                  footnotes, and certified by a Senior Financial Officer of
                  Holdings as fairly presenting, in all material respects, the
                  financial position of the companies being reported on and
                  their results of operations and cash flows, subject to changes
                  resulting from year-end adjustments;

                           (ii)     duplicate copies of:




                                      -11-

Lincoln Electric Holdings, Inc.                          Note Purchase Agreement
The Lincoln Electric Company

                                    (1) a consolidated balance sheet of the
                           Company and its Restricted Subsidiaries as at the end
                           of such Fiscal Quarter, and

                                     (2) consolidated statements of income and
                           cash flows of the Company and its Restricted
                           Subsidiaries for such Fiscal Quarter and (in the case
                           of the second and third quarters) for the portion of
                           the Fiscal Year ending with such Fiscal Quarter,

                  setting forth in each case in comparative form the figures for
                  the corresponding periods in the previous Fiscal Year, all in
                  reasonable detail, prepared in accordance with GAAP applicable
                  to quarterly financial statements generally, but excluding
                  footnotes, and certified by a Senior Financial Officer of the
                  Company as fairly presenting, in all material respects, the
                  financial position of the companies being reported on and
                  their results of operations and cash flows, subject to changes
                  resulting from year-end adjustments;

                  (b) Annual Statements -- promptly, and in any event within 120
         days after the end of each Fiscal Year,

                            (i) duplicate copies of Holdings' Annual Report on
                  Form 10-K for such Fiscal Year (together with Holdings' annual
                  report to shareholders, if any, prepared pursuant to Rule
                  14a-3 under the Exchange Act) prepared in accordance with the
                  requirements therefor and filed with the SEC, together with:

                                    (1) a consolidated balance sheet of Holdings
                           and its Restricted Subsidiaries, as at the end of
                           such Fiscal Year, and

                                     (2) consolidated statements of income,
                           changes in shareholders' equity and cash flows of
                           Holdings and its Restricted Subsidiaries, for such
                           Fiscal Year,

                  setting forth in each case in comparative form the figures for
                  the previous Fiscal Year, all in reasonable detail, prepared
                  in accordance with GAAP applicable to year-end financial
                  statements generally, but excluding footnotes, and certified
                  by a Senior Financial Officer of Holdings as fairly
                  presenting, in all material respects, the financial position
                  of the companies being reported upon and their results of
                  operations and cash flows; and

                           (ii)     duplicate copies of:

                                    (1) a consolidated balance sheet of the
                           Company and its Restricted Subsidiaries as at the end
                           of such Fiscal Year; and




                                      -12-

Lincoln Electric Holdings, Inc.                          Note Purchase Agreement
The Lincoln Electric Company

                                     (2) consolidated statements of income,
                           changes in shareholders' equity and cash flows of the
                           Company and its Restricted Subsidiaries, for such
                           Fiscal Year,

                  setting forth in each case in comparative form the figures for
                  the previous Fiscal Year, all in reasonable detail, prepared
                  in accordance with GAAP applicable to year-end financial
                  statements generally, but excluding footnotes, and certified
                  by a Senior Financial Officer of the Company as fairly
                  presenting, in all material respects, the financial position
                  of the companies being reported on and their results of
                  operations and cash flows.

                   (c) SEC and Other Reports -- promptly upon their becoming
         available, one copy of (i) each financial statement, report, notice or
         information statement sent by either Obligor or any Restricted
         Subsidiary to public securities holders generally (including, without
         limitation, proxy materials), and (ii) each regular or periodic report
         (including, without limitation, any report of any Obligor on Form 8-K),
         each registration statement that shall have become effective and each
         final prospectus and all amendments thereto filed by either Obligor or
         any Restricted Subsidiary with the SEC;

                   (d) Notice of Default or Event of Default -- promptly, and in
         any event within five Business Days after a Responsible Officer of
         either Obligor becoming aware of the existence of any Default or Event
         of Default, a written notice specifying the nature and period of
         existence thereof and what action the Obligors are taking or propose to
         take with respect thereto;

                   (e) ERISA Matters -- promptly, and in any event within 30
         days after a Responsible Officer of either Obligor becoming aware of
         any of the following, a written notice setting forth the nature thereof
         and the action, if any, that Holdings or an ERISA Affiliate proposes to
         take with respect thereto:

                            (i) with respect to any Plan, any reportable event,
                  as defined in section 4043(b) of ERISA and the regulations
                  thereunder, for which notice thereof has not been waived
                  pursuant to such regulations as in effect on the date hereof;
                  or

                           (ii) the taking by the PBGC of steps to institute, or
                  the threatening by the PBGC of the institution of, proceedings
                  under section 4042 of ERISA for the termination of, or the
                  appointment of a trustee to administer, any Plan, or the
                  receipt by Holdings or any ERISA Affiliate of a notice from a
                  Multiemployer Plan that such action has been taken by the PBGC
                  with respect to such Multiemployer Plan (including a copy of
                  any notice thereof); or

                          (iii) any event, transaction or condition that could
                  result in the incurrence of any liability by Holdings or any
                  ERISA Affiliate pursuant to Title I or IV of ERISA or the
                  penalty or excise tax provisions of the Code relating to






                                      -13-


Lincoln Electric Holdings, Inc.                          Note Purchase Agreement
The Lincoln Electric Company

                  employee benefit plans, or in the imposition of any Lien on
                  any of the rights, properties or assets of Holdings or any
                  ERISA Affiliate pursuant to Title I or IV of ERISA or such
                  penalty or excise tax provisions, if such liability or Lien,
                  taken together with any other such liabilities or Liens then
                  existing, would reasonably be expected to have a Material
                  Adverse Effect;

                   (f) Litigation or Other Proceedings -- promptly, and in any
         event within five Business Days after a Responsible Officer of either
         Obligor becoming aware of any of the following, written notice of any
         pending litigation or, to the knowledge of either Obligor, threat of
         litigation against or affecting either Obligor or any Restricted
         Subsidiary or any property of either Obligor or any Restricted
         Subsidiary, that, individually or in the aggregate, is reasonably
         likely to have a Material Adverse Effect; and

                   (g) Requested Information -- with reasonable promptness, such
         other data and information relating to the business, operations,
         affairs, financial condition, assets or properties of either Obligor or
         any Restricted Subsidiary or relating to the ability of the Obligors to
         perform their obligations hereunder and under the Notes as from time to
         time may be reasonably requested by any such holder of Notes.

         Section 7.2. Officer's Certificate. Each set of financial statements
delivered to a holder of Notes pursuant to Section 7.1(a) or Section 7.1(b)
hereof shall be accompanied by a certificate of a Senior Financial Officer of
Holdings setting forth:

                   (a) Covenant Compliance -- the information (including
         detailed calculations) required in order to establish whether the
         Obligors were in compliance with the requirements of Section 10.2
         through Section 10.7 hereof, inclusive, during the quarterly or annual
         period covered by the statements then being furnished (including with
         respect to each such Section, where applicable, the calculations of the
         maximum or minimum amount, ratio or percentage, as the case may be,
         permissible under the terms of such Sections, and the calculation of
         the amount, ratio or percentage then in existence); and

                   (b) Event of Default -- a statement that such officer has
         reviewed the relevant terms hereof and has made, or caused to be made,
         under his or her supervision, a review of the transactions and
         conditions of Holdings and its Restricted Subsidiaries from the
         beginning of the quarterly or annual period covered by the statements
         then being furnished to the date of the certificate and that such
         review shall not have disclosed the existence during such period of any
         condition or event that constitutes a Default or an Event of Default
         or, if any such condition or event existed or exists (including,
         without limitation, any such event or condition resulting from the
         failure of either Obligor or any Restricted Subsidiary to comply with
         any Environmental Law), specifying the nature and period of existence
         thereof and what action the Obligors shall have taken or proposes to
         take with respect thereto.



                                      -14-

Lincoln Electric Holdings, Inc.                          Note Purchase Agreement
The Lincoln Electric Company

         Section 7.3. Inspection. The Obligors shall permit the representatives
of each holder of Notes that is an Institutional Investor:

                   (a) No Default -- if no Default or Event of Default then
         exists, at the expense of such holder and upon reasonable prior notice
         to the Obligors, to visit the principal executive office of each
         Obligor, to discuss the affairs, finances and accounts of the Obligors
         and the Restricted Subsidiaries with each Obligor's officers, and, with
         the consent of the Obligors (which consent will not be unreasonably
         withheld), to visit the other offices and properties of each Obligor
         and the Restricted Subsidiaries, all at such reasonable times and as
         often as may be reasonably requested in writing; and

                   (b) Default -- if a Default or Event of Default then exists,
         at the expense of the Obligors to visit and inspect any of the offices
         or properties of each Obligor or any Restricted Subsidiary, to examine
         all their respective books of account, records, reports and other
         papers, to make copies and extracts therefrom, and to discuss their
         respective affairs, finances and accounts with their respective
         officers and independent public accountants (and by this provision the
         Obligors authorize said accountants to discuss the affairs, finances
         and accounts of the Obligors and the Restricted Subsidiaries), all at
         such times and as often as may be requested.

SECTION 8.           PREPAYMENT OF THE NOTES.

         Section 8.1.    Required Prepayments.

         (a) Series A Notes. The entire outstanding principal amount of the
Series A Notes shall be due on March 12, 2007. Except as set forth in Section
8.2, the Series A Notes may not be prepaid prior to maturity at the option of
the Obligors.

         (b) Series B. Notes. The entire outstanding principal amount of the
Series B Notes shall be due on March 12, 2009. Except as set forth in Section
8.2, the Series B Notes may not be prepaid prior to maturity at the option of
the Obligors.

         (c) Series C. Notes. The entire outstanding principal amount of the
Series C Notes shall be due on March 12, 2012. Except as set forth in Section
8.2, the Series C Notes may not be prepaid prior to maturity at the option of
the Obligors.

         Section 8.2. Optional Prepayments with Make-Whole Amount. The Obligors
may, at their option, upon notice as provided below, prepay at any time all, or
from time to time any part of, the Notes, in a minimum principal amount of
$10,000,000 in the case of a partial prepayment, at 100% of the principal amount
so prepaid, together with interest accrued thereon to the date of such
prepayment, plus the Make-Whole Amount determined for the prepayment date with
respect to such principal amount. The Obligors will give each holder of Notes
written notice of each optional prepayment under this Section 8.2 not less than
30 days and not more than 60 days prior to the date fixed for such prepayment.
Each such notice shall specify such date, the aggregate principal amount of the
Notes to be prepaid on such date, the principal amount of each





                                      -15-

Lincoln Electric Holdings, Inc.                          Note Purchase Agreement
The Lincoln Electric Company

Note held by such holder to be prepaid (determined in accordance with Section
8.4), and the interest to be paid on the prepayment date with respect to such
principal amount being prepaid, and shall be accompanied by a certificate of a
Senior Financial Officer of Holdings as to the estimated Make-Whole Amount due
in connection with such prepayment (calculated as if the date of such notice
were the date of the prepayment), setting forth the details of such computation.
Two Business Days prior to such prepayment, the Obligors shall deliver to each
holder of Notes a certificate of a Senior Financial Officer of Holdings
specifying the calculation of such Make-Whole Amount as of the specified
prepayment date.

         Section 8.3. Prepayment of Notes upon Change of Control. (a) In the
event that any Change of Control shall occur or either Obligor shall have
knowledge of any proposed Change of Control, the Obligors will give written
notice (the "Obligor Notice") of such fact in the manner provided in Section 18
hereof to the holders of the Notes. The Obligor Notice shall be delivered
promptly upon receipt of such knowledge by an Obligor and in any event no later
than three Business Days following the occurrence of any Change of Control. The
Obligor Notice shall (i) describe the facts and circumstances of such Change of
Control in reasonable detail, (ii) make reference to this Section 8.3 and the
right of the holders of the Notes to require prepayment of the Notes on the
terms and conditions provided for in this Section 8.3, (iii) offer in writing to
prepay the outstanding Notes, together with accrued interest to the date of
prepayment, and without payment of the Make-Whole Amount or any premium, (iv)
specify a date for such prepayment (the "Change of Control Prepayment Date"),
which Change of Control Prepayment Date shall be not more than 90 days nor less
than 30 days following the date of such Obligor Notice, and (v) specify the date
by which such holder is required to give notice of its acceptance to be prepaid.
Each holder of the then outstanding Notes shall have the right to accept such
offer and require prepayment of the Notes held by such holder in full by written
notice to an Obligor (a "Noteholder Notice") given not later than 20 days after
receipt of the Obligor Notice. The Obligors shall on the Change of Control
Prepayment Date prepay in full all of the Notes held by holders which have so
accepted such offer of prepayment. The prepayment price of the Notes payable
upon the occurrence of any Change of Control shall be an amount equal to 100% of
the outstanding principal amount of the Notes so to be prepaid and accrued
interest thereon to the date of such prepayment.

      (b)(i) Without limiting the foregoing, notwithstanding any failure on the
part of the Obligors to give the Obligor Notice herein required, as a result of
the occurrence of a Change of Control each holder of the Notes shall have the
right by delivery of written notice to the Obligors to require the Obligors to
prepay, and the Obligors will prepay, such holder's Notes in full, together with
accrued interest thereon to the date of prepayment, and without payment of the
Make-Whole Amount or any premium. Notice of any required prepayment pursuant to
this Section 8.3(b)(i) shall be delivered by any holder of the Notes which was
entitled to, but did not receive, such Obligor Notice to the Obligors after such
holder has actual knowledge of such Change of Control. On the date (the "Change
of Control Delayed Prepayment Date") designated in such holder's notice (which
shall be not more than 90 days nor less than 30 days following the date of such
holder's notice), the Obligors shall prepay in full all of the Notes held by
such holder, together with accrued interest thereon to the date of prepayment.
If the holder of any Note gives any notice pursuant to this Section 8.3(b)(i),
the Obligors shall give an Obligor





                                      -16-

Lincoln Electric Holdings, Inc.                          Note Purchase Agreement
The Lincoln Electric Company

Notice within three Business Days of receipt of such notice and identify the
Change of Control Delayed Prepayment Date to all other holders of the Notes and
each of such other holders shall then and thereupon have the right to accept the
Obligors' offer to prepay the Notes held by such holder in full and require
prepayment of such Notes by delivery of a Noteholder Notice within 20 days
following receipt of such Obligor Notice; provided only that any date for
prepayment of such holder's Notes shall be the Change of Control Delayed
Prepayment Date. On the Change of Control Delayed Prepayment Date, the Obligors
shall prepay in full the Notes of each holder thereof which has accepted such
offer of prepayment at a prepayment price equal to 100% of the outstanding
principal amount of the Notes so to be prepaid and accrued interest thereon to
the date of such prepayment.

        (ii) Compliance with the provisions of this Section 8.3(b) shall not be
deemed to constitute a waiver of, or consent to, any Default or Event of Default
caused by any violation of the provisions of Section 8.3(a).

         (c) "Change of Control" means if any person (as such term is used in
section 13(d) and section 14(d)(2) of the Exchange Act as in effect on the date
of the Closing) or related persons constituting a group (as such term is used in
Rule 13d-5 under the Exchange Act), become the "beneficial owners" (as such term
is used in Rule 13d-3 under the Exchange Act as in effect on the date of the
Closing), directly or indirectly, of more than 50% of the issued and outstanding
common stock of Holdings.

         Section 8.4. Allocation of Partial Prepayments. In the case of each
partial prepayment of the Notes (other than a partial prepayment under Section
8.3), the principal amount of the Notes to be prepaid shall be allocated among
all of the Notes of all Series at the time outstanding in proportion, as nearly
as practicable, to the respective unpaid principal amounts thereof.

         Section 8.5. Maturity; Surrender, etc. In the case of each prepayment
of Notes pursuant to this Section 8, the principal amount of each Note to be
prepaid shall mature and become due and payable on the date fixed for such
prepayment, together with interest on such principal amount accrued to such date
and the applicable Make-Whole Amount, if any. From and after such date, unless
the Obligors shall fail to pay such principal amount when so due and payable,
together with the interest and Make-Whole Amount, if any, as aforesaid, interest
on such principal amount shall cease to accrue. Any Note paid or prepaid in full
shall be surrendered to Holdings and cancelled and shall not be reissued, and no
Note shall be issued in lieu of any prepaid principal amount of any Note.

         Section 8.6. Purchase of Notes. The Obligors will not and will not
permit any Affiliate to purchase, redeem, prepay or otherwise acquire, directly
or indirectly, any of the outstanding Notes except (a) upon the payment or
prepayment of the Notes in accordance with the terms of this Agreement and the
Notes or (b) pursuant to an offer to purchase made by the Obligors or an
Affiliate pro rata to the holders of all Notes at the time outstanding upon the
same terms and conditions (but taking into account the respective interest rates
of each Series). Any such offer shall provide each holder with sufficient
information to enable it to make an informed decision with respect to such
offer, and shall remain open for at least 20 Business Days. If the holders of







                                      -17-

Lincoln Electric Holdings, Inc.                          Note Purchase Agreement
The Lincoln Electric Company

more than 20% of the principal amount of the Notes then outstanding accept such
offer, the Obligors shall promptly notify the remaining holders of such fact and
the expiration date for the acceptance by holders of Notes of such offer shall
be extended by the number of days necessary to give each such remaining holder
at least 10 Business Days from its receipt of such notice to accept such offer.
The Obligors will promptly cancel all Notes acquired by it or any Affiliate
pursuant to any payment, prepayment or purchase of Notes pursuant to any
provision of this Agreement and no Notes may be issued in substitution or
exchange for any such Notes.

         Section 8.7. Make-Whole Amount. The term "Make-Whole Amount" means,
with respect to any Note, an amount equal to the excess, if any, of the
Discounted Value of the Remaining Scheduled Payments with respect to the Called
Principal of such Note over the amount of such Called Principal, provided that
the Make-Whole Amount may in no event be less than zero. For the purposes of
determining the Make-Whole Amount, the following terms have the following
meanings:

                  "Called Principal" means, with respect to any Note, the
         principal of such Note that is to be prepaid pursuant to Section 8.2 or
         has become or is declared to be immediately due and payable pursuant to
         Section 12.1, as the context requires.

                  "Discounted Value" means, with respect to the Called Principal
         of any Note, the amount obtained by discounting all Remaining Scheduled
         Payments with respect to such Called Principal from their respective
         scheduled due dates to the Settlement Date with respect to such Called
         Principal, in accordance with accepted financial practice and at a
         discount factor (applied on the same periodic basis as that on which
         interest on the Notes is payable) equal to the Reinvestment Yield with
         respect to such Called Principal.

                  "Reinvestment Yield" means, with respect to the Called
         Principal of any Note, 0.50% over the yield to maturity implied by (i)
         the yields reported, as of 10:00 A.M. (New York City time) on the
         second Business Day preceding the Settlement Date with respect to such
         Called Principal, on the display designated as "Page PX1" on the
         Bloomberg Financial Services Screen (or such other display as may
         replace Page PX1 on the Bloomberg Financial Services Screen) for
         "on-the-run" U.S. Treasury securities having a maturity equal to the
         Remaining Average Life of such Called Principal as of such Settlement
         Date, or (ii) if such yields are not reported as of such time or the
         yields reported as of such time are not ascertainable, the Treasury
         Constant Maturity Series Yields reported, for the latest day for which
         such yields have been so reported as of the second Business Day
         preceding the Settlement Date with respect to such Called Principal, in
         Federal Reserve Statistical Release H.15 (519) (or any comparable
         successor publication) for "on-the-run" U.S. Treasury securities having
         a constant maturity equal to the Remaining Average Life of such Called
         Principal as of such Settlement Date. Such implied yield will be
         determined, if necessary, by (a) converting U.S. Treasury bill
         quotations to bond-equivalent yields in accordance with accepted
         financial practice and (b) interpolating linearly between (1) the
         "on-the-run" U.S. Treasury security with the maturity closest to and
         greater than the Remaining Average Life and (2) the "on-the-run"





                                      -18-

Lincoln Electric Holdings, Inc.                          Note Purchase Agreement
The Lincoln Electric Company

         U.S. Treasury security with the maturity closest to and less than the
         Remaining Average Life.

                  "Remaining Average Life" means, with respect to any Called
         Principal, the number of years (calculated to the nearest one-twelfth
         year) obtained by dividing (i) such Called Principal into (ii) the sum
         of the products obtained by multiplying (a) the principal component of
         each Remaining Scheduled Payment with respect to such Called Principal
         by (b) the number of years (calculated to the nearest one-twelfth year)
         that will elapse between the Settlement Date with respect to such
         Called Principal and the scheduled due date of such Remaining Scheduled
         Payment.

                  "Remaining Scheduled Payments" means, with respect to the
         Called Principal of any Note, all payments of such Called Principal and
         interest thereon that would be due after the Settlement Date with
         respect to such Called Principal if no payment of such Called Principal
         were made prior to its scheduled due date, provided that if such
         Settlement Date is not a date on which interest payments are due to be
         made under the terms of the Notes, then the amount of the next
         succeeding scheduled interest payment will be reduced by the amount of
         interest accrued to such Settlement Date and required to be paid on
         such Settlement Date pursuant to Section 8.2 or 12.1.

                  "Settlement Date" means, with respect to the Called Principal
         of any Note, the date on which such Called Principal is to be prepaid
         pursuant to Section 8.2 or has become or is declared to be immediately
         due and payable pursuant to Section 12.1, as the context requires.

SECTION 9.           AFFIRMATIVE COVENANTS.

         Each Obligor, jointly and severally, covenants that so long as any of
the Notes are outstanding:

         Section 9.1. Compliance with Law. Each Obligor will, and will cause
each of its Subsidiaries to, comply with all laws, ordinances or governmental
rules or regulations to which each of them is subject, including, without
limitation, Environmental Laws, and will obtain and maintain in effect all
licenses, certificates, permits, franchises and other governmental
authorizations necessary to the ownership of their respective properties or to
the conduct of their respective businesses, in each case to the extent necessary
to ensure that non-compliance with such laws, ordinances or governmental rules
or regulations or failures to obtain or maintain in effect such licenses,
certificates, permits, franchises and other governmental authorizations would
not reasonably be expected, individually or in the aggregate, to have a Material
Adverse Effect.

         Section 9.2. Insurance. Each Obligor will, and each Obligor will cause
each of the Restricted Subsidiaries to, maintain, with financially sound and
reputable insurers, insurance with respect to their respective properties and
businesses against such casualties and contingencies, of such types, on such
terms and in such amounts (including deductibles, co-






                                      -19-

Lincoln Electric Holdings, Inc.                          Note Purchase Agreement
The Lincoln Electric Company

insurance and self-insurance, if adequate reserves are maintained with respect
thereto) as is customary in the case of entities of established reputations
engaged in the same or a similar business and similarly situated.

         Section 9.3. Maintenance of Properties. Each Obligor will, and each
Obligor will cause each of the Restricted Subsidiaries to, maintain and keep, or
cause to be maintained and kept, their respective properties in good repair,
working order and condition (other than ordinary wear and tear), so that the
business carried on in connection therewith may be properly conducted at all
times, provided that this Section shall not prevent either Obligor or any
Restricted Subsidiary from discontinuing the operation and the maintenance of
any of its properties if such discontinuance is desirable in the conduct of its
business and the Obligors have concluded that such discontinuance would not,
individually or in the aggregate, have a Material Adverse Effect.

         Section 9.4. Payment of Taxes. Each Obligor will, and each Obligor will
cause each of its Subsidiaries to, file all income tax or similar tax returns
required to be filed in any jurisdiction and to pay and discharge all taxes
shown to be due and payable on such returns and all other taxes, assessments,
governmental charges, or levies payable by any of them, to the extent such taxes
and assessments have become due and payable and before they have become
delinquent, provided that neither Obligor nor any of its Subsidiaries need pay
any such tax or assessment if (i) the amount, applicability or validity thereof
is contested by such Obligor or such Subsidiary on a timely basis in good faith
and in appropriate proceedings diligently conducted, and such Obligor or such
Subsidiary has established adequate reserves therefor in accordance with GAAP on
the books of such Obligor or such Subsidiary or (ii) the failure to file such
tax return or the nonpayment of all such taxes and assessments in the aggregate
would not reasonably be expected to have a Material Adverse Effect.

         Section 9.5. Corporate Existence, etc. Each Obligor will at all times
preserve and keep in full force and effect its corporate existence. Subject to
Section 10.6, each Obligor will at all times preserve and keep in full force and
effect the corporate existence of the Restricted Subsidiaries and all rights and
franchises of such Obligor and its Restricted Subsidiaries unless, in the good
faith judgment of such Obligor, the termination of or failure to preserve and
keep in full force and effect such corporate existence, right or franchise would
not, individually or in the aggregate, have a Material Adverse Effect.

         Section 9.6. Notes to Rank Pari Passu. The Notes of the Obligors are
and shall at all times rank at least pari passu as against the assets of each
Obligor with all other present and future unsecured Indebtedness (actual or
contingent) of such Obligor which is not expressed to be subordinate or junior
in rank to any other unsecured Debt of such Obligor.

         Section 9.7. Ownership of the Company. Holdings shall at all times own
100%, directly or indirectly, of the issued and outstanding capital stock of the
Company.

         Section 9.8. Changes in Status of Subsidiaries. (a) So long as no
Default or Event of Default shall have occurred and be continuing, a Senior
Financial Officer of Holdings may at any time and from time to time, upon not
less than 30 days' prior written notice given to each holder






                                      -20-

Lincoln Electric Holdings, Inc.                          Note Purchase Agreement
The Lincoln Electric Company

of Notes, designate a previously Unrestricted Subsidiary as a Restricted
Subsidiary, provided that immediately after such designation and after giving
effect thereto (i) no Default or Event of Default shall have occurred and be
continuing and (ii) Holdings and its Restricted Subsidiaries would be in
compliance with the provisions of Sections 10.2, 10.3, 10.4, 10.5 and 10.7
hereof, assuming, for purposes of determining such compliance, that the date of
such designation was the last day of the most recently ended Fiscal Quarter, and
provided, further, that the status of such Subsidiary had not previously been
changed more than once.

         (b) So long as no Default or Event of Default shall have occurred and
be continuing, a Senior Financial Officer of Holdings may at any time and from
time to time, upon not less than 30 days' prior written notice given to each
holder of Notes, designate a previously Restricted Subsidiary (other than the
Company and any Restricted Subsidiary that owns, directly or indirectly, any
capital stock of the Company), or a new Subsidiary on the date of its formation
or acquisition, as an Unrestricted Subsidiary, provided that such designation is
treated as a sale of assets subject to the provisions of Section 10.6 and
immediately after such designation and after giving effect thereto (i) no
Default or Event of Default shall have occurred and be continuing, (ii) such
previously Restricted Subsidiary does not own, directly or indirectly, any Debt,
shares of capital stock or any other Securities of Holdings or any Restricted
Subsidiary and (iii) Holdings and its Restricted Subsidiaries would be in
compliance with the provisions of Sections 10.2, 10.3, 10.4, 10.5, 10.6 and 10.7
hereof, assuming, for purposes of determining such compliance, that the date of
such designation was the last day of the most recently ended Fiscal Quarter, and
provided, further, that the status of such Subsidiary had not previously been
changed more than once.

         (c) Any notice of designation pursuant to this Section 9.8 shall be
accompanied by a certificate signed by a Responsible Officer of Holdings stating
that the provisions of this Section 9.8 have been complied with in connection
with such designation and setting forth the name of each other Subsidiary (if
any) which has or will become a Restricted Subsidiary or an Unrestricted
Subsidiary as a result of such designation.

SECTION 10.          NEGATIVE COVENANTS.

         Each Obligor covenants that so long as any of the Notes are
outstanding:

        Section 10.1. Transactions with Affiliates. Neither Obligor will, nor
will it permit any Restricted Subsidiary to enter into directly or indirectly
any transaction or group of related transactions (including without limitation
the purchase, lease, sale or exchange of properties of any kind or the rendering
of any service) with any Affiliate (other than an Obligor or another Restricted
Subsidiary), except in the ordinary course and pursuant to the reasonable
requirements of such Obligor's or such Restricted Subsidiary's business and upon
fair and reasonable terms no less favorable to such Obligor or such Restricted
Subsidiary than would be obtainable in a comparable arm's-length transaction
with a Person not an Affiliate.

         Section 10.2. Fixed Charges Coverage Ratio. The Obligors will not, at
any time, permit the Fixed Charges Coverage Ratio to be less than 1.75 to 1.00.





                                      -21-

Lincoln Electric Holdings, Inc.                          Note Purchase Agreement
The Lincoln Electric Company

         Section 10.3. Leverage Ratio. The Obligors will not, at any time,
permit the Leverage Ratio to exceed 3.00 to 1.00.

         Section 10.4. Priority Debt. The Obligors will not, at any time, permit
Priority Debt to exceed 20% of Consolidated Net Worth determined at such time.

         Section 10.5. Investments. The Obligors will not, and will not permit
any Restricted Subsidiary to, make or have outstanding any Investments, other
than:

                   (a) Investments by Holdings and its Restricted Subsidiaries
         in and to Restricted Subsidiaries, including any Investment in any
         Person which, after giving effect to such Investment, will become a
         Restricted Subsidiary or a division of Holdings or of a Restricted
         Subsidiary;

                   (b) Investments of Holdings and its Restricted Subsidiaries
         existing as of the date of the Closing and described on Schedule 5.18
         hereto;

                   (c) Investments in Cash Equivalents;

                   (d) Investments in mutual funds registered under the
         Investment Company Act of 1940, as amended, which invest only in either
         money market securities or United States Governmental Securities, in
         either case, maturing within three years from the date of acquisition
         thereof by such mutual fund;

                   (e) Investments in Related Industries, provided that such
         Investments are in furtherance of the reasonable business purposes of
         Holdings and its Restricted Subsidiaries and are not speculative in
         nature;

                   (f) Subject to the limitations provided for under Section
         10.6(b) hereof, Investments in Special Purpose Companies incidental to
         the consummation of Qualifying Securitization Transactions and not
         involving any significant investment of capital;

                   (g) Investments in property to be used in the ordinary course
         of business of Holdings and its Restricted Subsidiaries;

                   (h) Investments in current assets arising from the sale of
         goods and services in the ordinary course of business of Holdings and
         its Restricted Subsidiaries; and

                   (i) Investments of Holdings and its Restricted Subsidiaries
         not described in the foregoing clauses (a) through (h); provided that
         the aggregate amount of all such Investments outstanding under this
         clause (i) shall not at any time exceed 15% of Consolidated Net Worth.

As of any date of determination, each Investment shall be valued at the greater
of:




                                      -22-

Lincoln Electric Holdings, Inc.                          Note Purchase Agreement
The Lincoln Electric Company

                  (x) the amount at which such is shown on the books of Holdings
         or any of its Restricted Subsidiaries (or zero if such Investment is
         not shown on any such books); and

                  (y) either

                            (i) in the case of any Guaranty of the obligation of
                  any Person, the amount which Holdings or any of its Restricted
                  Subsidiaries has paid on account of such obligation less any
                  recoupment by Holdings or such Restricted Subsidiary of any
                  such payments, or

                           (ii) in the case of any other Investment, the excess
                  of (x) the greater of (A) the amount originally entered on the
                  books of Holdings or any of its Restricted Subsidiaries with
                  respect thereto and (B) the cost thereof to Holdings or its
                  Restricted Subsidiary over (y) any return of capital (after
                  income taxes applicable thereto) upon such Investment through
                  the sale or other liquidation thereof or part thereof or
                  otherwise.

         Section 10.6. Mergers, Consolidations and Sales of Assets. (a) The
Obligors will not, and will not permit any Restricted Subsidiary to, consolidate
with or be a party to a merger with any other Person, or sell, lease or
otherwise dispose of all or substantially all of its assets; provided that:

                   (i) any Subsidiary (other than the Company) may merge or
         consolidate with or into, or transfer all or substantially all of its
         assets to, Holdings or any Restricted Subsidiary so long as in (1) any
         merger or consolidation involving an Obligor pursuant to this clause
         (i), such Obligor shall be the surviving or continuing corporation, (2)
         any merger or consolidation involving a Restricted Subsidiary (other
         than the Company) (other than a merger or consolidation with Holdings),
         a Restricted Subsidiary shall be the surviving or continuing
         corporation, provided that any decrease in the percentage of the Voting
         Stock of such Restricted Subsidiary beneficially owned, directly or
         indirectly, by Holdings shall be treated as a disposition of such
         Voting Stock by Holdings subject to the provisions of Section 10.6(b)
         hereof and (3) at the time of such consolidation or merger and
         immediately after giving effect thereto, no Default or Event of Default
         would exist;

                  (ii) any Restricted Subsidiary (other than the Company) may
         sell, lease or otherwise dispose of all or substantially all of its
         assets in compliance with the provisions of Section 10.6(b);

                 (iii) either Obligor may consolidate or merge with or into any
         other corporation if (1) the corporation which results from such
         consolidation or merger (the "surviving corporation") is organized
         under the laws of any state of the United States or the District of
         Columbia, (2) if such Obligor is not the surviving corporation, the due
         and punctual performance and observation of all of the covenants in
         this Agreement and the Notes to be performed or observed by such
         Obligor are expressly assumed in writing by the surviving corporation
         (pursuant to such agreements and instruments as shall be





                                      -23-

Lincoln Electric Holdings, Inc.                          Note Purchase Agreement
The Lincoln Electric Company

         satisfactory in form and substance to the Required Holders of the
         Notes), and the surviving corporation shall furnish to the Required
         Holders an opinion of counsel satisfactory to such holders to the
         effect that the agreements and instruments of assumption have been duly
         authorized, executed and delivered and constitute the legal, valid and
         binding contracts and agreements of the surviving corporation
         enforceable in accordance with their respective terms, except as
         enforcement of such terms may be limited by bankruptcy, insolvency,
         reorganization, moratorium and similar laws affecting the enforcement
         of creditors' rights generally and by general equitable principles, and
         (3) at the time of such consolidation or merger and immediately after
         giving effect thereto, no Default or Event of Default would exist; and

                  (iv) the Obligors may, collectively, sell or otherwise dispose
         of all or substantially all of their assets, taken as a whole (other
         than as provided in this Section 10.6(a) and Section 10.6(c)) to any
         Person for consideration which represents the fair market value of such
         assets (as determined in good faith by a Senior Financial Officer of
         such Obligor or, to the extent the approval of the Board of Directors
         is required, the Board of Directors of such Obligor), at the time of
         such sale or other disposition if (1) the acquiring Person is a
         corporation organized under the laws of any state of the United States
         or the District of Columbia, (2) the due and punctual performance and
         observance of all of the covenants in this Agreement and the Notes to
         be performed or observed by such Obligor are expressly assumed in
         writing by the acquiring corporation (pursuant to such agreements and
         instruments as shall be satisfactory in form and substance to the
         Required Holders of the Notes), and the acquiring corporation shall
         furnish to the Required Holders an opinion of counsel satisfactory to
         such holders to the effect that the agreements and instruments of
         assumption have been duly authorized, executed and delivered and
         constitute the legal, valid and binding contracts and agreements of the
         surviving corporation enforceable in accordance with their respective
         terms, except as enforcement of such terms may be limited by
         bankruptcy, insolvency, reorganization, moratorium and similar laws
         affecting the enforcement of creditors' rights generally and by general
         equitable principles, and (3) at the time of such sale or disposition
         and immediately after giving effect thereto, no Default or Event of
         Default would exist.

         (b) The Obligors will not, and will not permit any Restricted
Subsidiary to, sell, lease, transfer, abandon or otherwise dispose of assets,
including, without limitation, any Restricted Subsidiary Stock of, or any
Investment in, any Restricted Subsidiary; provided that the foregoing
restrictions do not apply to:

                   (i) the sale, lease, transfer or other disposition of assets
         of a Restricted Subsidiary (other than the Company) to Holdings or a
         Restricted Subsidiary, provided that any sale, lease, transfer or other
         disposition of assets from a transferring Restricted Subsidiary to
         another Restricted Subsidiary with a larger minority interest than the
         transferring Restricted Subsidiary shall be treated as a sale, lease,
         transfer or other disposition of assets by such transferring Restricted
         Subsidiary, to the extent that the minority interest of such other
         Restricted Subsidiary exceeds the minority interest of the





                                      -24-

Lincoln Electric Holdings, Inc.                          Note Purchase Agreement
The Lincoln Electric Company

         transferring Restricted Subsidiary, subject to the provisions of
         Section 10.6(b)(v) hereof; or

                  (ii) the sale of assets in the ordinary course of business for
         fair market value; or

                  (iii) the sale or other disposition of all or substantially
         all of the assets of the Obligors, taken as a whole, as provided in
         Section 10.6(a)(iv) hereof; or

                  (iv) the sale, transfer or other disposition of Restricted
         Subsidiary Stock (1) to qualify directors, (2) to comply with local
         laws requiring multiple shareholders, or (3) in connection with a
         merger or consolidation permitted under Section 10.6(a)(i); or

                   (v) the sale of assets (including, without limitation, (A) a
         decrease in the percentage of Voting Stock of a Restricted Subsidiary
         (other than the Company) beneficially owned, directly or indirectly, by
         Holdings as a result of a merger or consolidation pursuant to Section
         10.6(a)(i) hereof, (B) a sale, lease or other disposition of all or
         substantially all of the assets of a Restricted Subsidiary (other than
         the Company) pursuant to Section 10.6(a)(ii), (C) any Restricted
         Subsidiary Stock of, or any Investment in, any Restricted Subsidiary
         pursuant to Section 10.6(b)(i) and (D) an increase in the minority
         interest in the stock and surplus of a Restricted Subsidiary as a
         result of the issuance of stock by such Restricted Subsidiary permitted
         under Section 10.6(c)) for cash or Cash Equivalents to a Person or
         Persons other than an Affiliate if all of the following conditions are
         met:

                            (1) the Disposition Value of such assets does not,
                  together with the Disposition Value of all other assets of
                  Holdings and its Restricted Subsidiaries previously disposed
                  of during the Fiscal Year in which such sale occurs (other
                  than pursuant to Sections 10.6(b)(i) (subject to the proviso
                  therein), 10.6(b)(ii), 10.6(b)(iii), 10.6(b)(iv) and
                  10.6(b)(vi)), exceed 15% of Consolidated Total Assets;

                            (2) a Senior Financial Officer of Holdings, or (to
                  the extent the approval of the Board of Directors is required)
                  the Board of Directors of Holdings (as evidenced by a
                  resolution thereof) shall have determined, that the proposed
                  sale, lease, transfer or other disposition is for fair value
                  and is in the best interests of Holdings and its Restricted
                  Subsidiaries;

                            (3) if, after giving effect to such sale, transfer
                  or other disposition of Restricted Subsidiary Stock of a
                  Restricted Subsidiary, such Restricted Subsidiary shall no
                  longer qualify to be a "Restricted Subsidiary" hereunder,
                  simultaneously with such sale, transfer or disposition, all
                  shares of such Restricted Subsidiary Stock related to such
                  Restricted Subsidiary and all Investment in such Restricted
                  Subsidiary at the time owned by Holdings and by every other
                  Restricted Subsidiary shall be sold, transferred or disposed
                  of as an entirety and such





                                      -25-

Lincoln Electric Holdings, Inc.                          Note Purchase Agreement
The Lincoln Electric Company

                  Restricted Subsidiary shall not have any continuing Investment
                  in Holdings or any other Restricted Subsidiary not being
                  simultaneously disposed of;

                            (4) any Restricted Subsidiary Stock of and
                  Investment in any Restricted Subsidiary that are sold,
                  transferred or otherwise disposed of shall be sold,
                  transferred or otherwise disposed of to a Person on terms
                  reasonably deemed by a Senior Financial Officer of Holdings or
                  (to the extent the approval of the Board of Directors is
                  required) the Board of Directors of Holdings to be adequate
                  and satisfactory; and

                           (5) immediately after the consummation of the
                  transaction and after giving effect thereto no Default or
                  Event of Default would exist;

         provided, however, that for purposes of the foregoing calculation,
         there shall not be included any assets the net proceeds of which were
         or are applied either (A) within twelve months after the date of sale
         of such assets, to the acquisition of assets of a similar character
         useful and intended to be used in the operation of the business of
         Holdings and its Restricted Subsidiaries and having a fair market value
         and a capacity to contribute to Consolidated EBITDA (as determined in
         good faith by a Senior Financial Officer of Holdings or (to the extent
         the approval of the Board of Directors is required) the Board of
         Directors of Holdings), in each case, at least equal to that of the
         assets so disposed of or (B) immediately upon receipt, to the
         prepayment, together with any applicable prepayment premium, on a pro
         rata basis, of the Notes and any other Consolidated Senior Funded Debt,
         provided that the Obligors may prepay any secured Consolidated Senior
         Funded Debt then outstanding prior to unsecured Consolidated Senior
         Funded Debt. It is understood and agreed by the Obligors that any such
         proceeds paid and applied to the prepayment of the Notes as hereinabove
         provided shall be prepaid as and to the extent provided in Section 8.2;
         or

                  (vi) the sale or other transfer of Trade Receivables to a
         Special Purpose Company pursuant to one or more Qualifying
         Securitization Transactions, to the extent that the aggregate amount
         outstanding under all financing facilities relating to such Qualifying
         Securitization Transactions shall not exceed $75,000,000 at any time of
         determination.

         (c) The Obligors will not permit any Restricted Subsidiary to issue any
of its own stock (or any options or warrants to purchase stock or other
Securities exchangeable for or convertible into such stock) to any Person other
than an Obligor (except (i) to qualify directors, (ii) stock issued to comply
with local laws requiring multiple shareholders, or (iii) in connection with an
issuance of such stock whereby Holdings maintains its same direct or indirect
proportionate interest in such Restricted Subsidiary), unless

                   (i) such issuance is for cash consideration or Cash
         Equivalents and after giving effect to such issuance of such stock,
         such Restricted Subsidiary shall continue to be a "Restricted
         Subsidiary" hereunder;




                                      -26-

Lincoln Electric Holdings, Inc.                          Note Purchase Agreement
The Lincoln Electric Company

                  (ii) a Senior Financial Officer of Holdings, or (to the extent
         the approval of the Board of Directors is required) the Board of
         Directors of Holdings (as evidenced by a resolution thereof) shall have
         determined that the proposed issuance of said stock is for fair value
         and is in the best interest of Holdings and its Restricted
         Subsidiaries;

                 (iii) said stock issued to a Person on terms reasonably deemed
         by such Senior Financial Officer of Holdings or (to the extent the
         approval of the Board of Directors is required) the Board of Directors
         of Holdings to be adequate and satisfactory; and

                  (iv) such issuance shall be treated as a disposition of assets
         by Holdings of a portion of such Restricted Subsidiary equal to the
         increase in the minority interests in the stock and surplus of such
         Restricted Subsidiary subject to the provisions of Section 10.6(b)
         hereof.

        Section 10.7. Limitation on Liens. The Obligors will not, and will not
permit any Restricted Subsidiary to, create or incur, or suffer to be incurred
or to exist, any Lien on its or their property or assets, whether now owned or
hereafter acquired, or upon any income or profits therefrom, or transfer any
property for the purpose of subjecting the same to the payment of obligations in
priority to the payment of its or their general creditors, or acquire or agree
to acquire, or permit any Restricted Subsidiary to acquire or agree to acquire,
any property or assets upon conditional sales agreements or other title
retention devices, except:

                   (a) Liens for taxes, assessments or other governmental
         charges or levies which are not yet due and payable or if they can
         thereafter be paid without penalty or the payment of which is not at
         the time required by Section 9.4;

                   (b) any attachment or judgment Lien, unless either (i) the
         judgment it secures shall not, within thirty (30) days after the entry
         thereof, have been discharged or execution thereof stayed pending
         appeal, or shall not have been discharged within thirty (30) days after
         the expiration of any such stay or (ii) the judgment it secures, when
         taken together with all other judgments under this subclause (ii)
         related to attachment and judgment Liens under this clause (b), does
         not exceed $5,000,000 in the aggregate;

                   (c) statutory Liens of landlords and Liens of carriers,
         warehousemen, workmen, repairmen, mechanics, materialmen and other
         similar Liens, in each case, incurred in the ordinary course of
         business for sums not yet due and payable or the amount, applicability
         or validity thereof is contested by such Obligor or such Restricted
         Subsidiary on a timely basis in good faith and in appropriate
         proceedings diligently conducted, and such Obligor or such Restricted
         Subsidiary has established adequate reserves therefor in accordance
         with GAAP on the books of such Obligor or such Restricted Subsidiary;

                   (d) Liens (other than any Lien imposed by ERISA) incurred or
         deposits made in the ordinary course of business in connection with
         workers' compensation obligations, unemployment insurance, other types
         of social security or retirement benefits;




                                      -27-

Lincoln Electric Holdings, Inc.                          Note Purchase Agreement
The Lincoln Electric Company


                   (e) Liens incurred in the ordinary course of business to
         secure (i) the non-delinquent performance of bids, trade contracts,
         leases (other than Capital Leases) and statutory obligations, (ii)
         contingent obligations on surety bonds and appeal bonds, and (iii)
         other similar non-delinquent obligations, in each case, not incurred or
         made in connection with the borrowing of money, the obtaining of
         advances or credit or the payment of the deferred purchase price of
         property, provided that such Liens, taken as a whole, would not, even
         if enforced, have a Material Adverse Effect on Holdings and its
         Restricted Subsidiaries, taken as a whole;

                   (f) leases or subleases granted to others, easements,
         rights-of-way, restrictions and other similar charges or encumbrances
         in the ordinary course of business, in each case incidental to, and not
         interfering in any material respect with, the ordinary conduct of the
         business of Holdings or any of its Restricted Subsidiaries, and which
         do not in the aggregate materially impair the use of such property in
         the operation of the business of Holdings and its Restricted
         Subsidiaries, taken as a whole, or the value of such property for the
         purposes of such business;

                   (g) Liens created or incurred after the date of the Closing
         given to secure all or any part of the purchase price, or to secure
         Debt incurred solely for the purpose of financing the acquisition or
         purchase, of property (or any improvement thereon) acquired by Holdings
         or a Restricted Subsidiary; provided that

                           (i) the Lien shall attach solely to the property (or
                  improvement thereon) so acquired or purchased,

                           (ii) such Lien shall have been created or incurred
                  contemporaneously with or within 180 days of the date of
                  acquisition or purchase of such property,

                          (iii) the aggregate principal amount of Debt secured
                  by such Lien and all other Debt secured by any other Lien on
                  such property or such improvement does not exceed in the
                  aggregate 100% of the cost to Holdings or such Restricted
                  Subsidiary of such property (or improvement thereon), and

                           (iv) at the time of creation, issuance, assumption,
                  guarantee or incurrence of the Debt secured by such Lien and
                  after giving effect thereto and to the application of the
                  proceeds thereof, no Default or Event of Default would exist;

                   (h) any such Lien existing on property or assets of a
         corporation at the time such corporation is consolidated with or merged
         into Holdings or a Restricted Subsidiary or its becoming a Restricted
         Subsidiary, or any Lien existing on any property or assets acquired by
         Holdings or any Restricted Subsidiary at the time such property or
         assets are so acquired (whether or not the Debt secured thereby shall
         have been assumed), provided that (i) each such Lien shall extend
         solely to the corporation or property or assets so acquired, (ii) such
         Lien was not incurred in contemplation of such consolidation, merger




                                      -28-

Lincoln Electric Holdings, Inc.                          Note Purchase Agreement
The Lincoln Electric Company

         or acquisition, and (iii) at the time of creation, issuance,
         assumption, guarantee or incurrence of the Debt secured by such Lien
         and after giving effect thereto and to the application of the proceeds
         thereof, no Default or Event of Default would exist;

                   (i) Liens securing operating leases with respect to personal
         property pursuant to which Holdings or a Restricted Subsidiary is the
         lessee (excluding financing leases, synthetic leases and similar
         arrangements), in each case incidental to, and not interfering with,
         the ordinary conduct of the business of Holdings or any of its
         Restricted Subsidiaries, provided that the Lien shall attach solely to
         the leased property or assets;

                   (j) Liens existing on the date of this Agreement and securing
         the Debt of Holdings and its Restricted Subsidiaries, provided that (i)
         no Liens securing Debt in excess of $5,000,000 exist on the date of the
         Closing and (ii) the aggregate amount of all Debt secured by Liens
         existing on the date of the Closing does not exceed $12,000,000; and

                   (k) any extension, renewal or refunding of any Lien permitted
         by the preceding clauses (g), (h) and (j) of this Section 10.7 in
         respect of the same property theretofore subject to such Lien in
         connection with the extension, renewal or refunding of the Debt secured
         thereby; provided that (i) such extension, renewal or refunding of Debt
         shall be without increase in the principal amount remaining unpaid as
         of the date of such extension, renewal or refunding, (ii) such Lien
         shall attach solely to the same such property, (iii) the principal
         amount remaining unpaid as of the date of such extension, renewal or
         refunding of Debt is less than or equal to the fair market value of the
         property (determined in good faith by the Board or Directors of
         Holdings) to which such Lien is attached, (iv) at the time of such
         extension, renewal or refunding and after giving effect thereto, no
         Default or Event of Default would exist and (v) all Debt of Holdings
         and the Company secured by any Lien with respect to any property of
         Holdings or the Company and all Debt of the Restricted Subsidiaries
         (other than the Company) shall not in the aggregate exceed 20% of
         Consolidated Net Worth.

        Section 10.8. Sale-and-Leaseback Transactions. The Obligors will not,
and will not permit any Restricted Subsidiary to, enter into any
Sale-and-Leaseback Transaction unless, immediately after giving effect thereto,
the aggregate amount of Priority Debt does not exceed 20% of Consolidated Net
Worth.

SECTION 11.          EVENTS OF DEFAULT.

         An "Event of Default" shall exist if any of the following conditions or
events shall occur and be continuing:

                   (a) the Obligors default in the payment of any principal or
         Make-Whole Amount, if any, on any Note when the same becomes due and
         payable, whether at maturity or at a date fixed for prepayment or by
         declaration or otherwise; or




                                      -29-

Lincoln Electric Holdings, Inc.                          Note Purchase Agreement
The Lincoln Electric Company

                  (b) the Obligors default in the payment of any interest on any
         Note for more than five days after the same becomes due and payable; or

                  (c) the Obligors default in the performance of or compliance
         with any term contained in Section 10.2, 10.3, 10.4, 10.5, 10.6, 10.7
         or 10.8; or

                   (d) the Obligors default in the performance of or compliance
         with any term contained herein (other than those referred to in
         paragraphs (a), (b) or (c) of this Section 11) and such default is not
         remedied within 30 days after the earlier of (i) a Responsible Officer
         of either Obligor obtaining actual knowledge of such default and (ii)
         either Obligor receiving written notice of such default from any holder
         of a Note (any such written notice to be identified as a "notice of
         default" and to refer specifically to this paragraph (d) of Section
         11); or

                   (e) any representation or warranty made in writing by or on
         behalf of the Obligors or by any officer of an Obligor in this
         Agreement or in any writing furnished in connection with the
         transactions contemplated hereby proves to have been false or incorrect
         in any material respect on the date as of which made; or

                   (f) (i) an Obligor or any Restricted Subsidiary is in default
         (as principal or as guarantor or other surety) in the payment of any
         principal of or premium or make-whole amount or interest on any
         Indebtedness that is outstanding in an aggregate principal amount
         exceeding $10,000,000 beyond any period of grace provided with respect
         thereto, or (ii) an Obligor or any Restricted Subsidiary is in default
         in the performance of or compliance with any term of any evidence of
         any Indebtedness in an aggregate outstanding principal amount exceeding
         $10,000,000 or of any mortgage, indenture or other agreement relating
         thereto or any other condition exists, and as a consequence of such
         default or condition such Indebtedness has become, or has been
         declared, due and payable before its stated maturity or before its
         regularly scheduled dates of payment; or

                   (g) an Obligor or any Restricted Subsidiary (i) is generally
         not paying, or admits in writing its inability to pay, its debts as
         they become due, (ii) files, or consents by answer or otherwise to the
         filing against it of, a petition for relief or reorganization or
         arrangement or any other petition in bankruptcy, for liquidation or to
         take advantage of any bankruptcy, insolvency, reorganization,
         moratorium or other similar law of any jurisdiction, (iii) makes an
         assignment for the benefit of its creditors, (iv) consents to the
         appointment of a custodian, receiver, trustee or other officer with
         similar powers with respect to it or with respect to any substantial
         part of its property, (v) is adjudicated as insolvent or to be
         liquidated, or (vi) takes corporate action for the purpose of any of
         the foregoing; or

                   (h) a court or Governmental Authority of competent
         jurisdiction enters an order appointing, without consent by an Obligor
         or any Restricted Subsidiary, a custodian, receiver, trustee or other
         officer with similar powers with respect to it or with respect to any
         substantial part of its property, or constituting an order for relief
         or





                                      -30-

Lincoln Electric Holdings, Inc.                          Note Purchase Agreement
The Lincoln Electric Company

         approving a petition for relief or reorganization or any other petition
         in bankruptcy or for liquidation or to take advantage of any bankruptcy
         or insolvency law of any jurisdiction, or ordering the dissolution,
         winding-up or liquidation of an Obligor or any Restricted Subsidiary,
         or any such petition shall be filed against an Obligor or any
         Restricted Subsidiary and such petition shall not be dismissed within
         60 days; or

                   (i) a final judgment or judgments for the payment of money
         aggregating in excess of $5,000,000 are rendered against one or more of
         the Obligors and the Restricted Subsidiaries and which judgments are
         not, within 60 days after entry thereof, bonded, discharged or stayed
         pending appeal or are not discharged within 60 days after the
         expiration of such stay; or

                   (j) If (i) any Plan shall fail to satisfy the minimum funding
         standards of ERISA or the Code for any plan year or part thereof or a
         waiver of such standards or extension of any amortization period is
         sought or granted under section 412 of the Code, (ii) a notice of
         intent to terminate any Plan shall have been or is reasonably expected
         to be filed with the PBGC or the PBGC shall have instituted proceedings
         under ERISA section 4042 to terminate or appoint a trustee to
         administer any Plan or the PBGC shall have notified Holdings or any
         ERISA Affiliate that a Plan may become a subject of any such
         proceedings, (iii) the aggregate "amount of unfunded benefit
         liabilities" (within the meaning of section 4001(a)(18) of ERISA) under
         all Plans, determined in accordance with Title IV of ERISA, shall
         exceed $50,000,000, (iv) Holdings or any ERISA Affiliate shall have
         incurred or is reasonably expected to incur any liability pursuant to
         Title I or IV of ERISA or the penalty or excise tax provisions of the
         Code relating to employee benefit plans, (v) Holdings or any ERISA
         Affiliate withdraws from any Multiemployer Plan, or (vi) Holdings or
         any Subsidiary establishes or amends any employee welfare benefit plan
         that provides post-employment welfare benefits in a manner that would
         increase the liability of Holdings or any Subsidiary thereunder; and
         any such event or events described in clauses (i) through (vi) above,
         either individually or together with any other such event or events,
         would reasonably be expected to have a Material Adverse Effect.

As used in Section 11(j), the terms "employee benefit plan" and "employee
welfare benefit plan" shall have the respective meanings assigned to such terms
in Section 3 of ERISA.

SECTION 12.          REMEDIES ON DEFAULT, ETC.

         Section 12.1. Acceleration. (a) If an Event of Default with respect to
either Obligor described in paragraph (g) or (h) of Section 11 (other than an
Event of Default described in clause (i) of paragraph (g) or described in clause
(vi) of paragraph (g) by virtue of the fact that such clause encompasses clause
(i) of paragraph (g)) has occurred, all the Notes then outstanding shall
automatically become immediately due and payable.

         (b) If any other Event of Default has occurred and is continuing, any
holder or holders of a majority in principal amount of the Notes at the time
outstanding may at any time at its or





                                      -31-

Lincoln Electric Holdings, Inc.                          Note Purchase Agreement
The Lincoln Electric Company

their option, by notice or notices to either Obligor, declare all the Notes then
outstanding to be immediately due and payable.

         (c) If any Event of Default described in paragraph (a) or (b) of
Section 11 has occurred and is continuing, any holder of Notes at the time
outstanding affected by such Event of Default may at any time, at its option, by
notice or notices to either Obligor, declare all the Notes held by it to be
immediately due and payable.

         Upon any Note becoming due and payable under this Section 12.1, whether
automatically or by declaration, such Note will forthwith mature and the entire
unpaid principal amount of such Note, plus (x) all accrued and unpaid interest
thereon and (y) the Make-Whole Amount determined in respect of such principal
amount (to the full extent permitted by applicable law), shall all be
immediately due and payable, in each and every case without presentment, demand,
protest or further notice, all of which are hereby waived. Each Obligor
acknowledges, and the parties hereto agree, that each holder of a Note has the
right to maintain its investment in the Notes free from repayment by the
Obligors (except as herein specifically provided for) and that the provision for
payment of a Make-Whole Amount by the Obligors in the event that the Notes are
prepaid or are accelerated as a result of an Event of Default, is intended to
provide compensation for the deprivation of such right under such circumstances.

        Section 12.2. Other Remedies. If any Default or Event of Default has
occurred and is continuing, and irrespective of whether any Notes have become or
have been declared immediately due and payable under Section 12.1, the holder of
any Note at the time outstanding may proceed to protect and enforce the rights
of such holder by an action at law, suit in equity or other appropriate
proceeding, whether for the specific performance of any agreement contained
herein or in any Note, or for an injunction against a violation of any of the
terms hereof or thereof, or in aid of the exercise of any power granted hereby
or thereby or by law or otherwise.

        Section 12.3. Rescission. At any time after any Notes have been declared
due and payable pursuant to clause (b) or (c) of Section 12.1, the holders of
not less than 66-2/3% in principal amount of the Notes then outstanding, by
written notice to the Obligors, may rescind and annul any such declaration and
its consequences if (a) the Obligors have paid all overdue interest on the Notes
of each Series, all principal of and Make-Whole Amount, if any, on any Notes of
each Series that are due and payable and are unpaid other than by reason of such
declaration, and all interest on such overdue principal and Make-Whole Amount,
if any, and (to the extent permitted by applicable law) any overdue interest in
respect of the Notes of each Series, at the respective Default Rates, (b) all
Events of Default and Defaults, other than non-payment of amounts that have
become due solely by reason of such declaration, have been cured or have been
waived pursuant to Section 17, and (c) no judgment or decree has been entered
for the payment of any monies due pursuant hereto or to the Notes. No rescission
and annulment under this Section 12.3 will extend to or affect any subsequent
Event of Default or Default or impair any right consequent thereon.

        Section 12.4. No Waivers or Election of Remedies, Expenses, etc. No
course of dealing and no delay on the part of any holder of any Note in
exercising any right, power or remedy shall






                                      -32-

Lincoln Electric Holdings, Inc.                          Note Purchase Agreement
The Lincoln Electric Company

operate as a waiver thereof or otherwise prejudice such holder's rights, powers
or remedies. No right, power or remedy conferred by this Agreement or by any
Note upon any holder thereof shall be exclusive of any other right, power or
remedy referred to herein or therein or now or hereafter available at law, in
equity, by statute or otherwise. Without limiting the obligations of the
Obligors under Section 15, the Obligors will pay to the holder of each Note on
demand such further amount as shall be sufficient to cover all costs and
expenses of such holder incurred in any enforcement or collection under this
Section 12, including, without limitation, reasonable attorneys' fees, expenses
and disbursements.

SECTION 13.          REGISTRATION; EXCHANGE; SUBSTITUTION OF NOTES.

        Section 13.1. Registration of Notes. The Obligors shall keep at the
principal executive office of Holdings a register for the registration and
registration of transfers of Notes. The name and address of each holder of one
or more Notes, each transfer thereof and the name and address of each transferee
of one or more Notes shall be registered in such register. Prior to due
presentment for registration of transfer, the Person in whose name any Note
shall be registered shall be deemed and treated as the owner and holder thereof
for all purposes hereof, and the Obligors shall not be affected by any notice or
knowledge to the contrary. The Obligors shall give to any holder of a Note that
is an Institutional Investor promptly upon request therefor, a complete and
correct copy of the names and addresses of all registered holders of Notes.

         Section 13.2. No Transfers of Notes to Competitors; Transfer and
Exchange of Notes. (a) Without the consent of Holdings, which consent shall not
be unreasonably withheld, no holder of a Note may transfer such Note to a
Competitor.

         (b) Upon surrender of any Note at the principal executive office of
Holdings for registration of transfer or exchange (and in the case of a
surrender for registration of transfer, duly endorsed or accompanied by a
written instrument of transfer duly executed by the registered holder of such
Note or its attorney duly authorized in writing and accompanied by the address
for notices of each transferee of such Note or part thereof), the Obligors shall
execute and deliver, at the Obligors' expense (except as provided below), one or
more new Notes (as requested by the holder thereof) of the same Series in
exchange therefor, in an aggregate principal amount equal to the unpaid
principal amount of the surrendered Note. Each such new Note shall be payable to
such Person as such holder may request and shall be substantially in the form of
Exhibit 1-A, 1-B or 1-C, as the case may be. Each such new Note shall be dated
and bear interest from the date to which interest shall have been paid on the
surrendered Note or dated the date of the surrendered Note if no interest shall
have been paid thereon. The Obligors may require payment of a sum sufficient to
cover any stamp tax or governmental charge imposed in respect of any such
transfer of Notes. Notes shall not be transferred in denominations of less than
$100,000, provided that if necessary to enable the registration of transfer by a
holder of its entire holding of Notes, one Note may be in a denomination of less
than $100,000. Any transferee of a Note, or purchaser of a participation
therein, shall, by its acceptance of such Note be deemed to make the same
representations to the Obligors regarding the Note or participation as the
Purchasers have made pursuant to Sections 6.1 and 6.2, provided that such entity
may (in reliance upon information provided by the Obligors, which shall not be
unreasonably withheld) make a representation to





                                      -33-

Lincoln Electric Holdings, Inc.                          Note Purchase Agreement
The Lincoln Electric Company

the effect that the purchase by such entity of any Note will not constitute a
non-exempt prohibited transaction under Section 406(a) of ERISA.

         Section 13.3. Replacement of Notes. Upon receipt by the Obligors of
evidence reasonably satisfactory to it of the ownership of and the loss, theft,
destruction or mutilation of any Note (which evidence shall be, in the case of
an Institutional Investor, notice from such Institutional Investor of such
ownership and such loss, theft, destruction or mutilation), and

                   (a) in the case of loss, theft or destruction, of indemnity
         reasonably satisfactory to it (provided that if the holder of such Note
         is, or is a nominee for, an original Purchaser or another holder of a
         Note with a minimum net worth of at least $50,000,000, such Person's
         own unsecured agreement of indemnity shall be deemed to be
         satisfactory), or

                  (b) in the case of mutilation, upon surrender and cancellation
         thereof,

the Obligors at their own expense shall execute and deliver, in lieu thereof, a
new Note of the same Series, dated and bearing interest from the date to which
interest shall have been paid on such lost, stolen, destroyed or mutilated Note
or dated the date of such lost, stolen, destroyed or mutilated Note if no
interest shall have been paid thereon.

SECTION 14.          PAYMENTS ON NOTES.

        Section 14.1. Place of Payment. Subject to Section 14.2, payments of
principal, Make-Whole Amount, if any, and interest becoming due and payable on
the Notes shall be made in Cleveland, Ohio at the principal office of the
Company in such jurisdiction. The Obligors may at any time, by notice to each
holder of a Note, change the place of payment of the Notes so long as such place
of payment shall be either the principal office of an Obligor in such
jurisdiction or the principal office of a bank or trust company in such
jurisdiction.

        Section 14.2. Home Office Payment. So long as any Purchaser or its
nominee shall be the holder of any Note, and notwithstanding anything contained
in Section 14.1 or in such Note to the contrary, the Obligors will pay all sums
becoming due on such Note for principal, Make-Whole Amount, if any, and interest
by the method and at the address specified for such purpose below such
Purchaser's name in Schedule A, or by such other method or at such other address
as such Purchaser shall have from time to time specified to Holdings in writing
for such purpose, without the presentation or surrender of such Note or the
making of any notation thereon, except that upon written request of the Obligors
made concurrently with or reasonably promptly after payment or prepayment in
full of any Note, such Purchaser shall surrender such Note for cancellation,
reasonably promptly after any such request, to Holdings at its principal
executive office or at the place of payment most recently designated by the
Obligors pursuant to Section 14.1. The Obligors will afford the benefits of this
Section 14.2 to any Institutional Investor that is the direct or indirect
transferee of any Note purchased by any Purchaser under this Agreement and that
has made the same agreement relating to such Note as such Purchaser has made in
this Section 14.2.




                                      -34-

Lincoln Electric Holdings, Inc.                          Note Purchase Agreement
The Lincoln Electric Company

SECTION 15.        EXPENSES, ETC.

        Section 15.1. Transaction Expenses. Whether or not the transactions
contemplated hereby are consummated, the Obligors will pay all costs and
expenses (including reasonable attorneys' fees of a special counsel and, if
reasonably required, local or other counsel) incurred by each Purchaser or
holder of a Note in connection with such transactions and in connection with any
amendments, waivers or consents under or in respect of this Agreement or the
Notes (whether or not such amendment, waiver or consent becomes effective),
including, without limitation: (a) the costs and expenses incurred in enforcing
or defending (or determining whether or how to enforce or defend) any rights
under this Agreement or the Notes or in responding to any subpoena or other
legal process or informal investigative demand issued in connection with this
Agreement or the Notes, or by reason of being a holder of any Note, and (b) the
costs and expenses, including financial advisors' fees, incurred in connection
with the insolvency or bankruptcy of either Obligor or any Subsidiary or in
connection with any work-out or restructuring of the transactions contemplated
hereby and by the Notes. The Obligors will pay, and will save each Purchaser and
each other holder of a Note harmless from, all claims in respect of any fees,
costs or expenses if any, of brokers and finders (other than those retained by
such Purchaser).

         Section 15.2. Survival. The obligations of the Obligors under this
Section 15 will survive the payment or transfer of any Note, the enforcement,
amendment or waiver of any provision of this Agreement or the Notes, and the
termination of this Agreement.

SECTION 16.        SURVIVAL OF REPRESENTATIONS AND WARRANTIES; ENTIRE AGREEMENT.

         All representations and warranties contained herein shall survive the
execution and delivery of this Agreement and the Notes, the purchase or transfer
by any Purchaser of any Note or portion thereof or interest therein and the
payment of any Note, and may be relied upon by any subsequent holder of a Note,
regardless of any investigation made at any time by or on behalf of such
Purchaser or any other holder of a Note. All statements contained in any
certificate or other instrument delivered by or on behalf of an Obligor pursuant
to this Agreement shall be deemed representations and warranties of such Obligor
under this Agreement. Subject to the preceding sentence, this Agreement and the
Notes embody the entire agreement and understanding between each Purchaser and
the Obligors and supersede all prior agreements and understandings relating to
the subject matter hereof.

SECTION 17.        AMENDMENT AND WAIVER.

         Section 17.1. Requirements. This Agreement and the Notes may be
amended, and the observance of any term hereof or of the Notes may be waived
(either retroactively or prospectively), with (and only with) the written
consent of the Obligors and the Required Holders, except that (a) no amendment
or waiver of any of the provisions of Section 1, 2, 3, 4, 5, 6 or 21 hereof, or
any defined term (as it is used therein), will be effective as to any Purchaser
unless consented to by such Purchaser in writing, and (b) no such amendment or
waiver may, without the written consent of the holder of each Note at the time
outstanding affected thereby,







                                      -35-

Lincoln Electric Holdings, Inc.                          Note Purchase Agreement
The Lincoln Electric Company

(i) subject to the provisions of Section 12 relating to acceleration or
rescission, change the amount or time of any prepayment or payment of principal
of, or reduce the rate or change the time of payment or method of computation of
interest or of the Make-Whole Amount on, the Notes, (ii) change the percentage
of the principal amount of the Notes the holders of which are required to
consent to any such amendment or waiver, or (iii) amend any of Sections 8,
11(a), 11(b), 12, 17 or 20.

        Section 17.2.    Solicitation of Holders of Notes.

         (a) Solicitation. The Obligors will provide each holder of the Notes
(irrespective of the amount of Notes then owned by it) with sufficient
information, sufficiently far in advance of the date a decision is required, to
enable such holder to make an informed and considered decision with respect to
any proposed amendment, waiver or consent in respect of any of the provisions
hereof or of the Notes. The Obligors will deliver executed or true and correct
copies of each amendment, waiver or consent effected pursuant to the provisions
of this Section 17 to each holder of outstanding Notes promptly following the
date on which it is executed and delivered by, or receives the consent or
approval of, the requisite holders of Notes.

         (b) Payment. The Obligors will not directly or indirectly pay or cause
to be paid any remuneration, whether by way of supplemental or additional
interest, fee or otherwise, or grant any security, to any holder of Notes as
consideration for or as an inducement to the entering into by any holder of
Notes or any waiver or amendment of any of the terms and provisions hereof or of
the Notes unless such remuneration is concurrently paid, or security is
concurrently granted, on the same terms, ratably to each holder of Notes then
outstanding whether or not such holder consented to such waiver or amendment.

        Section 17.3. Binding Effect, etc. Any amendment or waiver consented to
as provided in this Section 17 applies equally to all holders of Notes and is
binding upon them and upon each future holder of any Note and upon the Obligors
without regard to whether such Note has been marked to indicate such amendment
or waiver. No such amendment or waiver will extend to or affect any obligation,
covenant, agreement, Default or Event of Default not expressly amended or waived
or impair any right consequent thereon. No course of dealing between the
Obligors and the holder of any Note nor any delay in exercising any rights
hereunder or under any Note shall operate as a waiver of any rights of any
holder of such Note. As used herein, the term "this Agreement" and references
thereto shall mean this Agreement as it may from time to time be amended or
supplemented.

        Section 17.4. Notes Held by the Obligors, etc. Solely for the purpose of
determining whether the holders of the requisite percentage of the aggregate
principal amount of Notes then outstanding approved or consented to any
amendment, waiver or consent to be given under this Agreement or the Notes, or
have directed the taking of any action provided herein or in the Notes to be
taken upon the direction of the holders of a specified percentage of the
aggregate principal amount of Notes then outstanding, Notes directly or
indirectly owned by the Obligors or any of their Affiliates shall be deemed not
to be outstanding.




                                      -36-

Lincoln Electric Holdings, Inc.                          Note Purchase Agreement
The Lincoln Electric Company

SECTION 18.          NOTICES.

         All notices and communications provided for hereunder shall be in
writing and sent (a) by telefacsimile if the sender on the same day sends a
confirming copy of such notice by a recognized overnight delivery service
(charges prepaid), or (b) by registered or certified mail with return receipt
requested (postage prepaid), or (c) by a recognized overnight delivery service
(with charges prepaid). Any such notice must be sent:

                   (i) if to any Purchaser or its nominee, to such Purchaser or
         it at the address specified for such communications in Schedule A, or
         at such other address as such Purchaser or it shall have specified to
         the Obligors in writing,

                  (ii) if to any other holder of any Note, to such holder at
         such address as such other holder shall have specified to the Obligors
         in writing, or

                 (iii) if to an Obligor, to the such Obligor at its address set
         forth at the beginning hereof to the attention of the Treasurer of such
         Obligor, or at such other address as such Obligor shall have specified
         to the holder of each Note in writing.

Notices under this Section 18 will be deemed given only when actually received.

SECTION 19.          REPRODUCTION OF DOCUMENTS.

         This Agreement and all documents relating thereto, including, without
limitation, (a) consents, waivers and modifications that may hereafter be
executed, (b) documents received by any Purchaser at the Closing (except the
Notes themselves), and (c) financial statements, certificates and other
information previously or hereafter furnished to any Purchaser, may be
reproduced by such Purchaser by any photographic, photostatic, microfilm,
microcard, miniature photographic or other similar process and such Purchaser
may destroy any original document so reproduced. Each Obligor agrees and
stipulates that, to the extent permitted by applicable law, any such
reproduction shall be admissible in evidence as the original itself in any
judicial or administrative proceeding (whether or not the original is in
existence and whether or not such reproduction was made by such Purchaser in the
regular course of business) and any enlargement, facsimile or further
reproduction of such reproduction shall likewise be admissible in evidence. This
Section 19 shall not prohibit the Obligors or any other holder of Notes from
contesting any such reproduction to the same extent that it could contest the
original, or from introducing evidence to demonstrate the inaccuracy of any such
reproduction.

SECTION 20.          CONFIDENTIAL INFORMATION.

         For the purposes of this Section 20, "Confidential Information" means
information delivered to any Purchaser or other holder of the Notes (each a
"Recipient") by or on behalf of either Obligor or any Subsidiary in connection
with the transactions contemplated by or otherwise pursuant to this Agreement
that is proprietary in nature and that was clearly marked or labeled or
otherwise adequately identified when received by such Recipient as being
confidential




                                      -37-

Lincoln Electric Holdings, Inc.                          Note Purchase Agreement
The Lincoln Electric Company

information of such Obligor or such Subsidiary, provided that such term does not
include information that (a) was publicly known or otherwise known to such
Recipient prior to the time of such disclosure, (b) subsequently becomes
publicly known through no act or omission by such Recipient or any person acting
on such Recipient's behalf, (c) otherwise becomes known to such Recipient other
than through disclosure by an Obligor or any Subsidiary or (d) constitutes
financial statements delivered to such Recipient under Section 7.1 that are
otherwise publicly available. Each Recipient will maintain the confidentiality
of such Confidential Information in accordance with procedures adopted by such
Recipient in good faith to protect confidential information of third parties
delivered to such Recipient, provided that such Recipient may deliver or
disclose Confidential Information to (i) such Recipient's directors, officers,
employees, agents, attorneys and affiliates (to the extent such disclosure
reasonably relates to the administration of the investment represented by such
Recipient's Notes), (ii) such Recipient's financial advisors and other
professional advisors who agree to hold confidential the Confidential
Information substantially in accordance with the terms of this Section 20, (iii)
any other holder of any Note, (iv) any Institutional Investor to which such
Recipient sells or offers to sell such Note or any part thereof or any
participation therein (if such Person has agreed in writing prior to its receipt
of such Confidential Information to be bound by the provisions of this Section
20), (v) any Person from which such Recipient offers to purchase any security of
an Obligor (if such Person has agreed in writing prior to its receipt of such
Confidential Information to be bound by the provisions of this Section 20), (vi)
any federal or state regulatory authority having jurisdiction over such
Recipient, (vii) the National Association of Insurance Commissioners or any
similar organization, or any nationally recognized rating agency that requires
access to information about such Recipient's investment portfolio, or (viii) any
other Person to which such delivery or disclosure may be necessary or
appropriate (w) to effect compliance with any law, rule, regulation or order
applicable to such Recipient, (x) in response to any subpoena or other legal
process, (y) in connection with any litigation to which such Recipient is a
party or (z) if an Event of Default has occurred and is continuing, to the
extent such Recipient may reasonably determine such delivery and disclosure to
be necessary or appropriate in the enforcement or for the protection of the
rights and remedies under such Recipient's Notes and this Agreement. Each holder
of a Note, by its acceptance of a Note, will be deemed to have agreed to be
bound by and to be entitled to the benefits of this Section 20 as though it were
a party to this Agreement. On reasonable request by the Obligors in connection
with the delivery to any holder of a Note of information required to be
delivered to such holder under this Agreement or requested by such holder (other
than a holder that is a party to this Agreement or its nominee or any other
holder that shall have previously delivered such a confirmation), such holder
will confirm in writing that it is bound by the provisions of this Section 20.

SECTION 21.          SUBSTITUTION OF PURCHASER.

         Each Purchaser shall have the right to substitute any one of such
Purchaser's Affiliates as the purchaser of the Notes that such Purchaser has
agreed to purchase hereunder, by written notice to the Obligors, which notice
shall be signed by both such Purchaser and such Affiliate, shall contain such
Affiliate's agreement to be bound by this Agreement and shall contain a
confirmation by such Affiliate of the accuracy with respect to it of the
representations set forth in Section 6. Upon receipt of such notice, wherever
the word "Purchaser" is used in this




                                      -38-

Lincoln Electric Holdings, Inc.                          Note Purchase Agreement
The Lincoln Electric Company

Agreement (other than in this Section 21), such word shall be deemed to refer to
such Affiliate in lieu of such substituting Purchaser. In the event that such
Affiliate is so substituted as a purchaser hereunder and such Affiliate
thereafter transfers to the substituting Purchaser all of the Notes then held by
such Affiliate, upon receipt by the Obligors of notice of such transfer,
wherever the word "Purchaser" is used in this Agreement (other than in this
Section 21), such word shall no longer be deemed to refer to such Affiliate, but
shall refer to such Purchaser, and such Purchaser shall have all the rights of
an original holder of the Notes under this Agreement.

SECTION 22.          MISCELLANEOUS.

        Section 22.1. Successors and Assigns. All covenants and other agreements
contained in this Agreement by or on behalf of any of the parties hereto bind
and inure to the benefit of their respective successors and assigns (including,
without limitation, any subsequent holder of a Note) whether so expressed or
not.

        Section 22.2. Payments Due on Non-Business Days. Anything in this
Agreement or the Notes to the contrary notwithstanding, any payment of principal
of or Make-Whole Amount or interest on any Note that is due on a date other than
a Business Day shall be made on the next succeeding Business Day without
including the additional days elapsed in the computation of the interest payable
on such next succeeding Business Day.

         Section 22.3. Severability. Any provision of this Agreement that is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall (to the full extent permitted by law)
not invalidate or render unenforceable such provision in any other jurisdiction.

        Section 22.4. Construction. Each covenant contained herein shall be
construed (absent express provision to the contrary) as being independent of
each other covenant contained herein, so that compliance with any one covenant
shall not (absent such an express contrary provision) be deemed to excuse
compliance with any other covenant. Where any provision herein refers to action
to be taken by any Person, or which such Person is prohibited from taking, such
provision shall be applicable whether such action is taken directly or
indirectly by such Person.

         Section 22.5. Counterparts. This Agreement may be executed in any
number of counterparts, each of which shall be an original but all of which
together shall constitute one instrument. Each counterpart may consist of a
number of copies hereof, each signed by fewer than all, but together signed by
all, of the parties hereto.

        SECTION 22.6. GOVERNING LAW. THIS AGREEMENT SHALL BE CONSTRUED AND
ENFORCED IN ACCORDANCE WITH, AND THE RIGHTS OF THE PARTIES SHALL BE GOVERNED BY,
THE LAW OF THE STATE OF NEW YORK EXCLUDING CHOICE-OF-LAW PRINCIPLES OF THE LAW
OF SUCH STATE THAT WOULD REQUIRE THE APPLICATION OF THE LAWS OF A JURISDICTION
OTHER THAN SUCH STATE.





                                      -39-

Lincoln Electric Holdings, Inc.                          Note Purchase Agreement
The Lincoln Electric Company

        Section 22.7. Consent to Jurisdiction and Service of Process. (a) To the
extent permitted by applicable law, each Obligor (i) hereby irrevocably submits
to the nonexclusive jurisdiction of the Supreme Court of the State of New York,
New York County (without prejudice to the rights of any holder of a Note to
remove to the United States District Court for the Southern District of New
York) and to the nonexclusive jurisdiction of the United States District Court
for the Southern District of New York, for the purposes of any suit, action or
other proceeding arising out of this Agreement, or the subject matter hereof or
any of the transactions contemplated hereby or thereby brought by any holder of
the Notes, (ii) hereby irrevocably agrees that all claims in respect of such
action or proceeding may be heard and determined in such New York State court
or, to the fullest extent permitted by applicable law, in such federal court,
and (iii) hereby irrevocably waives, and agrees not to assert, by way of motion,
as a defense, or otherwise, in any such suit, action or proceeding any claim
that is not personally subject to the jurisdiction of the above-named courts,
that the suit, action or proceeding is improper or that this Agreement, or the
subject matter hereof may not be enforced in or by such court.

         (b) A final judgment obtained in respect of any action, suit or
proceeding referred to in this Section 22.7 shall be conclusive and may be
enforced in other jurisdictions by suit or judgment or in any manner as provided
by applicable law. Each Obligor hereby consents to service of process by
registered mail, Federal Express, or similar courier at its address set forth in
Section 18, it being agreed that service in such manner shall constitute valid
service upon or its respective successors or assigns in connection with any such
action or proceeding only; provided, however, that nothing in this Section 22.7
shall affect the right of any holder of the Notes to serve legal process in any
other manner permitted by applicable law.
                                    * * * * *





                                      -40-

Lincoln Electric Holdings, Inc.                          Note Purchase Agreement
The Lincoln Electric Company

         The execution hereof by the Purchasers shall constitute a contract
among the Obligors and the Purchasers for the uses and purposes hereinabove set
forth.

                                            Very truly yours,

                                            LINCOLN ELECTRIC HOLDINGS, INC.




                                            By _______________________________
                                                 Title:


                                            By
                                                 Title:


                                            THE LINCOLN ELECTRIC COMPANY



                                            By _______________________________
                                                 Title:


                                            By  ______________________________
                                                 Title


The foregoing is hereby
agreed to as of the
date thereof.

STATE FARM LIFE INSURANCE COMPANY



By _______________________________
   Its



By _______________________________
   Its




                                      -41-

Lincoln Electric Holdings, Inc.                          Note Purchase Agreement
The Lincoln Electric Company


The foregoing is hereby
agreed to as of the
date thereof.

THE PRUDENTIAL INSURANCE COMPANY OF AMERICA



By _________________________________
    Its


The foregoing is hereby
agreed to as of the
date thereof.

MEDICA HEALTH PLAN

By:      Prudential Private Placement Investors,
           L.P., as Investment Advisor
By:      Prudential Private Placement Investors,
           Inc., General Partner



         By ________________________
             Its  Vice President


The foregoing is hereby
agreed to as of the
date thereof.

HARTFORD LIFE INSURANCE COMPANY
By:      Prudential Private Placement Investors,
           L.P., as Investment Advisor
By:      Prudential Private Placement Investors,
           Inc., General Partner



         By ________________________
             Its Vice President





                                      -42-

Lincoln Electric Holdings, Inc.                          Note Purchase Agreement
The Lincoln Electric Company

The foregoing is hereby
agreed to as of the
date thereof.

CONNECTICUT GENERAL LIFE INSURANCE COMPANY

By:      CIGNA Investments, Inc. (authorized agent)



   By ______________________________
      Its


The foregoing is hereby
agreed to as of the
date thereof.

CONNECTICUT GENERAL LIFE INSURANCE COMPANY,
 on behalf of one or more separate accounts


By:      CIGNA Investments, Inc. (authorized agent)




     By ____________________________
        Its



The foregoing is hereby
agreed to as of the
date thereof.

NATIONWIDE LIFE INSURANCE COMPANY



By _________________________________
    Its




                                      -43-

Lincoln Electric Holdings, Inc.                          Note Purchase Agreement
The Lincoln Electric Company

The foregoing is hereby
agreed to as of the
date thereof.

NATIONWIDE LIFE AND ANNUITY INSURANCE COMPANY



By _________________________________
    Its



The foregoing is hereby
agreed to as of the
date thereof.

THE LINCOLN NATIONAL LIFE INSURANCE COMPANY

By     Delaware Lincoln Investment Advisers,
       a series of Delaware Management
       Business Trust, Attorney-In-Fact



By _________________________________
    Its


The foregoing is hereby
agreed to as of the
date thereof.

MODERN WOODMEN OF AMERICA



By _________________________________
    Its




                                      -44-

Lincoln Electric Holdings, Inc.                          Note Purchase Agreement
The Lincoln Electric Company

The foregoing is hereby
agreed to as of the
date thereof.

AMERICAN UNITED LIFE INSURANCE COMPANY



By _________________________________
    Its


The foregoing is hereby agreed to as of the date thereof.

PIONEER MUTUAL LIFE INSURANCE COMPANY

By:      American United Life Insurance Company, Its Agent


         By:_______________________________
             Its:


The foregoing is hereby
agreed to as of the
date thereof.

THE STATE LIFE INSURANCE COMPANY

By:      American United Life Insurance Company, Its Agent


         By:_______________________________
               Its:






                                      -45-

Lincoln Electric Holdings, Inc.                          Note Purchase Agreement
The Lincoln Electric Company

The foregoing is hereby
agreed to as of the
date thereof.

WEST AMERICAN INSURANCE COMPANY



By _________________________________
    Its



The foregoing is hereby agreed to as of the date thereof.

THE OHIO CASUALTY INSURANCE COMPANY



By _________________________________
    Its


The foregoing is hereby
agreed to as of the
date thereof.

CLARICA LIFE INSURANCE COMPANY-U.S.



By _________________________________
    Its





                                      -46-




                                  DEFINED TERMS

GENERAL PROVISIONS

         Where the character or amount of any asset or liability or item of
income or expense is required to be determined or any consolidation or other
accounting computation is required to be made for the purposes of this
Agreement, the same shall be done in accordance with GAAP, to the extent
applicable, except where such principles are inconsistent with the express
requirements of this Agreement.

DEFINITIONS

         As used herein, the following terms have the respective meanings set
forth below or set forth in the Section hereof following such term:

         "Affiliate" means, at any time, and with respect to any Person, (a) any
other Person that at such time directly or indirectly through one or more
intermediaries Controls, or is Controlled by, or is under common Control with,
such first Person. As used in this definition, "Control" means the possession,
directly or indirectly, of the power to direct or cause the direction of the
management and policies of a Person, whether through the ownership of voting
securities, by contract or otherwise. Unless the context otherwise clearly
requires, any reference to an "Affiliate" is a reference to an Affiliate of
Holdings.

         "Attributable Debt" means, as to any particular lease relating to a
Sale-and-Leaseback Transaction, the present value of all Lease Rentals required
to be paid by the Holdings or any Restricted Subsidiary under such lease during
the remaining term thereof (determined in accordance with generally accepted
financial practice using a discount factor equal to the interest rate implicit
in such lease if known or, if not known, of 7% per annum).

         "Business Day" means (a) for the purposes of Section 8.7 only, any day
other than a Saturday, a Sunday or a day on which commercial banks in New York
City are required or authorized to be closed, and (b) for the purposes of any
other provision of this Agreement, any day other than a Saturday, a Sunday or a
day on which commercial banks in New York, New York, or Cleveland, Ohio are
required or authorized to be closed.

         "Capital Lease" means, at any time, a lease with respect to which the
lessee is required concurrently to recognize the acquisition of an asset and the
incurrence of a liability in accordance with GAAP.

         "Capital Lease Obligation" means, with respect to any Person and a
Capital Lease, the amount of the obligation of such Person as the lessee under
such Capital Lease which would, in accordance with GAAP, appear as a liability
on a balance sheet of such Person.

         "Cash Equivalents" means investments in (i) United States Governmental
Securities maturing within 365 days from the date of acquisition thereof; (ii)
negotiable certificates of deposit and bankers' acceptances maturing within 365
days from the date of acquisition thereof






                                   SCHEDULE B
                          (to Note Purchase Agreement)







issued by any commercial bank or trust company organized under the laws of the
United States or any state thereof or the District of Columbia, having at any
date of determination combined capital and surplus and retained earnings of not
less than $100,000,000, provided, that the long-term unsecured debt obligations
of such bank or trust company (or the long-term unsecured debt obligations of
the bank holding company owning all of the capital stock of such bank or trust
company) shall have been given a rating of "A" or better by S&P or an equivalent
rating by any other credit rating agency of recognized national standing, and
(iii) commercial paper maturing not more than 270 days from the date of issuance
thereof which has a rating, at the time of acquisition by Holdings or such
Restricted Subsidiary, of "A-1" or better by S&P or an equivalent rating by any
other credit rating agency of recognized national standing.

         "Closing" is defined in Section 3.

         "Code" means the Internal Revenue Code of 1986, as amended from time to
time, and the rules and regulations promulgated thereunder from time to time.

         "Company" means The Lincoln Electric Company, an Ohio corporation.

         "Competitor" shall mean any Person directly or indirectly through its
Affiliates has substantial operations related to the welding and cutting
industry, including the manufacture and sale of welding and cutting equipment
and related consummables, industrial gases and gas apparatus, lasers and
robotics for welding applications, and the engineered adhesives and industrial
fastener industries, provided that:

                   (a) the provision of investment advisory services by a Person
         to a Plan which is owned or controlled by a Person which would
         otherwise be a Competitor shall not of itself cause the Person
         providing such services to be deemed to be a Competitor; and

                   (b) in no event shall an Institutional Investor be deemed a
         Competitor unless such Institutional Investor controls, or is
         controlled by, or is under common control with, a Person that is
         substantially engaged in the welding and cutting industry, including
         the manufacture and sale of welding and cutting equipment and related
         consummables, industrial gases and gas apparatus, lasers and robotics
         for welding applications, and the engineered adhesives and industrial
         fastener industries.

         "Confidential Information" is defined in Section 20.

         "Consolidated Debt" means, as of any date of determination, the sum of
all Debt of Holdings and its Restricted Subsidiaries outstanding on such date,
after eliminating all offsetting debits and credits between Holdings and its
Restricted Subsidiaries and all other items required to be eliminated in the
course of the preparation of consolidated financial statements of Holdings and
its Restricted Subsidiaries in accordance with GAAP.

         "Consolidated EBITDA" for any period means the sum of (a) Consolidated
Net Income during such period plus (to the extent deducted in determining
Consolidated Net Income for such period), (b) all provisions for any Federal,
state or local income taxes made by Holdings and its



                                      B-2


Restricted Subsidiaries during such period, (c) all provisions for depreciation
and amortization (other than amortization of debt discount) made by Holdings and
its Restricted Subsidiaries during such period, and (d) Interest Charges during
such period.

         "Consolidated Fixed Charges" means, with respect to any period, on a
consolidated basis the sum of (a) Interest Charges for such period and (b) Lease
Rentals for such period.

         "Consolidated Funded Debt" means, as of any date of determination, the
sum of all Funded Debt of Holdings and its Restricted Subsidiaries outstanding
on such date, after eliminating all offsetting debits and credits between
Holdings and its Restricted Subsidiaries and all other items required to be
eliminated in the course of the preparation of consolidated financial statements
of Holdings and its Restricted Subsidiaries in accordance with GAAP.

         "Consolidated Income Available for Fixed Charges" means, with respect
to any period, Consolidated Net Income for such period plus all amounts deducted
in the computation thereof on account of (a) Consolidated Fixed Charges and (b)
taxes imposed on or measured by income or excess profits.

         "Consolidated Net Income" means, with reference to any period, the net
income (or loss) of Holdings and its Restricted Subsidiaries for such period
(taken as a cumulative whole), as determined in accordance with GAAP, after
eliminating all offsetting debits and credits between Holdings and its
Restricted Subsidiaries and all other items required to be eliminated in the
course of the preparation of consolidated financial statements of Holdings and
its Restricted Subsidiaries in accordance with GAAP, provided that there shall
be excluded:

                   (a) the income (or loss) of any Person accrued prior to the
         date it becomes a Restricted Subsidiary or is merged into or
         consolidated with Holdings or a Restricted Subsidiary, and the income
         (or loss) of any Person, substantially all of the assets of which have
         been acquired in any manner, realized by such other Person prior to the
         date of acquisition,

                   (b) the income (or loss) of any Person (other than a
         Restricted Subsidiary) in which Holdings or any Restricted Subsidiary
         has an ownership interest, except to the extent that any such income
         has been actually received by Holdings or such Restricted Subsidiary in
         the form of cash dividends or similar cash distributions,

                   (c) the undistributed earnings of any Restricted Subsidiary
         to the extent that, to the best of the knowledge of the Obligors, the
         declaration or payment of dividends or similar distributions by such
         Restricted Subsidiary is (i) not at the time permitted by the terms of
         its charter or any agreement, instrument, judgment, decree, order,
         statute, rule or governmental regulation applicable to such Restricted
         Subsidiary, or (ii) otherwise unavailable for payment,

                   (d) any aggregate net gain (but not any aggregate net loss)
         during such period arising from the sale, conversion, exchange or other
         disposition of Investments or capital assets (such term to include,
         without limitation, the following, whether or not current: all





                                      B-3


         fixed assets, whether tangible or intangible, and all inventory sold in
         conjunction with the disposition of fixed assets), and any taxes on
         such net gain (or net loss),

                  (e) any gains resulting from any write-up or reappraisal of
         any assets (but not any losses resulting from any write-down or
         reappraisal of any assets),

                  (f) any net gain from the collection of the proceeds of life
         insurance policies,

                  (g) any gain arising from the acquisition of any Security, or
         the extinguishment, under GAAP, of any Debt, of Holdings or any
         Restricted Subsidiary,

                  (h) any deferred or other credit representing the excess of
         equity in any Restricted Subsidiary at the date of acquisition over the
         cost of the investment in such Restricted Subsidiary; and

                  (i) any non-cash charges related to the implementation by
         Holdings and its Restricted Subsidiaries of FASB Statement 142.

         "Consolidated Net Worth" means, at any time,

                   (a) the sum (adjusted for any non-cash charges related to the
         implementation by Holdings and its Restricted Subsidiaries of FASB
         Statement 142) of (i) the par value (or value stated on the books of
         the corporation) of the capital stock (but excluding treasury stock and
         capital stock subscribed and unissued) of Holdings and its Restricted
         Subsidiaries plus (ii) the amount of the paid-in capital and retained
         earnings of Holdings and its Restricted Subsidiaries, in each case as
         such amounts would be shown on a consolidated balance sheet of Holdings
         and its Restricted Subsidiaries as of such time prepared in accordance
         with GAAP, minus

                   (b) to the extent included in clause (a), all amounts
         properly attributable to minority interests, if any, in the stock and
         surplus of Restricted Subsidiaries.

         "Consolidated Senior Funded Debt" means (a) all Debt evidenced by the
Notes, and (b) all other Consolidated Funded Debt ranking pari passu or senior
in right of payment with the Debt evidenced by the Notes.

         "Consolidated Total Assets" means, at any time,

                   (a) total assets of Holdings and its Restricted Subsidiaries
         determined as of the end of the most recently ended Fiscal Year on a
         consolidated basis in accordance with GAAP, minus

                  (b) to the extent included in clause (a), all amounts properly
attributable to minority interests, if any, in the stock and surplus of such
Restricted Subsidiaries.




                                      B-4


         "Current Maturities of Funded Debt" means, at any time and with respect
to any item of Funded Debt, the portion of such Funded Debt outstanding at such
time which by the terms of such Funded Debt or the terms of any instrument or
agreement relating thereto is due on demand or within one year from such time
(whether by sinking fund, other required prepayment or final payment at
maturity) and is not directly or indirectly renewable, extendible or refundable
at the option of the obligor under an agreement or firm commitment in effect at
such time to a date one year or more from such time.

         "Debt" means, with respect to any Person, without duplication,

                   (a)     its liabilities for borrowed money;

                   (b) its liabilities for the deferred purchase price of
         property acquired by such Person (excluding accounts payable arising in
         the ordinary course of business but including, without limitation, all
         liabilities created or arising under any conditional sale or other
         title retention agreement with respect to any such property);

                   (c)     its Capital Lease Obligations;

                   (d) all liabilities for borrowed money secured by any Lien
         with respect to any property owned by such Person (whether or not it
         has assumed or otherwise become liable for such liabilities); and

                   (e) any Guaranty of such Person with respect to liabilities
         of a type described in any of clauses (a) through (d) hereof.

         Debt of any Person shall include all obligations of such Person of the
character described in clauses (a) through (e) to the extent such Person remains
legally liable in respect thereof notwithstanding that any such obligation is
deemed to be extinguished under GAAP.

         "Default" means an event or condition the occurrence or existence of
which would, with the lapse of time or the giving of notice or both, become an
Event of Default.

         "Default Rate" with respect to a Series means that rate of interest
that is the greater of (i) 2% per annum above the rate of interest stated in
clause (a) of the first paragraph of the Notes of such Series or (ii) 2% over
the rate of interest publicly announced by The Bank of New York in New York, New
York as its "base" or "prime" rate.

         "Disposition Value" means, at any time, with respect to any property

                   (a) in the case of property that does not constitute
         Subsidiary Stock, the book value thereof, valued at the time of such
         disposition in good faith by Holdings, and

                   (b) in the case of property that constitutes Subsidiary
         Stock, an amount equal to that percentage of book value of the assets
         of the Subsidiary that issued such stock as is equal to the percentage
         that the book value of such Subsidiary Stock represents of the






                                      B-5


         book value of all of the outstanding capital stock of such Subsidiary
         (assuming, in making such calculations, that all Securities convertible
         into such capital stock are so converted and giving full effect to all
         transactions that would occur or be required in connection with such
         conversion) determined at the time of the disposition thereof, in good
         faith by Holdings.

         "Environmental Laws" means any and all Federal, state, local, and
foreign statutes, laws, regulations, ordinances, rules, judgments, orders,
decrees, permits, concessions, grants, franchises, licenses, agreements or
governmental restrictions relating to pollution and the protection of the
environment or the release of any materials into the environment, including but
not limited to those related to hazardous substances or wastes, air emissions
and discharges to waste or public systems.

         "ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, and the rules and regulations promulgated thereunder
from time to time in effect.

         "ERISA Affiliate" means any trade or business (whether or not
incorporated) that is treated as a single employer together with Holdings under
section 414 of the Code.

         "Event of Default" is defined in Section 11.

         "Exchange Act" means the Securities Exchange Act of 1934, as amended.

         "Fair Market Value" means, at any time and with respect to any
property, the sale value of such property that would be realized in an
arm's-length sale at such time between an informed and willing buyer and an
informed and willing seller (neither being under a compulsion to buy or sell).

         "Fiscal Quarter" means the three month fiscal period of Holdings
beginning on each January 1, April 1, July 1 and October 1 of each year and
ending on the succeeding March 31, June 30, September 30 and December 31,
respectively.

         "Fiscal Year" means the fiscal year of Holdings beginning on January 1
of each year and ending on the succeeding December 31.

         "Fixed Charges Coverage Ratio" means, at any time, the ratio of (a)
Consolidated Income Available for Fixed Charges for the period of four
consecutive fiscal quarters ending as of the most recent fiscal quarter ended
prior to such time to (b) Consolidated Fixed Charges for such period.

         "Funded Debt" means, with respect to any Person, all Debt of such
Person which by its terms or by the terms of any instrument or agreement
relating thereto matures, or which is otherwise payable or unpaid, one year or
more from, or is directly or indirectly renewable or extendible at the option of
the obligor in respect thereof to a date one year or more (including, without
limitation, an option of such obligor under a revolving credit or similar
agreement






                                      B-6


obligating the lender or lenders to extend credit over a period of one
year or more) from, the date of the creation thereof, provided that Funded Debt
shall include, as at any date of determination, Current Maturities of Funded
Debt.

         "GAAP" means generally accepted accounting principles as in effect from
time to time in the United States of America.

         "Governmental Authority" means

                  (a) the government of

                           (i) the United States of America or any State or
                  other political subdivision thereof, or

                           (ii) any jurisdiction in which either Obligor or any
                  Restricted Subsidiary conducts all or any part of its
                  business, or which asserts jurisdiction over any properties of
                  either Obligor or any Restricted Subsidiary, or

                  (b) any entity exercising executive, legislative, judicial,
         regulatory or administrative functions of, or pertaining to, any such
         government.

         "Guaranty" means, with respect to any Person, any obligation (except
the endorsement in the ordinary course of business of negotiable instruments for
deposit or collection) of such Person guaranteeing or in effect guaranteeing any
indebtedness, dividend or other obligation of any other Person in any manner,
whether directly or indirectly, including (without limitation) obligations
incurred through an agreement, contingent or otherwise, by such Person:

                  (a) to purchase such indebtedness or obligation or any
         property constituting security therefor;

                  (b) to advance or supply funds (i) for the purchase or payment
         of such indebtedness or obligation, or (ii) to maintain any working
         capital or other balance sheet condition or any income statement
         condition of any other Person or otherwise to advance or make available
         funds for the purchase or payment of such indebtedness or obligation;

                  (c) to lease properties or to purchase properties or services
         primarily for the purpose of assuring the owner of such indebtedness or
         obligation of the ability of any other Person to make payment of the
         indebtedness or obligation; or

                  (d) otherwise to assure the owner of such indebtedness or
         obligation against loss in respect thereof.

In any computation of the indebtedness or other liabilities of the obligor under
any Guaranty, the indebtedness or other obligations that are the subject of such
Guaranty shall be assumed to be direct obligations of such obligor.






                                      B-7


         "holder" means, with respect to any Note, the Person in whose name such
Note is registered in the register maintained by Holdings pursuant to Section
13.1.

         "Holdings" means Lincoln Electric Holdings, Inc., an Ohio corporation.

         "Indebtedness" with respect to any Person means, at any time, without
duplication,

                  (a) its liabilities for borrowed money and its redemption
         obligations in respect of mandatorily redeemable Preferred Stock;

                  (b) its liabilities for the deferred purchase price of
         property acquired by such Person (excluding accounts payable arising in
         the ordinary course of business but including all liabilities created
         or arising under any conditional sale or other title retention
         agreement with respect to any such property);

                  (c) all liabilities appearing on its balance sheet in
         accordance with GAAP in respect of Capital Leases;

                  (d) all liabilities for borrowed money secured by any Lien
         with respect to any property owned by such Person (whether or not it
         has assumed or otherwise become liable for such liabilities);

                  (e) all its liabilities in respect of letters of credit or
         instruments serving a similar function issued or accepted for its
         account by banks and other financial institutions (whether or not
         representing obligations for borrowed money);

                  (f) Swaps of such Person; and

                  (g) any Guaranty of such Person with respect to liabilities of
         a type described in any of clauses (a) through (f) hereof.

         "Institutional Investor" means (a) any original purchaser of a Note,
(b) any holder of a Note holding more than 5% of the aggregate principal amount
of the Notes then outstanding, and (c) any bank, trust company, savings and loan
association or other financial institution, any pension plan, any investment
company, any insurance company, any broker or dealer, or any other similar
financial institution or entity, regardless of legal form.

         "Interest Charges" means, with respect to any period, the sum (without
duplication) of the following (in each case, eliminating all offsetting debits
and credits between Holdings and its Restricted Subsidiaries and all other items
required to be eliminated in the course of the preparation of consolidated
financial statements of Holdings and its Restricted Subsidiaries in accordance
with GAAP): (a) all interest in respect of Indebtedness of Holdings and its
Restricted Subsidiaries (including imputed interest on Capital Lease
Obligations) deducted in determining Consolidated Net Income for such period,
and (b) all debt discount and expense amortized or required to be amortized in
the determination of Consolidated Net Income for such period.





                                      B-8


         "Investment" means any investment, made in cash or by delivery of
property, by Holdings or any of its Restricted Subsidiaries (i) in any Person,
whether by acquisition of stock, indebtedness or other obligation or Security,
or by loan, Guaranty, advance, capital contribution or otherwise, or (ii) in any
property.

         "Lease Rentals" means, with respect to any period, the sum of the
rental and other obligations required to be paid during such period by Holdings
or any Restricted Subsidiary as lessee under all leases of real or personal
property (other than Capital Leases), excluding any amount required to be paid
by the lessee (whether or not therein designated as rental or additional rental)
on account of maintenance and repairs, insurance, taxes, assessments, water
rates and similar charges, provided that, if at the date of determination, any
such rental or other obligations (or portion thereof) are contingent or not
otherwise definitely determinable by the terms of the related lease, the amount
of such obligations (or such portion thereof) (i) shall be assumed to be equal
to the amount of such obligations for the period of 12 consecutive calendar
months immediately preceding the date of determination or (ii) if the related
lease was not in effect during such preceding 12-month period, shall be the
amount estimated by a Senior Financial Officer of Holdings on a reasonable basis
and in good faith.

         "Leverage Ratio" means, at any time, the ratio of (a) Consolidated Debt
at such time to (b) Consolidated EBITDA for the period of four consecutive
fiscal quarters ending as of the most recent fiscal quarter ended prior to such
time.

         "Lien" means, with respect to any Person, any mortgage, lien, pledge,
charge, security interest or other encumbrance, or any interest or title of any
vendor, lessor, lender or other secured party to or of such Person under any
conditional sale or other title retention agreement or Capital Lease, upon or
with respect to any property or asset of such Person (including in the case of
stock, stockholder agreements, voting trust agreements and all similar
arrangements).

         "Make-Whole Amount" is defined in Section 8.7.

         "Material" means material in relation to the business, operations,
affairs, financial condition, assets, or properties of Holdings and its
Restricted Subsidiaries taken as a whole.

         "Material Adverse Effect" means a material adverse effect on (a) the
business, operations, affairs, financial condition, assets or properties of
Holdings and its Restricted Subsidiaries taken as a whole, or (b) the ability of
the Obligors to perform their obligations under this Agreement and the Notes, or
(c) the validity or enforceability of this Agreement or the Notes.

         "Memorandum" is defined in Section 5.3.

          "Multiemployer Plan" means any Plan that is a "multiemployer plan" (as
such term is defined in section 4001(a)(3) of ERISA).

         "Notes" is defined in Section 1.





                                      B-9


         "Officer's Certificate" of an Obligor means a certificate of a Senior
Financial Officer of such Obligor or of any other officer of such Obligor whose
responsibilities extend to the subject matter of such certificate.

         "PBGC" means the Pension Benefit Guaranty Corporation referred to and
defined in ERISA or any successor thereto.

         "Person" means an individual, partnership, corporation, limited
liability company, association, trust, unincorporated organization, or a
government or agency or political subdivision thereof.

         "Plan" means an "employee benefit plan" (as defined in section 3(3) of
ERISA) that is or, within the preceding five years, has been established or
maintained, or to which contributions are or, within the preceding five years,
have been made or required to be made, by Holdings or any ERISA Affiliate or
with respect to which Holdings or any ERISA Affiliate may have any liability.

         "Preferred Stock" means any class of capital stock of a corporation
that is preferred over any other class of capital stock of such corporation as
to the payment of dividends or the payment of any amount upon liquidation or
dissolution of such corporation.

         "Priority Debt" means the sum of (a) all Debt of the Obligors secured
by Liens, (b) all Debt of Restricted Subsidiaries (other than the Company) and
(c) all Attributable Debt of Holdings and its Restricted Subsidiaries.

         "property" or "properties" means, unless otherwise specifically
limited, real or personal property of any kind, tangible or intangible, choate
or inchoate.

         "QPAM Exemption" means Prohibited Transaction Class Exemption 84-14
issued by the United States Department of Labor.

         "Qualifying Securitization Transaction" means a bona fide
securitization transaction effected under terms and conditions customary in the
capital markets and consisting of sales of Trade Receivables by Holdings or a
Restricted Subsidiary to a Special Purpose Company which in turn either sells or
pledges such Trade Receivables (or undivided interests therein) to a commercial
paper conduit or other financing source (whether with or without recourse to the
Special Purpose Company), and as to which each of the following conditions shall
be satisfied: (i) such sales to the Special Purpose Company are not accounted
for under GAAP as secured loans, (ii) such transactions are, in the good faith
opinion of a Senior Financial Officer of Holdings, for fair value and in the
best interests of Holdings and its Restricted Subsidiaries, and (iii) recourse
to the Obligors or any Restricted Subsidiary in connection with any such sale of
Trade Receivables is limited to repurchase, substitution or indemnification
obligations customarily provided for in asset securitization transactions and
arising from breaches of representations or warranties made by Holdings or such
Restricted Subsidiary in connection with such sale.




                                      B-10


         "Related Industries" means the welding and cutting industry, including
the manufacture and sale of welding and cutting equipment and related
consummables, industrial gases and gas apparatus, laser and robotics for welding
applications, and the engineered adhesives and industrial fastener industries.

         "Required Holders" means, at any time, the holders of a majority in
principal amount of each Series of the Notes at the time outstanding (exclusive
of Notes then owned by either or both of the Obligors or any of their
Affiliates).

         "Responsible Officer" of an Obligor means any Senior Financial Officer
of such Obligor and any other officer of such Obligor with responsibility for
the administration of the relevant portion of this agreement.

         "Restricted Subsidiary" means at any time any Subsidiary (a) of which
at least a majority (by number of votes) of the Voting Stock is beneficially
owned, directly or indirectly, by Holdings or one or more Wholly-Owned
Restricted Subsidiaries; and (b) which is (i) not designated as an Unrestricted
Subsidiary in the most recent notice, if any, with respect thereto delivered
pursuant to Section 9.8, or (ii) which is designated a Restricted Subsidiary in
the most recent notice, if any, with respect thereto delivered pursuant to
Section 9.8.

         "Restricted Subsidiary Stock" means the stock (or any options or
warrants to purchase stock or other Securities exchangeable for or convertible
into stock) of any Restricted Subsidiary (other than the Company).

         "Sale-and-Leaseback Transaction" means a transaction or series of
transactions pursuant to which Holdings or any Restricted Subsidiary shall sell
or transfer to any Person (other than Holdings or a Restricted Subsidiary) any
property, whether now owned or hereafter acquired, and, as part of the same
transaction or series of transactions, Holdings or any Restricted Subsidiary
shall rent or lease as lessee (other than pursuant to a Capital Lease), or
similarly acquire the right to possession or use of, such property or one or
more properties which it intends to use for the same purpose or purposes as such
property.

         "SEC" means the Securities and Exchange Commission or any Governmental
Authority succeeding to any of its functions.

         "Securities Act" means the Securities Act of 1933, as amended from time
to time.

         "Security" shall have the same meaning as in Section 2(1) of the
Securities Act.

         "Senior Financial Officer" of an Obligor means the chief financial
officer, principal accounting officer, treasurer or comptroller of such Obligor.

         "Series" is defined in Section 1.

         "Series A Notes" is defined in Section 1.






                                      B-11


         "Series B Notes" is defined in Section 1.

         "Series C Notes" is defined in Section 1.

         "S&P" means Standard & Poor's Ratings Group, a division of McGraw Hill,
Inc.

         "Special Purpose Company" means any Person created in connection with a
Qualifying Securitization Transaction, provided, that any Special Purpose
Company shall not own any property or conduct any activities other than those
properties and activities which are reasonably required to be owned and
conducted in connection with the involvement of such Person in Qualifying
Securitization Transactions.

         "Subsidiary" means, as to any Person, any corporation, association or
other business entity in which such Person or one or more of its Subsidiaries or
such Person and one or more of its Subsidiaries owns sufficient equity or voting
interests to enable it or them (as a group) ordinarily, in the absence of
contingencies, to elect a majority of the directors (or Persons performing
similar functions) of such entity, and any partnership or joint venture if more
than a 50% interest in the profits or capital thereof is owned by such Person or
one or more of its Subsidiaries or such Person and one or more of its
Subsidiaries (unless such partnership or joint venture can and does ordinarily
take major business actions without the prior approval of such Person or one or
more of its Subsidiaries). Unless the context otherwise clearly requires, any
reference to a "Subsidiary" is a reference to a Subsidiary of Holdings.

         "Subsidiary Stock" means, with respect to any Person, the stock (or any
options or warrants to purchase stock or other Securities exchangeable for or
convertible into stock) of any Subsidiary of such Person.

         "Swaps" means, with respect to any Person, payment obligations with
respect to interest rate swaps, currency swaps and similar obligations
obligating such Person to make payments, whether periodically or upon the
happening of a contingency. For the purposes of this Agreement, the amount of
the obligation under any Swap shall be the amount determined in respect thereof
as of the end of the then most recently ended fiscal quarter of such Person,
based on the assumption that such Swap had terminated at the end of such fiscal
quarter, and in making such determination, if any agreement relating to such
Swap provides for the netting of amounts payable by and to such Person
thereunder or if any such agreement provides for the simultaneous payment of
amounts by and to such Person, then in each such case, the amount of such
obligation shall be the net amount so determined.

         "Trade Receivables" means indebtedness and other obligations owed to
Holdings or any Restricted Subsidiary, whether constituting accounts, chattel
paper, instruments or general intangibles, arising in connection with the sale
of goods and services by Holdings or such Restricted Subsidiary to commercial
customers, including, without limitation, the obligation to pay any finance
charges with respect thereto, and agreements relating thereto, collateral
securing the foregoing, books and records relating thereto and all proceeds
thereof.






                                      B-12


         "United States Governmental Security" means any direct obligation of,
or obligation guaranteed by, the United States of America, or any agency
controlled or supervised by or acting as an instrumentality of the United States
of America pursuant to authority granted by the Congress of the United States of
America, so long as such obligation or guarantee shall have the benefit of the
full faith and credit of the United States of America which shall have been
pledged pursuant to authority granted by the Congress of the United States of
America.

         "Unrestricted Subsidiary" means any Subsidiary that is not a Restricted
Subsidiary.

         "Voting Stock" means Securities of any class or classes, the holders of
which are ordinarily, in the absence of contingencies, entitled to elect a
majority of the corporate directors (or Persons performing similar functions).

         "Wholly-Owned Restricted Subsidiary" means, at any time, any Restricted
Subsidiary one hundred percent (100%) of all of the equity interests (except
directors' qualifying shares) and voting interests of which are owned by any one
or more of the Obligors and Holdings' other Wholly-Owned Restricted Subsidiaries
at such time.




















                                      B-13

EX-10.R

                                                                   Exhibit 10(R)
                                CREDIT AGREEMENT


         THIS CREDIT AGREEMENT is made as of the 24th day of April, 2002 by and
among:

(i) LINCOLN ELECTRIC HOLDINGS, INC., an Ohio corporation ("Holdings"), THE
LINCOLN ELECTRIC COMPANY, an Ohio corporation ("Lincoln"), LINCOLN ELECTRIC
INTERNATIONAL HOLDING COMPANY, a Delaware corporation ("International"), HARRIS
CALORIFIC, INC., a Delaware corporation ("Harris"), and LINCOLN GLOBAL, INC., a
Delaware corporation ("Global" and with Harris, International, Lincoln and
Holdings, each an "Borrower" and, collectively, the "Borrowers");

(ii) The financial institutions named in Annex A attached hereto and made a part
hereof and their successors and assigns (hereinafter sometimes collectively
called the "Lenders" and each individually a "Lender"); and

(iii) KEYBANK NATIONAL ASSOCIATION, a national banking association, Cleveland,
Ohio, in its capacity as letter of credit issuer and its successors and assigns
(the "Letter of Credit Issuer"); and

(iv) KEYBANK NATIONAL ASSOCIATION, a national banking association, Cleveland,
Ohio, as Administrative Agent for the Lenders under this Agreement (hereinafter
sometimes called the "Agent").


                                    RECITALS:

         The Borrowers are indebted to certain banks or lending institutions
under and pursuant to the Existing Credit Agreement (defined below).

         The Borrowers have requested the Lenders to extend credit to the
Borrowers in order to enable the Borrowers to borrow on a revolving credit basis
and to have letters of credit issued at their request, on and after the date
hereof and at any time and from time to time during the Commitment Period
(defined below), in an aggregate principal amount not in excess of $125,000,000
at any time outstanding. The proceeds of such loans and credits are to be used
(a) to repay sums owing under and pursuant to the Existing Credit Agreement, (b)
for the general corporate working capital purposes of Holdings and its
Subsidiaries and (c) for other general corporate purposes, including, without
limitation, but subject to the terms and conditions hereinafter set forth, the
acquisition of other businesses. The Lenders are willing to extend such credit
to the Borrowers on the terms and subject to the conditions herein set forth.







                                   AGREEMENTS:

         NOW, THEREFORE, in consideration of the foregoing Recitals and the
mutual agreements hereinafter set forth, the Borrowers, the Lenders and the
Agent hereby agree as follows:


                                    ARTICLE 1
                                   DEFINITIONS

         SECTION 1.1 DEFINITIONS. As used in this Agreement, the following
capitalized terms shall have the following meanings:

         "ACCRUAL PERIOD" shall mean (i) the period commencing with the first
day of the Commitment Period and ending on the close of business May 31, 2002,
and (ii) thereafter, each of the following successive periods during the
Commitment Period commencing with each, as the case may be, Fee Adjustment Date
or Interest Adjustment Date during the Commitment Period, commencing with the
Fee Adjustment Date and Interest Adjustment Date which are June 1, 2002:

                  June 1 through August 31, inclusive
                  September 1 through November 30, inclusive
                  December 1 through March 31, inclusive
                  April 1 through May 31, inclusive.

         "ACQUISITION" shall mean and include (i) any acquisition on a going
concern basis (whether by purchase, lease or otherwise) of any facility and/or
business operated by any Person who is not a Subsidiary of Holdings, and (ii)
any acquisition of a majority of the outstanding equity or other similar
interests in any such Person (whether by merger, stock purchase or otherwise).

         "ADJUSTED LIBOR" shall mean a rate per annum equal to the quotient
obtained (rounded upwards, if necessary, to the nearest 1/100th of 1%) by
DIVIDING (i) the applicable LIBOR rate by (ii) 1.00 MINUS the Reserve
Percentage, and which Adjusted LIBOR shall be automatically adjusted on and as
of the effective date of any change in the Reserve Percentage.

         "ADVANTAGE" shall mean any payment (whether made voluntarily or
involuntarily, by offset of any deposit or other indebtedness or otherwise)
received by any Lender in respect of the Obligations owing by the Borrowers to
the Lenders if such payment results in that Lender having a lesser share (based
upon its Ratable Share) of such Obligations to the Lenders than was the case
immediately before such payment.

         "AFFECTED LENDER" has the meaning assigned to such term in Section 3.8.

         "AFFILIATE" shall mean, with respect to any Person, any other person
directly or indirectly controlling, controlled by, or under direct or indirect
common control with such Person. A







                                       2


Person shall be deemed to control a second Person if such first Person
possesses, directly or indirectly, the power (i) to vote 50% or more of the
securities having ordinary voting power for the election of directors or
managers of such second Person or (ii) to direct or cause the direction of the
management and policies of such second Person, whether through the ownership of
voting securities, by contract or otherwise. Notwithstanding the foregoing, (x)
a director, officer or employee of a Person shall not, solely by reason of such
status, be considered an Affiliate of such Person; and (y) none of the Lenders,
the Agent, or the Letter of Credit Issuer shall in any event be considered to be
an Affiliate of Holdings or any of its Subsidiaries.

         "AGENT" has the meaning assigned to such term in the preamble of this
Agreement and any successor thereto pursuant to Section 13.

         "AGREEMENT" shall mean this Credit Agreement, as the same may from time
to time be amended, supplemented, restated or otherwise modified.

         "ANNIVERSARY DATE" shall mean the date which is one (1) year after the
Closing Date (which Closing Date the Agent shall confirm to the Borrowers in
writing, and which the Borrowers shall acknowledge in writing) occurs and each
successive anniversary of such date thereafter.

         "APPLICABLE FEE PERCENTAGE" shall mean, on each day of any Accrual
Period, with respect to any Facility Fee,

         (i) commencing on the first day of the Commitment Period and continuing
         through and including May 31, 2002, twelve and one-half (12.50) Basis
         Points per annum, and

         (ii) effective on the Fee Adjustment Date which is June 1, 2002 and on
         each Fee Adjustment Date thereafter, the Basis Points per annum
         indicated in the following table corresponding to Holdings' Total
         Leverage Ratio as of the Fee Determination Date for each such Fee
         Adjustment Date:



         Total Leverage Ratio:                     Applicable Fee Percentage (in Basis Points):
         --------------------                      -------------------------------------------

                                                
         Equal to or greater than 2.50 to 1        Twenty-five (25)

         Less than 2.50 to 1, but equal to
            or greater than 2.00 to 1              Twenty (20)

         Less than 2.00 to 1, but equal to
            or greater than 1.50 to 1              Eighteen and three-fourths (18.75)

         Less than 1.50 to 1, but equal to
            or greater than 1.00 to 1              Fifteen (15)

         Less than 1.00 to 1                       Twelve and one-half (12.50);





                                       3


provided, however, that, (a) at any and all times during which the Borrowers are
in default of the timely delivery of (1) the financial statements required by
Section 8.1(a) or Section 8.1(b), as the case may be, for any period or (2) the
certificate complying with Section 8.1(c)(ii) certifying the Total Leverage
Ratio, the Applicable Fee Percentage shall be twenty-five (25) Basis Points, and
(b) the accrual of fees based upon the Applicable Fee Percentage pursuant to
clause (a) of this proviso shall not be construed to waive any Event of Default
which may exist by reason of such failure or limit any right or remedy of the
Agent or the Lenders.

         "APPLICABLE LIBOR PERCENTAGE" shall mean, on each day of any Accrual
Period with respect to any LIBOR Loans comprising a Revolving Credit Borrowing,

         (i) commencing on the first day of the Commitment Period and continuing
         through and including May 31, 2002, forty (40) Basis Points per annum,
         and

         (ii) effective on the Interest Adjustment Date which is June 1, 2002
         and on each Interest Adjustment Date thereafter, the Basis Points per
         annum indicated in the applicable table below corresponding to
         Holdings' Total Leverage Ratio as of the Interest Determination Date
         for each such Interest Adjustment Date:



                                                    Applicable LIBOR
         Total Leverage Ratio:                      Percentage (in Basis Points):
         --------------------                       ----------------------------

                                                 
         Equal to or greater than 2.50 to 1         One Hundred Twelve and one-half (112.50)

         Less than 2.50 to 1, but equal to
            or greater than 2.00 to 1               Ninety (90)

         Less than 2.00 to 1, but equal to
            or greater than 1.50 to 1               Sixty-seven and one-half (67.50)

         Less than 1.50 to 1, but equal to
            or greater than 1.00 to 1               Fifty (50)

         Less than 1.00 to 1                        Forty (40)


provided, however, that, (a) at any and all times during which the Borrowers are
in default of the timely delivery of (1) the financial statements required by
Section 8.1(a) or Section 8.1(b), as the case may be, for any period or (2) the
certificate complying with Section 8.1(c)(ii) certifying the Total Leverage
Ratio, the Applicable LIBOR Percentage shall be one hundred twelve and one-half
(112.50) Basis Points, and (b) the accrual of interest based upon the Applicable
LIBOR Percentage pursuant to clause (a) of this proviso shall not be construed
to waive any Event of Default which may exist by reason of such failure or limit
any right or remedy of the Agent or the Lenders.

         "BANKING DAY" shall mean a day of the year on which banks are not
required or authorized to close in Cleveland, Ohio and New York, New York;
provided, however, that, when






                                       4


used in connection with a LIBOR Loan, "Banking Day" shall mean any such day on
which banks are open for dealings in or quoting deposit rates for dollar
deposits in the London interbank market.

         "BASIS POINT" shall mean one one-hundredth of one percent (0.01%).

         "BORROWER" and "BORROWERS" has the meaning assigned to such term in the
preamble of this Agreement.

         "BORROWER PROPERTY" shall mean any real property and improvements
owned, leased, used, operated or occupied by any Borrower or any of their
respective corporate predecessors, including any soil, surface water or
groundwater on or under such real property and improvements.

         "CAPITALIZED LEASES" shall mean, in respect of any Person, any lease of
property imposing obligations on such Person, as lessee of such property, which
are required in accordance with GAAP to be capitalized on a balance sheet of
such Person.

         "CASH EQUIVALENTS" shall mean investments in (i) United States
Governmental Securities maturing within 365 days from the date of acquisition
thereof; (ii) negotiable certificates of deposit and bankers' acceptances
maturing within 365 days from the date of acquisition thereof issued by any
commercial bank or trust company organized under the laws of the United States
or any state thereof or the District of Columbia, having at any date of
determination combined capital and surplus and retained earnings of not less
than $100,000,000, PROVIDED, that the long-term unsecured debt obligations of
such bank or trust company (or the long-term unsecured debt obligations of the
bank holding company owning all of the capital stock of such bank or trust
company) shall have been given a rating of "A" or better by the Standard &
Poor's Ratings Group division of McGraw Hill, Inc. ("S&P") or an equivalent
rating by any other credit rating agency of recognized national standing, and
(iii) commercial paper maturing not more than 270 days from the date of issuance
thereof which has a rating, at the time of acquisition by a Lincoln Party, of
"A-1" or better by S&P or an equivalent rating by any other credit rating agency
of recognized national standing.

         "CHANGE OF CONTROL" shall mean and include any of the following:

                  (i) during any period of twelve (12) consecutive calendar
         months, individuals who at the beginning of such period constituted any
         Holdings' Board of Directors (together with any new directors (x) whose
         election by Holdings' Board of Directors was, or (y) whose nomination
         for election by Holdings' shareholders was (prior to the date of the
         proxy or consent solicitation relating to such nomination), approved by
         a vote of at least two-thirds of the directors then still in office who
         either were directors at the beginning of such period or whose election
         or nomination for election was previously so approved), shall cease for
         any reason to constitute a majority of the directors then in office;





                                       5


                  (ii) any person or group (as such term is defined in section
         13(d)(3) of the 1934 Act) shall acquire, directly or indirectly,
         beneficial ownership (within the meaning of Rule 13d-3 and 13d-5 of the
         1934 Act) of more than 50%, on a fully diluted basis, of the economic
         or voting interest in Holdings' capital stock;

                  (iii) the shareholders of Holdings approve a merger or
         consolidation of such with any other person, other than a merger or
         consolidation which would result in the voting securities of Holdings
         outstanding immediately prior thereto continuing to represent (either
         by remaining outstanding or by being converted or exchanged for voting
         securities of the surviving or resulting entity) more than 50% of the
         combined voting power of the voting securities of Holdings or such
         surviving or resulting entity outstanding after such merger or
         consolidation;

                  (iv) the shareholders of Holdings approve a plan of complete
         liquidation of Holdings or an agreement or agreements for the sale or
         disposition by Holdings of all or substantially all of Holdings'
         assets; and/or

                  (v) Holdings ceases to own one hundred percent (100%) of the
         issued and outstanding capital stock of a Borrower, except as a result
         of a transaction expressly permitted in Section 9.3, below.

         "CLOSING DATE" shall mean April 24, 2002 or such other date which is
acceptable to the Agent and the Lenders.

         "CODE" shall mean the Internal Revenue Code of 1986, as amended from
time to time, and the rules and regulations promulgated thereunder from time to
time.

         "COMMITMENT" shall mean, with respect to each Lender, the obligation
hereunder of such Lender to make Loans and to participate in the risks of all
Letters of Credit issued by the Letter of Credit Issuer at Holdings' request on
behalf of the Borrowers, up to the amount set forth opposite such Lender's name
under the column headed "Commitments" as set forth in Annex A hereof during the
Commitment Period as such Commitment may be reduced in accordance with a
reduction in the Total Commitment Amount pursuant to Section 3.2 hereof.

         "COMMITMENT PERIOD" shall mean the period FROM (i) the Closing Date TO
(ii) the third (3rd) Anniversary Date, or such earlier date on which the
Commitments are terminated pursuant to the terms hereof.

         "CONSOLIDATED" shall mean Holdings and its Subsidiaries, taken as a
whole in accordance with GAAP.

         "CONSOLIDATED FIXED CHARGES" shall mean, with respect to any period,
the sum of (a) Consolidated Interest Expense for such period and (b)
Consolidated Lease Rentals for such period.




                                       6


         "CONSOLIDATED INCOME AVAILABLE FOR FIXED CHARGES" shall mean, with
respect to any period, Consolidated Net Income for such period, PLUS all amounts
deducted in the computation thereof on account of (a) Consolidated Fixed Charges
and (b) taxes imposed on or measured by income or excess profits.

         "CONSOLIDATED INTEREST EXPENSE" shall mean, for any period, Interest
Expense of Holdings and its Subsidiaries on a Consolidated basis.

         "CONSOLIDATED LEASE RENTALS" shall mean, with respect to any period,
the sum of the rental and other obligations required to be paid during such
period by Holdings and its Subsidiaries as lessee under all leases of real or
personal property (other than Capitalized Leases), on a Consolidated basis,
excluding any amount required to be paid by the lessee (whether or not therein
designated as rental or additional rental) on account of maintenance and
repairs, insurance, taxes, assessments, water rates and similar charges,
PROVIDED that, if at the date of determination, any such rental or other
obligations (or portion thereof) are contingent or not otherwise definitely
determinable by the terms of the related lease, the amount of such obligations
(or such portion thereof) (i) shall be assumed to be equal to the amount of such
obligations for the period of 12 consecutive calendar months immediately
preceding the date of determination or (ii) if the related lease was not in
effect during such preceding 12-month period, shall be the amount estimated by a
responsible officer of Holdings on a reasonable basis and in good faith.

         "CONSOLIDATED NET INCOME" shall mean, with reference to any period, the
net income (or loss) of Holdings and its Subsidiaries for such period, on a
Consolidated basis, as determined in accordance with GAAP, after eliminating all
offsetting debits and credits between Holdings and its Subsidiaries and all
other items required to be eliminated in the course of the preparation of
consolidated financial statements of Holdings and its Subsidiaries in accordance
with GAAP, PROVIDED that there shall be excluded:

                  (a) the income (or loss) of any Person accrued prior to the
         date it becomes a Subsidiary or is merged into or consolidated with
         Holdings or a Subsidiary, and the income (or loss) of any Person,
         substantially all of the assets of which have been acquired in any
         manner, realized by such other Person prior to the date of acquisition,

                  (b) the income (or loss) of any Person (other than a
         Subsidiary) in which Holdings or any Subsidiary has an ownership
         interest, except to the extent that any such income has been actually
         received by Holdings or such Subsidiary in the form of cash dividends
         or similar cash distributions,

                  (c) the undistributed earnings of any Subsidiary to the extent
         that, to the best of the knowledge of the Holdings, the declaration or
         payment of dividends or similar distributions by such Subsidiary is (i)
         not at the time permitted by the terms of its charter or any agreement,
         instrument, judgment, decree, order, statute, rule or governmental
         regulation applicable to such Subsidiary, or (ii) otherwise unavailable
         for payment,




                                       7


                  (d) any aggregate net gain (but not any aggregate net loss)
         during such period arising from the sale, conversion, exchange or other
         disposition of Investments or capital assets (such term to include,
         without limitation, the following, whether or not current: all fixed
         assets, whether tangible or intangible, and all inventory sold in
         conjunction with the disposition of fixed assets), and any taxes on
         such net gain (or net loss),

                  (e) any gains resulting from any write-up or reappraisal of
         any assets (but not any losses resulting from any write-down or
         reappraisal of any assets),

                  (f) any net gain from the collection of the proceeds of life
         insurance policies,

                  (g) any gain arising from the acquisition of any security (as
         defined in the Securities Act of 1933), or the extinguishment, under
         GAAP, of any Indebtedness, of Holdings or any Subsidiary,

                  (h) any deferred or other credit representing the excess of
         equity in any Subsidiary at the date of acquisition over the cost of
         the investment in such Subsidiary; and

                  (i) any non-cash charges related to the implementation by
         Holdings and its Subsidiaries of FASB Statement 142.

         "CONSOLIDATED NET WORTH" shall mean, at any time,

                  (a) the sum (adjusted for any non-cash charges related to the
         implementation by Holdings and its Subsidiaries of FASB Statement 142)
         of (i) the par value (or value stated on the books of the corporation)
         of the capital stock (but excluding treasury stock and capital stock
         subscribed and unissued) of Holdings and its Subsidiaries, PLUS (ii)
         the amount of the paid-in capital and retained earnings of Holdings and
         its Subsidiaries, in each case as such amounts would be shown on a
         Consolidated balance sheet of Holdings and its Subsidiaries as of such
         time prepared in accordance with GAAP, MINUS

                  (b) to the extent included in clause (a), all amounts properly
         attributable to minority interests, if any, in the stock and surplus of
         Subsidiaries.

         "CONTROLLED GROUP" shall mean a controlled group of corporations as
defined in Section 1563 of the Code of 1986, of which any Borrower is a part.

         "CREDIT EVENT" shall mean (a) the obligation of (i) each Lender to make
a Loan on the occasion of each Revolving Credit Borrowing, (ii) the Letter of
Credit Issuer to issue any Letter of Credit, or (iii) any Lender to participate
in the risk of any Letter of Credit, (b) the making of a Loan by any Lender, (c)
the delivery by Holdings on behalf of the Borrowers of (i) a Notice of Borrowing
requesting a Revolving Credit Borrowing or a Letter of Credit or (ii) a Rate
Conversion/Continuation Request requesting the conversion or continuation of
Revolving Credit Loans, (d) a Rate Conversion or Rate Continuation, or (e) the
acceptance by any Borrower of proceeds of any Revolving Credit Borrowing.





                                       8


         "DEFAULT UNDER ERISA" shall mean (a) the occurrence or existence of a
material "accumulated funding deficiency" (as defined in ERISA) in respect of
any Plan within the scope of Section 302(a) of ERISA or (b) any failure by any
Borrower to make a full and timely payment of premiums required by Section 4001
of ERISA in respect of any Plan, or (c) the occurrence or existence of any
material liability under Section 4062, 4063, 4064, 4069, 4201, 4217 or 4243 of
ERISA in respect of any Plan, or (d) the occurrence or existence of any material
breach of any other Law or regulation in respect of any such Plan, or (e) the
institution or existence of any action for the forcible termination of any such
Plan which is within the scope of Section 4001(a)(3) or (15) or ERISA.

         "DISTRIBUTION" shall mean any payment made, liability incurred and
other consideration (other than any stock dividend, or stock split or similar
distributions payable only in capital stock of a Borrower) given (i) for the
purchase, acquisition, redemption or retirement of any capital stock of a
Borrower or (ii) as a dividend, return of capital or other distribution of any
kind in respect of a Borrower's capital stock outstanding at any time.

         "DOMESTIC SUBSIDIARY" means any Subsidiary which is incorporated or
organized in the United States or any state or territory thereof.

         "EBITDA" shall mean, for any period, the sum of the amounts of (i)
Consolidated Net Income, (ii) Consolidated Interest Expense for such period,
(iii) depreciation for such period on a Consolidated basis, as determined in
accordance with GAAP, (iv) amortization for such period on a Consolidated basis,
as determined in accordance with GAAP, and (v) all provisions for any taxes
imposed on or measured by income or excess profits made by Holdings and its
Subsidiaries during such period.

         "ENVIRONMENTAL LAWS" shall mean any federal, state or local Law,
regulation, ordinance, or order pertaining to the protection of the environment
and the health and safety of the public, including (but not limited to) the
Comprehensive Environmental Response, Compensation and Liability Act ("CERCLA"),
42 USC secs. 9601 ET SEQ.; the Resource Conservation and Recovery Act ("RCRA"),
42 USC secs. 6901 ET SEQ., the Hazardous Materials Transportation Act, 49 USC
secs. 1801 ET SEQ., the Federal Water Pollution Control Act (33 USC secs. 1251
ET SEQ.), the Toxic Substances Control Act (15 USC secs. 2601 ET SEQ.) and the
Occupational Safety and Health Act (29 USC secs. 651 ET SEQ.), and all similar
state, regional or local Laws, treaties, regulations, statutes or ordinances,
common Law, civil Laws, or any case precedents, rulings, requirements,
directives or requests having the force of Law of any foreign or domestic
governmental authority, agency or tribunal, and all foreign equivalents thereof,
as the same have been or hereafter may be amended, and any and all analogous
future Laws, treaties, regulations, statutes or ordinances, common Law, civil
Laws, or any case precedents, rulings, requirements, directives or requests
having the force of Law of any foreign or domestic governmental authority,
agency or tribunal and the regulations promulgated pursuant thereto, which
governs: (i) the existence, cleanup and/or remedy of contamination on property;
(ii) the emission or discharge of Hazardous Materials into the environment;
(iii) the control of hazardous wastes; (iv) the use, generation, transport,
treatment, storage, disposal, removal or recovery of Hazardous Materials; or (v)
the maintenance and development of wetlands.





                                       9


         "ERISA" shall mean the Employee Retirement Income Security Act of 1974
(Public Law 93406), as amended, and in the event of any amendment affecting any
section thereof referred to in this Agreement, that reference shall be reference
to that section as amended, supplemented, replaced or otherwise modified.

         "ERISA AFFILIATE" of any Person shall mean any other Person that for
purposes of Title IV of ERISA is a member of such Person's Controlled Group, or
under common control with such Person, within the meaning of Section 414 of the
Code.

         "ERISA REGULATOR" shall mean any governmental agency (such as the
Department of Labor, the Internal Revenue Service and the Pension Benefit
Guaranty Corporation) having any regulatory authority over any Plan.

         "EUROCURRENCY LIABILITIES" has the meaning assigned to that term in
Regulation D of the Board of Governors of the Federal Reserve System, as in
effect from time to time.

         "EVENT OF DEFAULT" has the meaning assigned to such term in Article 11.

         "EXEMPTION CERTIFICATE" has the meaning assigned to such term in
Section 3.9(f).

         "EXISTING CREDIT AGREEMENT" shall mean the Credit Agreement dated
December 20, 1995, as amended, among Lincoln and others, as borrowers, KeyBank
(as successor by merger to Society National Bank), as agent, and various lenders
party thereto.

         "FACILITY FEE" has the meaning assigned to such term in Section 3.4(a).

         "FED FUNDS RATE" shall mean, for any period, a fluctuating interest
rate per annum equal for each day during such period to the weighted average of
the rates on overnight Federal funds transactions with members of the Federal
Reserve System arranged by federal funds brokers, as published for such day (or,
if such day is not a Banking Day, for the next preceding Banking Day) by the
Federal Reserve Bank of New York, or, if such rate is not so published for any
day which is a Banking Day, the average of the quotations for such day on such
transactions received by the Agent from three (3) federal funds brokers of
recognized standing selected by it.

         "FEE ADJUSTMENT DATE" shall mean each April 1, June 1, September 1 and
December 1 during the Commitment Period, commencing with June 1, 2002.

         "FEE DETERMINATION DATE" shall mean, as to each Fee Adjustment Date,
the last day of the Fiscal Quarter most recently ended prior to such Fee
Adjustment Date. By way of example, the Fee Determination Date for the Fee
Adjustment Date on June 1, 2002 shall be March 31, 2002, which is the last day
of the Fiscal Quarter most recently ended prior to such Fee Adjustment Date.

         "FISCAL QUARTER" shall mean any of the four consecutive three-month
fiscal accounting periods collectively forming a Fiscal Year of Holdings
consistent with Holdings' past practice.





                                       10


         "FISCAL YEAR" shall mean Holdings' regular annual accounting period
which shall end December 31, 2002, in respect of Holdings' current annual
accounting period, and which thereafter shall end on December 31 of each
succeeding calendar year.

         "FIXED CHARGES COVERAGE RATIO" shall mean, at any time, the ratio of
(a) Consolidated Income Available for Fixed Charges for the period of four
consecutive fiscal quarters ending as of the most recent fiscal quarter ended
prior to such time to (b) Consolidated Fixed Charges for such period.

         "FORMER AGENT" has the meaning assigned to such term in Section 13.13.

         "FORMER LC BANK" has the meaning assigned to such term in Section 5.3.

         "FUNDED DEBT" shall mean (a) Indebtedness, other than Indebtedness of
the types described in clauses (ix), (x), (xii) and (xiii) of the definition of
such term, below, and (b) all guaranty obligations of such Person in respect of
any Indebtedness of the type described in clause (a) of this definition.

         "GAAP" shall mean generally accepted accounting principles in the
United States of America as in effect from time to time; it being understood and
agreed that determinations in accordance with GAAP for purposes of Sections 8.16
through 8.20, inclusive, including defined terms as used therein, are subject
(to the extent provided therein) to Sections 1.1 and 1.3.

         "GUARANTOR" shall mean one who pledges his, her or its credit or
property in any manner for the payment or other performance of the Indebtedness,
contract or other obligation of another and includes (without limitation) any
guarantor (whether of collection or payment), any obligor in respect of a
standby letter of credit or surety bond issued for the obligor's account, and
surety, any co-maker, any endorser, and anyone who agrees conditionally or
otherwise to make any loan, purchase or investment in order thereby to enable
another to prevent or correct a default of any kind.

         "GUARANTY" shall mean the obligation of a Guarantor.

         "HAZARDOUS MATERIAL" shall mean and include (i) any asbestos or other
material composed of or containing asbestos which is, or may become, even if
properly managed, friable, (ii) petroleum and any petroleum product, including
crude oil or any fraction thereof, and natural gas or synthetic natural gas
liquids or mixtures thereof, (iii) any hazardous, toxic or dangerous waste,
substance or material defined as such in (or for purposes of) CERCLA or RCRA,
any so-called "Superfund" or "Superlien" law, or any other applicable
Environmental Laws, and (iv) any other substance whose generation, handling,
transportation, treatment or disposal is regulated pursuant to any Environmental
Laws.

         "INCIPIENT DEFAULT" shall mean an event, condition or thing which
constitutes, or which with the lapse of any applicable grace period or the
giving of notice or both would constitute, any





                                       11


Event of Default and which has not been appropriately waived by the Lenders in
writing or fully corrected prior to becoming an actual Event of Default.

         "INCREASED RATE" shall mean, at any time and from time to time, a rate
of interest per annum which (i) as to any LIBOR Loan, is Three Hundred (300)
Basis Points in excess of the rate of interest otherwise accruing on such Loan
at such time, and (ii) as to other Obligations, including, without limitation
Prime Rate Loans, One Hundred (100) Basis Points in excess of the Prime Rate.

         "INDEBTEDNESS" means, with respect to any Person, without duplication,
(i) all indebtedness for money borrowed of such Person; (ii) all bonds, notes,
debentures and similar debt securities of such Person; (iii) the deferred
purchase price of capital assets or services which in accordance with GAAP would
be shown on the liability side of the balance sheet of such Person; (iv) the
face amount of all letters of credit issued for the account of such Person and,
without duplication, all drafts drawn thereunder; (v) all obligations,
contingent or otherwise, of such Person in respect of bankers' acceptances; (vi)
all Indebtedness of a second Person secured by any Lien on any property owned by
such first Person, whether or not such Indebtedness has been assumed; (vii) all
Capitalized Lease obligations of such Person and all Indebtedness of such Person
secured by purchase money Liens; (viii) the present value, determined on the
basis of the implicit interest rate, of all basic rental obligations under all
"synthetic" leases (i.e. leases accounted for by the lessee as operating leases
under which the lessee is the "owner" of the leased property for Federal income
tax purposes); (ix) all obligations of such Person to pay a specified purchase
price for goods or services whether or not delivered or accepted, i.e.,
take-or-pay and similar obligations; (x) all net obligations of such Person
under any so-called `hedge', `swap', `collar', `cap' or similar interest rate or
currency fluctuation protection agreements; (xi) the full outstanding balance of
trade receivables, notes or other instruments sold with full recourse (and the
portion thereof subject to potential recourse, if sold with limited recourse),
including, without limitation, in connection with a Qualifying Securitization
Transaction, other than in any such case any thereof sold solely for purposes of
collection of delinquent accounts; (xii) the stated value, or liquidation value
if higher, of all redeemable stock (or other equity interest) of such Person;
and (xiii) all guaranty obligations of such Person; provided that (a) neither
trade payables nor other similar accrued expenses, in each case arising in the
ordinary course of business, unless evidenced by a note, shall constitute
Indebtedness; and (b) the Indebtedness of any Person shall in any event include
(without duplication) the Indebtedness of any other entity (including any
general partnership in which such Person is a general partner) to the extent
such Person is liable thereon as a result of such Person's ownership interest in
or other relationship with such entity, except to the extent the terms of such
Indebtedness provide expressly that such Person is not liable thereon.

         "INITIAL CREDIT EVENT" shall mean the first Credit Event hereunder to
occur.

         "INTEREST ADJUSTMENT DATE" shall mean each April 1, June 1, September 1
and December 1 during the Commitment Period, commencing with June 1, 2002.

         "INTEREST DETERMINATION DATE" shall mean, as to each Interest
Adjustment Date, the last day of the Fiscal Quarter most recently ended prior to
such Interest Adjustment Date. By way of






                                       12


example, the Interest Determination Date for the Interest Adjustment Date on
June 1, 2002 shall be March 31, 2002, which is the last day of the Fiscal
Quarter most recently ended prior to such Interest Adjustment Date.

         "INTEREST EXPENSE" shall mean, for any fiscal period, all expense of
Holdings or any of its Subsidiaries for such fiscal period classified as
interest expense for such period, including capitalized interest and interest
under "synthetic" leases, in accordance with GAAP.

         "INTEREST PERIOD" shall mean, for each of the LIBOR Loans comprising a
Revolving Credit Borrowing, the period commencing on the date of such Loans or
the date of the Rate Conversion or Rate Continuation of any Loans into such
LIBOR Loans and ending on the numerically corresponding day of the period
selected by Holdings on behalf of the Borrowers pursuant to the provisions
hereof and each subsequent period commencing on the last day of the immediately
preceding Interest Period in respect of such Loans and ending on the last day of
the period selected by Holdings on behalf of the Borrowers pursuant to the
provisions hereof. The duration of each such Interest Period shall be one (1),
two (2), three (3) or six (6) months, in each case as Holdings on behalf of the
Borrowers may select, upon delivery to the Agent of a Notice of Borrowing
therefor in accordance with Section 3.l(d) hereof; provided, however, that:

         (i)      Interest Periods for Loans comprising part of the same
                  Revolving Credit Borrowing shall be of the same duration;

         (ii)     no Interest Period may end on a date later than the last day
                  of the Commitment Period;

         (iii)    if there is no such numerically corresponding day in the month
                  that is such, as the case may be, first, second, third or
                  sixth month after the commencement of an Interest Period, such
                  Interest Period shall end on the last day of such month;

         (iv)     whenever the last day of any Interest Period in respect of
                  LIBOR Loans would otherwise occur on a day other than a
                  Banking Day, the last day of such Interest Period shall be
                  extended to occur on the next succeeding Banking Day;
                  provided, however, that if such extension would cause the last
                  day of such Interest Period to occur in the next following
                  calendar month, the last day of such Interest Period shall
                  occur on the immediately preceding Banking Day; and

         (v)      Holdings, on behalf of the Borrowers, may not select any
                  Interest Period ending after the date of any reduction in the
                  Total Commitment Amount unless, after giving effect to such
                  selection, the aggregate unpaid principal amount of any then
                  outstanding Prime Rate Loans taken together with the principal
                  amount of any then outstanding LIBOR Loans having Interest
                  Periods ending on or prior to the date of such reduction shall
                  be at least equal to the principal amount of the Revolving
                  Credit Loans due and payable on or prior to such date.

         "INVESTMENT" means any investment, made in cash, by undertaking or by
delivery of property, by Holdings or any of its Subsidiaries (i) in any Person,
whether by acquisition of stock






                                       13


or other equity interest, joint venture or partnership, Indebtedness or other
obligation or security, or by loan, Guaranty, advance, capital contribution or
otherwise, or (ii) in any property.

         "KEYBANK" shall mean KeyBank National Association, a national banking
association, its successors and assigns.

         "LC SUBLIMIT" shall mean the amount Five Million Dollars ($5,000,000).

         "LAW" shall mean any law, treaty, regulation, statute or ordinance,
common law, civil law, or any case precedent, ruling, requirement, directive or
request having the force of law of any foreign or domestic governmental
authority, agency or tribunal.

         "LENDER" or "LENDERS" has the meaning assigned to such term in the
preamble of this Agreement.

         "LENDER DEBT" shall mean, collectively, every Indebtedness and
liability now or hereafter owing by any Borrower to the Lenders or any thereof,
whether owing absolutely or contingently, whether created by loan, overdraft,
guaranty of payment or other contract or by quasi-contract, tort, statute or
other operation of Law, whether incurred directly to the Lenders or any thereof
or acquired by any or all thereof by purchase, pledge or otherwise, and whether
participated to or from the Lenders or any thereof in whole or in part.

         "LENDING OFFICE" shall mean, with respect to any Lender, the office of
such Lender specified as its "Lending Office" below its name on the signature
pages hereto, or such other office of such Lender as such Lender may from time
to time specify in writing to the Borrowers and the Agent as the office at which
Loans are to be made and maintained.

         "LETTER OF CREDIT" shall mean any standby letter of credit issued by
the Letter of Credit Issuer on a risk-participated basis with the other Lenders
pursuant to the provisions of this Agreement.

         "LETTER OF CREDIT ISSUER" shall mean KeyBank and any successor thereto
pursuant to Section 5.3.

         "LIBOR" shall mean, with respect to any LIBOR Loan for any Interest
Period, the per annum rate of interest, determined by the Agent in accordance
with its usual procedures (which determination shall be conclusive and binding
absent manifest error) as of approximately 11:00 A.M. (London time) two (2)
Banking Days prior to the beginning of such Interest Period pertaining to such
LIBOR Loan, appearing on page 3750 of the Dow Jones Telerate Service (or any
successor to or substitute page of such Service, or any successor to or
substitute for such Service providing rate quotations comparable to those
currently provided on such page of such Service, as determined by the Agent from
time to time for purposes of providing quotations of interest rates applicable
to dollar deposits in the London interbank market) as the rate in the London
interbank market for dollar deposits in immediately available funds with a
maturity comparable to such Interest Period. In the event that such a rate
quotation is not available for any reason, then the rate shall be the rate,
determined by the Agent as of approximately 11:00



                                       14


A.M. (London time) two (2) Banking Days prior to the beginning of such Interest
Period pertaining to such LIBOR Loan, to be the average (rounded upwards, if
necessary, to the nearest one sixteenth of one percent (1/16th of 1%)) of the
per annum rates of interest at which dollar deposits in immediately available
funds approximately equal in principal amount to such LIBOR Loan and for a
maturity comparable to the Interest Period are offered to KeyBank by prime banks
in the London interbank market.

         "LIBOR LOANS" shall mean those Loans described in Section 3.1 hereof on
which the Borrowers shall pay interest at a rate based on LIBOR.

         "LIEN" shall mean any lien, security interest or other charge or
encumbrance of any kind, or any other type of preferential arrangement,
including, without limitation, the lien or retained security title of a
conditional vendor and any easement, right of way or other encumbrance on title
to real property.

         "LINCOLN PARTY" shall mean any of the Borrowers or any other direct or
indirect Subsidiary of any of them from time to time, collectively, the "Lincoln
Parties".

         "LOAN" shall mean a Revolving Credit Loan made by a Lender to or for
the account of the Borrowers pursuant to Article 3 and refers to a Prime Rate
Loan or a LIBOR Loan.

         "LOAN DOCUMENT" shall mean this Agreement, any assignment, note
(including the Notes), guaranty, subordination agreement (including, without
limitation, subordination provisions contained in documents evidencing or
governing Subordinated Indebtedness), Reimbursement Agreement, financial
statement, certificate, audit report or other writing furnished by the
Borrowers, or any of their officers to the Lenders pursuant to or otherwise in
connection with this Agreement.

         "MAJORITY LENDERS" shall mean, at any time of determination, one or
more Lenders having Commitments in the aggregate of at least fifty-one percent
(51%) of the Total Commitment Amount or, in the event that the Commitments of
the Lenders shall have been terminated, the Lenders holding fifty-one percent
(51%) of the amount of the outstanding Revolving Credit Loans.

         "MATERIAL ADVERSE EFFECT" shall mean the occurrence or existence of (a)
a material adverse effect on the business, results of operations or financial
condition of a Borrower, or (b) a material adverse effect on the ability of a
Borrower to perform its Obligations under this Agreement or any of the other
Loan Documents, or (c) a material adverse effect on the legality, validity or
enforceability of a Borrower's Obligations under this Agreement or any of the
other Loan Documents.

         "MULTIEMPLOYER PLAN" shall mean any Plan that is a "multiemployer plan"
(as such term is defined in section 4001(a)(3) of ERISA).

         "NOTE" or "NOTES" shall mean a note or notes executed and delivered
pursuant to Section 3.1(c) hereof.





                                       15


         "NOTICE OF BORROWING" shall have the meaning assigned to such term in
Section 3.1(d).

         "OBLIGATIONS" shall mean the obligations of the Borrowers under this
Agreement and the other Loan Documents, including, without limitation, the
outstanding principal and accrued interest in respect of any Revolving Credit
Loans, the outstanding principal and accrued interest in respect of Letters of
Credit, all Facility Fees, Risk Participation Fees, fees owing to the Lenders or
the Agent, reimbursement obligations under Letters of Credit, any indebtedness
or obligations under any so-called `hedge', `swap', `collar', `cap' or similar
interest rate or currency fluctuation protection agreements hereafter
constituting one or more of the Loan Documents pursuant to a writing signed by
the Borrowers, the Agent and the Majority Lenders, and any expenses, taxes,
compensation or other amounts owing under this Agreement, the Notes, any
Reimbursement Agreement, including, without limitation, pursuant to Sections
3.3, 3.4, 3.7, 3.8, 3.9 or 15.4 and any and all other amounts owed by any
Borrower to the Agent or the Lenders pursuant to this Agreement, the Notes or
any other Loan Document.

         "OTHER TAXES" has the meaning assigned to such term in Section 3.9.


         "PAYMENT OFFICE" shall mean such office of the Agent as set forth below
the Agent's name on the signature pages hereof or such offices as may be from
time to time selected by the Agent and notified in writing by the Agent to the
Borrowers and the Lenders as the office to which payments are to be made by the
Borrowers or the Lenders, as the case may be.

         "PERMITTED ACQUISITION" shall mean any Acquisition as to which all of
the following conditions are satisfied:

                  (i) such Acquisition involves a line or lines of business in a
         Related Industry;

                  (ii) such Acquisition is not actively opposed by the Board of
         Directors (or similar governing body) of the selling Person or the
         Person whose equity interests are to be acquired;

                  (iii) no Event of Default or Incipient Default then exists or
         would exist after giving effect to such Acquisition; and

                  (iv) at least ten (10) Banking Days prior to the completion of
         any such Acquisition involving aggregate consideration, including the
         principal amount of any assumed Indebtedness and (without duplication)
         any Indebtedness of any acquired Person or Persons, in excess of
         $10,000,000, Holdings shall have delivered to the Agent and the Lenders
         a certificate of a responsible financial or accounting officer of
         Holdings demonstrating, in reasonable detail, the computation of the
         ratios referred to in Sections 9.7 and 9.8 on a pro forma basis (which
         pro forma basis shall be satisfactory to the Agent);






                                       16


provided, that the term Permitted Acquisition specifically excludes any loans,
advances or minority investments otherwise permitted pursuant to Section 9.2.

         "PERMITTED HOLDINGS MERGER" shall mean a merger between Holdings and
another Person as to which all of the following conditions are satisfied:

         (i)   Holdings is the surviving corporation under such merger;

         (ii)  no Event of Default or Incipient Default then exists or would
         exist after giving effect to such merger;

         (iii) without limiting the generality of clause (ii), above, no Change
         of Control would occur by reason of such merger; and

         (iv)  at least 20 Banking Days prior to the completion of any such
         merger, Holdings shall have delivered to the Agent and the Lenders (A)
         audited financial statements for the other merger party (unless audited
         financial statements are unavailable, in which case, unaudited
         financial statements shall be delivered) for the three most recent
         fiscal years of such Person and (B) a certificate of a responsible
         officer of Holdings demonstrating, in reasonable detail, the
         computation of the ratios referred to in Sections 9.7 and 9.8 hereof on
         a pro forma basis (which pro forma basis shall be satisfactory to the
         Agent).

         "PERMITTED PURCHASE MONEY SECURITY INTEREST" shall mean any Lien which
is created or assumed in purchasing, constructing or improving any real or
personal property (other than inventory) in the ordinary course of business, or
to which any such property is subject when so purchased, including, without
limitation, Capitalized Leases, provided, that (i) such lien shall be confined
to the aforesaid property, (ii) the Indebtedness secured thereby does not exceed
the total cost of the purchase, construction or improvement, (iii) any
refinancing of such indebtedness does not increase the amount of indebtedness
owing as of the date of such refinancing.

         "PERSON" shall mean an individual, partnership, limited liability
company, corporation (including a business trust), joint stock company, trust,
unincorporated association, joint venture or other entity, or a government or
any political subdivision or agency thereof.

         "PLAN" shall mean any employee pension benefit plan subject to Title IV
of the Employee Retirement Income Security Act of 1974, as amended, established
or maintained by Holdings, any Subsidiary, or any member of the Controlled
Group, or any such Plan to which Holdings, any Subsidiary, or any member of the
Controlled Group is required to contribute on behalf of any of its employees
(other than a Multi-Employer Plan, as that term is defined in Section 414(f) of
the Code).

         "PREPAYMENT LIBOR" has the meaning assigned to such term in Section
3.3(d).

         "PRIME RATE" shall mean the higher of (i) the per annum rate equal to
the Fed Funds Rate PLUS one and one-half percent (1.5%) or (ii) that interest
rate established from time to time by KeyBank as its so-called "prime" rate (or
equivalent rate otherwise named), whether or not such






                                       17


rate is publicly announced; the Prime Rate may not necessarily be the lowest
interest rate charged by KeyBank for commercial or other extensions of credit.

         "PRIME RATE LOANS" shall mean those loans described in Section 3.1(b)
hereof on which the Borrowers shall pay interest at the rate based on the Prime
Rate.

         "PURCHASE DATE" shall have the meaning assigned to such term in Section
3.1(i).

         "QUALIFYING SECURITIZATION TRANSACTION" shall mean a bona fide
securitization transaction effected under terms and conditions customary in the
capital markets and consisting of sales of Trade Receivables by a Lincoln Party
to a Special Purpose Company which in turn either sells or pledges such Trade
Receivables (or undivided interests therein) to a commercial paper conduit or
other financing source (whether with or without recourse to the Special Purpose
Company), and as to which each of the following conditions shall be satisfied:
(i) such sales to the Special Purpose Company are not accounted for under GAAP
as secured loans, (ii) such transactions are, in the good faith opinion of a
responsible officer of Holdings, for fair value and in the best interests of
such Lincoln Party, and (iii) recourse to any Lincoln Party in connection with
any such sale of Trade Receivables is limited to repurchase, substitution or
indemnification obligations customarily provided for in asset securitization
transactions and arising from breaches of representations or warranties made by
any Lincoln Party in connection with such sale.

         "QUARTERLY PAYMENT DATE" shall mean each March 31, June 30, September
30 and December 31 during the Commitment Period, commencing with June 30, 2002.

         "QUOTED RATE" shall have the meaning assigned to such term in Section
3.1(i).

         "RATABLE PORTION" or "RATABLE SHARE" shall mean, in respect of any
Lender, the quotient (expressed as a percentage) obtained at any time by
dividing such Lender's Commitment at such time by the Total Commitment Amount.

         "RATE CONTINUATION" shall mean a continuation of LIBOR Loans having a
particular Interest Period as LIBOR Loans having an Interest Period of the same
duration pursuant to Section 3.1(h).

         "RATE CONVERSION" refers to a conversion pursuant to Section 3.1(h) of
Loans of one Type into Loans of another Type and, with respect to LIBOR Loans,
from one permissible Interest Period to another permissible Interest Period.

         "RATE CONVERSION/CONTINUATION REQUEST" shall have the meaning assigned
to such term in Section 3.l(h).

         "REDUCTION NOTICE" shall mean a notice for a request for the reduction
in the Total Commitment Amount pursuant to Section 3.2 in the form of Exhibit D
hereto.





                                       18


         "REGULATORY CHANGE" shall mean, as to any Lender, any change in United
States federal, state or foreign Laws or regulations or the adoption or making
of any interpretations, directives or requests of or under any United States
federal, state or foreign Laws or regulations (whether or not having the force
of Law) by any court or governmental authority charged with the interpretation
or administration thereof.

         "REIMBURSEMENT AGREEMENT" shall mean any reimbursement agreement in
respect of any Letter of Credit.

         "RELATED INDUSTRIES" means the welding and cutting industry, including
the manufacture and sale of welding and cutting equipment and related
consummables, industrial gases and gas apparatus, laser and robotics for welding
applications, and the engineered adhesives and industrial fastener industries.

         "REPORTABLE EVENT" shall mean a reportable event as that term is
defined in Title IV of the Employee Retirement Income Security Act of 1974, as
amended, except actions of general applicability by the Secretary of Labor under
Section 110 of such Act.

         "RESERVE PERCENTAGE" shall mean for any day that percentage (expressed
as a decimal) which is in effect on such day, as prescribed by the Board of
Governors of the Federal Reserve System (or any successor) for determining the
maximum reserve requirement (including, without limitation, all basic,
supplemental, marginal and other reserves and taking into account any
transitional adjustments or other scheduled changes in reserve requirements) for
a member bank of the Federal Reserve System in Cleveland, Ohio, in respect of
"Eurocurrency Liabilities".

         "REVOLVING CREDIT BORROWING" shall mean a group of Revolving Credit
Loans of a single Type, made by the Lenders on a single date and as to which, as
to LIBOR Loans, a single Interest Period is in effect (I.E. any group of
Revolving Credit Loans made by the Lenders having a different Type, or, as to
LIBOR Loans, having a different Interest Period [regardless of whether such
Interest Period commences on the same date as another Interest Period], or made
on a different date shall be considered to comprise a different Revolving Credit
Borrowing).

         "REVOLVING CREDIT FACILITY" shall mean the revolving credit established
by the Lenders in favor of the Borrowers hereby in the maximum principal amount
of the Total Commitment Amount.

         "REVOLVING CREDIT LOAN" shall mean a Loan by a Lender to the Borrowers
pursuant to Section 3.1(a), and refers to a Prime Rate Loan or a LIBOR Loan.

         "REVOLVING CREDIT NOTE" shall mean a note executed and delivered
pursuant to Section 3.l(c) hereof.

         "RISK PARTICIPATION EXPOSURE" shall mean, with respect to any Lender,
at any time of determination, such Lender's Ratable Portion of the sum of (a)
the aggregate entire Stated Amount of all such Letters of Credit outstanding at
such time, and (b) the aggregate amount that






                                       19


has been drawn under such Letters of Credit but for which the Letter of Credit
Issuer or the Lenders, as the case may be, have not at such time been reimbursed
by the Borrowers.

         "RISK PARTICIPATION FEE" shall mean the fee payable to the Lenders
pursuant to Section 3.4(c).

         "SEC" shall mean the Securities and Exchange Commission.

         "SIGNIFICANT SUBSIDIARY" shall mean any Domestic Subsidiary that is a
"significant subsidiary" as defined in Regulation S-X, Rule 1-02(w) of the SEC,
as such Regulation and Rule are in effect on the date hereof.

         "SPECIAL PURPOSE COMPANY" shall mean any Person created in connection
with a Qualifying Securitization Transaction, PROVIDED, that any Special Purpose
Company shall not own any property or conduct any activities other than those
properties and activities which are reasonably required to be owned and
conducted in connection with the involvement of such Person in Qualifying
Securitization Transactions.

         "STATED AMOUNT" of each Letter of Credit shall mean the maximum
available to be drawn thereunder (regardless of whether any conditions or other
requirements for drawing could then be met).

         "SUBORDINATED INDEBTEDNESS" shall mean any Indebtedness which has been
subordinated to the Obligations in right and time of payment upon terms which
are satisfactory to the Majority Lenders, which terms may, in the Majority
Lenders' determination, include (without limitation) limitations or restrictions
on the right of the holder of such Indebtedness to receive payments and exercise
remedies.

         "SUBSIDIARY" shall mean, as to any Person, (i) any corporation more
than 50% of whose stock of any class or classes having by the terms thereof
ordinary voting power to elect a majority of the directors of such corporation
(irrespective of whether or not at the time stock of any class or classes of
such corporation shall have or might have voting power by reason of the
happening of any contingency) is at the time owned by such Person directly or
indirectly through Subsidiaries and (ii) any partnership, limited liability
company, association, joint venture or other entity in which such Person
directly or indirectly through Subsidiaries, has more than a 50% equity interest
at the time. Unless otherwise expressly provided in this Agreement, all
references herein to "Subsidiary" shall mean a Subsidiary (direct or indirect)
of Holdings.

         "TAXES" has the meaning assigned to such term in Section 3.9(a).

         "TOTAL COMMITMENT AMOUNT" shall mean the amount One Hundred Twenty-five
Million Dollars ($125,000,000), as such amount may be reduced pursuant to the
provisions of this Agreement.

         "TOTAL FUNDED DEBT" shall mean, as at the date of any determination,
and on a Consolidated basis, the principal amount of any and all outstanding
Funded Debt of Holdings





                                       20


and its Subsidiaries at such date, including, without limitation, the
outstanding Obligations of the Borrowers to the Lenders under this Agreement at
such date and any other Lender Debt at such date.

         "TOTAL LEVERAGE RATIO" shall mean, as of the end of any Fiscal Quarter,
the ratio of (i) Total Funded Debt outstanding on such Fiscal Quarter end to
(ii) Trailing EBITDA as of such Fiscal Quarter end.

         "TRADE RECEIVABLES" shall mean indebtedness and other obligations owed
to Holdings or any other Lincoln Party, whether constituting accounts, chattel
paper, instruments or general intangibles, arising in connection with the sale
of goods and services by Holdings or such Lincoln Party to commercial customers,
including, without limitation, the obligation to pay any finance charges with
respect thereto, and agreements relating thereto, collateral securing the
foregoing, books and records relating thereto and all proceeds thereof.

         "TRAILING EBITDA" shall mean, as of the end of any Fiscal Quarter,
EBITDA for such Fiscal Quarter, plus EBITDA for the three (3) immediately
preceding Fiscal Quarters

         "TYPE" shall mean, when used in respect of any Revolving Credit Loan,
LIBOR or Prime Rate as applicable to such Loan.

         "UTILIZATION FEE" has the meaning assigned to such term in Section
3.4(f).

         The foregoing definitions shall be applicable to the singular and
plurals of the foregoing defined terms.

         SECTION 1.2 COMPUTATION OF TIME PERIODS. In this Agreement in the
computation of periods of time from a specific date to a later specified date,
the word "from" means "from and including" and the words "to" and "until" each
means "to but excluding".

         SECTION 1.3 ACCOUNTING TERMS. Except as otherwise expressly provided
herein, all terms of an accounting or financial nature shall be construed in
accordance with GAAP; provided, however, that, for purposes of determining
satisfaction of the financial tests set forth in the definitions of Applicable
LIBOR Percentage, and Applicable Fee Percentage, and Consolidated Net Pre-Tax
Earnings and compliance with the covenants set forth in Article 9, all terms of
an accounting or financial nature shall be construed in accordance with
generally accepted accounting principles as in effect on the date of this
Agreement and in all cases shall be applied on a basis consistent with those
applied in the preparation of the audited financial statements referred to in
Section 10.5.







                                       21



                                    ARTICLE 2
                           AMOUNT AND NATURE OF CREDIT

         SECTION 2.1 AMOUNT AND NATURE OF CREDIT. Subject to the terms and
conditions set forth in this Agreement, each of the Lenders hereby establishes a
facility pursuant to which Revolving Credit Loans shall be available to the
Borrowers on a revolving credit basis in an amount, in the aggregate as to all
of the Lenders, not to exceed the Total Commitment Amount, of which an amount
not to exceed the LC Sublimit shall be available for the issuance of Letters of
Credit.

         SECTION 2.2 PURPOSE OF FACILITY. The Borrowers shall use the proceeds
of Revolving Credit Loans hereunder (a) to repay sums owing to the "Lenders" and
the "Agent" under and pursuant to the Existing Credit Agreement, including,
without limitation, obligations in respect of letters of credit outstanding
thereunder, and (b) for other general corporate purposes. The Borrowers shall
use the Letters of Credit for the purposes set forth in Article 5 and for
general corporate purposes of the Lincoln Parties.


                                    ARTICLE 3
                                      LOANS

         SECTION 3.1 REVOLVING CREDIT LOANS.

         (a) REVOLVING CREDIT LOANS. Subject to the terms and provisions of this
Agreement, each Lender severally agrees to make Revolving Credit Loans to the
Borrowers in respect of the Revolving Credit Facility from time to time during
the Commitment Period up to such Lender's respective Commitment; provided,
however, that in no event at any time shall the aggregate principal amount of
all Revolving Credit Loans then outstanding, PLUS the aggregate Risk
Participation Exposure then existing, be in excess of the Total Commitment
Amount. Within the limits set forth herein, the Borrowers may borrow, prepay and
reborrow Revolving Credit Loans.

         (b) REVOLVING CREDIT BORROWINGS.

         (i) Subject to the terms and conditions set forth in this Agreement,
the Borrowers shall have the option to request Revolving Credit Borrowings in
respect of the Revolving Credit Facility, comprised of (A) Prime Rate Loans
maturing on or before the last day of the Commitment Period, in aggregate
amounts of not less than Five Hundred Thousand Dollars ($500,000) or additional
increments of One Hundred Thousand Dollars ($100,000) or any integral multiple
thereof or (B) LIBOR Loans maturing on the last day of the Interest Period
applicable thereto in aggregate amounts of not less than Three Million Dollars
($3,000,000), or additional increments of One Million Dollars ($1,000,000) or
any integral multiple thereof.

         (ii) The Borrowers may request more than one Revolving Credit Borrowing
on any Banking Day; provided, however, that if on the same Banking Day the
Borrowers request two or more Revolving Credit Borrowings which are comprised of
LIBOR Loans, each such Revolving Credit Borrowing of LIBOR Loans shall have an
Interest Period which is different in duration






                                       22


from the Interest Periods in respect of the other such Revolving Credit
Borrowings of LIBOR Loans.

         (iii) The Borrowers shall not request a Revolving Credit Borrowing
consisting of LIBOR Loans if, after giving effect to such request, there would
be outstanding more than ten (10) Revolving Credit Borrowings consisting of
LIBOR Loans.

         (c) NOTES.

         (i) The obligation of the Borrowers to repay Revolving Credit Loans
made by each Lender in respect of the Revolving Credit Facility and to pay
interest thereon shall be evidenced by a Revolving Credit Note of the Borrowers
substantially in the form of Exhibit A hereto, with appropriate insertions,
dated the date of this Agreement and payable to the order of such Lender on the
last day of the Commitment Period, in the principal amount of its Commitment.

         (ii) The principal amount of the Revolving Credit Loans made by each
Lender, and all prepayments thereof and the applicable dates with respect
thereto shall be recorded by such Lender from time to time on any ledger or
other record of such Lender or such Lender shall record such information by such
other method as such Lender may generally employ; provided, however, that
failure to make any such record shall in no way detract from each Borrower's
obligations under any Note. The aggregate unpaid amount of the Revolving Credit
Loans shown on the records of such Lender shall be rebuttably presumptive
evidence of the principal amount owing and unpaid on such Revolving Credit Note,
as the case may be.

         (d) NOTICE OF BORROWING. The obligation of each Lender to make
Revolving Credit Loans comprising a Revolving Credit Borrowing under the
Revolving Credit Facility is conditioned upon receipt by the Agent of a request
by Holdings on behalf of the Borrowers not later than 12:00 noon (Cleveland,
Ohio time) (i) on the Banking Day which is the requested date of a proposed
Revolving Credit Borrowing comprised of Prime Rate Loans and (ii) on a day which
is three (3) Banking Days prior to the Banking Day which is the requested date
of a proposed Revolving Credit Borrowing comprised of LIBOR Loans (except that
the Revolving Credit Borrowing requested on the Closing Date may be comprised of
LIBOR Loans so long as each of the Lenders shall have agreed to make LIBOR Loans
on the Closing Date without the notice required by this Section 3.l(d) and the
Borrowers shall have agreed in a writing satisfactory in form and substance to
the Agent to indemnify the Lenders in respect of any loss suffered by reason of
such accommodation). Each such request (a "Notice of Borrowing") shall be
transmitted by Holdings on behalf of the Borrowers to the Agent by telecopier or
such other means as the Agent agrees to in writing, substantially in the form of
Exhibit B, specifying therein the requested (A) date of the Revolving Credit
Loans comprising such Revolving Credit Borrowing, (B) Type of Revolving Credit
Loans comprising such Revolving Credit Borrowing, (C) aggregate amount of such
Revolving Credit Loans and (D) in the case of a proposed Revolving Credit
Borrowing comprised of LIBOR Loans, the initial Interest Period for such
Revolving Credit Loans. The Borrowers may give a Notice of Borrowing
telephonically so long as written confirmation of such Revolving Credit
Borrowing by delivery of written Notice of Borrowing is received by the Agent by
1:00 p.m. (Cleveland, Ohio time) on the same day such telephonic Notice of
Borrowing is given. The Agent may rely on such telephonic Notice of






                                       23


Borrowing to the same extent that the Agent may rely on a written Notice of
Borrowing. Each Notice of Borrowing and telephonic Notice of Borrowing shall be
irrevocable and binding on the Borrowers and subject to the indemnification
provisions of this Article 3. The Borrowers shall bear all risks related to the
giving of a Notice of Borrowing telephonically or by such other method of
transmission as Holdings on behalf of the Borrowers shall elect. The Agent shall
give to each Lender reasonably prompt notice by telecopier on the day received
of each such Notice of Borrowing.

         (e) LENDERS TO FUND AGENT. Each Lender shall, before the later of one
(1) hour after the Agent issues its notice to such Lender of a Notice of
Borrowing or 2:00 P.M. (Cleveland, Ohio time) on the date of each Revolving
Credit Borrowing, make available to the Agent, in immediately available funds at
the account of the Agent maintained at the Payment Office as specified by the
Agent to the Lenders prior to such date, such Lender's Ratable Portion of the
Revolving Credit Loans comprising such Revolving Credit Borrowing. On the date
requested by Holdings on behalf of the Borrowers for a Revolving Credit
Borrowing, after the Agent's receipt of the funds representing a Lender's
Ratable Portion of such Revolving Credit Borrowing and upon the Borrowers'
fulfillment of the applicable conditions set forth in this Article 3, the Agent
will make the funds of such Lender available to the Borrowers at the aforesaid
applicable Payment Office.

         (f) AVAILABILITY OF FUNDS. Unless the Agent shall have received notice
from a Lender prior to the date (except in the case of Prime Rate Loans, in
which case prior to the time) of any Revolving Credit Borrowing that such Lender
will not make available to the Agent such Lender's Ratable Portion of the
Revolving Credit Borrowing, the Agent may assume that such Lender has made its
Ratable Portion of the Revolving Credit Borrowing available to the Agent on the
date of the Revolving Credit Borrowing in accordance with Section 3.1(e). In
reliance upon such assumption, the Agent may, but shall not be obligated to,
make available to the Borrowers on such date a corresponding portion of the
Revolving Credit Borrowing. If and to the extent that such Lender shall not have
made available to the Agent its Ratable Portion of the Loans to be made as to
the Revolving Credit Borrowing, such Lender and the Borrowers severally agree to
repay to the Agent, immediately upon demand, the corresponding portion of the
Revolving Credit Borrowing, together with interest thereon, for each day from
the date such amount is made available to the Borrowers until the date such
amount is repaid to the Agent (i) in the case of the Borrowers, at the interest
rate applicable at the time to the Revolving Credit Loans comprising such
Revolving Credit Borrowing and (ii) in the case of such Lender, at the Fed Funds
Rate. If such Lender shall repay to the Agent such corresponding portion of the
Revolving Credit Borrowing, the amount so repaid shall constitute such Lender's
Ratable Portion as part of such Revolving Credit Borrowing.

         (g) FAILURE OF LENDER TO LOAN. The failure of any Lender to make the
Loan to be made by it as its Ratable Portion of any Revolving Credit Borrowing
shall not relieve any other Lender of its obligation hereunder to make its Loan
on the date of such Revolving Credit Borrowing. No Lender shall be responsible
for the failure of any other Lender to make the Loan to be made by such other
Lender on the date of any Revolving Credit Borrowing.




                                       24


         (h) RATE CONVERSION AND CONTINUATION. The Borrowers shall have the
right to cause a Rate Conversion or Rate Continuation in respect of Revolving
Credit Loans then outstanding, upon request delivered by Holdings on behalf of
the Borrowers to the Agent not later than 12:00 noon (Cleveland, Ohio time) (i)
on the day which is the Banking Day that the Borrowers desire to convert any
LIBOR Loans comprising a Revolving Credit Borrowing into Prime Rate Loans so as
to comprise a Revolving Credit Borrowing, (ii) on the day that is three (3)
Banking Days prior to the Banking Day upon which the Borrowers desire to convert
any Prime Rate Loans comprising a Revolving Credit Borrowing into LIBOR Loans
for a given Interest Period so as to comprise a Revolving Credit Borrowing,
(iii) on the day which is three (3) Banking Days prior to the Banking Day upon
which the Borrowers desire to continue any LIBOR Loans comprising a given
Revolving Credit Borrowing as LIBOR Loans for an additional Interest Period of
the same duration so as to comprise a Revolving Credit Borrowing, (iv) on the
day which is three (3) Banking Days prior to the Banking Day upon which the
Borrowers desire to convert any LIBOR Loans having a particular Interest Period
comprising a Revolving Credit Borrowing into LIBOR Loans having a different
permissible Interest Period so as to comprise a Revolving Credit Borrowing,
provided, however, that each such Rate Conversion or Rate Continuation shall be
subject to the following:

                  (A) each Rate Conversion or Rate Continuation shall be funded
         among the Lenders based upon each Lender's Ratable Portion of such
         converted or continued Revolving Credit Loans comprising a Revolving
         Credit Borrowing;

                  (B) if less than all the outstanding principal amount of the
         Revolving Credit Loans comprising a Revolving Credit Borrowing is
         converted or continued, the aggregate principal amount of such
         Revolving Credit Loans converted or continued shall be (1) in the case
         of LIBOR Loans, not less than Three Million Dollars ($3,000,000) or
         additional increments of One Million Dollars ($1,000,000) in excess
         thereof, and (2) in the case of Prime Rate Loans, not less than Five
         Hundred Thousand Dollars ($500,000) or additional increments of One
         Hundred Thousand Dollars ($100,000) in excess thereof;

                  (C) each Rate Conversion or Rate Continuation shall be
         effected by each Lender by applying the proceeds of the Loan resulting
         from such Rate Conversion or Rate Continuation to the Loan of such
         Lender being converted or continued, as the case may be, and the
         accrued interest on any such Loan (or portion thereof) being converted
         or continued shall be paid to the Agent on behalf of each Lender by the
         Borrowers at the time of such Rate Conversion or Rate Continuation;

                  (D) LIBOR Loans may not be converted or continued at a time
         other than the end of the Interest Period applicable thereto unless the
         Borrowers shall pay, upon demand, any amounts due to the Lenders
         pursuant to Section 3.3(d);

                  (E) Revolving Credit Loans comprising a Revolving Credit
         Borrowing may not be converted into or continued as LIBOR Loans less
         than one month prior to the last day of the Commitment Period or for an
         Interest Period which would continue after the last day of the
         Commitment Period;




                                       25


                  (F) LIBOR Loans comprising a Revolving Credit Borrowing that
         cannot be converted into or continued as LIBOR Loans by reason of
         clause (E) shall be automatically converted at the end of the Interest
         Period in effect for such LIBOR Loans into Prime Rate Loans comprising
         a Revolving Credit Borrowing; and

                  (G) in connection with any Rate Conversion or Rate
         Continuation, no Interest Period can be selected which ends after the
         date of any reduction in the Total Commitment Amount unless, after
         giving effect to such selection, the aggregate unpaid principal amount
         of any then outstanding Prime Rate Loans taken together with the
         principal amount of any then outstanding LIBOR Loans having Interest
         Periods ending on or prior to the date of such reduction shall be at
         least equal to the principal amount of the Revolving Credit Loans due
         and payable on or prior to such reduction date.

Each such request for a conversion or continuation (a "Rate
Conversion/Continuation Request") in respect of Revolving Credit Loans
comprising a Revolving Credit Borrowing shall be transmitted by Holdings on
behalf of the Borrowers to the Agent, by telecopier, telex or cable (in the case
of telex or cable, confirmed in writing prior to the effective date of the Rate
Conversion or Rate Continuation requested), in substantially the form of Exhibit
C hereto, specifying (A) the identity and amount of the Revolving Credit Loans
comprising a Revolving Credit Borrowing that the Borrowers request be converted
or continued, (B) the Type of Revolving Credit Loans into which such Revolving
Credit Loans are to be converted or continued, (C) if such notice requests a
Rate Conversion, the date of the Rate Conversion (which shall be a Banking Day)
and (D) in the case of Revolving Credit Loans comprising a Revolving Credit
Borrowing being converted into or continued as LIBOR Loans, the Interest Period
for such LIBOR Loans. The Borrowers may make Rate Conversion/Continuation
Requests telephonically so long as written confirmation of such Revolving Credit
Borrowing is received by the Agent by 1:00 p.m. (Cleveland, Ohio time) on the
same day of such telephonic Rate Conversion/Continuation Request. The Agent may
rely on such telephonic Rate Conversion/Continuation Request to the same extent
that the Agent may rely on a written Rate Conversion/Continuation Request. Each
Rate Conversion/Continuation Request, whether telephonic or written, shall be
irrevocable and binding on the Borrowers and subject to the indemnification
provisions of this Article 3. The Borrowers shall bear all risks related to its
giving any Rate Conversion/Continuation Request telephonically or by such other
method of transmission as Holdings on behalf of the Borrowers shall elect. The
Agent shall promptly deliver on the day received a copy of each such Rate
Conversion/Continuation Request to the Lenders by telecopier.

         SECTION 3.2 OPTIONAL REDUCTIONS; TERMINATION OF COMMITMENTS. The
Borrowers may, at any time and without payment of premium or penalty except as
set forth in Section 3.3, terminate in whole or from time to time in part reduce
the Total Commitment Amount of the Lenders by delivering to the Agent, not later
than 12:00 noon (Cleveland, Ohio time) three (3) Banking Days immediately
preceding the effective date of the reduction, a notice of such reduction (a
"Reduction Notice"), stating the amount by which the Total Commitment Amount is
to be reduced and the effective date of such reduction. Each reduction shall be
subject to the following: (i) each such reduction shall be in an aggregate
principal amount of not less than Five Million Dollars ($5,000,000) or any
integral multiple of $1,000,000 in excess thereof and (ii) each such reduction
shall be in an amount such that the Total Commitment Amount, as so





                                       26


reduced, is not less than an amount equal to the aggregate of (A) the aggregate
principal amount of the Revolving Credit Loans then outstanding hereunder, PLUS
(B) the aggregate Risk Participation Exposure. The Borrowers shall not be
permitted to reduce the Total Commitment Amount unless, concurrently with any
reduction, the Borrowers shall make a principal payment on each Lender's then
outstanding Revolving Credit Loans in an amount equal to the excess, if any, of
such Revolving Credit Loans, PLUS the aggregate Risk Participation Exposure,
OVER the Commitment of such Lender as so reduced. The Agent shall promptly
notify each Lender of its proportionate amount and the date of each such
reduction. From and after each such reduction, the Facility Fees payable
hereunder shall be calculated upon the Commitments of the Lenders as so reduced.
Each reduction of the aggregate Commitments shall be made among the Lenders in
accordance with their respective Ratable Portions and shall be allocated ratably
to the Total Commitment Amount. Any partial reduction in the Total Commitment
Amount shall be irrevocable and effective during the remainder of the Commitment
Period. If the Borrowers terminate in whole the Commitments of the Lenders, on
the effective date of such termination (the Borrowers having prepaid in full the
unpaid principal balance, if any, of the Notes outstanding, together with all
interest (if any) and Facility Fees and Utilization Fees accrued and unpaid and
all other amounts due to the Agent or the Lenders hereunder, including, without
limitation, the satisfaction of all Obligations in respect of Letters of
Credit), all of the Notes outstanding shall be delivered to the Agent marked
"Canceled" and redelivered to the Borrowers.

         SECTION 3.3 REPAYMENTS AND PREPAYMENTS; PREPAYMENT COMPENSATION.

         (a) PRINCIPAL REPAYMENT. The Borrowers shall repay to the Agent for the
account of the Lenders the outstanding principal amount of the Revolving Credit
Loans under the Revolving Credit Facility (together with all accrued and unpaid
interest, Facility Fees, Utilization Fees and any other amounts owing to the
Lenders, or any thereof, under this Agreement) on the last day of the Commitment
Period (or in the case of a termination of the Commitment Period pursuant to
Section 3.3(e), below, on the date that is 30 days thereafter) or upon
acceleration pursuant to Section 12.1 or 12.2.

         (b) PERMITTED PREPAYMENTS. Except as set forth in Section 3.3(d), the
Borrowers may prepay, without penalty or premium, not later than 12:00 noon
(Cleveland, Ohio time): (i) in the case of any LIBOR Loan, at least three (3)
Banking Days' notice to the Agent prior to the date fixed for such prepayment;
and (ii) in the case of any Prime Rate Loan, upon notice to the Agent not later
than 12:00 noon (Cleveland, Ohio time) on the date fixed for such prepayment, in
each case stating the proposed date and aggregate principal amount of the
prepayment, and, upon such notice, shall prepay the outstanding aggregate
principal amount of the Revolving Credit Loans comprising part of the same
Revolving Credit Borrowing in whole or ratably in part, together with accrued
interest to the date of such prepayment on the principal amount prepaid;
provided, however, that (A) each partial prepayment of LIBOR Loans shall be in
an aggregate principal amount of Three Million Dollars ($3,000,000) or
additional increments of One Million Dollars ($1,000,000) in excess thereof, and
(B) each partial prepayment of Prime Rate Loans shall be in an aggregate
principal amount of Five Hundred Thousand Dollars ($500,000) or additional
increments of One Hundred Thousand Dollars ($100,000) in excess thereof. Any
prepayment of any LIBOR Loans made on other than the last day of an Interest
Period shall obligate the Borrowers to reimburse the Lenders in respect thereof
pursuant to Section 3.3(d). Upon receipt






                                       27


by the Agent of a notice pursuant to this Section 3.3(b), the Agent shall
promptly forward a copy of such notice, by telecopier in the case of a
prepayment of LIBOR Loans comprising Revolving Credit Borrowing, to each of the
Lenders.

         (c) MANDATORY PREPAYMENTS. If on any Banking Day the aggregate
outstanding amount of the Revolving Credit Loans under the Revolving Credit
Facility PLUS the aggregate Risk Participation Exposures exceeds the Total
Commitment Amount then in effect, the Borrowers shall on such day prepay an
aggregate principal amount of the related Revolving Credit Loans in an amount at
least equal to such excess, together with accrued interest to the date of such
prepayment on the principal amount prepaid, to the Agent for the account of each
of the Lenders ratably in accordance with their Commitments. Any prepayment of
any LIBOR Loans made pursuant to this Section 3.3(c) on other than the last day
of an Interest Period shall obligate the Borrowers to reimburse the Lenders in
respect thereof pursuant to Section 3.3(d).

         (d) BREAKAGE COMPENSATION. The Borrowers shall compensate each
applicable Lender, upon its written request (which request shall set forth the
detailed basis for requesting and the method of calculating such compensation),
for all reasonable losses (including loss of profits), expenses and liabilities
(including, without limitation, any loss, expense or liability incurred by
reason of the liquidation or reemployment of deposits or other funds required by
such Lender to fund its LIBOR Loans) which such Lender may sustain: (i) if for
any reason (other than a default by such Lender or the Agent), a Credit Event of
LIBOR Loans does not occur on a date specified therefor in a Notice of Borrowing
or Rate Conversion/Continuation Request (whether or not rescinded or withdrawn
by or on behalf of the Borrowers or deemed rescinded or withdrawn pursuant to
this Agreement); (ii) if any repayment, prepayment, Rate Continuation or Rate
Conversion of any of its LIBOR Loans occurs on a date which is not the last day
of an Interest Period applicable thereto; (iii) if any prepayment of any of its
LIBOR Loans is not made on any date specified in a notice of prepayment given by
the Borrowers; (iv) if such Lender transfers its LIBOR Loans pursuant to a
request by the Borrowers under Section 3.9(d) hereof; or (vi) as a consequence
of any other default by the Borrowers to repay its LIBOR Loans when required by
the terms of this Agreement or any other election by the Borrowers pursuant to
the terms hereof.

         (e) PREPAYMENT OF OBLIGATIONS UPON CHANGE OF CONTROL. (i) In the event
that any Change of Control shall occur or Holdings shall have knowledge of any
proposed Change of Control, Holdings shall give written notice (the "Borrower
Notice") of such fact to the Agent and each Lender. The Borrower Notice shall be
delivered promptly upon receipt of such knowledge by Holdings and in any event
no later than three (3) Banking Days following the occurrence of any Change of
Control. The Borrower Notice shall (A) describe the facts and circumstances of
such Change of Control in reasonable detail, (B) make reference to this Section
3.3(e) and the right of the Majority Lenders to require prepayment and discharge
in full of the Loans and all of the other Obligations on the terms and
conditions provided for in this Section 3.3(e), and (C) offer in writing to
prepay in full, no later than the Acceptance Prepayment Date (defined below),
the outstanding principal of the Loans, together with accrued interest to the
date of prepayment and all of the other Obligations, including, without
limitation, the cancellation of all outstanding Letters of Credit (or, at the
option of the Borrowers, the deposit with the Letter of Credit Issuer, on terms
satisfactory to the Letter of Credit Issuer, of cash collateral in an amount
equal the





                                       28


aggregate of the respective Stated Amounts of all such Letters of Credit) and
any breakage compensation under Section 3.3(d), above. The Agent (at the
instruction of the Majority Lenders) shall have the right to accept such offer
on behalf of all of the Lenders and require the prepayment and discharge in full
of the outstanding principal of all of the Loans, together with accrued interest
to the date of prepayment and all of the other Obligations, including, without
limitation, the cancellation of all outstanding Letters of Credit (or, at the
option of the Borrowers, the deposit with the Letter of Credit Issuer, on terms
satisfactory to the Letter of Credit Issuer, of cash collateral in an amount
equal the aggregate of the respective Stated Amounts of all such Letters of
Credit) and any breakage compensation under Section 3.3(d), above, by written
notice to Holdings (the "Acceptance Notice") given not later than twenty (20)
days after the Agent's receipt of the Borrower Notice. If the Agent (at the
instruction of the Majority Lenders) accepts such offer, (1) the Borrowers
shall, no later than the date (the "Acceptance Prepayment Date") that is thirty
(30) days after the date on which the Agent delivers the Acceptance Notice to
Holdings, prepay and discharge in full the outstanding principal of all of the
Loans, together with accrued interest to the date of prepayment and all of the
other Obligations, including, without limitation, the cancellation of all
outstanding Letters of Credit (or, at the option of the Borrowers, the deposit
with the Letter of Credit Issuer, on terms satisfactory to the Letter of Credit
Issuer, of cash collateral in an amount equal the aggregate of the respective
Stated Amounts of all such Letters of Credit) and any breakage compensation
under Section 3.3(d), above, and (2) on the date on which the Agent delivers the
Acceptance Notice to Holdings, the Commitment of each Lender shall terminate in
full.

         (ii) Without limiting the provisions of paragraph (i), above, if
Holdings fails to give the Borrower Notice required by paragraph (i), above,
upon and after the occurrence of a Change of Control, the Agent shall have the
right (at the instruction of the Majority Lenders), by delivery of written
notice to Holdings (the "Demand Notice"), to require the Borrowers to prepay and
discharge, and the Borrowers shall prepay and discharge, in full the outstanding
principal of all of the Loans, together with accrued interest to the date of
prepayment and all of the other Obligations, including, without limitation, the
cancellation of all outstanding Letters of Credit (or, at the option of the
Borrowers, the deposit with the Letter of Credit Issuer, on terms satisfactory
to the Letter of Credit Issuer, of cash collateral in an amount equal the
aggregate of the respective Stated Amounts of all such Letters of Credit) and
any breakage compensation under Section 3.3(d), above. The Demand Notice shall
be delivered by the Agent (upon instruction of the Majority Lenders) to Holdings
at any time after the Agent or any Lender has knowledge of such Change of
Control. Upon delivery of the Demand Notice to Holdings, (1) the Borrowers
shall, no later than the date (the "Demand Prepayment Date") that is thirty (30)
days after the date on which the Agent delivers the Demand Notice to Holdings,
prepay and discharge in full the outstanding principal of all of the Loans,
together with accrued interest to the date of prepayment and all of the other
Obligations, including, without limitation, the cancellation of all outstanding
Letters of Credit (or, at the option of the Borrowers, the deposit with the
Letter of Credit Issuer, on terms satisfactory to the Letter of Credit Issuer,
of cash collateral in an amount equal the aggregate of the respective Stated
Amounts of all such Letters of Credit) and any breakage compensation under
Section 3.3(d), above, and (2) on the date on which the Agent delivers the
Demand Notice to Holdings, the Commitment of each Lender shall terminate in
full.




                                       29


         (iii) Compliance with the provisions of paragraph (ii) of this Section
3.3(e) shall not be deemed to constitute a waiver of, or consent to, any
Incipient Default or Event of Default caused by any breach of the obligations of
Holdings under paragraph (i) of this Section 3.3(e); and, without limiting the
generality of the provisions of Section 11.1, below, the failure of the
Borrowers timely to prepay and discharge in full all of the Obligations if
required under and pursuant to either of paragraph (i) or (ii), above, shall
constitute an Event of Default under said Section 11.1.

         SECTION 3.4  FEES.

         (a) FACILITY FEE. The Borrowers agree during the Commitment Period to
pay to each Lender, through the Agent, at the dates specified herein, a facility
fee (the "Facility Fee") at a rate per annum equal to the Applicable Fee
Percentage from time to time in effect for Facility Fees, as determined pursuant
to Section 3.4(b), on the Commitment of such Lender. Such Facility Fee shall be
payable in arrears on each Quarterly Payment Date, commencing June 30, 2002, for
the calendar quarter year, or portion thereof, then ending and on the earlier
date on which the Commitment of such Lender shall be terminated or assigned in
whole (or in the case of a termination of the Commitment of such Lender pursuant
to Section 3.3(e), above, on the date that is 30 days thereafter).

         (b) DETERMINATION OF APPLICABLE FEE PERCENTAGE. The Applicable Fee
Percentage shall be adjusted as herein specified as of the first day of the
Commitment Period and thereafter as of each Fee Adjustment Date, commencing with
the Fee Adjustment Date on June 1, 2002, by reference to (A) the financial
statements required by Section 8.1(a) or Section 8.1(b), as the case may be, for
the period ending as of the Fee Determination Date for such Fee Adjustment Date
and (B) a certificate complying with Section 8.1(c)(ii) certifying the Total
Leverage Ratio as of such Fee Determination Date. As of any such Fee Adjustment
Date and during the Accrual Period commencing on such date, the Applicable Fee
Percentage for Facility Fees shall be the Applicable Fee Percentage therefor
indicated in the definition of the term "Applicable Fee Percentage"
corresponding to the Total Leverage Ratio as of the Fee Determination Date for
such Fee Adjustment Date. Any such adjustment of the Applicable Fee Percentage
shall cease to be effective from the next Fee Adjustment Date.

         (c) RISK PARTICIPATION FEE. The Borrowers shall pay to the Letter of
Credit Issuer, and the Letter of Credit Issuer shall share with the Lenders, on
a pro rata basis based on their respective Ratable Portions, a risk
participation fee (the "Risk Participation Fee") in an amount equal to the per
annum rate equal to the Applicable LIBOR Percentage in effect pursuant to
Section 3.5(b), TIMES the Stated Amount of each Letter of Credit as of the date
on which payment of the Risk Participation Fee is due and payable. The Borrowers
shall pay the Risk Participation Fee to the Letter of Credit Issuer in advance
on the date of issuance and, for Letters of Credit having a term longer than one
(1) year, on each anniversary of such date of issuance thereafter during the
term of such Letter of Credit, computed at the Applicable LIBOR Percentage in
effect on the date of issuance and, as applicable, each such subsequent
anniversary payment date. Upon receipt of any Risk Participation Fee, the Letter
of Credit Issuer shall pay such Risk Participation Fees to the Agent for the
account of the Lenders.





                                       30


         (d) FRONTING FEE. The Borrowers shall pay to the Letter of Credit
Issuer for its own account a fronting fee in an amount equal to the Stated
Amount of each Letter of Credit issued by the Letter of Credit Issuer TIMES
twelve and one-half (12.50) Basis Points, which fee shall be payable on the date
of such issuance.

         (e) UP FRONT FEE. The Borrowers shall pay to the Agent, for the ratable
benefit of the Lenders, on the Closing Date a fee in the amount set forth in a
separate letter and term sheet between the Agent and Holdings dated April 5,
2002, which fee shall be deemed fully earned on the Closing Date.

         (f) UTILIZATION FEE. The Borrowers shall (through the Agent) pay to the
Banks on the dates specified herein, a utilization fee (the "Utilization Fee")
at a rate of Ten (10) Basis Points per annum, computed on the entire unpaid
balance of the Revolving Credit Loans and the aggregate of the Stated Amounts of
all outstanding Letters of Credit for each day on which the sum of (i) the
aggregate outstanding principal balance of the Revolving Credit Loans on such
day, PLUS (ii) the aggregate of the Stated Amounts of all Letters of Credit then
outstanding, exceeds an amount equal to one-third (1/3) of the Commitment of
such Lender on such day. Such Utilization Fee shall be payable in arrears on
each Quarterly Payment Date, commencing June 30, 2002, in respect of the
calendar quarter year then ending and on the earlier date on which the
Commitment of such Lender shall be terminated or assigned in whole (or in the
case of a termination of the Commitment of such Lender pursuant to Section
3.3(e), above, on the date that is 30 days thereafter).

         (g) AGENCY FEE. The Borrowers shall pay to the Agent in advance on the
Closing Date and on each anniversary thereof during the Commitment Period an
agency fee in the amount set forth in a separate fee letter between the Agent
and Holdings dated April 5, 2002, which fee shall be deemed fully earned on each
such date

         (h) FEES NONREFUNDABLE. All fees set forth in this Section 3.4 and
closing fees payable pursuant to Sections 6.1 and 6.2 shall be paid on the date
due, in immediately available funds, to the Agent for distribution, if and as
appropriate, to the Lenders and, once paid, none of such fees shall be
refundable under any circumstances.

         SECTION 3.5  INTEREST.

         (a) REGULAR INTEREST. The Borrowers shall pay interest on the unpaid
principal amount of each Loan made by each Lender from the date of such Loan
until such principal amount shall be paid in full at the following times and
rates per annum:

                  (i) PRIME RATE LOANS. During such periods as a Revolving
         Credit Loan is a Prime Rate Loan, a rate per annum equal at all times
         to the Prime Rate in effect from time to time, payable quarterly, in
         arrears, on each Quarterly Payment Date and on the date such Prime Rate
         Loan shall be converted or paid in full and at maturity (whether by
         reason of acceleration or otherwise).




                                       31


                  (ii) LIBOR LOANS. During such periods as a Revolving Credit
         Loan is a LIBOR Loan, a rate per annum equal to the sum of the Adjusted
         LIBOR for the Interest Period of such LIBOR Loan, PLUS the Applicable
         LIBOR Percentage in effect from time to time during the Interest Period
         of such LIBOR Loan, in accordance with Section 3.1(h), payable (A) on
         the last day of each Interest Period and (B) if such Interest Period
         has a duration of more than three months, three months after the first
         day of such Interest Period and (C) on the date such LIBOR Loan shall
         be converted to a Prime Rate Loan or to a LIBOR Loan of a different
         Interest Period or paid in full and at maturity (whether by reason of
         acceleration or otherwise).

         (b) APPLICABLE LIBOR PERCENTAGE; TERMS OF ADJUSTMENT.

                  (i) COMMENCEMENT; CONDITIONS. The Applicable LIBOR Percentage
         shall be adjusted as herein specified as of the first day of the
         Commitment Period and thereafter as of each Interest Adjustment Date,
         commencing with the Interest Adjustment Date on June 1, 2002, by
         reference to (A) the financial statements required by Section 8.1(a) or
         Section 8.1(b) for the period ending as of the Interest Determination
         Date for such Interest Adjustment Date and (B) a certificate complying
         with Section 8.l(c)(ii) certifying the Total Leverage Ratio as of such
         Interest Determination Date.

                  (ii) CALCULATION AND DURATION OF ADJUSTMENT. On each Interest
         Adjustment Date and during the Accrual Period commencing on such date,
         the Applicable LIBOR Percentage shall be the percent per annum in Basis
         Points indicated in the definitions of the term "Applicable LIBOR
         Percentage" corresponding to the Total Leverage Ratio as of the
         Interest Determination Date for such Interest Adjustment Date.

         (c) INTEREST ON UNPAID OBLIGATIONS; INTEREST UPON EVENT OF DEFAULT. If
any principal, interest or fees or other sum due under this Agreement shall not
be paid when due, or if any Revolving Credit Note shall not be paid at maturity,
whether such maturity occurs by reason of lapse of time or by operation of any
provision of acceleration of maturity therein contained (and without waiving any
Event of Default resulting therefrom or limiting any right or remedy of the
Lenders or the Agent in respect thereof), the principal thereof and the unpaid
interest and fees thereon, or such fees or other sum shall bear interest,
payable on demand, at the Increased Rate from time to time in effect in respect
of such Loan or other Obligation. The Borrowers acknowledge that this
calculation will result in the accrual of interest on interest and the Borrowers
expressly consent and agree to this provision. In addition, notwithstanding
anything to the contrary contained in this Agreement, upon and during the
continuance of an Event of Default, but without waiving such Event of Default or
limiting any right or remedy of the Lenders or the Agent in respect thereof, all
of the Obligations shall bear interest at the Increased Rate.

         (d) INTEREST RATE DETERMINATION.

                  (i) AGENT DETERMINATION; NOTICE. The Agent shall determine the
         Prime Rate and Adjusted LIBOR in accordance with the definitions of
         Prime Rate, LIBOR Rate and Adjusted LIBOR set forth in Section 1.1. The
         Agent shall give prompt notice to the



                                       32


         Borrowers and the Lenders of the applicable interest rate determined by
         the Agent for purposes of Section 3.5(a)(i) or (ii).

                  (ii) FAILURE OF BORROWERS TO ELECT. If no Interest Period is
         specified in any Notice of Borrowing for any LIBOR Rate Loans
         comprising a Revolving Credit Borrowing, the Borrowers shall be deemed
         to have selected instead Prime Rate Loans. If Holdings, on behalf of
         the Borrowers, shall not have given notice in accordance with Section
         3.1(h) to continue any LIBOR Rate Loans comprising a Revolving Credit
         Borrowing into a subsequent Interest Period (and shall not have
         otherwise delivered a Rate Conversion/Continuation Request in
         accordance with Section 3.1(h) to convert such Loans), subject to the
         limitations set forth in Section 3.1(h), such LIBOR Rate Loans shall,
         at the end of the Interest Period applicable thereto (unless repaid
         pursuant to the terms hereof), automatically shall be converted to (or,
         as the case may be, continued as) LIBOR Rate Loans having an Interest
         Period of one (1) month, provided that if such limitations of Section
         3.1(h) would not be complied with, such LIBOR Rate Loans automatically
         shall be converted to Prime Rate Loans.

         SECTION 3.6 PAYMENTS AND COMPUTATIONS.

         (a) PAYMENTS. The Borrowers shall make each payment hereunder and under
the Notes with respect to principal of, interest on, and other amounts relating
to Revolving Credit Loans, not later than 11:00 A.M. (Cleveland, Ohio time) on
the day when due in dollars to the Agent in immediately available funds by
deposit of such funds to the Agent's account maintained at the Payment Office.
Payments received after 12:00 noon (Cleveland, Ohio time) on any day shall be
deemed to have been received on the next succeeding Banking Day. The Agent will
promptly thereafter, on the same Banking Day, cause to be distributed like funds
relating to the payment of principal, interest, Facility Fees, Utilization Fees
or other fees or other amounts which may be received in respect of the
Obligations of the Borrowers under this Agreement ratably (other than amounts
payable pursuant to the express terms of this Agreement solely to the Agent or
the Letter of Credit Issuer, as the case may be) to each of the Lenders for the
account of its respective Lending Office, and like funds relating to the payment
of any other amount payable to any Lender to such Lender for the account of its
Lending Office. The funds so distributed to each Lender shall in each case be
applied by such Lender in accordance with the terms of this Agreement.

         (b) AUTHORIZATION TO CHARGE ACCOUNT. If and to the extent payment owed
to any Lender is not made when due hereunder or under the Note held by such
Lender, each Borrower hereby authorizes such Lender to charge from time to time
against any or all of such Borrower's general deposit accounts with such Lender
any amount so due. Any Lender exercising the foregoing authorization will
endeavor to advise such Borrower of such exercise reasonably promptly
thereafter; provided, however, that such Lender's failure to do so shall not
subject such Lender, the Agent or any other Lender to liability or claim of any
nature whatsoever and shall not create in any Borrower any set-off, defense or
other claim of any nature whatsoever.

         (c) COMPUTATIONS OF INTEREST AND FEES. All computations of interest,
Facility Fees, Utilization Fees and Risk Participation Fees and all other fees
shall be made by the Agent, (i) in the case of LIBOR Loans, Risk Participation
Fees, Facility Fees and Utilization Fees, on the





                                       33


basis of a year of 360 days, and (ii) in the case of Prime Rate Loans, on the
basis of a year of 365/366 days, in each case for the actual number of days
(including the first day but excluding the last day) occurring in the period for
which such interest or fees are payable. Each determination by the Agent (or, in
the case of Section 3.7, by a Lender) of an interest rate hereunder shall be
conclusive and binding for all purposes, absent manifest error.

         (d) PAYMENT NOT ON BANKING DAY. Whenever any payment hereunder or under
the Notes shall be stated to be due on a day other than a Banking Day, such
payment shall be made on the next succeeding Banking Day, except, that, if such
extension would cause payment of interest on or principal of LIBOR Loans to be
made in the next following calendar month, such payment shall be made on the
immediately preceding Banking Day. Any such extension or reduction of time shall
in such case be included in the computation of payment of interest or Facility
Fee or Utilization Fee, as the case may be.

         (e) PRESUMPTION OF PAYMENT IN FULL BY BORROWERS. Unless the Agent shall
have received notice from Holdings, on behalf of the Borrowers, prior to the
date on which any payment is due to the Lenders hereunder that the Borrowers
will not make such payment in full, the Agent may assume that the Borrowers will
make or have made such payment in full to the Agent on such date. In reliance
upon such assumption, the Agent may, but shall not be obligated to, distribute
to each Lender on such due date the amount then due such Lender. If and to the
extent the Borrowers shall not have made such payment in full to the Agent, each
Lender shall repay to the Agent promptly upon demand the amount distributed to
such Lender together with interest thereon, for each day from the date such
amount is distributed to such Lender until the date such Lender repays such
amount to the Agent, at the Federal Funds Rate plus the amount of any costs,
expenses, liabilities or losses incurred by the Agent in connection with its
distribution of such funds, unless such costs, expenses, liabilities or losses
are the result of the gross negligence or wilful misconduct of the Agent.

         SECTION 3.7 RESERVES; TAXES; INDEMNITIES.

         (a) RESERVES OR DEPOSIT REQUIREMENTS. If at any time any Law, treaty or
regulation (including, without limitation, Regulation D of the Board of
Governors of the Federal Reserve System) or the interpretation thereof by any
governmental authority charged with the administration thereof or any central
bank or other fiscal, monetary or other authority shall impose (whether or not
having the force of Law), modify or deem applicable any reserve and/or special
deposit requirement (other than reserves included in the Reserve Percentage, the
effect of which is reflected in the interest rate(s) of the LIBOR Loan(s) in
question) against assets held by, or deposits in or for the amount of any loans
by, any Lender, and the result of the foregoing is to increase the cost (whether
by incurring a cost or adding to a cost) to such Lender of making or maintaining
hereunder LIBOR Loans or to reduce the amount of principal or interest received
by such Lender with respect to such LIBOR Loans, then upon demand by such Lender
the Borrowers shall pay to such Lender from time to time on Interest Adjustment
Dates with respect to such loans, as additional consideration hereunder,
additional amounts sufficient to fully compensate and indemnify such Lender for
such increased cost or reduced amount, assuming (which assumption such Lender
need not corroborate) such additional cost or reduced amount was allocable to
such LIBOR Loans. A certificate as to the increased cost or reduced amount as





                                       34


a result of any event mentioned in this Section 3.7(a), setting forth the
calculations therefor, shall be promptly submitted by such Lender to the
Borrowers and shall be rebuttably presumptive evidence as to the amount thereof.
Notwithstanding any other provision of this Agreement, after any such demand for
compensation by any Lender, the Borrowers, upon at least three (3) Banking Days'
prior written notice to such Lender through the Agent, may prepay the affected
LIBOR Loans in full or convert all LIBOR Loans to Prime Rate Loans regardless of
the Interest Period of any thereof. Any such prepayment or conversion shall
entitle the Lenders to the prepayment compensation provided for in Section 3.3
hereof. Each Lender will notify the Borrowers as promptly as practicable (with a
copy thereof delivered to the Agent) of the existence of any event which will
likely require the payment by the Borrowers of any such additional amount under
this Section.

         (b) IMPOSITION OF TAXES. In the event that by reason of any Law,
regulation or requirement or in the interpretation thereof by an official
authority, or the imposition of any requirement of any central bank whether or
not having the force of Law, any Lender shall, with respect to this Agreement or
any transaction under this Agreement, be subjected to any tax, levy, impost,
charge, fee, duty, deduction or withholding of any kind whatsoever (other than
any tax imposed upon the total net income of such Lender) and if any such
measures or any other similar measure shall result in an increase in the cost to
such Lender of making or maintaining any LIBOR Loan or in a reduction in the
amount of principal, interest or commitment fee receivable by such Lender in
respect thereof, then such Lender shall promptly notify the Borrowers in writing
stating the reasons therefor. The Borrowers shall thereafter pay to such Lender
upon demand from time to time on Interest Adjustment Dates with respect to such
LIBOR Loans, as additional consideration hereunder, such additional amounts as
will fully compensate such Lender for such increased cost or reduced amount. A
certificate as to any such increased cost or reduced amount, setting forth the
calculations therefor, shall be submitted by such Lender to the Borrowers and
shall be rebuttably presumptive evidence of the amount thereof. Notwithstanding
any other provision of this Agreement, after any such demand for compensation by
any Lender, the Borrowers, upon at least three (3) Banking Days prior written
notice to such Lender through the Agent, may prepay the affected LIBOR Loans in
full or convert all LIBOR Loans to Prime Rate Loans regardless of the Interest
Period of any thereof. Any such prepayment or conversion shall entitle the
Lenders to prepayment compensation provided for in Section 3.3 hereof.

         (c) EURODOLLAR DEPOSIT UNAVAILABLE OR INTEREST RATE UNASCERTAINABLE. In
respect of any LIBOR Loans, in the event that the Agent or any Lender shall have
determined that, by reason of circumstances affecting such market, adequate and
reasonable means do not exist for ascertaining the LIBOR rate applicable to such
Interest Period, as the case may be, the Agent or such Lender shall promptly
give notice of such determination to the Borrowers and (i) any notice of new
LIBOR Loans (or conversion of existing loans to LIBOR Loans) previously given by
the Borrowers and not yet borrowed (or converted, as the case may be) shall be
deemed a notice to make Prime Rate Loans, and (ii) the Borrowers shall be
obligated either to prepay or to convert any outstanding LIBOR Loans on the last
day of the then current Interest Period or Periods with respect thereto. Any
such prepayment or conversion shall entitle the Lenders to prepayment
compensation provided for in Section 3.3 hereof.





                                       35


         (d) INDEMNITY. Without prejudice to any other provisions of this
Article 3, the Borrowers hereby agree to indemnify each Lender against any loss
or expense which such Lender may sustain or incur as a consequence of any
failure by the Borrowers to accept the proceeds of any LIBOR Loan, or otherwise
consummate a Revolving Credit Borrowing in respect of LIBOR Loans, requested by
the Borrowers pursuant to the provisions of this Agreement and of any default by
the Borrowers in payment when due of any amount due hereunder in respect of any
LIBOR Loan, including, but not limited to, any loss of profit, premium or
penalty incurred by such Lender in respect of funds borrowed by it for the
purpose of making or maintaining such LIBOR Loan, as determined by such Lender
in the exercise of its sole but reasonable discretion. A certificate as to any
such loss or expense shall be promptly submitted by such Lender to the Borrowers
and shall be rebuttably presumptive evidence of the amount thereof.

         (e) CHANGES IN LAW RENDERING LIBOR LOANS UNLAWFUL. If at any time any
new Law, treaty or regulation, or any change in any existing Law, treaty or
regulation, or any interpretation thereof by any governmental or other
regulatory authority charged with the administration thereof, shall make it
unlawful for any Lender to fund any LIBOR Loans which it is committed to make
hereunder with moneys obtained in the Eurodollar market, the commitment of such
Lender to fund LIBOR Loans shall, upon the happening of such event, forthwith be
suspended for the duration of such illegality, and such Lender shall by written
notice to the Borrowers and the Agent declare that its Commitment with respect
to such Loans has been so suspended and, if and when such illegality ceases to
exist, such suspension shall cease and such Lender shall similarly notify the
Borrowers and the Agent. If any such change shall make it unlawful for any
Lender to continue in effect the funding in the applicable Eurodollar market of
any LIBOR Loan previously made by it hereunder, such Lender shall, upon the
happening of such event, notify the Borrowers, the Agent and the other Lenders
thereof in writing stating the reasons therefor, and the Borrowers shall, on the
earlier of (i) the last day of the then current Interest Period or (ii) if
required by such Law, regulation or interpretation, on such date as shall be
specified in such notice, either convert all LIBOR Loans to Prime Rate Loans to
the extent permissible under this Agreement or prepay all LIBOR Loans to the
Lenders in full. Any such prepayment or conversion shall entitle the Lenders to
prepayment compensation as provided in Section 3.3 hereof.

         SECTION 3.8 CAPITAL ADEQUACY. If any Lender shall have determined,
that, whether in effect at the date of this Agreement or hereafter in effect,
any applicable Law, rule, regulation or guideline regarding capital adequacy, or
any change therein, or any change in the interpretation or administration
thereof by any governmental authority, central bank or comparable agency charged
with the interpretation or administration thereof, or compliance by any Lender
(or its Lending Office) with any request or directive regarding capital adequacy
(whether or not having the force of Law) of any such authority, central bank or
comparable agency, has or would have the effect of reducing the rate of return
on such Lender's capital allocated to the transactions contemplated by this
Agreement (or the capital of its holding company) as a consequence of its
obligations hereunder to a level below that which such Lender (or its holding
company) could have achieved but for such adoption, change or compliance (taking
into consideration such Lender's policies or the policies of its holding company
with respect to capital adequacy) by an amount deemed by such Lender to be
material, then from time to time, within 15 days after demand by such Lender
(with a copy to the Agent), the Borrowers shall pay to such Lender such






                                       36


additional amount or amounts as will compensate such Lender (or its holding
company) for such reduction. Each Lender will designate a different lending
office if such designation will avoid the need for, or reduce the amount of,
such compensation and will not, in the judgment of such Lender, be otherwise
disadvantageous to such Lender. A certificate of any Lender claiming
compensation under this section and setting forth the additional amount or
amounts to be paid to it hereunder shall be conclusive and binding in the
absence of manifest error. In determining such amount, such Lender may use any
reasonable averaging and attribution methods. Within four (4) months following
the date such certificate is furnished claiming compensation by any such Lender
(the "Affected Lender"), the Borrowers may replace the Affected Lender with a
lending institution satisfactory to the Agent (the consent to which may not be
unreasonably withheld by the Agent), upon payment to the Affected Lender of all
principal of and interest on all of its then outstanding Revolving Credit Loans
and of all Facility Fees, Utilization Fees and other Obligations then owing to
it and upon such other terms and conditions as are satisfactory to the Majority
Lenders. The protection of this Section 3.8 shall be available to each Lender
regardless of any possible contention of the invalidity or inapplicability of
the Law, regulation or other condition which shall have been imposed.

         SECTION 3.9 TAXES.

         (a) TAXES; WITHHOLDING. Any and all payments by the Borrowers
hereunder, under the Notes or the other Loan Documents shall be made, in
accordance with the provisions of Article 3, free and clear of and without
deduction for any and all present or future taxes, levies, imposts, deductions,
charges or withholdings, and all liabilities with respect thereto, excluding, in
the case of each Lender, taxes imposed on its income, and franchise taxes
imposed on it, by the jurisdiction under the Laws of which such Lender is
organized or any political subdivision thereof (all such non-excluded taxes,
levies, imposts, deductions, charges, withholdings and liabilities being
hereinafter referred to as "Taxes"). If the Borrowers shall be required by Law
to deduct any Taxes from or in respect of any sum payable hereunder or under any
Note to any Lender or the Agent, (i) the sum payable shall be increased as may
be necessary so that after making all required deductions (including deductions
applicable to additional sums payable under this Section 3.9) such Lender (as
the case may be) receives an amount equal to the sum it would have received had
no such deductions been made, (ii) the Borrowers shall make such deductions, and
(iii) the Borrowers shall pay the full amount deducted to the relevant taxation
authority or other authority in accordance with applicable Law. All such Taxes
shall be paid by the Borrowers prior to the date on which penalties attach
thereto or interest accrues thereon; provided, however, that, if any such
penalties or interest become due, the Borrowers shall make prompt payment
thereof to the appropriate governmental authority. The Borrowers shall indemnify
each Lender for the full amount of such Taxes (including any Taxes on amounts
payable under this Section 3.9) paid by the Lender and any liability (including
penalties, interest and expenses) arising therefrom or with respect thereto,
whether or not such Taxes were correctly or legally asserted. Any
indemnification payment shall be made within thirty (30) days from the date the
Lender makes written demand therefor.

         (b) STAMP TAXES. The Borrowers agree to pay, and will indemnify each
Lender and the Agent for, any present or future stamp or documentary taxes or
any other excise or property taxes, charges or similar levies which arise from
any payment made hereunder or under the





                                       37


Notes or from the execution, delivery or registration of, or otherwise with
respect to, this Agreement or the Notes (hereinafter referred to as "Other
Taxes").

         (c) OTHER TAXES. The Borrowers shall indemnify each Lender and the
Agent for the full amount of Taxes or Other Taxes (including, without
limitation, any Taxes or Other Taxes imposed by any jurisdiction on amounts
payable under this Section 3.9) paid by such Lender or the Agent (as the case
may be) and any liability (including penalties, interest and expenses) arising
therefrom or with respect thereto, whether or not such Taxes or Other Taxes were
correctly or legally asserted. Any indemnification payment shall be made within
thirty (30) days from the date such Lender or the Agent (as the case may be)
makes written demand therefor.

         (d) REMOVAL OF LENDER. Within four (4) months following the date the
Agent or a Lender shall make a written demand for Taxes or Other Taxes pursuant
to this Section 3.9, the Borrowers may replace the Affected Lender with a
lending institution satisfactory to the Agent (the consent to which may not be
unreasonably withheld by the Agent), upon payment to the Affected Lender of all
principal of and interest on all of its then outstanding Revolving Credit Loans
and of all Facility Fees, Utilization Fees and other Obligations then owing to
it and upon such other terms and conditions as are satisfactory to the Majority
Lenders (exclusive of each Affected Lender and be computed without consideration
of the Commitment of each such Affected Lender). The protection of this Section
shall be available to each Lender regardless of any possible contention of the
invalidity or inapplicability of the law, regulation or other condition which
shall have been imposed.

         (e) REQUEST FOR REFUND. At the reasonable request of Holdings, on
behalf of the Borrowers, a Lender or the Agent shall apply at the Borrowers'
expense for a refund in respect of Taxes or Other Taxes previously paid by the
Borrowers pursuant to this Section 3.9. Notwithstanding the foregoing, none of
the Lenders or the Agent shall be obligated to pursue such refund if, in its
sole good faith judgment, such action would be disadvantageous to it. If any
Lender subsequently receives from a taxing authority a refund of any Tax
previously paid by the Borrowers and for which the Borrowers have indemnified
the Lender pursuant to this Section 3.9, such Lender shall within thirty (30)
days after receipt of such refund, and to the extent permitted by applicable
Law, pay to the Borrowers the net amount of any such recovery after deducting
taxes and reasonable expenses attributable thereto.

         (f) EXEMPTION CERTIFICATE. Not later than the commencement of the
Commitment Period or, in the case of any bank or financial institution that
becomes a Lender after such date, pursuant to Article 14, the date of the
instrument of assignment pursuant to which such bank or financial institution
became a Lender, and annually on each Anniversary Date thereafter or at such
other times as the Agent or the Borrowers may request, each Lender organized
under the Laws of a jurisdiction outside the United States shall provide the
Agent and the Borrowers with duly completed copies of Form 1001 or Form 4224 or
any successor form prescribed by the Internal Revenue Service of the United
States certifying that such Lender is exempt from United States withholding
taxes with respect to all payments to be made to such Lender hereunder or other
document satisfactory to Holdings, on behalf of the Borrowers, and the Agent
indicating that all payments to be made to such Lender hereunder are not subject
to such taxes (each such certificate, an "Exemption Certificate"). Unless the
Agent and Holdings have received an






                                       38


Exemption Certificate from such Lender, the Borrowers, or the Agent if the
Borrowers have not withheld, may withhold taxes from such payments at the
applicable statutory rate (subject, in the case of the Borrowers to the
requirements of Section 3.9(a)); provided, however, that if the Borrowers have
withheld Holdings shall so notify the Agent. If the Borrowers are required to
pay additional amounts to any Lender pursuant to this Section 3.9, such Lender
shall use reasonable efforts to designate a different Lending Office if such
designation will thereafter avoid the need for any additional payments under
this Section 3.9 and will not, in the sole good faith judgment of such Lender,
be otherwise disadvantageous to such Lender in any material respect. A Lender
which ceases to be exempt from United States withholding taxes shall notify the
Agent and the Borrowers promptly thereof.

         (g) FURNISHING OF CERTIFICATE. Within 30 days after the date of any
payment of Taxes, the Borrowers will furnish to the Agent, at its address set
forth on the signature page of the Agent to this Agreement or such other address
as the Agent notifies the Lenders, the original or a certified copy of a receipt
evidencing payment thereof.

         (h) SURVIVAL OF PROVISION. Without prejudice to the survival of any
other agreement of the parties hereunder, but subject to Section 3.10, below,
the respective agreements, rights and liabilities of the Borrowers, the Agent
and the Lenders contained in this Section 3.9 shall survive the payment in full
of the outstanding Revolving Credit Loans, Facility Fees, Utilization Fees, Risk
Participation Fees, interest and termination of the Commitments hereunder.

         SECTION 3.10 NO WAIVER; REIMBURSEMENT LIMITATION. Failure on the part
of any Lender to demand compensation, payment, or reimbursement of amounts under
any of Sections 3.7, 3.8 and 3.9, above, with respect to any period shall not
constitute a waiver of such Lender's rights to demand such compensation,
payment, or reimbursement in such period or in any other period; PROVIDED,
HOWEVER, that no Lender shall be entitled to compensation, payment, or
reimbursement of amounts under any of Sections 3.7, 3.8 and 3.9 for any amounts
incurred or accruing more than 270 days prior to the giving of notice to
Holdings of any cost, reduction, Taxes or other amount of the nature described
in any of such Sections, and PROVIDED FURTHER, HOWEVER, that, if such cost,
reduction, Tax or other amount is owing by a Lender by reason of a an audit or
assessment by governmental authority or change in law having effect on a date
earlier than the date on which such Lender receives notice thereof, then the
270-day period referred to above shall be extended to include such period of
retroactive effect.


                                    ARTICLE 4
                               PRO RATA TREATMENT

         SECTION 4.1 PRO RATA TREATMENT. Except as required by Section 3.7 or
Section 12.4(b) or as permitted under Section 3.9, each Revolving Credit
Borrowing, each participation in a Letter of Credit, each payment or prepayment
of principal of any Revolving Credit Borrowing, each payment of interest on the
Revolving Credit Loans, each payment of the Facility Fees, each payment of the
Utilization Fees, each payment of Risk Participation Fees, each reduction of the
Commitments, each Rate Conversion or Rate Continuation of Revolving Credit Loans
comprising a Revolving Credit Borrowing shall be allocated among the Lenders in
accordance






                                       39


with each Lender's Ratable Portion of the Total Commitment Amount (or if the
Commitments shall have expired or been terminated, in accordance with the
respective principal amounts of each Lender's Revolving Credit Loans).


                                    ARTICLE 5
                                LETTERS OF CREDIT

         SECTION 5.1 LETTERS OF CREDIT.

         (a) ISSUANCE. Subject to the terms and conditions set forth this
Agreement, upon written request from Holdings, on behalf of the Borrowers, a
copy of which is delivered to the Agent, the Letter of Credit Issuer will issue,
for the account of any Borrower, on or at any time after the commencement of the
Commitment Period but prior to the earlier of (i) fifteen (15) days prior to the
last day of the Commitment Period or (ii) the date on which the Lenders'
Commitments are terminated in full, whether pursuant to Section 3.2 or Article
12 hereof or otherwise, Letters of Credit in such form as Holdings, on behalf of
the Borrowers, and the Letter of Credit Issuer may agree, but in no case having
a final expiry date later than fifteen (15) Banking Days prior to last day of
the Commitment Period, and in all cases in compliance with all applicable
provisions of Law; provided, however, that, in no event shall (x) the aggregate
Risk Participation Exposure exceed the LC Sublimit or (y) the aggregate
principal amount of all Revolving Credit Loans, PLUS the aggregate Risk
Participation Exposure, exceed the Total Commitment Amount. The Agent shall
advise the Lenders promptly following the issuance of a Letter of Credit or
other event or condition which affects the Lenders' respective Risk
Participation Exposures.

         (b) REIMBURSEMENT OBLIGATIONS. Each Letter of Credit issued by the
Letter of Credit Issuer hereunder shall be issued pursuant to the Letter of
Credit Issuer's standard and customary form of letter of credit application
and/or Reimbursement Agreement (or equivalent agreement otherwise named) then in
use under which the Borrowers are the reimbursement obligors and shall identify:
(i) the respective dates of issuance and expiry of such Letter of Credit (which
date of expiry shall not be later than fifteen (15) days prior to the last day
of the Commitment Period), (ii) the amount of such Letter of Credit (which shall
be a sum certain), (iii) the beneficiary and account party of such Letter of
Credit and (iv) the drafts and other documents (if any) necessary to be
presented to the Letter of Credit Issuer upon a drawing thereunder. To the
extent that any of the terms of the above-referenced Reimbursement Agreement
conflict with the terms of this Agreement, the terms of this Agreement shall
control.

         (c) PAYMENT OF LETTER OF CREDIT OBLIGATIONS. The Borrowers hereby agree
to pay the Letter of Credit Issuer, on demand, the amount of each drawing under
any Letter of Credit issued by the Letter of Credit Issuer pursuant to this
Section, plus interest from the date of such drawing until paid in full to the
Letter of Credit Issuer by the Borrowers or pursuant to Section 5.2(b) hereof,
at an annual rate equal to the Prime Rate from time to time in effect.





                                       40


         SECTION 5.2  LETTER OF CREDIT ISSUER RELATIONSHIP WITH LENDERS.

         (a) RISK PARTICIPATION. The Letter of Credit Issuer hereby agrees that
it will sell simultaneously with the issuance of each Letter of Credit, and each
other Lender hereby agrees that it will buy simultaneously with the issuance of
each Letter of Credit (subject to the following sentence) a participation in any
payment which the Letter of Credit Issuer makes for the account of the Borrowers
under any such Letter of Credit for which payment the Letter of Credit Issuer is
not otherwise immediately reimbursed by the Borrowers in an amount equal to such
Lender's Ratable Portion. The aggregate principal amount of all outstanding
Revolving Credit Loans of such Lender, PLUS such Lender's aggregate Risk
Participation Exposure (after taking into effect such Lender's Ratable Portion
of the risk participation created under this Section 5.2) shall not exceed such
Lender's Commitment in effect from time to time. The sale of the risk
participation by the Letter of Credit Issuer and the purchase thereof by each
Lender, respectively, shall occur simultaneously with and shall be evidenced by
each Letter of Credit.

         (b) REIMBURSEMENT OF LETTER OF CREDIT ISSUER. The Letter of Credit
Issuer will notify the Agent, who will promptly notify each other Lender, if the
Letter of Credit Issuer makes any payment under any Letter of Credit. Upon
demand by the Agent each such other Lender shall pay to the Agent that Lender's
Ratable Portion of each such payment made by the Letter of Credit Issuer. Each
such payment shall for all purposes hereunder be deemed to be a Prime Rate Loan
(it being understood that (i) each Lender's obligation to make such payment is
absolute and unconditional and shall not be affected by any event or
circumstance whatsoever, including the occurrence of any Incipient Default
hereunder or the failure of any condition precedent set forth in Article 7 to be
satisfied and (ii) each such payment shall be made without any offset,
abatement, withholding or reduction whatsoever). In addition, upon demand by the
Letter of Credit Issuer through the Agent, each other Lender will pay an amount
equal to such Lender's Ratable Portion of all costs and expenses not reimbursed
by the Borrowers which have been incurred or made by the Letter of Credit Issuer
as the result of, or in connection with, any action including, but not limited
to, legal action which may be taken by Agent to obtain reimbursement for
payments made by Agent under any Letter of Credit, unless such costs and
expenses are the result of the gross negligence or willful misconduct of, as the
case may be, the Letter of Credit Issuer or the Agent.

         (c) RIGHTS AND OBLIGATIONS OF LETTER OF CREDIT ISSUER. Neither the
Letter of Credit Issuer, nor any of its correspondents, shall be responsible,
provided it has exercised reasonable care, as to any document presented under a
Letter of Credit, or any renewal or extension thereof, which appears to be
regular on its face and appears on its face to conform to the terms of the
Letter of Credit and to make reasonable reference thereto, for the validity or
sufficiency of any signature or endorsement, for delay in giving any notice or
failure of any instrument to bear adequate reference to the Letter of Credit, or
to any renewal or extension thereof, or failure of documents not clearly
specified in the Letter of Credit to accompany any instrument at negotiation, or
for failure of any person to note the amount of any draft on the reverse of the
Letter of Credit or on any renewal or extension thereof. Any action, inaction or
omission on the part of the Letter of Credit Issuer or any of its
correspondents, under or in connection with any Letter of Credit or any renewal
or extension thereof or the related instruments or documents, if in good faith
and in conformity with such Laws, regulations or customs as are applicable and
the terms of this





                                       41


Section 5.2, shall be binding upon the Borrowers and shall not place the Letter
of Credit Issuer or any of its correspondents under any liability to any
Borrower, in the absence of negligence by the Letter of Credit Issuer or its
correspondents. The Letter of Credit Issuer's rights, powers, privileges and
immunities specified in or arising under this Agreement are in addition to any
heretofore or at any time hereafter otherwise created or arising, whether by
statute or rule of Law or contract.

         (d) EFFECT OF APPLICABLE LAW OR CUSTOM. All Letters of Credit issued
hereunder will, except to the extent otherwise expressly provided, be governed
by the International Standby Practices, as adopted by the International Chamber
of Commerce at the time of issuance of the Letter of Credit.

         (e) TERMINATION OF LETTER OF CREDIT COMMITMENT. In the event that (i)
any restriction is imposed on the Letter of Credit Issuer (including, without
limitation, any legal lending or acceptance limits imposed by the United States
of America or any political subdivision thereof) which in the reasonable
judgment of the Letter of Credit Issuer would prevent the Letter of Credit
Issuer from issuing Letters of Credit or maintaining its commitment to issue
Letters of Credit or (ii) there shall have occurred, at any time during the term
of this Agreement (A) any adverse change or a development involving a
prospective adverse change affecting the condition of any of the Borrowers which
would materially impair the ability of the Borrowers to meet their obligations
under this Article 5, (B) any outbreak of hostilities or other national or
international crisis or change in economic conditions if the effect of such
outbreak, crisis or change would make the creation of Letters of Credit or the
discount or sale thereof impracticable, or (C) the enactment, publication,
decree or other promulgation of any statute, regulation, rule or order of any
court or other governmental authority which would materially and adversely
affect the ability of the Borrowers to perform their obligations under this
Agreement, then the Letter of Credit Issuer, through the Agent, in the case of
the occurrence of any event described above, shall give written notice of the
occurrence of such event to the Borrowers and the Lenders, whereupon the
commitment of the Letter of Credit Issuer to issue Letters of Credit shall
terminate on the effective date of such notice. The Borrowers shall forthwith
pay to the Letter of Credit Issuer all obligations in respect of Letters of
Credit on the date of drawing of such Letter of Credit.

         SECTION 5.3 RESIGNATION AND REMOVAL OF LETTER OF CREDIT ISSUER. The
Letter of Credit Issuer (or any successor) may at any time resign (so long as,
at the same time, the institution then serving as the Letter of Credit Issuer
also resigns as Agent in the manner provided in Section 13.13, below, unless
Holdings, on behalf of the Borrowers, has waived in writing the requirements of
this parenthetical) as such by giving thirty (30) days' prior written notice to
the Agent, the Borrowers and each Lender; and the Majority Lenders may remove
the Letter of Credit Issuer at any time with or without cause by giving written
notice to the Agent, the Letter of Credit Issuer and the Borrowers. In any such
case, the Majority Lenders may appoint a successor to the resigned or removed
Letter of Credit Issuer (the "Former LC Bank"), which successor shall (unless
waived by Holdings, on behalf of the Borrowers, in writing) also be successor
Agent, provided that the Majority Lenders obtain the Borrowers' prior written
consent to the successor (which consent shall not be unreasonably withheld), by
giving written notice to the Agent, the Borrowers, the Former LC Bank and each
Lender not participating in the






                                       42


appointment; provided, however, that, if at the time of the proposed resignation
or removal of a Letter of Credit Issuer, any Borrower is the subject of an
action referred to in Section 11.7 or any other Event of Default shall have
occurred and be continuing, the Borrowers' consent shall not be required. In the
absence of a timely appointment, the Former LC Bank shall have the right (but
not the duty) to make a temporary appointment of any Lender (but only with that
Lender's consent) to act as its successor pending an appointment pursuant to the
immediately preceding sentence. In either case, the successor Letter of Credit
Issuer shall deliver its written acceptance of appointment to the Borrowers, the
Agent, each Lender and the Former LC Bank, whereupon (a) the Former LC Bank
shall execute and deliver such assignments and other writings as the successor
Letter of Credit Issuer may reasonably require to facilitate its being and
acting as the Letter of Credit Issuer, (b) the successor Letter of Credit Issuer
shall in any event automatically acquire and assume all the rights and duties as
those prescribed for the Letter of Credit Issuer by this Article 5 and (c) the
Former LC Bank shall be discharged from its duties and obligations under this
Agreement and the other Loan Documents. Notwithstanding anything to the contrary
contained in the foregoing, the Former LC Bank shall continue to enjoy all of
the rights and remedies (as against the Borrowers and the other Lenders)
provided to the Letter of Credit Issuer hereunder with respect to any and all
Letters of Credit which are outstanding on the effective date of its resignation
or removal and which are not replaced by Letters of Credit issued by its
successor or otherwise canceled.


                                    ARTICLE 6
              OPENING COVENANTS; CONDITIONS TO INITIAL CREDIT EVENT

         SECTION 6.1 OPENING COVENANTS. Prior to or concurrently with the
execution and delivery of this Agreement, Holdings shall, on behalf of the
Borrowers, furnish to Agent originals or copies for delivery to each Lender and
the Letter of Credit Issuer of the following:

         (a) BORROWER CERTIFICATES. A certificate executed by an authorized
officer of Holdings and each other Borrower and a secretary or assistant
secretary of Holdings and each other Borrower certifying (a) the resolutions of
the Board of Directors of such Borrower authorizing the execution, performance
and delivery of this Agreement, the Notes and all other Loan Documents, (b) the
names and signatures of the officers of such Borrower executing or attesting to
such documents, and (c) the absence of any Event of Default or Incipient
Default;

         (b) GOOD STANDING CERTIFICATES. Certificates of good standing for
Holdings and each other Borrower, certified by the office of the Secretary of
State or other similar official of the state of incorporation of such entities,
and certificates of qualification to transact business as a foreign corporation
or other entity in every other State where such Borrower's failure so to qualify
could have a Material Adverse Effect;

         (c) PAYMENT OF AGENT'S LEGAL FEES. Evidence of payment to the Agent,
for its own account, of the legal fees and expenses of the Agent.






                                       43


         SECTION 6.2 PRIOR TO INITIAL CREDIT EVENT. Prior to or concurrently
with the occurrence of the Initial Credit Event, Holdings shall, on behalf of
the Borrowers, furnish to Agent originals or copies for delivery to each Lender
and the Letter of Credit Issuer of the following:

         (a) REVOLVING CREDIT NOTES. Revolving Credit Notes, in favor of each of
the Lenders, in the principal amount of such Lender's Commitment;

         (b) EXISTING CREDIT FACILITY. Contemporaneously with the Initial Credit
Event hereunder, the Borrowers shall have terminated the commitments of the
lenders under the Existing Credit Agreements and prepaid (with such exceptions
as may be agreed to by the Agent and the Lenders) all borrowings thereunder,
including letters of credit outstanding thereunder;

         (c) CREDIT REQUEST AND DISBURSEMENT DIRECTION LETTER. To the extent, if
any, that an advance of Loans on such date is to be requested, a Notice of
Borrowing and a letter from Holdings, on behalf of the Borrowers, directing the
Agent to disburse the proceeds of the initial Revolving Credit Borrowing;

         (d) LEGAL OPINION. A favorable opinion of counsel for the Borrowers,
all in form and substance reasonably acceptable to the Agent;

         (e) BORROWER CERTIFICATE. A certificate executed by an authorized
officer of each Borrower and a secretary or assistant secretary of each Borrower
certifying the absence of any Event of Default or Incipient Default;

         (f) LETTER OF CREDIT REIMBURSEMENT AGREEMENT. A Letter of Credit
Reimbursement Agreement duly executed by the applicable Borrower with respect to
any Letter of Credit issued on the Closing Date;

         (g) CLOSING FEES. The Borrowers shall have paid to each Lender the
upfront fee provided for in Section 3.4(e);

         (h) OTHER MATTERS. Such other documents, certificates and other matters
as the Agent may reasonably request of Holdings and any of the other Borrowers.


                                    ARTICLE 7
                         CONDITIONS TO ALL CREDIT EVENTS

         On the date of each Credit Event, such Credit Event shall constitute a
representation and warranty by the Borrowers that the following are and will be
true as of such date and after giving effect to such Credit Event, and each of
the following shall be true as a condition precedent thereto:

         SECTION 7.1 REPRESENTATION BRINGDOWN. The representations and
warranties contained in Article 10 are true and correct in all respects on and
as of the date of such Credit Event with





                                       44


the same effect as though made on and as of such date, except to the extent such
representations and warranties expressly relate to an earlier date;

         SECTION 7.2 COMPLIANCE WITH AGREEMENT. The Borrowers shall be in
compliance with all other terms and provisions set forth herein and in each
other Loan Document on its part to be observed or performed, and at the time of
and immediately after such Credit Event, no Event of Default or Incipient
Default shall have occurred and be continuing; and

         SECTION 7.3 NO MATERIAL ADVERSE CHANGE. There has been no event since
the date hereof which would or might reasonably be expected to have a Material
Adverse Effect.


                                    ARTICLE 8
                              AFFIRMATIVE COVENANTS

         From and after the Closing Date through the commencement of the
Commitment Period and for so long thereafter as any of the Obligations remain
unpaid and outstanding, or any Lender shall have any Commitment outstanding, or
any Loans shall remain unpaid, the Borrowers shall perform and observe, and
shall cause all of the other Lincoln Parties to perform and observe, all of the
following covenants:

         SECTION 8.1 FINANCIAL STATEMENTS.

         (a) QUARTERLY FINANCIAL STATEMENTS. Holdings shall furnish to each
Lender promptly, and in any case within forty-five (45) days after the end of
each of the first three (3) Fiscal Quarters of each of its Fiscal Years,
unaudited Consolidated balance sheet of Holdings as at the end of that period
and the related unaudited Consolidated statements of income and cash flows, and
setting forth, in the case of such unaudited Consolidated statements of income
and of cash flows, comparative figures for the related periods in the prior
Fiscal Year, all prepared in accordance with GAAP and otherwise in form and
detail satisfactory to each Lender and certified by a financial officer of
Holdings.

         (b) ANNUAL FINANCIAL STATEMENTS. Holdings shall furnish to each Lender
as soon as available and in any event within 90 days after the close of each
Fiscal Year of Holdings, the Consolidated balance sheets of Holdings and its
Subsidiaries as at the end of such Fiscal Year and the related Consolidated
statements of income, of stockholders' equity and of cash flows for such Fiscal
Year, in each case setting forth comparative figures for the preceding Fiscal
Year, all in reasonable detail and accompanied by the opinion with respect to
such Consolidated financial statements of independent public accountants of
recognized national standing selected by Holdings, which opinion shall be
unqualified and shall (A) state that such accountants audited such Consolidated
financial statements in accordance with generally accepted auditing standards,
that such accountants believe that such audit provides a reasonable basis for
their opinion, and that in their opinion such Consolidated financial statements
present fairly, in all material respects, the Consolidated financial position of
Holdings and its Subsidiaries as at the end of such Fiscal Year and the
Consolidated results of their operations and cash flows for such Fiscal Year in
conformity with generally accepted accounting principles, or (B) contain such
statements







                                       45


as are customarily included in unqualified reports of independent accountants in
conformity with the recommendations and requirements of the American Institute
of Certified Public Accountants (or any successor organization).

         (c) OFFICER'S CERTIFICATES. Holdings shall furnish to each Lender the
following:

                  (i) concurrently with the financial statements delivered in
         connection with clauses (a) and (b) above, a certificate of a
         responsible financial officer of Holdings, certifying that (A) to his
         or her knowledge and belief, those financial statements fairly present
         in all material respects the financial condition and results of
         operations of Holdings and its Subsidiaries (subject, in the case of
         interim financial statements, to routine year-end audit adjustments)
         and (B) no Incipient Default or Event of Default then exists or if any
         does, a brief description thereof and of Holdings' intentions in
         respect thereof, and

                  (ii) within forty-five (45) days after the end of each of the
         first three (3) Fiscal Quarters of any Fiscal Year and within ninety
         (90) days after the end of any Fiscal Year, a certificate of a
         responsible financial officer of Holdings, in the form of Exhibit E
         hereto, setting forth the calculations necessary to determine whether
         or not the Borrowers are in compliance with Sections 9.7 and 9.8
         hereof.

         (d) SEC REPORTS AND REGISTRATION STATEMENTS. Promptly after
transmission thereof or other filing with the SEC, copies of all registration
statements (other than the exhibits thereto and any registration statement on
Form S-8 or its equivalent) and all annual, quarterly or current reports that
Holdings or any of its Subsidiaries files with the SEC on Form 10-K, 10-Q or 8-K
(or any successor forms).

         (e) ANNUAL AND QUARTERLY REPORTS, PROXY STATEMENTS AND OTHER REPORTS
DELIVERED TO STOCKHOLDERS Generally. Promptly after transmission thereof to its
stockholders, copies of all annual, quarterly and other reports and all proxy
statements that Holdings furnishes to its stockholders generally.

         (f) OTHER INFORMATION. With reasonable promptness, such other
information or documents (financial or otherwise) relating to Holdings or any of
its Subsidiaries as any Lender may reasonably request from time to time.

         (g) FISCAL YEAR. Holdings shall not change its Fiscal Year and shall
not permit any of its Subsidiaries to change its respective fiscal year unless
(i) Holdings has delivered to the Agent written notice thereof at least thirty
(30) days prior to the effectiveness of such change, and (ii) the Borrowers have
executed and delivered to the Agent and the Lenders such amendments to this
Agreement and other Loan Documents as Agent or the Majority Lenders may
reasonably require to cause the provisions of this Agreement and the other Loan
Documents immediately after such change to have the same effect as that intended
by the provisions of this Agreement and the other Loan Documents immediately
prior to such change.




                                       46


         SECTION 8.2  NOTICE.

         (a) NOTICE OF DEFAULT; OTHER EVENTS. Holdings shall give each Lender
prompt written notice as soon as possible, and in any event within five (5)
Banking Days after any responsible officer of any Lincoln Party obtains
knowledge thereof, of (i) the occurrence of any Incipient Default or Event of
Default or of any development which in such officer's reasonable belief would or
might reasonably be expected to result in a Material Adverse Effect, setting
forth the details of such Incipient Default or such development and the action
that such Lincoln Party has taken or proposes to take with respect thereto or
(ii) any litigation or governmental or regulatory proceeding against any Lincoln
Party which is likely to have a Material Adverse Effect.

         (b) NOTICE OF ERISA MATTERS. Promptly, and in any event within 10 days
after receipt from any ERISA Regulator of notice of, or a responsible officer of
any Borrower otherwise becoming aware of, any of the following, Holdings shall
give the Agent written notice setting forth the nature thereof and the action,
if any, that Holdings or an ERISA Affiliate proposes to take with respect
thereto:

         (i)   the occurrence of a Default under ERISA;

         (ii)  with respect to any Plan, any Reportable Event;

         (iii) the taking by the Pension Benefit Guaranty Corporation of steps
         to institute, or the threatening by the Pension Benefit Guaranty
         Corporation of the institution of, proceedings under section 4042 of
         ERISA for the termination of, or the appointment of a trustee to
         administer, any Plan, or the receipt by Holdings or any ERISA Affiliate
         of a notice from a Multiemployer Plan that such action has been taken
         by the Pension Benefit Guaranty Corporation with respect to such
         Multiemployer Plan (including a copy of any notice thereof); or

         (iv)  any event, transaction or condition that could result in the
         incurrence of any liability by Holdings or any ERISA Affiliate pursuant
         to Title I or IV of ERISA or the penalty or excise tax provisions of
         the Code relating to employee benefit plans (as defined in Section 3 of
         ERISA), or in the imposition of any Lien on any of the rights,
         properties or assets of Holdings or any ERISA Affiliate pursuant to
         Title I or IV of ERISA or such penalty or excise tax provisions, if
         such liability or Lien, taken together with any other such liabilities
         or Liens then existing, would reasonably be expected to have a Material
         Adverse Effect.

         (c) ENVIRONMENTAL REPORTING. Holdings shall give each Lender prompt,
and in any event within ten (10) days of the date any Lincoln Party receives or
transmits, as the case may be, copies of all material communications with any
government or governmental agency relating to Environmental Laws.

         SECTION 8.3 INSURANCE. Each Lincoln Party shall keep itself and all of
its insurable properties insured at all times to such extent, by such insurers,
and against such hazards and liabilities as is customarily carried by prudent
businesses of like size and enterprise; and promptly upon the Agent's written
request upon and during the continuance of an Event of






                                       47


Default, Holdings shall furnish to the Agent such information about any such
insurance as the Agent may from time to time reasonably request, which
information shall be prepared in form and detail satisfactory to the Agent and
certified by an appropriate officer of Holdings.

         SECTION 8.4 MONEY OBLIGATIONS. Each Lincoln Party shall pay, in full
(a) all taxes, assessments and governmental charges and levies (except only
those so long as and to the extent that the same shall be contested in good
faith by appropriate and timely proceedings) for which such Lincoln Party may be
or become liable, or to which any or all of the properties of such Lincoln Party
may be or become subject, prior to the date on which the failure to make such
payment would reasonably be expected to have a Material Adverse Effect, and (b)
all of its other obligations calling for the payment of money (except only those
so long as and to the extent that the same shall be contested in good faith and
except further trade accounts payable consistent with such Lincoln Party's past
practice) before such payment becomes overdue where the failure to make such
payment would reasonably be expected to have a Material Adverse Effect.

         SECTION 8.5  RECORDS.

         (a) Each Lincoln Party shall at all times maintain true and complete
records and books of account and, without limiting the generality of the
foregoing, maintain appropriate reserves for possible losses and liabilities,
all in accordance with GAAP in all material respects.

         (b) If no Incipient Default or Event of Default then exists, the
Borrowers shall permit the Agent, at the expense of the Lenders, and any Lender,
at the expense of such Lender, and upon reasonable prior notice to Holdings, to
visit the principal executive office of each Borrower, to discuss the affairs,
finances and accounts of the Borrowers and the other Subsidiaries with each
Borrower's officers and, with the consent of Holdings (which consent will not be
unreasonably withheld), to visit the other offices and properties of the
Borrowers and the Subsidiaries and to make copies and extracts from the books
and records of such Borrowers and Subsidiaries, all at such reasonable times and
as often as may be reasonably requested; and

         (c) If any Incipient Default or Event of Default then exists, the
Borrowers shall permit the Agent and any Lender, at the expense of the
Borrowers, to visit and inspect any of the offices or properties of each
Borrower or any other Subsidiaries, to examine all their respective books of
account, records, reports and other papers, to make copies and extracts
therefrom, and to discuss their respective affairs, finances and accounts with
their respective officers and independent public accountants (and by this
provision each Borrower hereby authorizes said accountants to discuss the
affairs, finances and accounts of such Borrower and its Subsidiaries), all at
such times and as often as may be determined by the Agent or such Lender.

         SECTION 8.6 FRANCHISES. Each Lincoln Party shall preserve and maintain
at all times its corporate existence, rights and franchises, except where the
failure to maintain any such corporate right or franchise would reasonably not
be expected to have a Material Adverse Effect; PROVIDED, HOWEVER, that this
Section 8.6 shall not prevent any merger or consolidation permitted by Section
9.3 hereof.






                                       48


         SECTION 8.7 CERTAIN SUBSIDIARIES TO JOIN AS BORROWER. In the event that
at any time after the Closing Date any Borrower directly or indirectly has any
Significant Subsidiary that is not a Borrower, Holdings shall notify the Agent
in writing of such event, identifying the Significant Subsidiary in question and
referring specifically to the rights of the Agent and the Lenders under this
Section 8.7. Holdings shall, within 30 days following request therefor from the
Agent, cause such Significant Subsidiary to deliver to the Agent (i) a joinder
to this Agreement and such other Loan Documents as the Agent reasonably requires
to cause such Significant Subsidiary to be a Borrower hereunder and (ii) if such
Significant Subsidiary is a corporation, resolutions of the Board of Directors
of such Significant Subsidiary, certified by the Secretary or an Assistant
Secretary of such Significant Subsidiary as duly adopted and in full force and
effect, authorizing the execution and delivery thereof, or if such Significant
Subsidiary is not a corporation, such other evidence of the authority of such
Significant Subsidiary to execute such joinder and other Loan Documents, as the
Agent may reasonably request.

         SECTION 8.8 MOST FAVORED COVENANT STATUS. If any one or more of the
Borrowers at any time after the Closing Date, issues or guarantees any unsecured
Indebtedness denominated in Dollars for money borrowed or represented by bonds,
notes, debentures or similar securities in an aggregate amount exceeding
$25,000,000, to any lender or group of lenders acting in concert with one
another, or one or more institutional investors, pursuant to a loan agreement,
credit agreement, note purchase agreement, indenture, guaranty or other similar
instrument, which agreement, indenture, guaranty or instrument, includes
affirmative or negative business or financial covenants (or any events of
default or other type of restriction which would have the practical effect of
any affirmative or negative business or financial covenant, including, without
limitation, any "put" or mandatory prepayment of such Indebtedness upon the
occurrence of a "change of control") which are applicable to such Borrower or
Borrowers, other than those set forth herein or in any of the other Loan
Documents, Holdings shall promptly so notify the Agent and the Lenders and, if
the Agent shall, at the instruction of the Majority Lenders, so request by
written notice to Holdings, the Borrowers, the Agent and the Lenders shall
promptly amend this Agreement to incorporate some or all of such provisions, in
the discretion of the Majority Lenders, into this Agreement and, to the extent
necessary and reasonably desirable to the Majority Lenders, into any of the
other Loan Documents.

         SECTION 8.9 COMPLIANCE WITH LAWS. Each Lincoln Party shall comply in
all respects with its Articles of Incorporation or Certificate of
Incorporation(or equivalent organization documentation), as the case may be, and
Regulations or By-laws, as the case may be (or equivalent organization
documentation), and all applicable occupational safety and health Laws, federal
and state securities Laws, product safety Laws, Environmental Laws and every
other Law, treaty, rule, regulation, determination of an arbitrator, and every
lawful governmental order or determination if non-compliance with such Law or
order would have or might reasonably be expected to have a Material Adverse
Effect; provided, however, that this Section 8.9 shall not apply to any
noncompliance if and to the extent that the same is being contested in good
faith by timely and appropriate proceedings which are effective to stay
enforcement thereof and against which appropriate reserves have been
established.




                                       49


         SECTION 8.10 PROPERTIES. Each Lincoln Party shall maintain all assets
in any material respect necessary to its continuing operations in good working
order and condition, ordinary wear and tear excepted.

         SECTION 8.11 USE OF PROCEEDS. The Borrowers shall use the proceeds of
the Loans and the Letters of Credit only for the purposes specified in Section
2.2.


                                    ARTICLE 9
                               NEGATIVE COVENANTS

         From and after the Closing Date through the commencement of the
Commitment Period and for so long thereafter as any of the Obligations remain
unpaid and outstanding, or any Lender shall have any Commitment outstanding, or
any Loans shall remain unpaid, the Borrowers shall perform and observe, and
shall cause all of the other Lincoln Parties to perform and observe, all of the
following covenants:

         SECTION 9.1 ERISA COMPLIANCE. The Borrowers shall not permit (i) any
Plan to fail to satisfy the minimum funding standards of ERISA or the Code, for
any plan year or part thereof or a waiver of such standards or extension of any
amortization period is sought or granted under section 412 of the Code, (ii) the
aggregate "amount of unfunded benefit liabilities" (within the meaning of
section 4001(a)(18) of ERISA) under all Plans, determined in accordance with
Title IV of ERISA, to exceed $50,000,000, (iii) Holdings or any ERISA Affiliate
to incur any liability pursuant to Title I or IV of ERISA or the penalty or
excise tax provisions of the Code relating to employee benefit plans (as defined
in Section 3 of ERISA), or (iv) Holdings or any Subsidiary to establish or amend
any employee welfare benefit plan (as defined in Section 3 of ERISA) that
provides post-employment welfare benefits in a manner that would increase the
liability of Holdings or any Subsidiary thereunder, unless any such event or
events described in clauses (i) through (iv), above, either individually or
together with any other such event or events, would reasonably not be expected
to have a Material Adverse Effect.

         SECTION 9.2 INVESTMENTS. No Lincoln Party shall make or have
outstanding any Investment, other than:

         (a) Investments by a Lincoln Party in and to its Subsidiaries on the
date hereof, and after the date hereof, (i) any Investment in assets that is a
Permitted Acquisition and (ii) any Investment in any Person which, after giving
effect to such Investment, becomes a Subsidiary of such Lincoln Party under a
Permitted Acquisition, so long as such Lincoln Party causes such Subsidiary to
comply with the requirements of Section 8.7, above;

         (b) Investments of the Lincoln Parties existing as of the Closing Date
and described on Schedule 9.2 hereto;

         (c) Investments in Cash Equivalents;

         (d) Investments in mutual funds registered under the Investment Company
Act of 1940, as amended, which invest only in either money market securities or
United States







                                       50


Governmental Securities, in either case, maturing within three years from the
date of acquisition thereof by such mutual fund;

         (e) Subject to the limitations provided for under Section 9.3(c)
hereof, Investments in Special Purpose Companies incidental to the consummation
of Qualifying Securitization Transactions;

         (f) Investments in property to be used in the ordinary course of
business of the Borrowers and their Subsidiaries;

         (g) Investments in current assets arising from the sale of goods and
services in the ordinary course of business of the Borrowers and their
Subsidiaries; and

         (h) Investments of the Lincoln Parties not described in the foregoing
clauses (a) through (g); PROVIDED that the aggregate amount of all such
Investments, on a Consolidated basis, outstanding under this clause (h) shall
not at any time exceed an amount equal to fifteen (15%) of Consolidated Net
Worth at such time.

         SECTION 9.3 MERGERS; ACQUISITIONS; BULK TRANSFERS. No Lincoln Party
shall:

         (a) be a party to any consolidation, control share acquisition,
majority share acquisition or other business combination or merger, other than:

         (i) a Permitted Holdings Merger,

         (ii) a Permitted Acquisition, or

         (iii) a merger of a Subsidiary into another Subsidiary, PROVIDED that
         (A) if either such Subsidiary is a Borrower:

                  (1) Holdings shall deliver to the Agent written notice thereof
                  at least five (5) Banking Days prior to the effective date of
                  such merger,

                  (2) such merging Subsidiaries (and any other Borrowers
                  requested by the Agent or the Lenders) shall execute and
                  deliver to the Agent and the Lenders such assumptions,
                  confirmations, and other Loan Documents as the Agent or the
                  Lenders may require to protect their interests under this
                  Agreement and the other Loan Documents, and

                  (3) after giving effect to such merger, no Event of Default or
                  Incipient Default shall exist,

         and (B) as to all other mergers of a Subsidiary into another
         Subsidiary, Holdings shall advise the Agent in writing of such merger
         contemporaneously with its effectiveness, or






                                       51


         (b) purchase all or a substantial part of the outstanding securities or
assets of any corporation or other business enterprise, except Permitted
Acquisitions, or

         (c) other than Holdings, issue any of its own stock (or any options or
warrants to purchase stock or other securities exchangeable for or convertible
into such stock) to any Person other than another Lincoln Party, except (i) to
qualify directors, in the minimum amount required for such qualification, (ii)
stock issued, in the minimum amount required by law, to comply with laws
requiring multiple shareholders, or (iii) in connection with an issuance of such
stock whereby such Lincoln Party maintains its same direct or indirect
proportionate interest in such Subsidiary, unless

         (A) such issuance is for cash consideration or Cash Equivalents and
         after giving effect to such issuance of such stock, such Lincoln Party
         shall continue to be a Subsidiary of Holdings;

         (B) in the opinion of a responsible officer of Holdings (and the Board
         of Directors of such Lincoln Party to the extent Board approval is
         required), that the sale is for fair value and in the best interests of
         such Lincoln Party;

         (C) said stock issued to a Person on terms reasonably deemed by the
         responsible officer of Holdings (or the Board of Directors of such
         Lincoln Party to the extent Board approval is required) to be adequate
         and satisfactory;

         (D) for the purposes of measuring compliance with Section 9.3(d),
         below, such issuance shall be treated as a disposition of assets by
         such Lincoln Party proportionately equal to the increase in the
         minority interests in the stock and surplus of such Lincoln Party; and

         (E) no Event of Default or Incipient Default then exists or would exist
         after giving effect to such issuance.

         (d) lease, sell or otherwise transfer any material assets (other than
such personal property, if any, as may have become obsolete or no longer useful
in the continuance of its present business) except (i) in the normal course of
its present business, (ii) the sale or other transfer of Trade Receivables to a
Special Purpose Company pursuant to one or more Qualifying Securitization
Transactions, to the extent that the aggregate amount outstanding under all
financing facilities relating to such Qualifying Securitization Transactions
shall not exceed $75,000,000 at any time of determination, and (iii) any lease,
sale or transfer by a Lincoln Party to another Lincoln Party, which, as to
leases, sales and transfers by Borrowers to Lincoln Parties that are not
Borrowers, do not exceed in the aggregate $10,000,000 on a Consolidated basis in
any Fiscal Year; PROVIDED that the foregoing restrictions shall not apply to the
sale of assets for cash to a Person other than an Affiliate, if all of the
following conditions are met:

         (A) the aggregate book value of such assets, together with all other
         assets of the Lincoln Parties previously disposed of (other than
         pursuant to clauses (i), (ii) and (iii) above) during any Fiscal Year
         on a Consolidated basis does not exceed fifteen percent (15%) of
         Consolidated Net Worth as of the end of the Fiscal Year then most
         recently ended;






                                       52


         (B) in the opinion of a responsible officer and the Board of Directors
         of such Lincoln Party (to the extent Board approval is required), the
         sale is for fair value and in the best interests of such Lincoln Party;
         and

         (C) no Event of Default or Incipient Default then exists or would exist
after giving effect to such sale.

         SECTION 9.4 LIENS. No Lincoln Party shall (a) acquire any property
subject to any inventory consignment, lease, land contract or other title
retention contract (this section shall not apply to true leases, consignments,
tolling or other possessory agreements in respect of the property of others
whereby such Lincoln Party does not have legal or beneficial title to such
property and which, pursuant to GAAP, are not required to be capitalized), (b)
sell or otherwise transfer any Trade Receivables, whether with or without
recourse, or (c) suffer or permit any property now owned or hereafter acquired
by it to be or become encumbered by any mortgage, security interest, financing
statement or Lien of any kind or nature; PROVIDED, that this Section shall not
apply to:

         (i) any lien for a tax, assessment or governmental charge or levy which
         is not yet due and payable or which is being contested in good faith
         and as to which such Lincoln Party shall have made appropriate
         reserves,

         (ii) any lien securing only its workers' compensation, unemployment
         insurance and similar obligations,

         (iii) any mechanics, carrier's or similar common law or statutory lien
         incurred in the normal course of business,

         (iv) any transfer of a check or other medium of payment for deposit or
         collection through normal banking channels or any similar transaction
         in the normal course of business,

         (v) Permitted Purchase Money Security Interests,

         (vi) any mortgage, security interest or lien (other than Permitted
         Purchase Money Security Interests) securing only indebtedness incurred
         to any Lender, so long as the aggregate unpaid principal balance of all
         such Indebtedness secured by all such mortgages, security interests and
         liens does not at any time exceed Twenty-five Million Dollars
         ($25,000,000) on a Consolidated basis,

         (vii) any financing statement perfecting only a security interest
         permitted by this Section,

         (viii) easements, restrictions, minor title irregularities and similar
         matters having no adverse effect as a practical matter on the ownership
         or use of any Borrower's or any Subsidiary's real property,

         (ix) liens on assets acquired pursuant to a Permitted Acquisition or a
         Permitted Holdings Merger,





                                       53


         (x) any attachment or judgment Lien, but only so long as (A) the
         judgment it secures shall, within thirty (30) days after the entry
         thereof, have been discharged or execution thereof stayed pending
         appeal, or shall have been discharged within thirty (30) days after the
         expiration of any such stay and (B) the judgment it secures, when taken
         together with all other judgments related to attachment and judgment
         Liens under this clause (x), does not exceed $5,000,000 in the
         aggregate,

         (xi) Liens incurred in the ordinary course of business to secure (A)
         the non-delinquent performance of bids, trade contracts, leases (other
         than Capital Leases) and statutory obligations, (B) contingent
         obligations on surety bonds and appeal bonds, and (C) other similar
         non-delinquent obligations, in each case, not incurred or made in
         connection with the obtaining of advances or credit, the payment of the
         deferred purchase price of property or the incurrence of other
         Indebtedness, PROVIDED that such Liens, taken as a whole, would not,
         even if enforced, have a Material Adverse Effect,

         (xii) leases or subleases granted to others, easements, rights-of-way,
         restrictions and other similar charges or encumbrances in the ordinary
         course of business, in each case incidental to, and not interfering in
         any material respect with, the ordinary conduct of the business of such
         Lincoln Party, and which do not in the aggregate materially impair the
         use of such property in the operation of the business of such Lincoln
         Party or the value of such property for the purposes of such business,

         (xiii) any other liens existing on the date hereof which are identified
         on Schedule 9.4 hereto,

         (xiv) any extension, renewal or refunding of any Lien permitted by the
         preceding clauses (vii), (ix), (xii) and (xiii) of this Section 9.4 in
         respect of the same property theretofore subject to such Lien in
         connection with the extension, renewal or refunding of the Indebtedness
         secured thereby; PROVIDED that (A) such extension, renewal or refunding
         shall be without increase in the principal amount remaining unpaid as
         of the date of such extension, renewal or refunding, (B) such Lien
         shall attach solely to the same such property, (C) the principal amount
         remaining unpaid as of the date of such extension, renewal or refunding
         is less than or equal to the fair market value of the property
         (determined in good faith by the Board or Directors of Holdings) to
         which such Lien is attached, (D) at the time of such extension, renewal
         or refunding and after giving effect thereto, no Event of Default would
         exist, or

         (xv) liens (other than liens on Trade Receivables unless in connection
         with a Qualifying Securitization Transactions complying with the
         limitations contained in Section 9.3(d)(ii), above) not otherwise
         permitted in the foregoing clauses (i) through (xiv), above, securing
         Indebtedness that does not exceed at any time an amount equal to ten
         percent (10%) of Consolidated Net Worth.

         SECTION 9.5 TRANSACTIONS WITH AFFILIATES. No Lincoln Party shall enter
into any transaction or series of transactions with any Affiliate other than in
the ordinary course of







                                       54


business of and pursuant to the reasonable requirements of such Lincoln Party's
business and upon fair and reasonable terms no less favorable to such Lincoln
Party than would obtain in a comparable arm's-length transaction with a person
other than an Affiliate.

         SECTION 9.6 CHANGE IN NATURE OF BUSINESS, NAME. No Lincoln Party shall
make any material change in the nature of its business as carried on at the date
hereof; and no Borrower make, any change in its corporate or other entity name,
except upon sixty (60) days' prior written notice to the Agent.

         SECTION 9.7 FIXED CHARGES COVERAGE. Holdings shall not permit the Fixed
Charges Coverage Ratio as of the end of any Fiscal Quarter to be less than 1.75
to 1.00.

         SECTION 9.8 TOTAL LEVERAGE RATIO. Holdings shall not suffer or permit
the Total Leverage Ratio as of the end of any Fiscal Quarter to be equal to or
greater than 3.00 to 1.

         SECTION 9.9 DISTRIBUTIONS. Holdings shall not declare or pay any
dividend or other Distribution in cash, property or obligations (other than in
shares of capital stock of Holdings or in options, warrants or other rights to
acquire any such capital stock or in other securities convertible into any such
capital stock) on any shares of capital stock of Holdings of any class; and
Holdings shall not purchase, redeem or otherwise acquire for any consideration
any shares of capital stock Holdings of any class or any option, warrant or
other right to acquire any such capital stock, unless, as to any of the
foregoing, no Event of Default or Incipient Default then exists or would exist
after giving effect thereto.


                                   ARTICLE 10
                         REPRESENTATIONS AND WARRANTIES

         Each Borrower jointly and severally represents and warrants to each of
the Lenders as follows:

         SECTION 10.1 EXISTENCE; SUBSIDIARIES.

         (a) Each Borrower is a corporation duly organized and validly existing
and in good standing under the Laws of the state of its incorporation or
organization and is duly qualified and authorized to do business wherever it
owns any real estate or personal property or transacts any substantial business
(except in jurisdictions in which failure to so qualify would not have a
Material Adverse Effect).

         (b) Except as set forth on Schedule 10.1 hereto, no Lincoln Party has
any Subsidiaries.

         SECTION 10.2 POWER, AUTHORIZATION AND CONSENT. The execution, delivery
and performance of this Agreement and the Notes by a Borrower, and of all Loan
Documents to which any of them is party (a) are within Holdings' or such other
Borrower's legal power and authority, (b) have been duly authorized by all
necessary or proper action of Holdings or such other Borrower, (c) do not
require the consent or approval of any governmental body, agency,







                                       55


authority or any other Person which has not been obtained and (d) will not
violate (i) any provision of Law applicable to Holdings or such other Borrower,
(ii) any provision of Holdings' or such other Borrower's, as the case may be,
certificate or articles of incorporation, by-laws or regulations, or operating
agreement, or (iii) any material agreement or material indenture by which
Holdings or such other Borrower or the property of Holdings or such other
Borrower is bound, except where such violation specified in this clause (iii)
would not have a Material Adverse Effect, or (e) will not result in the creation
or imposition of any lien or encumbrance on any property or assets of Holdings
or such other Borrower except as provided herein.

         SECTION 10.3 LITIGATION; PROCEEDINGS. Except as set forth on Schedule
10.3 hereto, no action, suit, investigation or proceeding is now pending or, to
the knowledge of Holdings, threatened, against Holdings or any Subsidiary, at
Law, in equity or otherwise, or with respect to this Agreement or any other Loan
Document, before any court, board, commission, agency or instrumentality of any
federal, state, local or foreign government or of any agency or subdivision
thereof, or before any arbitrator or panel of arbitrators which would or might
reasonably be expected to have a Material Adverse Effect.

         SECTION 10.4 ERISA COMPLIANCE.

         (a) Holdings and each ERISA Affiliate have operated and administered
each Plan in compliance with all applicable Laws except for such instances of
noncompliance as have not resulted in and could not reasonably be expected to
result in a Material Adverse Effect. Neither Holdings nor any ERISA Affiliate
has incurred any liability pursuant to Title I or IV of ERISA or the penalty or
excise tax provisions of the Code relating to employee benefit plans (as defined
in Section 3 of ERISA), and no event, transaction or condition has occurred or
exists that would reasonably be expected to result in the incurrence of any such
liability by Holdings or any ERISA Affiliate, or in the imposition of any Lien
on any of the rights, properties or assets of Holdings or any ERISA Affiliate,
in either case pursuant to Title I or IV of ERISA or to such penalty or excise
tax provisions or to Section 401(a)(29) or 412 of the Code, other than such
liabilities or Liens as would not be individually or in the aggregate material
in relation to the business, operations, affairs, financial condition, assets,
or properties of Holdings and its Subsidiaries taken as a whole.

         (b) On the Closing Date, the present value of the aggregate benefit
liabilities under each of the Plans (other than Multiemployer Plans), determined
as of January 1, 2001 on the basis of the actuarial assumptions specified for
funding purposes in such Plan's most recent actuarial valuation report, did not
exceed the aggregate current value of the assets of such Plan allocable to such
benefit liabilities by more than $60,000 in the case of any single Plan and by
more than $0 in the aggregate for all Plans, PROVIDED that Holdings' Annual
Report on Form 10-K for the Fiscal Year ended December 31, 2001 indicated that,
as of December 31, 2001, the projected benefit obligation under all such Plans
exceeds the plan assets of such Plan by not more than $47,000,000. The term
"benefit liabilities" has the meaning specified in Section 4001 of ERISA and the
terms "current value" and "present value" have the meanings specified in Section
3 of ERISA.






                                       56


         (c) Holdings and its ERISA Affiliates have not incurred withdrawal
liabilities (and are not subject to contingent withdrawal liabilities) under
section 4201 or 4204 of ERISA in respect of Multiemployer Plans that
individually or in the aggregate are material in relation to the business,
operations, affairs, financial condition, assets, or properties of Holdings and
its Subsidiaries taken as a whole.

         (d) The expected post-retirement benefit obligation (determined as of
the last day of Holdings' most recently ended Fiscal Year in accordance with
Financial Accounting Standards Board Statement No. 106, without regard to
liabilities attributable to continuation coverage mandated by section 4980B of
the Code) of Holdings and its Subsidiaries is not material in relation to the
business, operations, affairs, financial condition, assets, or properties of
Holdings and its Subsidiaries taken as a whole.

         (e) The execution and delivery of this Agreement and the occurrence of
any Credit Event hereunder will not involve any transaction that is subject to
the prohibitions of section 406 of ERISA or in connection with which a tax could
be imposed pursuant to section 4975(c)(1)(A)-(D) of the Code.

         SECTION 10.5 FINANCIAL CONDITION. The Consolidated audited financial
statements of Holdings and its Subsidiaries for the Fiscal Year ending December
31, 2001, previously delivered to the Lenders, are true and complete (including,
without limiting the generality of the foregoing, a disclosure of all material
contingent liabilities), have been prepared in accordance with GAAP applied on a
basis consistent with those used during their next preceding Fiscal Year (except
as noted therein) and fairly present their then financial condition and
operations for the Fiscal Year then ending. There has been no material change in
Holdings' or any Subsidiary's financial condition, properties or business since
that date.

         SECTION 10.6 SOLVENCY. Each Borrower has received consideration which
is the reasonable equivalent value of the obligations and liabilities that such
Borrower has incurred to the Lenders. No Borrower is insolvent as defined by any
applicable state or federal Law, nor will any Borrower be rendered insolvent by
the execution and delivery of this Agreement or any Note or Guaranty to the
Lenders. No Borrower is engaged or about to engage in any business or
transaction for which the assets retained by it shall be an unreasonably small
capital, taking into consideration the obligations to the Lenders incurred
hereunder. No Borrower intends to, nor does it believe that it will, incur debts
beyond its ability to pay them as they mature.

         SECTION 10.7 DEFAULT. No Incipient Default exists hereunder, nor will
any begin to exist immediately after the execution and delivery hereof.

         SECTION 10.8 LAWFUL OPERATIONS. The operations of Holdings, the
operations of each of the Subsidiaries and all Borrower Property are in full
compliance with all requirements imposed by Law or regulation, whether federal,
state or local including (without limitation) all Environmental Laws,
occupational safety and health Laws and zoning ordinances except where the
noncompliance with any such Laws could not be reasonably expected to result in a
Material Adverse Effect; PROVIDED, HOWEVER, that this Section 10.8 shall not
apply to any noncompliance if and to the extent that the same is being contested
in good faith by timely and appropriate







                                       57


proceedings which are effective to stay enforcement thereof and against which
appropriate reserves have been established.

         SECTION 10.9 INVESTMENT COMPANY ACT STATUS. No Borrower is an
"investment company" or an "affiliated person" of, or "promoter" or "principal
underwriter" for, an "investment company", as such terms are defined in the
Investment Company Act of 1940, as amended (15 U.S.C. sec. 80(a)(1), et seq.).

         SECTION 10.10 REGULATION G/REGULATION U/REGULATION X COMPLIANCE. No
Borrower is engaged principally, or as one of its important activities, in the
business of extending credit for the purpose of purchasing or carrying "margin
stock", (as defined by Regulation U of the Board of Governors of the Federal
Reserve System of the United States (as amended from time to time)) and all
official rulings and interpretations thereunder or thereof and at no time shall
more than 25% of the value of the assets of Holdings and its Consolidated
Subsidiaries that are subject to any "arrangement" (as such term is used in
section 221.2(g) of Regulation U) be represented by "margin stock". No part of
the proceeds of any Loan will be used, whether directly or indirectly, and
whether immediately, incidentally or ultimately, (i) to purchase or to extend
credit to others for the purpose of purchasing "margin stock" or to carry or to
extend credit to others for the purpose of carrying stock which will be "margin
stock" after giving effect to the Loans or (ii) for any purpose that entails a
violation of, or is inconsistent with, the provisions of the Regulations of the
Board of Governors of the Federal Reserve System of the United States, including
Regulation G, U or X.

         SECTION 10.11 TITLE TO PROPERTIES. Each Lincoln Party has good and
marketable title to all assets reflected in such entity's most recent financial
statements referred to in Section 10.5, except for assets disposed of in the
ordinary course of business since the date of such financial statements. All
such assets are free and clear of any mortgage, security interest or other Lien
of any kind, other than any Liens permitted by this Agreement, except for those
defects in title (as distinct from Liens) that, individually or in the
aggregate, would not reasonably be expected to have a Material Adverse Effect.

         SECTION 10.12 INTELLECTUAL PROPERTY. Each Lincoln Party owns or has the
legal and valid right to use all intellectual property necessary for the
operation of its business as presently conducted, free from any Lien not
permitted under this Agreement and free of any restrictions material to the
operation of its business as presently conducted.

         SECTION 10.13 FULL DISCLOSURE. No information, exhibits or reports
furnished by Holdings or any other Borrower to the Agent or any Lender omits to
state any fact necessary to make the statements contained therein not materially
misleading in light of the circumstances and purposes for which such information
was provided. Holdings and each of the other Borrowers has provided all
information requested by the Agent or any Lender and all such information is
complete and accurate in all material respects.


                                   ARTICLE 11
                                EVENTS OF DEFAULT





                                       58


         Each of the following shall constitute an event of default (an "Event
of Default") hereunder:

         SECTION 11.1 PAYMENTS. If the principal of or interest on any Note, any
Letter of Credit reimbursement obligation not reimbursed pursuant to Section
5.1, any reimbursement, payment or amount due the Agent or any of the Lenders,
any amendment fee or administrative fee imposed by any of the Lenders, any
Letter of Credit fees or any Facility Fee, any Utilization Fee, the Risk
Participation Fee or other fee or amount owing to the Lenders or the Agent under
this Agreement or under any other Loan Document shall not be paid in full
punctually when due and payable.

         SECTION 11.2 COVENANTS. If any Borrower shall fail or omit to perform
and observe (i) any covenant or agreement contained in any of Sections 8.4, 8.5,
8.8, 8.9 and 8.10 hereof and such failure or omission is not cured within 30
days following the earlier of a Borrower's actual knowledge thereof or written
notice thereof from the Agent or any Lender or (ii) any other covenant or
agreement or other provision (other than those referred to in Section 11.1
hereof or clause (i) of this Section 11.2) contained or referred to in this
Agreement or any other Loan Document (after giving effect to any required
notice, grace period or both in such other Loan Document) that is on such
Borrower's part to be complied with.

         SECTION 11.3 WARRANTIES. If any representation, warranty or statement
made in or pursuant to this Agreement or any other Loan Document or any other
material information furnished by Holdings or any Subsidiary to the Lenders or
any thereof or any other holder of any Note shall be false or erroneous in any
material respect when furnished or made or deemed furnished or made hereunder.

         SECTION 11.4 CROSS DEFAULT. If Holdings or any Subsidiary, after any
applicable notice or grace period or both, (i) defaults in the payment of any
principal or interest due and owing upon any other Indebtedness or
Indebtednesses in excess of Ten Million Dollars ($10,000,000) in aggregate
principal amount or (ii) defaults in the performance of any other agreement,
term or condition contained in any promissory note, agreement or other
instrument under which such Indebtedness or Indebtednesses in excess of
$10,000,000 in the aggregate are evidenced, created, constituted, secured or
governed, and by reason of such default the holder or holders of such
Indebtedness or Indebtednesses have accelerated the maturity thereof.

         SECTION 11.5 TERMINATION OF PLAN OR CREATION OF WITHDRAWAL LIABILITY.
If (a) any Reportable Event occurs and the Majority Lenders, in their sole
determination, deem such Reportable Event to constitute grounds (i) for the
termination of any Plan by the Pension Benefit Guaranty Corporation or (ii) for
the appointment by the appropriate United States district court of a trustee to
administer any Plan and such Reportable Event shall not have been fully
corrected or remedied to the full satisfaction of the Majority Lenders within
thirty (30) days after giving of written notice of such determination to the
Borrowers by any Lender or (b) any Plan shall be terminated within the meaning
of Title IV of ERISA (other than a Standard Termination, as that term is defined
in Section 4041(b) of ERISA), or (c) a trustee shall be appointed by the
appropriate United States district court to administer any Plan, or (d) the
Pension Benefit Guaranty Corporation shall institute proceedings to terminate
any Plan or to appoint a trustee to







                                       59


administer any Plan or (e) there occurs a withdrawal by Holdings or any
Subsidiary from a Multi-Employer Plan which results or may result in a
withdrawal liability in an amount that is material in relation to the business,
operations, affairs, financial condition, assets, or properties of Holdings and
its Subsidiaries taken as a whole.

         SECTION 11.6 VALIDITY OF AGREEMENTS. If this Agreement, the Notes, any
Reimbursement Agreement, or any other Loan Document shall for any reason cease
to be, or be asserted by Holdings, any other Borrower or any other party
intended to be bound thereby (other than a Lender or the Agent) not to be, a
legal, valid and binding obligation of any party thereto (other than the Agent,
the Letter of Credit Issuer or any Lender) enforceable in accordance with its
terms.

         SECTION 11.7 SOLVENCY OF BORROWERS. If any Borrower shall (a)
discontinue business (except in connection with a transaction expressly
permitted under Section 9.3, above), or (b) generally not pay its debts as such
debts become due, or (c) make a general assignment for the benefit of creditors,
or (d) apply for or consent to the appointment of a receiver, a custodian, a
trustee, an interim trustee or liquidator of all or a substantial part of its
assets, or (e) be adjudicated a debtor or have entered against it an order for
relief under Title 11 of the United States Code, as the same may be amended from
time to time, or (f) file a voluntary petition in bankruptcy or file a petition
or an answer seeking reorganization or an arrangement with creditors or seeking
to take advantage of any other Law (whether federal or state) relating to relief
of debtors, or admit by any answer, by default or otherwise) the material
allegations of a petition filed against it in any bankruptcy, reorganization,
insolvency or other proceeding (whether federal or state) relating to relief of
debtors, or (g) suffer or permit to continue unstayed and in effect for thirty
(30) consecutive days any judgment, decree or order entered by a court or
governmental commission of competent jurisdiction, which assumes custody or
control of such Borrower approves a petition seeking reorganization of such
Borrower or any other judicial modification of the rights of its creditors, or
appoints a receiver, custodian, trustee, interim trustee or liquidator for such
Borrower or of all or a substantial part of its assets, or (h) take, or omit to
take, any action in order thereby to effect any of the foregoing.

         SECTION 11.8 JUDGMENTS. If (a) one or more judgments for the payment of
money in an aggregate amount in excess of Five Million Dollars
($5,000,000)(unless, in the determination of the Majority Lenders, the Borrowers
shall have made adequate provision for the prompt payment thereof) shall be
rendered against one or more Borrowers, and the same shall remain undischarged
for a period of 30 consecutive days during which execution shall not be
effectively stayed, or (b) any action shall be legally taken by a judgment
creditor to levy upon assets or properties of a Borrower to enforce any
judgment.


                                   ARTICLE 12
                              REMEDIES UPON DEFAULT

    Notwithstanding any contrary provision or inference herein or elsewhere,






                                       60


         SECTION 12.1 OPTIONAL DEFAULTS. If any Event of Default referred to in
any of Sections 11.1 through and including 11.6, in clause (b) of Section 11.7,
or in Section 11.8 shall occur, the Majority Lenders, shall have the right in
their discretion, (i) by directing the Agent, on behalf of the Lenders, to give
written notice to the Borrowers, to:

         (1) terminate the Commitments hereby established, if not theretofore
terminated, and forthwith upon such election the obligations of the Lenders, and
each thereof, to make any further loan or loans hereunder and to risk
participate in Letters of Credit hereunder or otherwise effect any Credit Event,
and the obligation of the Letter of Credit Issuer to issue Letters of Credit,
immediately shall be terminated, and/or

         (2) accelerate the maturity of all of the Borrowers' Obligations to the
Lenders and the Agent (if not already due and payable), whereupon all of the
Obligations to the Lenders and the Agent shall become and (including but not
limited to the Notes and all reimbursement obligations under Letters of Credit)
thereafter be immediately due and payable in full without any presentment or
demand and without any further or other notice of any kind, all of which are
hereby waived by each Borrower, and the Borrowers shall immediately deposit with
the Agent as cash collateral an amount equal to the aggregate Stated Amounts of
all Letters of Credit then outstanding,

and (ii) to exercise (or cause the Agent to exercise) such other rights and
remedies as may be available hereunder, under the other Loan Documents, at law
or in equity.

         SECTION 12.2 AUTOMATIC DEFAULTS. If any Event of Default referred to in
Section 11.7 (other than clause (b) thereof) shall occur:

         (1) all of the Commitments and the credits hereby established shall
automatically and forthwith terminate, if not theretofore terminated, and no
Lender thereafter shall be under any obligation to grant any further loan or
loans hereunder or otherwise effect any Credit Event, nor shall the Letter of
Credit Issuer be under any obligation to issue any Letter of Credit hereunder,
and

         (2) the principal of and interest on any Notes and all reimbursement
obligations with respect to Letters of Credit then outstanding, all of the
Borrowers' other Lender Debt, and the Agent shall thereupon become and
thereafter be immediately due and payable in full (if not already due and
payable), all without any presentment, demand or notice of any kind, which are
hereby waived by each Borrower, and the Borrowers shall immediately deposit with
the Agent as cash collateral an amount equal to the aggregate Stated Amounts of
all Letters of Credit then outstanding, and

         (3) subject to any applicable automatic stay or other restriction of
Law, the Agent and the Lenders may exercise such other rights and remedies as
may be available hereunder, under the other Loan Documents, at law or in equity.

         SECTION 12.3 OFFSETS. If there shall occur or exist any Event of
Default or if the maturity of the Notes or any Letter of Credit is accelerated
pursuant to Section 12.1 or 12.2, each






                                       61


Lender shall have the right at any time to set off against, and to appropriate
and apply toward the payment of, any and all Indebtedness then owing by any
Borrowers to that Lender (including, without limitation, any participation
purchased or to be purchased pursuant to Section 12.4), whether or not the same
shall then have matured, any and all deposit balances and all other indebtedness
then held or owing by that Lender to or for the credit or account of any
Borrowers, all without notice to or demand upon the Borrowers or any other
person, all such notices and demands being hereby expressly waived by the
Borrowers.

         SECTION 12.4 EQUALIZATION OF ADVANTAGE. Each Lender agrees with the
other Lenders that if it at any time shall obtain any Advantage over the other
Lenders in respect of the Obligations to the Lenders (except under Section 3.7,
3.8, 3.9 or 15.4), it will purchase from the other Lenders, for cash and at par,
such additional participation in the Obligations to the Lenders as shall be
necessary to nullify the Advantage. If any Advantage so resulting in the
purchase of an additional participation shall be recovered in whole or in part
from the Lender receiving the Advantage, each such purchase shall be rescinded,
and the purchase price restored (but without interest unless the Lender
receiving the Advantage is required to pay interest on the Advantage to the
person recovering the Advantage from such Lender) ratably to the extent of the
recovery. Each Lender further agrees with the other Lenders that if it at any
time shall receive any payment for or on behalf of any Borrowers on any
indebtedness owing by the Borrowers to that Lender by reason of offset of any
deposit or other indebtedness, it will apply such payment first to any and all
indebtedness owing by such Borrowers to that Lender pursuant to this Agreement
(including, without limitation, any participation purchased or to be purchased
pursuant to this Section 12.4) until the Obligations have been paid in full. The
Borrowers agree that any Lender so purchasing a participation from the other
Lenders pursuant to this Section may exercise all its rights of payment
(including the right of set-off) with respect to such participation as fully as
if such Lender were a direct creditor of any Borrowers in the amount of such
participation.

         SECTION 12.5 APPLICATION OF REMEDY PROCEEDS. All monies received by the
Agent and the Lenders from the exercise of remedies hereunder or under the other
Loan Documents or under any other documents relating to this Agreement or at Law
shall, unless otherwise required by the terms of the other Loan Documents or by
applicable Law, be applied as follows:

         FIRST, to the payment of all expenses (to the extent not paid by the
Borrowers) incurred by the Agent or the Lenders in connection with the exercise
of such remedies, including, without limitation, all reasonable costs and
expenses of collection, attorneys' fees, court costs and any foreclosure
expenses;

         SECOND, to the payment of any fees then accrued and payable to the
Lenders, the Letter of Credit Issuer or the Agent under this Agreement in
respect of the Loans or the Letters of Credit outstanding;

         THIRD, to the payment of interest then accrued on the outstanding
Loans;

         FOURTH, to the payment of the principal balance then owing on the
outstanding Loans and the stated amounts of the Letters of Credit then
outstanding (to be held and applied by the Agent as security for the
Reimbursement Agreement Obligations in respect thereof);







                                       62


         FIFTH, to the payment of all other amounts owed by the Borrowers to the
Agent or the Lenders under this Agreement or any other Loan Document; and

         FINALLY, any remaining surplus after all of the Obligations have been
paid in full, to the Borrowers or to whomsoever shall be lawfully entitled
thereto.


                                   ARTICLE 13
                                    THE AGENT

         SECTION 13.1 THE AGENT. Each Lender irrevocably appoints KeyBank to be
its Agent with full authority to take such actions, and to exercise such powers,
on behalf of the Lenders in respect of this Agreement and the other Loan
Documents as are therein respectively delegated to the Agent or as are
reasonably incidental to those delegated powers. KeyBank in such capacity shall
be deemed to be an independent contractor of the Lenders. For the purposes of
this Article 13, "Lender" shall include any Lender.


         SECTION 13.2 NATURE OF APPOINTMENT. The Agent shall have no fiduciary
relationship with any Lender by reason of this Agreement and the other Loan
Documents. The Agent shall not have any duty or responsibility whatsoever to any
Lender except those expressly set forth in this Agreement and the other Loan
Documents. Without limiting the generality of the foregoing, each Lender
acknowledges that the Agent is acting as such solely as a convenience to the
Lenders and not as a manager of the commitments or the Obligations evidenced by
the Notes. This Article 13 does not confer any rights upon the Borrowers or
anyone else (except the Lenders), whether as a third party beneficiary or
otherwise.

         SECTION 13.3 KEYBANK AS A LENDER; OTHER TRANSACTIONS. KeyBank's rights
as a Lender under this Agreement and the other Loan Documents shall not be
affected by its serving as the Agent. KeyBank and its affiliates may generally
transact any banking, financial, trust, advisory or other business with Holdings
or its Subsidiaries (including, without limitation, the acceptance of deposits,
the extension of credit and the acceptance of fiduciary appointments) without
notice to the Lenders, without accounting to the Lenders, and without prejudice
to KeyBank's rights as a Lender under this Agreement and the other Loan
Documents except as may be expressly required under this Agreement.

         SECTION 13.4 INSTRUCTIONS FROM LENDERS. The Agent shall not be required
to exercise any discretion or take any action as to matters not expressly
provided for by this Agreement and the other Loan Documents (including, without
limitation, collection and enforcement actions in respect of any Obligations
under the Notes or this Agreement and any collateral therefor) EXCEPT that the
Agent shall take such action (or omit to take such action) other than actions
referred to in Section 15.1, as may be reasonably requested of it in writing by
the Majority Lenders with instructions and which actions and omissions shall be
binding upon all the Lenders; PROVIDED, HOWEVER, that the Agent shall not be
required to act (or omit any act) if, in its judgment, any such






                                       63


action or omission might expose the Agent to personal liability or might be
contrary to this Agreement, any other Loan Documents or any applicable Law.

         SECTION 13.5 LENDERS' DILIGENCE. Each Lender (a) represents and
warrants that it has made its decision to enter into this Agreement and the
other Loan Documents and (b) agrees that it will make its own decision as to
taking or not taking future actions in respect of this Agreement and the other
Loan Documents; in each case without reliance on the Agent or any other Lender
and on the basis of its independent credit analysis and its independent
examination of and inquiry into such documents and other matters as it deems
relevant and material.

         SECTION 13.6 NO IMPLIED REPRESENTATIONS. The Agent shall not be liable
for any representation, warranty, agreement or obligation of any kind of any
other party to this Agreement or anyone else, whether made or implied by
Holdings or any other Borrower in this Agreement or any other Loan Document or
by a Lender in any notice or other communication or by anyone else or otherwise.

         SECTION 13.7 SUB-AGENTS. The Agent may employ agents and shall not be
liable (except as to money or property received by it or its agents) for any
negligence or misconduct of any such agent selected by it with reasonable care.
The Agent may consult with legal counsel, certified public accountants and other
experts of its choosing (including, without limitation, KeyBank's salaried
employees or any otherwise not independent) and shall not be liable for any
action or inaction taken or suffered in good faith by it in accordance with the
advice of any such counsel, accountants or other experts which shall have been
selected by it with reasonable care.

         SECTION 13.8 AGENT'S DILIGENCE. The Agent shall not be required (a) to
keep itself informed as to anyone's compliance with any provision of this
Agreement or any other Loan Document, (b) to make any inquiry into the
properties, financial condition or operation of Holdings or any of its
Subsidiaries or any other matter relating to this Agreement or any other Loan
Document, (c) to report to any Lender any information (other than which this
Agreement or any other Loan Document expressly requires to be so reported) that
the Agent or any of its affiliates may have or acquire in respect of the
properties, business or financial condition of Holdings or any of its
Subsidiaries or any other matter relating to this Agreement or any other Loan
Document or (d) to inquire into the validity, effectiveness or genuineness of
this Agreement or other Loan Document.

         SECTION 13.9 NOTICE OF DEFAULT. The Agent shall not be deemed to have
knowledge of any Incipient Default or Event of Default unless and until it shall
have received a written notice describing it and citing the relevant provision
of this Agreement or any other Loan Document. The Agent shall give each Lender
reasonably prompt notice of any such written notice except to any Lender that
shall have given the written notice.

         SECTION 13.10 AGENT'S LIABILITY. Neither the Agent nor any of its
directors, officers, employees, attorneys, and other agents shall be liable for
any action or omission on their respective parts except for gross negligence or
willful misconduct. Without limitation of the generality of the foregoing, the
Agent: (i) may treat the payee of any Revolving Credit Note as the holder
thereof until the Agent receives a fully executed copy of the assignment
agreement







                                       64


required by Section 14.1(b) signed by such payee and in form satisfactory to the
Agent and the fee required by Section 14.1(c); (ii) may consult with legal
counsel, independent public accountants and other experts selected by it and
shall not be liable for any action taken or omitted to be taken in good faith by
it in accordance with the advice or such counsel, accountants or experts which
have been selected by the Agent with reasonable care; (iii) makes no warranty or
representation to any Lender and shall not be responsible to any Lender for any
statements, warranties or representations made in or in connection with this
Agreement or any other Loan Document, including, without limitation, the truth
of the statements made in any certificate delivered by or on behalf of the
Borrowers under Article 6 or any Notice of Borrowing, Rate
Continuation/Conversion Request, Reimbursement Agreement or any other similar
notice or delivery, the Agent being entitled for the purposes of determining
fulfillment of the conditions set forth therein to rely conclusively upon such
certificates; (iv) shall not have any duty to ascertain or to inquire as to the
performance or observance of any of the terms, covenants or conditions of this
Agreement, the Notes or any other Loan Document or to inspect the property
(including the books and records) of Holdings or any Subsidiaries; (v) shall not
be responsible to any Lender for the due execution, legality, validity,
enforceability, genuineness, sufficiency or value of this Agreement, any
collateral covered by any agreement or any other Loan Document and (vi) shall
incur no liability under or in respect of this Agreement, the Notes or any other
Loan Document by acting upon any notice, consent, certificate or other
instrument or writing (which may be by telegram, telecopy, cable or telex)
believed by it in good faith to be genuine and correct and signed or sent by the
proper party or parties.

         Neither the Agent nor any of its directors, officers, employees or
agents shall have any responsibility to the Borrowers on account of the failure
of or delay in performance or breach by any Lender of any of its obligations
hereunder or to any Lender on account of the failure of or delay in performance
or breach by any other Lender or the Borrowers of any of their respective
obligations hereunder or under any other Loan Document or in connection herewith
or therewith.

         The Lenders each hereby acknowledge that the Agent shall be under no
duty to take any discretionary action permitted to be taken by it pursuant to
the provisions of this Agreement, the Notes or any other Loan Document unless it
shall be requested in writing to do so by the Majority Lenders.

         SECTION 13.11 COMPENSATION. The Agent shall receive no compensation for
its services as agent of the Lenders in respect of this Agreement and the other
Loan Document, except as otherwise expressly agreed between the Borrowers and
the Agent, but the Borrowers shall reimburse the Agent periodically on its
demand for out-of-pocket expenses, if any, reasonably incurred by it as such and
as to which Agent has delivered to the Borrowers' reasonable substantiation.

         SECTION 13.12 AGENT'S INDEMNITY. The Lenders shall indemnify the Agent
(to the extent the Agent is not reimbursed by the Borrowers) from and against
(a) any loss or liability (other than any caused by the Agent's gross negligence
or willful misconduct and other than any loss to the Agent resulting from the
Borrowers' non-payment of agency fees owed solely to the Agent) incurred by the
Agent as such in respect of this Agreement, the Notes, the Letters of Credit, or
other Loan Document (as the Agent) and (b) any out-of-pocket expenses incurred
in






                                       65


defending itself or otherwise related to this Agreement, the Notes, any Letter
of Credit, or other Loan Documents (other than any caused by the Agent's gross
negligence or willful misconduct) including, without limitation, reasonable fees
and disbursements of legal counsel of its own selection (including, without
limitation, the reasonable interdepartmental charges of its salaried attorneys)
in the defense of any claim against it or in the prosecution of its rights and
remedies as the Agent (other than the loss, liability or costs incurred by the
Agent in the defense of any claim against it by the Lenders arising in
connection with its actions in its capacity as Agent); PROVIDED, HOWEVER, that
each Lender shall be liable for only its Ratable Portion of the whole loss or
liability.

         SECTION 13.13 RESIGNATION. The Agent (or any successor) may at any time
resign as such by giving thirty (30) days' prior written notice to the Borrowers
and to each Lender; and the Majority Lenders may remove the Agent at any time
with or without cause by giving written notice to the Agent and the Borrowers.
In either case, resignation or removal, the institution then serving as Agent
shall also resign as Letter of Credit Issuer in the manner provided in Section
5.3, above, unless Holdings, on behalf of the Borrowers, has waived in writing
the requirements of this sentence. In any such case, the Majority Lenders shall
appoint a successor to the resigned or removed agent (the "Former Agent"), which
shall also serve as successor Letter of Credit Issuer, provided that the
Majority Lenders obtain the Borrowers' prior written consent to the successor
(which consent shall not be unreasonably withheld), by giving written notice to
the Borrowers, the Former Agent and each Lender not participating in the
appointment; PROVIDED, HOWEVER, that, if at the time of the proposed resignation
or removal of an Agent, any Borrower is the subject of an action referred to in
Section 11.7 or any other Event of Default shall have occurred and be
continuing, the Borrowers' consent shall not be required. In the absence of a
timely appointment, the Former Agent shall have the right (but not the duty) to
make a temporary appointment of any Lender (but only with that Lender's consent)
to act as its successor (and as successor Letter of Credit Issuer) pending an
appointment pursuant to the immediately preceding sentence. In either case, the
successor Agent and Letter of Credit Issuer shall deliver its written acceptance
of appointment to the Borrowers, to each Lender and to the Former Agent,
whereupon (a) the Former Agent shall execute and deliver such assignments and
other writings as the successor Agent may reasonably require to facilitate its
being and acting as the Agent and Letter of Credit Issuer, (b) the successor
Agent (and successor Letter of Credit Issuer) shall in any event automatically
acquire and assume all the rights and duties as those prescribed for the Agent
by this Article 13 and, subject to the provisions of Section 5.3, above, for the
Letter of Credit Issuer by Article 5, above, and (c) the Former Agent shall be
discharged from its duties and obligations under this Agreement and the other
Loan Documents.

         SECTION 13.14 LENDER PURPOSE. Each Lender represents and warrants to
the Agent, the other Lenders and the Borrowers that such Lender is familiar with
the Securities Act of 1933, as amended, and the rules and regulations thereunder
and is not entering into this Agreement with any intention to violate such Act
or any rule or regulation thereunder. Subject to the provisions of Sections
14.1, 14.2 and 14.3, each Lender shall at all times retain full control over the
disposition of its assets subject only to this Agreement and to all applicable
Law.





                                       66


                                   ARTICLE 14
                         ASSIGNMENTS AND PARTICIPATIONS

         SECTION 14.1  ASSIGNMENTS.

         (a) ASSIGNMENTS BY BORROWERS PROHIBITED. Whenever in this Agreement any
of the parties hereto is referred to, such reference shall be deemed to include
the successors and assigns of such party; PROVIDED, HOWEVER, that no Borrower
shall assign or transfer any of its rights or obligations hereunder or under any
Note without the prior written consent of all of the Lenders and the Agent.

         (b) ASSIGNMENTS BY LENDERS. Each Lender may assign all or any part of
any of its Revolving Credit Loans, its Note, its Commitment and its
participation in the Letters of Credit with the consent of Holdings and the
Agent, which consent shall not be unreasonably withheld; PROVIDED that (i) no
such consent by Holdings shall be required (A) for any such assignment by any
Lender to an Affiliate of such Lender or to another Lender or an Affiliate of
another Lender, or (B) if, at the time of such assignment, an Event of Default
or Incipient Default has occurred and is continuing; (ii) any such partial
assignment shall be in an amount at least equal to $5,000,000, unless such
partial assignment is to another Lender; (iii) each such assignment shall be
made by a Lender in such manner that the same portion of its Revolving Credit
Loans, its Note, its Commitment and its participation in the Letters of Credit
is assigned to the assignee; and (iv) the assignee, if not already a Lender,
shall agree to become a party to this Agreement pursuant to an Assignment
Agreement in the form of Exhibit F hereto, including, without limitation, an
Administrative Questionnaire as a supplement thereto in the form of Exhibit G
hereto. Upon execution and delivery by the assignor and the assignee to the
Borrowers and the Agent of an instrument in writing pursuant to which such
assignee agrees to become a "Lender" hereunder (if not already a Lender) having
the share of the Total Commitment Amount, Loans and Letters of Credit specified
in such instrument, and upon consent thereto by the Agent and Holdings (to the
extent, if any, required), the assignee shall have, to the extent of such
assignment (unless otherwise provided in such assignment with the consent of the
Agent), the obligations, rights and benefits of a Lender hereunder holding the
share of the Total Commitment Amount, Loans and Letters of Credit (or portions
thereof) assigned to it (in addition to the share of the Total Commitment
Amount, Loans and Letters of Credit, if any, theretofore held by such assignee);
and the assigning Lender shall, to the extent of such assignment, be released
from the share of the Total Commitment Amount, Loans and Letters of Credit and
the obligations hereunder so assigned.

         (c) PROCEDURES. Upon its receipt of an assignment pursuant to Section
14.1(b) above duly executed by an assigning Lender and the assignee, together
with any Note subject to such assignment and a processing and recordation fee of
$3,500, the Agent shall, if such assignment has been completed, accept such
assignment. Within five (5) business days after receipt of such notice, the
Borrowers, at the Borrowers' expense, shall execute and deliver to the Agent in
exchange for each surrendered Note a new Note to the order of the assignee in an
amount equal to the Commitment assumed by the assignee and, if the assigning
Lender has retained a portion of its Commitment, a new Note to the order of the
assigning Lender in an amount equal to the share of its Commitment retained by
it hereunder. Such new Notes shall be in an aggregate







                                       67


principal amount equal to the aggregate principal amount of such surrendered
Notes, shall be dated the effective date of such assignment, shall otherwise be
in substantially the form of Exhibit A hereto, and, upon such execution and
delivery shall be a "Note" under this Agreement. Canceled Notes shall be
returned to Holdings on behalf of the Borrowers.

         (d) ADDITIONAL RESTRICTION ON ASSIGNMENT. Anything in this Section 14.1
to the contrary notwithstanding, except pursuant to this Agreement, no Lender
may assign or participate any interest in any Loan held by it hereunder to
Holdings or any of its Subsidiaries or other Affiliates without the prior
written consent of each Lender.

         SECTION 14.2 PARTICIPATIONS. A Lender may sell or agree to sell to one
or more other Persons (each a "Participant") a participation in all or any part
of any Revolving Credit Loans held by it, or in its Commitment or its
participation in the Letters of Credit. Except as otherwise provided in the last
sentence of this Section 14.2, no Participant shall have any rights or benefits
under this Agreement or any Note or any other Loan Documents (the Participant's
rights against such Lender in respect of such participation to be those set
forth in the agreements executed by such Lender in favor of the Participant).
All amounts payable by the Borrowers to any Lender under this Agreement, and in
respect of its Commitment, shall be determined as if such Lender had not sold or
agreed to sell any participations in such Revolving Credit Loans and share of
Commitment, and as if such Lender were funding each of such Revolving Credit
Loans and its share of such Commitment in the same way that it is funding the
portion of such Revolving Credit Loans and its Commitment in which no
participations have been sold. In no event shall a Lender that sells a
participation agree with the Participant (other than an Affiliate of such
Lender) to take or refrain from taking any action hereunder or under any other
Loan Document, except that such Lender may agree with the Participant that it
will not, without the consent of the Participant, agree to any modification,
supplement or waiver hereof or of any of the Loan Documents to the extent that
the same, under Section 15.1 hereof, requires the consent of each Lender. The
Borrowers agree that each Participant shall be entitled to the benefits of
Sections 3.7 through 3.9, inclusive, and Section 12.3 (but, (i) only to the
extent that the selling Lender is entitled to such benefits and (ii) as to any
sums realized thereunder, subject to Section 12.4) with respect to its
participating interest.

         SECTION 14.3 PERMITTED PLEDGES. In addition to the assignments and
participations permitted under the foregoing provisions of this Article 13, any
Lender may assign and pledge all or any portion of its Revolving Credit Loans
and its Note to any Federal Reserve Bank as collateral security pursuant to
Regulation A of the Board of Governors of the Federal Reserve System and any
Operating Circular issued by such Federal Reserve Bank. No such assignment shall
release the assigning Lender from its obligations hereunder.

         SECTION 14.4 FURNISHING OF BORROWER INFORMATION. A Lender may furnish
any information concerning Holdings and its Subsidiaries in the possession of
such Lender from time to time to assignees and participants (including, with the
prior written consent of Holdings, which consent shall not be unreasonably
withheld or delayed, prospective assignees and participants, PROVIDED that no
such consent shall be required upon and during the continuance of an Event of
Default).






                                       68


                                   ARTICLE 15
                                  MISCELLANEOUS

         SECTION 15.1 AMENDMENTS, CONSENTS. No amendment, modification,
termination, or waiver of any provision of this Agreement or of the Notes, nor
consent to any variance therefrom, shall be effective unless the same shall be
in writing and signed by the Majority Lenders (and then such waiver or consent
shall be effective only in the specific instance and for the specific purpose
for which given); provided, however, that the unanimous consent of all Lenders
shall be required with respect to any amendment, modification, termination, or
waiver which would effect (i) the extension of maturity of any Note, or of the
payment date of interest, principal and/or fees thereunder or hereunder, or (ii)
any reduction in the rate of interest on the Notes, or in any amount of
principal or interest due on any Note or in the rate or amount of fees payable
pursuant to Section 3.4, or any change in the manner of pro rata application of
any payments made by the Borrowers to the Lenders hereunder, or (iii) any change
in any percentage voting requirement in this Agreement, or (iv) any change in
the dollar amount or percentage of the Lenders' Commitments or any Lender's
Commitment (provided that this clause shall not be construed to limit the right
of the Borrowers to reduce the Total Commitment Amount pursuant and subject to
the provisions of Section 3.2, above), or (v) any change in amount or timing of
any fees payable under this Agreement, or (vi) any release of any portion of
collateral, if any, or any release of any Borrower from its obligations under
Article 5, or (vii) any change in any provision of this Agreement which requires
all of the Lenders to take any action under such provision or (viii) any change
in Section 12.4, Article 14 or this Section 15.1 itself. Notice of amendments or
consents ratified by the Lenders hereunder shall immediately be forwarded by the
Borrowers to all Lenders. Each Lender or other holder of a Note shall be bound
by any amendment, waiver or consent obtained as authorized by this section,
regardless of its failure to agree thereto.

         SECTION 15.2 NO WAIVER; CUMULATIVE REMEDIES. No omission or course of
dealing on the part of Agent, any Lender or the holder of any Note in exercising
any right, power or remedy hereunder shall operate as a waiver thereof; nor
shall any single or partial exercise of any such right, power or remedy preclude
any other or further exercise thereof or the exercise of any other right, power
or remedy hereunder. The remedies herein provided are cumulative and in addition
to any other rights, powers or privileges held by operation of Law, by contract
or otherwise.

         SECTION 15.3 NOTICES. All notices, requests, demands and other
communications provided for hereunder to a party hereto shall be in writing and
shall be mailed or delivered to such party (including, without limitation,
delivery by facsimile transmission), addressed to such party at its address
specified on the signature pages of this Agreement or at such other address as
such party may from time to time specify in writing to the other parties hereto.
All notices, statements, requests, demands and other communications provided for
hereunder shall be deemed to be given or made when delivered or forty-eight (48)
hours after being deposited in the mails with postage prepaid by registered or
certified mail or delivered to a telegraph company, addressed as aforesaid,
except that notices from the Borrowers to Agent or the Lenders pursuant to any
of the provisions hereof, including, without limitation, Articles 3, 4, 5 and 6
hereof, shall not be effective until received by Agent or the Lenders.







                                       69


         SECTION 15.4 COSTS AND EXPENSES. The Borrowers agree to pay on demand
all reasonable costs and expenses of (i) the Agent in connection with the
syndication of the Obligations pursuant to the letter of the Agent to Holdings
dated April 5, 2002 and (ii) the Agent in connection with the preparation,
execution, delivery, filing for record, modification, administration and
amendment of this Agreement (including, without limitation, any amendment), the
Notes, the Letters of Credit, and the other Loan Documents and the other
documents to be delivered hereunder, including, without limitation, the
reasonable fees and out-of-pocket expenses of counsel for the Agent with respect
thereto and with respect to advising the Agent as to its rights and
responsibilities under this Agreement. Without limiting the generality of the
foregoing, such costs and expenses shall include: (a) reasonable attorneys' and
paralegals' costs, expenses and disbursements of counsel to the Agent; (b)
extraordinary expenses of Agent in connection with the administration of this
Agreement, the Notes, Letters of Credit, any other Loan Document and the other
instruments and documents to be delivered hereunder; (c) the reasonable fees and
out-of-pocket expenses of special counsel for the Agent or the Agent for the
benefit of the Lenders, with respect thereto and of local counsel, if any, who
may be retained by said special counsel with respect thereto; (d) costs and
expenses (including reasonable attorneys and paralegal costs, expenses and
disbursements) for any amendment, supplement, waiver, consent, or subsequent
closing in connection with this Agreement, the Notes, any Letters of Credit or
any other Loan Document and the transactions contemplated thereby; (e) sums paid
or incurred to pay any amount or take any action required of the Borrowers under
this Agreement, the Notes or any Loan Document that the Borrowers fail to pay or
take; (f) the cost of any appraisal, survey, environmental audit or the
retention of any other professional service or consultant commenced after the
occurrence and continuation of an Event of Default and deemed reasonably
necessary by the Agent; (g) costs of inspections and periodic review of the
records of Holdings or any of its Subsidiaries, including, without limitation,
travel, lodging, and meals for inspections of Holdings' and its Subsidiaries'
operations by the Agent at any time after the occurrence and during the
continuation of an Event of Default; (h) as specified in the letter of the Agent
to Holdings dated April 5, 2002, costs and expenses of forwarding loan proceeds,
fees, interest and other payments to the Lenders; and (i) costs and expenses
(including, without limitation, attorneys' fees) paid or incurred to obtain
payment of the Obligations (including the Obligations arising under this Section
15.4), enforce the provisions of the Credit Agreement, the Notes, or any other
Loan Document, or to defend any claims made or threatened against the Agent
arising out of the transactions contemplated hereby (including without
limitation, preparations for and consultations concerning any such matters). The
Borrowers further agree to pay on demand all costs and expenses of each Lender,
if any (including reasonable counsel fees and expenses), in connection with the
restructuring or the enforcement (whether through negotiations, legal
proceedings or otherwise) of this Agreement, the Notes, any other Loan Document
and the other documents to be delivered hereunder, including, without
limitation, reasonable counsel fees and expenses in connection with the
enforcement of rights under this Section 15.4. The foregoing shall not be
construed to limit any other provisions of this Agreement, the Notes, or any
other Loan Documents regarding costs and expenses to be paid by the Borrowers.
All of the foregoing costs and expenses may be charged, in the Agent's sole
discretion, to the Borrowers' loan accounts as Revolving Credit Loans
(notwithstanding existence of any Incipient Default or Event of Default or the
failure of the conditions of Article 7 to have been satisfied).







                                       70


         SECTION 15.5 OBLIGATIONS SEVERAL. The obligations of the Lenders
hereunder are several and not joint. Nothing contained in this Agreement and no
action taken by Agent or the Lenders pursuant hereto shall be deemed to
constitute the Lenders to be a partnership, association, joint venture or other
entity. No default by any Lender hereunder shall excuse the other Lenders from
any obligation under this Agreement; but no Lender shall have or acquire any
additional obligation of any kind by reason of such default.

         SECTION 15.6 EXECUTION IN COUNTERPARTS. This Agreement may be executed
in any number of counterparts and by different parties hereto in separate
counterparts, each of which when so executed and delivered shall be deemed to be
an original and all of which taken together shall constitute but one and the
same agreement.

         SECTION 15.7 BINDING EFFECT; ASSIGNMENT. This Agreement shall become
effective when it shall have been executed by the Borrowers, Agent and by each
Lender and thereafter shall be binding upon and inure to the benefit of the
Borrowers and each of the Lenders and their respective successors and permitted
assigns, except that the Borrowers shall not have the right to assign their
rights hereunder or any interest herein without the prior written consent of all
of the Lenders. No person, other than the Lenders, shall have or acquire any
obligation to grant the Borrowers any Loans hereunder. Any Lender may at any
time sell, assign, transfer, grant a participation pursuant to Article 14
hereof.

         SECTION 15.8 GOVERNING LAW. This Agreement, each of the Notes and any
other Loan Documents shall be governed by and construed in accordance with the
Laws of the State of Ohio and the respective rights and obligations of the
Borrowers and the Lenders shall be governed by Ohio Law.

         SECTION 15.9 SEVERABILITY OF PROVISIONS; CAPTIONS. Any provision of
this Agreement which is prohibited or unenforceable in any jurisdiction shall,
as to such jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof or
affecting the validity or enforceability of such provision in any other
jurisdiction. The several captions to sections and subsections herein are
inserted for convenience only and shall be ignored in interpreting the
provisions of this Agreement.

         SECTION 15.10 ENTIRE AGREEMENT. This Agreement and the other Loan
Documents referred to in or otherwise contemplated by this Agreement set forth
the entire agreement of the parties as to the transactions contemplated by this
Agreement.

         SECTION 15.11 CONFIDENTIALITY. The Agent and the Lenders hereby
acknowledge that Holdings and its Subsidiaries have financial and other data and
information the confidentiality of which is important to their business. The
Agent and the Lenders agree to use all reasonable efforts to keep confidential
any such confidential information conveyed to them and appropriately designated
in writing by Holdings on behalf of the Borrowers as being confidential
information, EXCEPT that this Section shall not be binding on the Agent or the
Lenders after the expiration of three (3) years after the termination of this
Agreement and shall not preclude the Agent and the Lenders from furnishing any
such confidential information: (i) subject to






                                       71


Holdings' receipt of prior notice from the Agent or a Lender, if permitted under
applicable law and such legal proceedings, to the extent which may be required
by subpoena or similar order of any court of competent jurisdiction (which
notice, if so permitted under applicable law and such legal proceedings, shall
advise Holdings of the information required by such subpoena or order, the party
to whom such subpoena or order requires such information to be delivered and the
court of other tribunal that issued such subpoena or order), (ii) to the extent
such information is required to be disclosed to any authority over the Agent or
a Lender or its securities, (iii) to any other party to this Agreement, (iv) to
any Affiliate of the Agent or a Lender so long as such Affiliate agrees in
writing to Holdings to be bound by the provisions of this Section 15.11, (v) to
any actual or prospective successor Agent and to any actual or prospective
transferee, participant or subparticipant of all or part of a Lender's rights
arising out of or in connection with this Agreement or any thereof so long as
such prospective transferee, participant or subparticipant to whom disclosure is
made agrees in writing to Holdings to be bound by the provisions of this Section
15.11, (vi) to anyone if it shall have been already publicly disclosed (other
than by the Agent or a Lender in contravention of this Section 15.11), (vii) to
the extent reasonably required in connection with the exercise of any right or
remedy under this Agreement or any other Loan Document, (viii) to the Agent's or
a Lender's legal counsel, auditors, professional advisors and consultants, and
accountants and (ix) in connection with any legal proceedings instituted by or
against the Agent or a Lender in its capacity as the Agent or a Lender under
this Agreement.

         SECTION 15.12 JURY TRIAL WAIVER. EACH BORROWER, EACH LENDER, THE AGENT
AND THE LETTER OF CREDIT ISSUER HEREBY IRREVOCABLY AGREE TO WAIVE THEIR
RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR
ARISING OUT OF THIS AGREEMENT, THE NOTES, OR ANY OTHER LOAN DOCUMENT OR ANY
DEALINGS BETWEEN THEM RELATING TO THE SUBJECT MATTER OF THIS AGREEMENT, THE
NOTES, OR ANY OTHER LOAN DOCUMENT AND THE RELATIONSHIPS THEREBY ESTABLISHED. The
scope of this waiver is intended to be all-encompassing of any and all disputes
that may be filed in any court and that relate to the subject matter of this
transaction, including, without limitation, contract claims, tort claims, breach
of duty claims, and all other statutory and common law claims. THIS WAIVER SHALL
APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS OF
THIS AGREEMENT. In the event of litigation, this provision may be filed as a
written consent to a trial by the court.

         SECTION 15.13  JURISDICTION; VENUE; INCONVENIENT FORUM.

         (a) JURISDICTION. EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY AND
UNCONDITIONALLY SUBMITS, FOR ITSELF AND ITS PROPERTY, TO THE NONEXCLUSIVE
JURISDICTION OF ANY OHIO STATE COURT OR FEDERAL COURT OF THE UNITED STATES OF
AMERICA SITTING IN CUYAHOGA COUNTY, OHIO, AND ANY APPELLATE COURT FROM ANY
THEREOF, IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS
AGREEMENT, THE NOTES OR ANY OTHER LOAN DOCUMENT, OR FOR RECOGNITION OR
ENFORCEMENT OF ANY JUDGMENT, AND EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY
AND UNCONDITIONALLY AGREES THAT ALL CLAIMS IN RESPECT OF ANY SUCH ACTION OR
PROCEEDING MAY BE HEARD AND DETERMINED IN ANY SUCH OHIO







                                       72


STATE OR, TO THE EXTENT PERMITTED BY LAW, IN SUCH FEDERAL COURT. EACH OF THE
PARTIES HERETO AGREES THAT A FINAL JUDGMENT IN ANY SUCH ACTION OR PROCEEDING
SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN OTHER JURISDICTIONS BY SUIT ON THE
JUDGMENT OR IN ANY OTHER MANNER PROVIDED BY LAW. NOTHING IN THIS AGREEMENT SHALL
AFFECT ANY RIGHT THAT ANY PARTY MAY OTHERWISE HAVE TO BRING ANY ACTION OR
PROCEEDING RELATING TO THIS AGREEMENT, THE NOTES OR ANY OTHER LOAN DOCUMENT IN
THE COURTS OF ANY JURISDICTION.

         (b) VENUE; INCONVENIENT FORUM. EACH OF THE PARTIES HERETO IRREVOCABLY
AND UNCONDITIONALLY WAIVES, TO THE FULLEST EXTENT IT MAY LEGALLY AND EFFECTIVELY
DO SO, ANY OBLIGATION THAT IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE
OF ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT,
THE NOTES OR ANY OTHER LOAN DOCUMENT IN ANY OHIO STATE OR FEDERAL COURT SITTING
IN OHIO. EACH OF THE PARTIES HERETO HEREBY WAIVES, TO THE FULLEST EXTENT
PERMITTED BY LAW, THE DEFENSE OF AN INCONVENIENT FORUM TO THE MAINTENANCE OF
SUCH ACTION OR PROCEEDING IN ANY SUCH COURT. THE BORROWER CONFIRMS THAT THE
FOREGOING WAIVERS ARE INFORMED AND FREELY MADE.


                                   ARTICLE 16
                                JOINT AND SEVERAL

         SECTION 16.1 JOINT AND SEVERAL. The Borrowers agree and acknowledge
that their liability to pay all Loans and to perform all other Obligations under
this Agreement and each other Loan Document to which they are a party is and
shall be joint and several. No Borrower shall have any right of subrogation,
reimbursement or similar right in respect of its payment of any sum or its
performance of any other obligation hereunder unless and until all Obligations
have been paid in full and the Lenders, the Letter of Credit Issuer and the
Agent have no further obligation hereunder. In addition, each Borrower confirms
that upon each Credit Event, it will have received adequate consideration and
reasonably equivalent value for the Indebtedness incurred and other agreements
made in the Loan Documents. No Borrower could reasonably expect to obtain
financing separately on terms as favorable as those provided for herein.

         SECTION 16.2 OBLIGATIONS ABSOLUTE. The Obligations of each Borrower
hereunder shall be valid and enforceable and, except as expressly provided
herein, shall not be subject to limitation, impairment or discharge for any
reason (other than the payment in full of the Obligations), including, without
limitation, the occurrence of any failure to assert or enforce or agreement not
to assert or enforce any claim or demand of any right power or remedy with
respect to the Obligations or any agreement relating thereto, or with respect to
any guaranty thereof or security therefor or any other act or thing or omission
which may or might in any manner or to any extent vary the risk of such Borrower
as an obligor in respect of the Obligations; and each Borrower hereby waives (i)
any defense based upon any statute or rule of law or equity to the effect that
the obligation of a surety must be neither larger in amount nor in






                                       73


other respects more burdensome than that of the principal, and (ii) to the
fullest extent permitted by law, any defenses or benefits which may be derived
from or afforded by law or equity which limit the liability of or exonerate
guarantors or sureties, or which may conflict with terms of this Agreement or
the other Loan Documents.

         SECTION 16.3  LIMITATIONS.

         (a) If the Obligations of a Borrower would be held or determined by a
court or tribunal having competent jurisdiction to be void, invalid or
unenforceable on account of the amount of its aggregate liability under this
Agreement or the Notes, then, notwithstanding any other provision of this
Agreement or the Notes to the contrary, the aggregate amount of the liability of
such Borrower under this Agreement and the Notes shall, without any further
action by such Borrower, the Lenders, the Agent, the Letter of Credit Issuer or
any other person, be automatically limited and reduced to an amount which is
valid and enforceable.

         (b) Without limiting the generality of paragraph (a), above, each
Borrower and the Agent, the Letter of Credit Issuer and each Lender, hereby
confirms that it is the intention of all such parties that none of this
Agreement, the Notes or any other Loan Document constitute a fraudulent transfer
or conveyance under the federal Bankruptcy Code, the Uniform Fraudulent
Conveyances Act, the Uniform Fraudulent Transfer Act or similar state statute
applicable to the Loan Documents. Therefore, such parties agree that the
Obligations of a Borrower shall be limited to such maximum amount as will, after
giving effect to such maximum amount and other contingent and fixed liabilities
of such Borrower that are relevant under such laws, and after giving effect to
any collections from, rights to receive contribution from or payments made by or
on behalf of the other Borrowers and any other obligor, result in the
Obligations not constituting a fraudulent transfer or conveyance.

         (c) The provisions of this Section 16.3 are intended solely to preserve
the rights of Lenders, the Letter of Credit Issuer and the Agent hereunder to
the maximum extent permitted by applicable Law, and neither a Borrower nor any
other Person shall have any right or claim under such provisions that would not
otherwise be available under applicable Law.

 [No additional provisions on this page; this page followed by signature pages]


















                                       74




         IN WITNESS WHEREOF, the parties hereto have hereunto set their hands as
of the date first above written.



BORROWERS                                            Address
- ---------                                            -------

                                                  
LINCOLN ELECTRIC HOLDINGS, INC.                      22801 St. Clair Avenue
                                                     Cleveland, Ohio 44117-1199
By________________________________________           Attention:  Chief Financial Officer
     Anthony A. Massaro, Chairman,                   Telecopy:  (216) 486-6476
     President and Chief Executive Officer

And_______________________________________
     H. Jay Elliot, Senior Vice President,
     Chief Financial Officer and Treasurer

THE LINCOLN ELECTRIC COMPANY                         22801 St. Clair Avenue
                                                     Cleveland, Ohio 44117-1199
By________________________________________           Attention:  Treasurer
     Anthony A. Massaro, Chairman,                   Telecopy:  (216) 486-6476
     President and Chief Executive Officer


And_______________________________________
     Paul R. Klingensmith, Treasurer

LINCOLN ELECTRIC INTERNATIONAL                       22801 St. Clair Avenue
HOLDING COMPANY                                      Cleveland, Ohio 44117-1199
                                                     Attention:  Treasurer
                                                     Telecopy:  (216) 486-6476
By________________________________________
     H. Jay Elliott, Treasurer

HARRIS CALORIFIC, INC.                               22801 St. Clair Avenue
                                                     Cleveland, Ohio 44117-1199
                                                     Attention:  Treasurer
By________________________________________           Telecopy:  (216) 486-6476
     Vincent K. Petrella, Treasurer

LINCOLN GLOBAL, INC.                                 22801 St. Clair Avenue
                                                     Cleveland, Ohio 44117-1199
                                                     Attention:  Treasurer
By________________________________________           Telecopy:  (216) 486-6476
     Vincent K. Petrella, Treasurer






                                       75





AGENT
- -----

KEYBANK NATIONAL ASSOCIATION,                        127 Public Square
AS AGENT                                             Cleveland, Ohio 44114-1306
                                                     Attention:  Large Corporate
                                                     Telecopy:  (216) 689-4981
By_________________________________________
  Daniel W. Lally, Assistant Vice President





























                                       76







LENDERS                                              Address
- -------                                              -------

                                                  
BANK OF AMERICA, N.A.                                Mail Code IL1-231-10-10
                                                     231 South LaSalle Street
                                                     Chicago, Illinois  60697
By________________________________                   Attention:  Lorraine Johnson
  _______________, _______________                   Telecopy:  312.828-5140

BANK ONE, NA                                         611 Woodward Avenue
                                                     Detroit, Michigan  48226
                                                     Attention:  Large Corporate
By________________________________                   Telecopy:  (313) 225-1671
  __________________,_____________

JPMORGAN CHASE BANK                                  270 Park Avenue, 47th Floor
                                                     New York, New York  10017-2070
                                                     Attention:  Tina Ruyter
By________________________________                   Telecopy:  212-270-5120
  __________________,_____________

KEYBANK NATIONAL ASSOCIATION                         127 Public Square
                                                     Cleveland, Ohio  44114-1306
                                                     Attention:  Large Corporate
By________________________________                   Telecopy:  (216) 689-4981
  Daniel W. Lally, Assistant Vice President

NATIONAL CITY BANK                                   1900 East 9th Street, Locator 2083
                                                     Cleveland, Ohio  44114-3484
                                                     Attention:  Anthony J. DiMare
By________________________________                   Telecopy:  (216) 222-9396
  __________________,_____________

PNC BANK, NATIONAL ASSOCIATION                       1375 East 9th Street, Suite 1250
                                                     Cleveland, Ohio  44114
                                                     Attention:  Joseph G. Moran
By________________________________                   Telecopy:  (216) 348-8594
  __________________,_____________














                                       77






                                List of Exhibits
                                ----------------

Exhibit A           -        Form of Revolving Credit Note

Exhibit B           -        Form of Notice of Borrowing

Exhibit C           -        Form of Rate Conversion/Continuation Request

Exhibit D           -        Form of Reduction Notice

Exhibit E           -        Form of Certificate of Financial Officer

Exhibit F           -        Form of Assignment Agreement

Exhibit G                    Form of Administrative Questionnaire





















                                       78





                                List of Schedules
                                -----------------

Schedule 9.2                              Existing Investments

Schedule 9.4                     -        Existing Liens

Schedule 10.1                    -        Existing Subsidiaries

Schedule 10.3                             Litigation



















                                       79





                                     ANNEX A
                                     -------

 To Credit Agreement dated April 24, 2002 among Lincoln Electric Holdings,
 -------------------------------------------------------------------------
 Inc., et al.
 ------------



Lender                                      Amount of Commitment
- ------                                      --------------------

Bank of America, N.A.                       $23,000,000

Bank One, NA                                $23,000,000

JPMorgan Chase Bank                         $23,000,000

Keybank National Association                $23,000,000

National City Bank                          $10,000,000

PNC Bank, National Association              $23,000,000















                                       80

EX-10.S

                                                                   Exhibit 10(s)





                         LINCOLN ELECTRIC HOLDINGS, INC.

                           DEFERRED COMPENSATION PLAN

                 (AS AMENDED AND RESTATED AS OF JANUARY 1, 2002)












                         LINCOLN ELECTRIC HOLDINGS, INC.
                           DEFERRED COMPENSATION PLAN
                 (as amended and restated as of January 1, 2002)




                                TABLE OF CONTENTS

                                                                                        PAGE

                                                                                 
ARTICLE I             PURPOSE...............................................................1

ARTICLE II            DEFINITIONS AND CONSTRUCTION..........................................1

         Section 2.1       Definitions......................................................1

         Section 2.2       Construction.....................................................4

ARTICLE III           PARTICIPATION AND DEFERRALS...........................................4

         Section 3.1       Eligibility and Participation....................................4

         Section 3.2       Ineligible Participant...........................................4

         Section 3.3       Amount of Deferral...............................................5

         Section 3.4       Modification of Deferral Commitments.............................5

ARTICLE IV            PARTICIPANTS' ACCOUNTS................................................5

         Section 4.1       Establishment of Accounts........................................5

         Section 4.2       Elective Deferred Compensation; Employment Agreement
                              Contributions.................................................5

         Section 4.3       Determination of Accounts........................................5

         Section 4.4       Adjustments to Accounts..........................................6

         Section 4.5       Statement of Accounts............................................6

         Section 4.6       Vesting of Accounts..............................................6

ARTICLE V             FINANCING OF BENEFITS.................................................6

         Section 5.1       Financing of Benefits............................................6

         Section 5.2       Security For Benefits............................................6

         Section 5.3       Investments......................................................7

ARTICLE VI            DISTRIBUTION OF BENEFITS..............................................7

         Section 6.1       Settlement Date..................................................7

         Section 6.2       Amount to be Distributed.........................................7

         Section 6.3       In-Service Distribution..........................................7

         Section 6.4       Form of Distribution.............................................7

         Section 6.5       Beneficiary Designation..........................................8




                                      -i-







                                TABLE OF CONTENTS
                                   (continued)
                                                                                        PAGE





                                                                               
         Section 6.6       Facility of Payment..............................................9

         Section 6.7       Hardship Distributions...........................................9

         Section 6.8       Special Distributions............................................9

         Section 6.9       Coordination with Other Benefits.................................9

         Section 6.10      Offset...........................................................9

ARTICLE VII           ADMINISTRATION, AMENDMENT AND TERMINATION............................10

         Section 7.1       Administration..................................................10

         Section 7.2       Plan Administrator..............................................10

         Section 7.3       Amendment, Termination and Withdrawal...........................10

         Section 7.4       Successors......................................................10

         Section 7.5       Claims..........................................................11

         Section 7.6       Expenses........................................................11

ARTICLE VIII          MISCELLANEOUS........................................................11

         Section 8.1       No Guarantee of Employment......................................11

         Section 8.2       Applicable Law..................................................11

         Section 8.3       Interests Not Transferable......................................11

         Section 8.4       Severability....................................................11

         Section 8.5       Withholding of Taxes............................................11

         Section 8.6       Top-Hat Plan....................................................12








                                      -ii-


                         LINCOLN ELECTRIC HOLDINGS, INC.
                           DEFERRED COMPENSATION PLAN

         The Lincoln Electric Holdings, Inc. Deferred Compensation Plan is
amended and restated effective as of January 1, 2002.

                               ARTICLE I PURPOSE

         THE LINCOLN ELECTRIC HOLDINGS, INC. DEFERRED COMPENSATION PLAN (the
"Plan"), was established by The Lincoln Electric Company effective as of
November 15, 1994 to allow designated management and highly compensated
employees to defer a portion of their current salary. The Plan is hereby assumed
by Lincoln Electric Holdings, Inc. and amended and restated as of January 1,
2002. It is intended that the Plan will aid in attracting and retaining
employees of exceptional ability by providing these benefits. The terms and
conditions of the Plan are set forth below.

                    ARTICLE II DEFINITIONS AND CONSTRUCTION

         Section 2.1 DEFINITIONS. Whenever the following terms are used in this
Plan they shall have the meanings specified below unless the context clearly
indicates to the contrary:

                  (a) "Account": The bookkeeping account maintained for each
         Participant showing his interest under the Plan.

                  (b) "Accounting Date": December 31 of each year and the last
         day of any calendar quarter in which a Participant's Settlement Date
         occurs.

                  (c) "Accounting Period": The period beginning on the day
         immediately following an Accounting Date and ending on the next
         following Accounting Date.

                  (d) "Administrator": The committee established pursuant to the
         provisions of Section 7.1.

                  (e) "Base Salary": The base earnings earned by a Participant
         and payable to him by the Corporation with respect to a Plan Year
         without regard to any increases or decreases in base earnings as a
         result of an election to defer base earnings under this Plan, or an
         election between benefits or cash provided under a plan of the
         Corporation maintained pursuant to Section 125 or 401(k) of the Code.

                  (f) "Beneficiary": The person or persons (natural or
         otherwise), within the meaning of Section 6.5, who are entitled to
         receive distribution of the Participant's Account balance in the event
         of the Participant's death.

                  (g) "Board": The Board of Directors of Holdings.

                  (h) "Bonus": Any annual bonus earned by a Participant and
         payable to him by the Corporation with respect to any single bonus plan
         year ending within a Plan Year without regard to any decreases as a
         result of an election to defer all or any portion of a








         bonus under this Plan, or an election between benefits or cash provided
         under a plan of the Corporation maintained pursuant to Section 125 or
         401(k) of the Code.

                  (i) "Change in Control": A Change in Control as defined in the
         Executive Benefit Plan, as it may be amended from time to time. Such
         definition is hereby incorporated by reference in the Plan, and an
         amendment to such definition shall be deemed an amendment to the Plan.

                  (j) "Code": The Internal Revenue Code of 1986, as amended from
         time to time; any reference to a provision of the Code shall also
         include any successor provision thereto.

                  (k) "Committee": The Compensation Committee of the Board.

                  (l) "Compensation": The amount of Base Salary plus Bonuses
         earned by a Participant and payable to him by the Corporation with
         respect to a Plan Year.

                  (m) "Corporation": Holdings and any Participating Employer or
         any successor or successors thereto.

                  (n) "Deferral Commitment": An agreement by a Participant to
         have a specified percentage or dollar amount of his Compensation
         deferred under the Plan for a specified period in the future.

                  (o) "Deferral Period": Means the Plan Year for which a
         Participant has elected to defer a portion of his Compensation.

                  (p) "Disability": The occurrence, while a Participant is an
         Employee, of a physical or mental incapacity which is likely to be
         permanent and which prevents a Participant from engaging in any
         occupation or performing any work for compensation or profit for which
         he is qualified by education, training or experience, as determined by
         the Administrator in its sole discretion on the basis of medical
         evidence certified by a physician or physicians designated by it.

                  (q) "Effective Date": November 15, 1994.

                  (r) "Employee": Any employee of the Corporation who is, as
         determined by the Committee, a member of a "select group of management
         or highly compensated employees" of the Corporation, within the meaning
         of Sections 201, 301 and 401 of ERISA, and who is designated by the
         Committee as an Employee eligible to participate in the Plan.

                  (s) "Employment Agreement": A written agreement between the
         Corporation and an Employee that provides for the deferral of
         compensation, and that may also provide for vesting, the crediting of
         earnings and other terms and conditions with respect to such deferred
         compensation.




                                       2


                  (t) "Employment Agreement Contribution": Any amount
         contributed to the Plan by the Corporation pursuant to an Employment
         Agreement.

                  (u) "ERISA": The Employee Retirement Income Security Act of
         1974, as amended from time to time; any reference to a provision of
         ERISA shall also include any successor provision thereto.

                  (v) "Executive Benefit Plan": The Lincoln Electric Company
         Executive Benefit Plan effective November 1, 1997.

                  (w) "Financial Hardship": An unforeseeable financial emergency
         of the Participant, determined by the Administrator on the basis of
         information supplied by the Participant, arising from an illness,
         disability, casualty loss, sudden financial reversal or other such
         unforeseeable occurrence, but not including foreseeable events such as
         the purchase of a house or education expenses for children.

                  (x) "Participant": An Employee participating in the Plan in
         accordance with the provisions of Section 3.1 or a former Employee
         retaining benefits under the Plan that have not been fully paid.

                  (y) "Participating Employer": The Lincoln Electric Company,
         and any other subsidiary or affiliate of Holdings that adopts the Plan
         with the consent of the Committee. Any Participating Employer that
         adopts the Plan and thereafter ceases to exist, ceases to be a
         subsidiary or affiliate or Holdings or withdraws from the Plan shall no
         longer be considered a Participating Employer unless otherwise
         determined by the Committee.

                  (z) "Participation Agreement": The Agreement submitted by a
         Participant to the Administrator with respect to one or more Deferral
         Commitments.

                  (aa) "Plan": The Plan set forth in this instrument as it may,
         from time to time, be amended.

                  (bb) "Plan Year": The 12-month period beginning January 1
         through December 31; provided that the first plan year began on
         November 15, 1994 and ended on December 31, 1994.

                  (cc) "Retirement": Termination of employment with the
         Corporation on or after attainment of age sixty (60), or early
         termination of employment with the Corporation on or after attainment
         of age fifty-five (55) and completion of twenty-five (25) years of
         service.

                  (dd) "Settlement Date": The date on which a Participant
         terminates employment with the Corporation. Leaves of absence granted
         by the Corporation will not be considered as termination of employment
         during the term of such leave. Settlement Date shall also include (I)
         with respect to any deferral date selected by a Participant pursuant to
         Section 6.3 for distribution of the amounts deferred during such
         Deferral Period, and (II) a date selected by the Participant pursuant
         to Section 6.4.





                                       3


         Section 2.2 CONSTRUCTION. The masculine gender, where appearing in the
Plan, shall be deemed to include the feminine gender, and the singular may
include the plural, unless the context clearly indicates to the contrary. The
words "hereof," "herein," "hereunder," and other similar compounds of the word
"here" shall mean and refer to the entire Plan, and not to any particular
provision or Section.

                    ARTICLE III PARTICIPATION AND DEFERRALS

         Section 3.1 ELIGIBILITY AND PARTICIPATION.

                  (a) ELIGIBILITY. Eligibility to participate in the Plan for
         any Deferral Period is limited to those management and/or highly
         compensated Employees of the Corporation (i) who are designated, from
         time to time, by the Committee, and (ii) who have elected to make the
         maximum elective contributions permitted them under the terms of the
         Corporation's Employee Savings Plan for such Deferral Period.

                  (b) PARTICIPATION. An eligible Employee may elect to
         participate in the Plan with respect to any Deferral Period by
         submitting a Participation Agreement to the Administrator by the last
         business day immediately preceding the applicable Deferral Period.

                  (c) INITIAL YEAR OF PARTICIPATION. In the event that an
         individual first becomes eligible to participate during a Deferral
         Period and wishes to elect a Deferral Commitment with respect to the
         Compensation earned by and payable to the individual during such
         Deferral Period, a Participation Agreement must be submitted to the
         Administrator no later than 30 days following such individual's initial
         eligibility. Any Deferral Commitments elected in such Participation
         Agreement shall be effective only with regard to Compensation earned
         following the submission of the Participation Agreement to the
         Administrator. If an eligible Employee does not submit a Participation
         Agreement within such period of time, such individual will not be
         eligible to participate in the Plan until the first day of a Deferral
         Period subsequent to the Deferral Period in which the individual
         initially became eligible to participate.

                  (d) TERMINATION OF PARTICIPATION. Participation in the Plan
         shall continue as long as the Participant is eligible to receive
         benefits under the Plan.

         Section 3.2 INELIGIBLE PARTICIPANT. Notwithstanding any other
provisions of this Plan to the contrary, if the Administrator determines that
any Participant may not qualify as a "management or highly compensated employee"
within the meaning of ERISA, or regulations thereunder, the Administrator may
determine, in its sole discretion, that such Participant shall cease to be
eligible to participate in this Plan. Upon such determination, the Corporation
shall make an immediate lump sum payment to the Participant equal to the amount
credited to his Account. Upon such payment no benefit shall thereafter be
payable under this Plan either to the Participant or any Beneficiary of the
Participant, and all of the Participant's elections as to the time and manner of
payment of his Account will be deemed to be cancelled.

         Section 3.3 AMOUNT OF DEFERRAL. With respect to each Plan Year, a
Participant may elect to defer a specified dollar amount or percentage of his or
her Compensation, provided






                                       4


the amount the Participant elects to defer under this Plan and the Corporation's
Employee Savings Plan shall not exceed the sum of 75% of his or her Base Salary
plus 100% of his or her Bonus with respect to such Plan Year. A Participant may
choose to have amounts deferred under this Plan deducted from his or her Base
Salary, Bonus or a combination of both. For the first Plan Year, a Participant
may elect to defer all or any portion of his or her Base Salary and/or Bonus
earned or payable after the later of the effective date of the Participation
Agreement or the date of filing the Participation Agreement with the
Administrator, provided the total deferred amount for such Plan Year does not
exceed the annual limitations under this Section 3.3 computed for the calendar
year. A Participant may change the dollar amount or percentage of his or her
Compensation to be deferred by filing a written notice thereof with the
Administrator. Any such change shall be effective as of the first day of the
Plan Year immediately succeeding the Plan Year in which such notice is filed
with the Administrator. Notwithstanding the foregoing, any Employment Agreement
Contribution shall be deferred in accordance with the terms of the Employment
Agreement.

         Section 3.4 MODIFICATION OF DEFERRAL COMMITMENTS. A Deferral Commitment
shall be irrevocable, except that the Administrator may, in its sole discretion,
permit a Participant to terminate, prospectively, any Deferral Commitment for a
Deferral Period. If a Participant terminates a Deferral Commitment during a
Deferral Period, such Participant will not be permitted to enter into a new
Deferral Commitment until the following Deferral Period.

                       ARTICLE IV PARTICIPANTS' ACCOUNTS

         Section 4.1 ESTABLISHMENT OF ACCOUNTS. The Corporation, through its
accounting records, shall establish an Account for each Participant. In
addition, the Corporation may establish one or more subaccounts of a
Participant's Account, if the Corporation determines that such subaccounts are
necessary or appropriate in administering the Plan.

         Section 4.2 ELECTIVE DEFERRED COMPENSATION; EMPLOYMENT AGREEMENT
CONTRIBUTIONS. A Participant's Compensation that is deferred pursuant to a
Deferral Commitment shall be credited to the Participant's Account within thirty
days following the date the corresponding non-deferred portion of his
Compensation would have been paid to the Participant. The amount of the
Employment Agreement Contribution contributed for a Participant (if any) shall
be credited by the Corporation to the Participant's Account in accordance with
the terms of the Employment Agreement. Any withholding of taxes or other amounts
with respect to Deferred Compensation or with respect to an Employment Agreement
which is required by state, federal or local laws shall be withheld from the
Participant's Deferred Compensation or Employment Agreement Contribution.

         Section 4.3 DETERMINATION OF ACCOUNTS.

                  (a) DETERMINATION OF ACCOUNTS. The amount credited to each
         Participant's Account as of a particular date shall equal the deemed
         balance of such Account as of such date. The balance in the Account
         shall equal the amount credited pursuant to Section 4.2, and shall be
         adjusted in the manner provided in Section 4.4.





                                       5


                  (b) ACCOUNTING. The Corporation, through its accounting
         records, shall maintain a separate and distinct record of the amount in
         each Account as adjusted to reflect income, gains, losses, withdrawals
         and distributions.

         Section 4.4 ADJUSTMENTS TO ACCOUNTS.

                  (a) Each Participant's Account shall be debited with the
         amount of any distributions under the Plan to or on behalf of the
         Participant or, in the event of his death, his Beneficiary during the
         Accounting Period ending on such Accounting Date.

                  (b) The Participant's Account shall next be credited or
         debited, as the case may be, with an income (loss) factor equal to an
         amount determined by multiplying (i) the balance credited to the
         Participant's Account as of the immediately preceding Accounting Date
         (as adjusted pursuant to Section 4.3(a) for the current Accounting
         Date) by (ii) the rate of return for the Accounting Period ending on
         such Accounting Date on deemed investments provided for in Section 5.3.

         Section 4.5 STATEMENT OF ACCOUNTS. As soon as practicable after the end
of each Plan Year, a statement shall be furnished to each Participant or, in the
event of his death, to his Beneficiary showing the status of his Account as of
the end of the Plan Year, any changes in his Account since the end of the
immediately preceding Plan Year, and such other information as the Administrator
shall determine.

         Section 4.6 VESTING OF ACCOUNTS. Subject to Section 5.1, each
Participant shall at all times have a nonforfeitable interest in his Account
balance.

                        ARTICLE V FINANCING OF BENEFITS

         Section 5.1 FINANCING OF BENEFITS. Benefits payable under the Plan to a
Participant or, in the event of his death, to his Beneficiary shall be paid by
the Corporation from its general assets. The payment of benefits under the Plan
represents an unfunded, unsecured obligation of the Corporation. Notwithstanding
the fact that the Participants' Accounts may be adjusted by an amount that is
measured by reference to the performance of any deemed investments as provided
in Section 5.3, no person entitled to payment under the Plan shall have any
claim, right, security interest or other interest in any fund, trust, account,
insurance contract, or asset of the Corporation which may be responsible for
such payment.

         Section 5.2 SECURITY FOR BENEFITS. Notwithstanding the provisions of
Section 5.1, nothing in this Plan shall preclude the Corporation from setting
aside amounts in trust (the "Trust") pursuant to one or more trust agreements
between a trustee and the Corporation. However, no Participant or Beneficiary
shall have any secured interest or claim in any assets or property of the
Corporation or the Trust and all funds contained in the Trust shall remain
subject to the claims of the Corporation's general creditors.

         Section 5.3 INVESTMENTS. The Committee may designate one or more
separate investment funds or vehicles, including, without limitation,
certificates of deposit, mutual funds, money market accounts or funds, limited
partnerships, or debt or equity securities, including equity securities of the
Corporation (measured by market value, book value or any formula






                                       6


selected by the Committee), in which the amount credited to a Participant's
Account will be deemed to be invested. Each Participant shall file an investment
preference request ("Request") to be effective as of the date of such Request
with respect to the amounts credited to his Account as of such date and amounts
subsequently credited to his Account. A Request will advise the Administrator as
to the Participant's preference with respect to investment vehicles for all or
some portion of the amounts credited to a Participant's Account in specified
multiples of 5%. A Request may be changed prospectively by a Participant as of
the first day of any calendar month by giving the Administrator prior written
notice. The Administrator may, but is under no obligation to, deem the amounts
credited to a Participant's Account to be invested in accordance with the
Request made by the Participant, or the Committee may, instead, in its sole
discretion, deem such Account to be invested in any deemed investment funds
selected by the Committee. Earnings on any amounts deemed to have been invested
in any deemed investment fund shall be deemed to have been reinvested in such
fund.

                      ARTICLE VI DISTRIBUTION OF BENEFITS

         Section 6.1 SETTLEMENT DATE. A Participant or, in the event of his
death, his Beneficiary shall be entitled to distribution of the balance of his
Account, as provided in this Article VI, following his Settlement Date or Dates.

         Section 6.2 AMOUNT TO BE DISTRIBUTED. The amount to which a Participant
or, in the event of his death, his Beneficiary is entitled in accordance with
the following provisions of this Article shall be based on the Participant's
adjusted account balance determined as of the Accounting Date coincident with or
next following his Settlement Date or Dates.

         Section 6.3 IN-SERVICE DISTRIBUTION. A Participant may elect to receive
an in-service distribution of his or her deferred Compensation for any Deferral
Period in a single lump sum payment on a date which is at least two years after
the end of such Deferral Period. A Participant's election of an in-service
distribution shall be filed in writing with the Administrator at the same time
as is filed his election to participate as provided in Section 3.1. Any benefits
paid to the Participant as an in-service distribution shall reduce the
Participant's Account.

         Section 6.4 FORM OF DISTRIBUTION. As soon as practicable after the end
of the Accounting Period in which a Participant's Settlement Date occurs, but in
no event later than thirty days following the end of such Accounting Period, the
Corporation shall commence distribution or cause distribution to be commenced,
to the Participant or, in the event of his death, to his Beneficiary, of the
balance of the Participant's Account, as determined under Section 6.2, under one
of the forms provided in this Section. Notwithstanding the foregoing, if elected
by the Participant, the distribution of the balance of the Participant's Account
may commence on (i) a date between a Settlement Date following his or her
Retirement and the date the Participant attains age sixty-five or (ii) the
beginning of the second calendar year commencing after the Participant's
Retirement. Anything in this Plan to the contrary notwithstanding, if a
Participant terminates employment with the Corporation prior to his Retirement,
the balance of his or her Account shall be distributed in a single lump sum
payment.

         Distribution of a Participant's Account following his or her Retirement
or death shall be made in one of the following forms as elected by the
Participant:





                                       7


         (a) by payment in cash in five (5) annual installments; or

         (b) by payment in cash in ten (10) annual installments; or

         (c) by payment in cash in fifteen (15) annual installments; or

         (d) by payment in a single lump sum;

provided, however, that in the event of a Participant's death, if the balance in
his or her Account is then less than $35,000, such balance shall be distributed
in a single lump sum payment.

The Participant's election of the form of distribution shall be made by written
notice filed with the Administrator at least six (6) months prior to the
Participant's voluntary termination of employment with, or Retirement from, the
Corporation. Any such election may be changed by the Participant without the
consent of any other person by filing a later signed written election with the
Administrator; provided that any election made less than six (6) months prior to
the Participant's voluntary termination of employment or Retirement shall not be
valid, and in such case payment shall be made in accordance with the
Participant's prior election.

The amount of each installment shall be equal to the quotient obtained by
dividing the Participant's Account balance as of the date of such installment
payment by the number of installment payments remaining to be made to or in
respect of such Participant at the time of calculation.

                  If a Participant fails to make an election in a timely manner
as provided in this Section 6.4, distribution shall be made in cash in ten (10)
annual installments.

         Section 6.5 BENEFICIARY DESIGNATION. As used in the Plan the term
"Beneficiary" means:

                  (a) The last person designated as Beneficiary by the
         Participant in a written notice on a form prescribed by the
         Administrator;

                  (b) If there is no designated Beneficiary or if the person so
         designated shall not survive the Participant, such Participant's
         spouse; or

                  (c) If no such designated Beneficiary and no such spouse is
         living upon the death of a Participant, or if all such persons die
         prior to the full distribution of the Participant's Account balance,
         then the legal representative of the last survivor of the Participant
         and such persons, or, if the Administrator shall not receive notice of
         the appointment of any such legal representative within one year after
         such death, the heirs-at-law of such survivor (in the proportions in
         which they would inherit his intestate personal property) shall be the
         Beneficiaries to whom the then remaining balance of the Participant's
         Account shall be distributed.

Any Beneficiary designation may be changed from time to time by like notice
similarly delivered. No notice given under this Section shall be effective
unless and until the Administrator actually receives such notice.





                                       8


         Section 6.6 FACILITY OF PAYMENT. Whenever and as often as any
Participant or his Beneficiary entitled to payments hereunder shall be under a
legal disability or, in the sole judgment of the Administrator, shall otherwise
be unable to apply such payments to his own best interests and advantage, the
Administrator in the exercise of its discretion may direct all or any portion of
such payments to be made in any one or more of the following ways: (i) directly
to him; (ii) to his legal guardian or conservator; or (iii) to his spouse or to
any other person, to be expended for his benefit; and the decision of the
Administrator, shall in each case be final and binding upon all persons in
interest.

         Section 6.7 HARDSHIP DISTRIBUTIONS. Upon a finding by the Administrator
that a Participant has suffered a Financial Hardship, the Administrator may, in
its sole discretion, distribute, or direct the Trustee to distribute, to the
Participant an amount which does not exceed the amount required to meet the
immediate financial needs created by the Financial Hardship and not reasonably
available from other sources of the Participant; provided, however, that in no
event shall any amount attributable to a Deferral Commitment be distributed less
than six months after the date of the applicable Participation Agreement. No
distributions pursuant to this Section 6.4 may be made in excess of the value of
the Participant's Account at the time of such distribution.

         Section 6.8 SPECIAL DISTRIBUTIONS. Notwithstanding any other provision
of this Article VI, a Participant, whether or not currently receiving a
distribution, may elect to receive a lump sum distribution of all or a portion
of the remaining balance of his Account if (and only if) the amount in such
Account subject to such distribution is reduced by ten percent (10%); provided,
however, that no such election may be made by a Participant who has an account
in the Executive Benefit Plan during any period commencing 90 days prior to a
Change in Control and ending on the date benefits, if any, are paid to
participants in the Executive Benefit Plan following a Change in Control. Any
distribution made pursuant to such an election shall be made within 30 days of
the date such election is submitted to the Administrator. The remaining ten
percent (10%) of the portion of the electing Participant's Account subject to
such distribution shall be forfeited.

         Section 6.9 COORDINATION WITH OTHER BENEFITS. Except as provided in
Section 6.10, the benefits provided for a Participant and Participant's
Beneficiary under the Plan are in addition to any other benefits available to
such Participant under any other plan or program for employees of the
Corporation. The Plan shall supplement and shall not supersede, modify or amend
any other such plan or program except as may otherwise be expressly provided.

         Section 6.10 OFFSET. In the event a Participant receives or becomes
entitled to receive a benefit under the Executive Benefit Plan, as it may be
amended from time to time, the benefits to be received under this Plan shall be
offset and reduced dollar for dollar (but not below zero) by the benefits paid
under the Executive Benefit Plan. In determining the amount that should offset
and reduce benefits under this Plan, the Participant's (or Beneficiary's)
Account hereunder at the time of distribution commencement shall be reduced by
an amount equal to the amount paid or to be paid under the Executive Benefit
Plan increased by earnings on such amount, if any, accruing from the time of
distribution from the Executive Benefit Plan through the time of the
commencement of distribution hereunder at an earnings rate corresponding to






                                       9


one-half of the Moody's Corporate Average Bond Yield adjusted on the first
business day of each January, April, July and October.

             ARTICLE VII ADMINISTRATION, AMENDMENT AND TERMINATION

         Section 7.1 ADMINISTRATION. The Plan shall be administered by an
Administrator consisting of one or more persons who shall be appointed by and
serve at the pleasure of the Board. The Administrator shall have such powers as
may be necessary to discharge its duties hereunder, including, but not by way of
limitation, to construe and interpret the Plan and determine the amount and time
of payment of any benefits hereunder. The Administrator may, from time to time,
employ agents and delegate to them such administrative duties as it sees fit,
and may from time to time consult with legal counsel who may be counsel to the
Corporation. The Administrator shall have no power to add to, subtract from or
modify any of the terms of the Plan, or to change or add to any benefits
provided under the Plan, or to waive or fail to apply any requirements of
eligibility for a benefit under the Plan. No member of the Administrator shall
act in respect of his own Account. All decisions and determinations by the
Administrator shall be final and binding on all parties. All decisions of the
Administrator shall be made by the vote of the majority, including actions in
writing taken without a meeting. All elections, notices and directions under the
Plan by a Participant shall be made on such forms as the Administrator shall
prescribe.

         Section 7.2 PLAN ADMINISTRATOR. The Corporation shall be the
"administrator" under the Plan for purposes of ERISA.

         Section 7.3 AMENDMENT, TERMINATION AND WITHDRAWAL. The Plan may be
amended from time to time or may be terminated at any time by the Board. No
amendment or termination of the Plan, however, may adversely affect the amount
or timing of payment of any person's benefits accrued under the Plan to the date
of amendment or termination without such person's written consent.

         Section 7.4 SUCCESSORS. The Corporation shall require any successor
(whether direct or indirect, by purchase, merger, consolidation, reorganization
or otherwise) to all or substantially all of the business and/or assets of the
Corporation expressly to assume and to agree to perform this Plan in the same
manner and to the same extent the Corporation would be required to perform if no
such succession had taken place. This Plan shall be binding upon and inure to
the benefit of the Corporation and any successor of or to the Corporation,
including without limitation any persons acquiring directly or indirectly all or
substantially all of the business and/or assets of the Corporation whether by
sale, merger, consolidation, reorganization or otherwise (and such successor
shall thereafter be deemed the "Corporation" for the purposes of this Plan), and
the heirs, beneficiaries, executors and administrators of each Participant.

         Section 7.5 CLAIMS. The Administrator will provide to any Participant
or Beneficiary whose claim for benefits under the Plan has been fully or
partially denied a written notice setting forth (i) the specific reasons for
such denial, (ii) a designation of any additional material or information
required and (iii) an explanation of the Plan's claim review procedure. Such
notice shall state that the Participant or Beneficiary is entitled to request a
review in writing, by the Administrator, of the decision denying the claim. The
claim will be reviewed by







                                       10


the Administrator who may, but need not, grant the claimant a hearing. On
review, the claimant may have legal representation, examine pertinent documents
and submit issues and comments in writing. The decision on review will be made
within 120 days following the request, will be provided in writing to the
claimant and will be final and binding on all parties concerned.

         Section 7.6 EXPENSES. All expenses of the Plan shall be paid by the
Corporation from funds other than those deemed investments as provided in
Section 5.3, except that brokerage commissions and other transaction fees and
expenses relating to the investment of deemed assets and investment fees
attributable to commingled investment of such assets shall be paid from or
charged to such assets or earnings thereon.

                           ARTICLE VIII MISCELLANEOUS

         Section 8.1 NO GUARANTEE OF EMPLOYMENT. Nothing contained in the Plan
shall be construed as a contract of employment between the Corporation and any
Employee, or as a right of any Employee, to be continued in the employment of
the Corporation, or as a limitation of the right of the Corporation to discharge
any of its Employees, with or without cause.

         Section 8.2 APPLICABLE LAW. All questions arising in respect of the
Plan, including those pertaining to its validity, interpretation and
administration, shall be governed, controlled and determined in accordance with
the applicable provisions of federal law and, to the extent not preempted by
federal law, the laws of the State of Ohio.

         Section 8.3 INTERESTS NOT TRANSFERABLE. No person shall have any right
to commute, encumber, pledge or dispose of any interest herein or right to
receive payments hereunder, nor shall such interests or payments be subject to
seizure, attachment or garnishment for the payments of any debts, judgments,
alimony or separate maintenance obligations or be transferable by operation of
law in the event of bankruptcy, insolvency or otherwise, all payments and rights
hereunder being expressly declared to be nonassignable and nontransferable.

         Section 8.4 SEVERABILITY. Each section, subsection and lesser section
of this Plan constitutes a separate and distinct undertaking, covenant and/or
provision hereof. Whenever possible, each provision of this Plan shall be
interpreted in such manner as to be effective and valid under applicable law. In
the event that any provision of this Plan shall finally be determined to be
unlawful, such provision shall be deemed severed from this Plan, but every other
provision of this Plan shall remain in full force and effect, and in
substitution for any such provision held unlawful, there shall be substituted a
provision of similar import reflecting the original intention of the parties
hereto to the extent permissible under law.

         Section 8.5 WITHHOLDING OF TAXES. The Corporation may withhold or cause
to be withheld from any amounts payable under this Plan all federal, state,
local and other taxes as shall be legally required.

         Section 8.6 TOP-HAT PLAN. The Plan is intended to be a plan which is
unfunded and maintained primarily for the purpose of providing deferred
compensation for a select group of management or highly compensated employees
within the meaning of Sections 201, 301 and 401 of ERISA, and therefore to be
exempt from the provisions of Parts 2, 3 and 4 of Title I of ERISA. Accordingly,
notwithstanding any other provision of the Plan, the Plan will terminate






                                       11


and no further benefits will accrue hereunder in the event it is determined by a
court of competent jurisdiction or by an opinion of counsel based upon a change
in law that the Plan constitutes an employee pension benefit plan within the
meaning of Section 3(2) of ERISA, which is not so exempt. In addition and
notwithstanding any other provision of the Plan, in the absolute discretion of
the Committee, the amount credited to each Participant's Account under the Plan
as of the date of termination, which shall be an Accounting Date for purposes of
the Plan, will be paid immediately to such Participant in a single lump sum cash
payment.



         IN WITNESS WHEREOF, Lincoln Electric Holdings, Inc. has caused this
amendment and restatement of the Lincoln Electric Holdings, Inc. Deferred
Compensation Plan to be executed in its name as of January 1, 2002.


                                        LINCOLN ELECTRIC HOLDINGS, INC.


                                        By:_____________________________________
                                        Its:  Chairman, Chief Executive Officer


Date:__________________, 2002

















                                       12

EX-10.T

                                                                   Exhibit 10(t)


                                 AMENDMENT NO. 1
                                       TO
               THE LINCOLN ELECTRIC COMPANY EXECUTIVE BENEFIT PLAN


       The Lincoln Electric Company (the "Company") hereby amends The Lincoln
Electric Company Executive Benefit Plan (the "Plan") pursuant to Section 6.1
thereof, as follows:

       1.     Section 3.1 of the Plan is hereby amended by adding thereto the
              following:

              For purposes of the Plan, the term "involuntary Termination of
              Employment" shall include an event described in Section 3(b) of
              the Severance Agreement, if any, entered into between a
              Participant and Lincoln Electric Holdings. Inc., the parent of the
              Company.

       2.     Section 3.3 of the Plan is hereby amended to read as follows:

              3.3.   ACCOUNT BALANCE. The Administrator may, from time to time,
                     provide a Participant with a statement setting forth the
                     balance of his or her Participant's Account as of a given
                     date.

       IN WITNESS WHEREOF, the Company, by its Compensation Committee, has
signed this Amendment No. 1, effective as of the 1st day of January, 2002.

                                          THE LINCOLN ELECTRIC COMPANY
                                          Compensation Committee

                                          _____________________________________

                                          _____________________________________

                                          _____________________________________

                                          _____________________________________

                                          _____________________________________

EX-10.U

                                                                   Exhibit 10(u)



                         LINCOLN ELECTRIC HOLDINGS, INC.
                     SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
                  (as amended and restated as of March 1, 2002)















                         LINCOLN ELECTRIC HOLDINGS, INC.
                     SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
                  (as amended and restated as of March 1, 2002)


                                TABLE OF CONTENTS


                                                                                  PAGE

                                                                         
ARTICLE I        GENERAL.............................................................1

         Section 1.1    Effective Date...............................................1

         Section 1.2    Intent.......................................................1

ARTICLE II       DEFINITIONS AND USAGE...............................................1

         Section 2.1    Definitions..................................................1

         Section 2.2    Usage........................................................5

ARTICLE III      ELIGIBILITY AND PARTICIPATION.......................................5

         Section 3.1    Eligibility..................................................5

         Section 3.2    Participation................................................5

ARTICLE IV       RETIREMENT BENEFIT..................................................5

         Section 4.1    Retirement Benefit...........................................5

         Section 4.2    Early Retirement Benefit.....................................6

         Section 4.3    Vesting......................................................6

         Section 4.4    Other Retirement Benefits....................................7

         Section 4.5    Maximum Retirement Benefit...................................7

ARTICLE V        PAYMENT OF RETIREMENT BENEFIT.......................................7

         Section 5.1    Payment of Retirement Benefits...............................7

         Section 5.2    Form of Retirement Benefits..................................7

         Section 5.3    Payment Procedure............................................8

         Section 5.4    Special Distributions........................................8

ARTICLE VI       PAYMENT OF BENEFIT ON OR AFTER DEATH OR DISABILITY..................8

         Section 6.1    Commencement of Benefit Payments Before Vesting..............8

         Section 6.2    Commencement of Benefit Payments After Vesting...............8

         Section 6.3    Form of Payment..............................................8

         Section 6.4    Committee Action.............................................8

ARTICLE VII      ADMINISTRATION......................................................9





                                      -i-





                                TABLE OF CONTENTS
                                   (continued)

                                                                               PAGE
                                                                       
         Section 7.1    General...................................................9

         Section 7.2    Administrative Rules......................................9

         Section 7.3    Duties....................................................9

         Section 7.4    Fees......................................................9

         Section 7.5    Limitation of Actions.....................................9

ARTICLE VIII     CLAIMS PROCEDURE................................................10

         Section 8.1     General.................................................10

         Section 8.2     Denials.................................................10

         Section 8.3     Appeals Procedure.......................................10

         Section 8.4     Review..................................................10

ARTICLE IX       MISCELLANEOUS PROVISIONS........................................11

         Section 9.1     Amendment and Termination...............................11

         Section 9.2     No Assignment...........................................11

         Section 9.3     Successors and Assigns..................................11

         Section 9.4     Governing Law...........................................11

         Section 9.5     No Guarantee of Employment..............................11

         Section 9.6     Severability............................................11

         Section 9.7     Notification of Addresses...............................12

         Section 9.8     Bonding.................................................12

         Section 9.9     Withdrawal of Employer..................................12

         Section 9.10    Coordination with Other Benefits........................12

         Section 9.11    Offset..................................................12

ARTICLE X        FUNDING.........................................................12



                                      -ii-



                         LINCOLN ELECTRIC HOLDINGS, INC.

                     SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN

                  (as amended and restated as of March 1, 2002)


                                    PREAMBLE


WHEREAS, Lincoln Electric Holdings, Inc. (the "Company") or an Employer has
established one or more qualified retirement plans that place limitations on the
amount of retirement benefits available to certain key management or highly
compensated employees; and

WHEREAS, the Company recognizes the unique qualifications of such employees and
the valuable services they provide and desires to establish an unfunded plan to
provide retirement benefits to eligible key employees that supplement what is
available under such qualified plans and Social Security; and

WHEREAS, the Company has determined that the implementation of such a plan will
best serve its interest in retaining key employees and ensuring benefit equity
among all employees;

NOW, THEREFORE, the Company hereby assumes and amends and restates the Lincoln
Electric Holdings, Inc. Supplemental Executive Retirement Plan as hereinafter
provided:

                                   ARTICLE I
                                     GENERAL

SECTION 1.1 EFFECTIVE DATE. This Plan was originally established by The Lincoln
Electric Company, a wholly-owned subsidiary of the Company, effective as of
January 1, 1994. This amended and restated Plan shall be effective as of March
1, 2002. The rights, if any, of any person whose status as an employee of an
Employer has terminated shall be determined pursuant to the Plan as in effect on
the date such employee terminated, unless a subsequently adopted provision of
the Plan is made specifically applicable to such person.

SECTION 1.2 INTENT. The Plan is intended to be an unfunded plan primarily for
the purpose of providing deferred compensation to a select group of management
or highly compensated employees, as such group is described under Sections
201(2), 301(a)(3), and 401(a)(1) of ERISA.

                                   ARTICLE II
                              DEFINITIONS AND USAGE

SECTION 2.1 DEFINITIONS. Wherever used in the Plan, the following words and
phrases, when capitalized, shall have the meaning set forth below unless the
context plainly requires a different meaning:

"ACCOUNT" means the account established on behalf of the Participant as
described in Section 5.3.






"ACTUARIAL EQUIVALENT" or "ACTUARIALLY EQUIVALENT" means a benefit of actuarial
equivalence determined using the Applicable Mortality Table, the Interest Rate
and other factors then in effect for the Company's qualified defined benefit
pension plan applicable to Participants.

"ADMINISTRATOR" means the committee established by the Company pursuant to
Section 7.1 to administer the Plan.

"APPLICABLE MORTALITY TABLE" means the 1994 Group Annuity Reserving Table (94
GAR) based on a fixed blend of 50% of the unloaded male mortality rates and 50%
of the unloaded female mortality rates, projected to 2002 or such subsequent
applicable mortality table used from time to time under Section 417(e) of the
Code.

"BOARD" means the Board of Directors of the Company.

"CODE" means the Internal Revenue Code of 1986, as amended from time to time.
Any reference to a particular Code section shall include any provision that
modifies, replaces or supersedes it.

"COMMITTEE" means the Compensation Committee of the Board.

"COMPANY" means Lincoln Electric Holdings, Inc., a corporation organized under
the laws of the state of Ohio, and any successor thereto.

"COMPENSATION" means the amount of a Participant's regular base salary paid by
the Controlled Group during a Plan Year and annual bonus accrued by the
Controlled Group and approved by the Board or a committee thereof with respect
to a Plan Year, excluding, however, any compensation related to equity
securities of the Company (including compensation resulting from Section 83(b)
elections under the Code) and excluding any special payments or multi-year
incentive programs, but including any salary reduction contributions that are
excluded from his gross income under Sections 125, 129 or 402(a)(8) of the Code,
and including any compensation which the Participant defers under any
nonqualified deferred compensation plan of the Controlled Group.

"CONTROLLED GROUP" OR "CONTROLLED GROUP MEMBER" means the Company and any and
all other corporations, trades or businesses the employees of which are required
by Section 414 of the Code to be treated as a single employer. An entity will
only be considered as a Controlled Group Member during the period that it is or
was a member of the Company's Controlled Group.

"DISABILITY" or "DISABLED" means a physical or mental condition of a Participant
resulting from a bodily injury, disease or mental disorder that renders him
incapable of continuing his position of employment with the Employer. Such
Disability shall be determined by the Committee based upon appropriate medical
advice and examination, and taking into account the ability of the Participant
to continue in his same, or similar, position with his Employer.

"EARLY RETIREMENT DATE" means the date the Participant has both attained age
fifty-five (55) and completed twenty-five (25) Years of Service.

"EMPLOYER" means the Company, The Lincoln Electric Company and any other
Controlled Group Member that adopts the Plan with the Committee's consent. Any
Controlled Group Member that adopts the Plan and thereafter ceases to exist,
ceases to be a member of the




                                       2


Controlled Group or withdraws from the Plan shall no longer be considered an
Employer unless otherwise determined by the Committee.

"ERISA" means the Employee Retirement Income Security Act of 1974, as amended
from time to time. Any reference to a particular ERISA section shall include any
provision that modifies, replaces, or supersedes it.

"FINAL AVERAGE PAY" means, with respect to any Participant, the average of his
annual Compensation over the three (3) full Years of Service within his final
consecutive full Years of Service (not to exceed seven (7) Years) that produce
the highest such average; provided, however, that if a Participant has fewer
than three (3) full Years of Service, "Final Average Compensation" shall mean
the average of his annual Compensation during all his Years of Service.

"FOREIGN PLAN BENEFIT" means the annual benefit, expressed in the form of a
single life annuity that can be derived from the sum of all non-U.S.
employer-provided benefits and non-U.S. state, national, government
instrumentality and government-provided benefits of every kind and nature under
all plans, programs and arrangements that are maintained or contributed to,
directly or indirectly, by contribution, tax or otherwise, by any Controlled
Group Member. The amount of the single life annuity determined for any such
plan, program or arrangement which does not provide for annuity payments shall
be determined using the Actuarial Equivalents provided for herein. For purposes
of this definition, non-U.S. employer and non-U.S. state, national, government
instrumentality or government-provided "benefits" means all retirement benefits
funded, directly or indirectly, by contribution, tax or otherwise, in part or
exclusively, by employer contributions, payments, taxes or otherwise (and
earnings thereon), and shall include any previous distribution of such benefits
made prior to a Participant's attainment of age 65 or the actual retirement
date, if earlier, including, but not limited to, in-service withdrawals,
retirement and disability benefits, or distributions pursuant to any domestic
relations order or similar order of any non-U.S. jurisdiction.

"INTEREST RATE" means the Moody's AA Corporate Bond rate for a calendar year.
The rate for a calendar year shall be the Moody's AA Corporate Bond rate on the
date used by the Company's Chief Financial Officer for setting the Company's
corporate discount rate for financial reporting purposes for such calendar year.

"NORMAL RETIREMENT DATE" means the date a Participant attains age sixty (60).

"PARTICIPANT" means an eligible employee of an Employer who is participating in
the Plan in accordance with Section 3.2.

"PARTICIPATION FACTOR" means the ratio determined based on active participation
under the Plan. Each employee, upon becoming a Participant, shall be credited
with a Participation Factor of two-tenths (.20) or such greater factor for such
Participant determined by the Committee, in its sole discretion. Thereafter, a
Participant will be credited with an additional one-tenth (.10) Participation
Factor for each Year of Service earned while an active Participant; fractional
credits shall apply for partial Years of Service. Notwithstanding the foregoing,
no Participation Factor shall exceed one (1.00), and Years of Service earned
after the last day of the Plan Year in






                                       3


which a Participant attains age sixty-seven (67) shall be disregarded for
purposes of determining his Participation Factor. The Committee may, in its sole
discretion, increase or authorize an increase in a Participant's Participation
Factor for any reason deemed appropriate by the Committee (including, but not
limited to, in consideration of the Participant's execution of a release of all
claims against the Company and its affiliates in a form satisfactory to the
Committee).

"PLAN" means The Lincoln Electric Holdings, Inc. Supplemental Executive
Retirement Plan, as it may be amended from time to time.

"PLAN YEAR" means the calendar year.

"QUALIFIED PLAN BENEFIT" means the annual benefit, expressed in the form of a
single life annuity that can be derived from the sum of all employer-provided
benefits under all plans intended to be qualified under Section 401(a) of the
Code that are maintained by the Controlled Group. The amount of the single life
annuity determined for any such plan which does not provide for annuity payments
shall be determined using the Actuarial Equivalents provided for herein. For
purposes of this definition, "employer-provided benefits" means all qualified
retirement benefits funded exclusively by employer contributions (and earnings
thereon), and shall include any previous distribution of such benefits made
prior to a Participant's attainment of age 65 or the actual retirement date, if
earlier, including, but not limited to, in-service withdrawals, retirement and
disability benefits, or distributions pursuant to any domestic relations order.
However, Participants' salary-reduction contributions described in Section
402(a)(8) of the Code (and any earnings thereon) shall not be treated as
benefits funded exclusively by Employer contributions. Notwithstanding the
foregoing, if the Committee grants additional Years of Service to a Participant
for purposes of determining his Retirement Benefit, "Qualified Plan Benefit"
shall also include the annual benefit, determined as above, to which such
Participant is entitled from all previous employers.

"RETIREMENT BENEFIT" or "BENEFIT" means the vested benefit determined under
Article IV.

"SOCIAL SECURITY BENEFIT" means the maximum annual benefit payable under the
Social Security Act, relating to Old-Age and Disability benefits, determined as
of a Participant's Normal Retirement Date, or upon his actual retirement date,
if later.

"SPOUSE" means the person to whom a Participant is legally married at the
specified time.

"TERMINATION FOR CAUSE" means the termination of a Participant's employment due
to any act by the Participant which the Committee, in its complete discretion,
determines to be inimical to the best interests of the Controlled Group,
including, but not limited to: (i) serious, willful misconduct in respect of his
duties for his Employer, (ii) conviction of a felony or perpetration of a common
law fraud, (iii) willful failure to comply with applicable laws with respect to
the execution of his Employer's business operations, (iv) theft, fraud,
embezzlement, dishonesty or other conduct that has resulted or is likely to
result in material economic damage to the Controlled Group, or (v) failure to
comply with requirements of his Employer's drug and alcohol abuse policies, if
any.





                                       4


"YEARS OF SERVICE" means each full and partial calendar-year (in increments of
one-twelfth (1/12th) for each full month) of active employment with the
Controlled Group during which substantial services were rendered as an employee,
commencing on the date the Participant was first employed by the Controlled
Group and ending on the date he ceases to perform services for the Controlled
Group. At the discretion of the Committee, a Participant may be granted
additional Years of Service for purposes of determining his Retirement Benefit.

SECTION 2.2 USAGE. Except where otherwise indicated by the context, any
masculine terminology used herein shall also include the feminine and vice
versa, and the definition of any term herein in the singular shall also include
the plural and vice versa.

                                  ARTICLE III
                          ELIGIBILITY AND PARTICIPATION

SECTION 3.1 ELIGIBILITY. An employee of an Employer shall be eligible to
participate in the Plan only to the extent, and for the period, that he is a
member of a select group of management or highly compensated employees, as such
group is described under Sections 201(2), 301(a)(3), and 401(a)(1) of ERISA.

SECTION 3.2 PARTICIPATION. An employee who is eligible to participate in the
Plan pursuant to Section 3.1 shall become a Participant at such time and for
such period he is designated as such by the Committee.

                                   ARTICLE IV
                               RETIREMENT BENEFIT

SECTION 4.1 RETIREMENT BENEFIT. Except for Participants described in Section
4.4, the Retirement Benefit for a Participant who retires from the employ of his
Employer and all Controlled Group Members on or after his Normal Retirement Date
shall be an annual benefit, expressed as a single life annuity payable over the
Participant's life, in an amount equal to (a) minus (b), multiplied by the
Participant's Participation Factor, where:

     (a)  =     one and four hundred forty-five thousandths percent (1.445%)
          of such Participant's Final Average Pay multiplied by his
          Years of Service, but not greater than sixty-five percent
          (65%) of the Participant's Final Average Pay; and

     (b)  =   (i)    the Social Security Benefit; plus

              (ii)   the Participant's Foreign Plan Benefit determined as of the
                     valuation date(s) under the applicable plans and programs
                     that immediately precede the date the Participant retires
                     and becomes entitled to the distribution of his Benefit
                     under Article V or Article VI; plus

              (iii)  the Participant's Qualified Plan Benefit, determined as of
                     the valuation date(s) under the applicable plans that
                     immediately precede the date the Participant retires and
                     becomes entitled to the distribution of his Benefit under
                     Article V or Article VI.





                                       5


For purposes of making the calculation in Subsection (a) of this Section, Years
of Service earned after the last day of the Plan Year in which the Participant
attains age sixty-five (65) shall not be counted.

SECTION 4.2 EARLY RETIREMENT BENEFIT. Except for Participants described in
Section 4.4, the Retirement Benefit for a Participant who retires from the
employ of his Employer and all Controlled Group Members on or after his Early
Retirement Date (but prior to his Normal Retirement Date) shall be the annual
benefit computed under Section 4.1, but based on a projected Social Security
Benefit equal to the maximum annual benefit payable under the provisions of the
Social Security Act as in effect on the date of such retirement indexed forward
to the Participant's Normal Retirement Date, and the annual Benefit so computed
shall be reduced based on the Participant's attained age when his Benefit
hereunder commences, according to the following table:

                Participant's Attained Age               Percent Reduction
                  at Benefit Commencement                    in Benefit
                  -----------------------                    ----------
                                 55                             36%
                                 56                             30%
                                 57                             24%
                                 58                             17%
                                 59                              9%
                        60 or later                              0%

SECTION 4.3       Vesting.

              (a)    Except as provided below or as otherwise provided in
                     Section 4.4, a Participant who is in the active employ of
                     an Employer shall have a vested right to his Benefit only
                     upon the occurrence of any of the following:

                     (i)    with approval by the Committee, the attainment of
                            his Early Retirement Date;

                     (ii)   the attainment of his Normal Retirement Date;

                     (iii)  his death prior to actual retirement; or

                     (iv)   his Disability prior to actual retirement.

              (b)    Notwithstanding the preceding, a Participant's Benefits
                     hereunder shall be forfeited, and no Benefits shall be
                     payable hereunder with respect to him or his beneficiaries,
                     in the event of:

                     (i)    his Termination for Cause prior to receiving all or
                            a portion of his Benefit; or








                                       6


                     (ii)   his termination of employment with all Controlled
                            Group Members prior to satisfying the requirements
                            for vesting set forth in Subsection (a) of this
                            Section.

SECTION 4.4 OTHER RETIREMENT BENEFITS. In lieu of or in addition to the Benefit
provided under Section 4.1 or 4.2, the Committee may, in its discretion,
determine to provide, a Participant with an alternative or an additional
supplemental pension benefit under this Plan, provided that the Company and such
Participant negotiate or have previously negotiated a supplemental pension
arrangement that provides for amounts to be paid other than or in addition to
the Benefits otherwise provided pursuant to the other terms hereof. The amount
of such Participant's supplemental pension, the manner of payment thereof and
any other terms or conditions applicable thereto shall be as set forth herein
and in the agreement between the Company and the Participant with respect to
such arrangement. Articles VII, VIII and IX of the Plan shall apply to the
supplemental pension payable pursuant to any such arrangement to the extent such
Articles do not conflict with the provisions of such agreement.

SECTION 4.5 MAXIMUM RETIREMENT BENEFIT. Anything in this Plan to the contrary
notwithstanding, the maximum annual Retirement Benefit determined for a
Participant under Section 4.1 shall not exceed $300,000, expressed as a single
life annuity, unless otherwise determined by the Committee.

                                   ARTICLE V
                          PAYMENT OF RETIREMENT BENEFIT

SECTION 5.1 PAYMENT OF RETIREMENT BENEFITS. A Participant who retires under this
Plan from the employ of his Employer and all Controlled Group Members on or
after his Normal Retirement Date or Early Retirement Date shall then be entitled
to, and shall receive, a Retirement Benefit, determined in accordance with
Section 4.1 or 4.2, as applicable. Such Benefit shall commence not later than
ninety (90) days following the date the Participant's retirement from his
Employer becomes effective; provided, however, that if a Participant elects a
single lump sum as provided in Section 5.2, such Participant may elect that such
payment be made at the beginning of the second calendar year commencing after
the Participant's retirement.

SECTION 5.2 FORM OF RETIREMENT BENEFITS. Except as otherwise provided herein, to
the extent a Benefit is payable to a Participant under Section 5.1, it shall be
paid in the form of a single life annuity, or any Actuarially Equivalent
survivor annuity. Notwithstanding the foregoing, a Participant may elect to have
his Benefit paid in the form of a single lump sum that is Actuarially Equivalent
to such single life annuity. Unless otherwise determined by the Committee, the
Participant's election of the form of distribution shall be made by written
notice filed with the Administrator at six (6) months prior to the Participant's
voluntary termination of employment with, or retirement from, the Company. Any
such election may be changed by the Participant without the consent of any other
person by filing a later signed written election with the Administrator;
provided that any election made less than six (6) months prior to the
Participant's voluntary termination of employment or retirement shall not be
valid, and in such case payment shall be made in accordance with the
Participant's prior election. If a Participant fails to make an election in a
timely manner as provided in this Section 5.2, his Benefit shall be paid in the
form






                                       7


of a single life annuity if he is an unmarried Participant or a 100%
pre-retirement spouse annuity if he is a married Participant at the time such
payment is made, as determined in this Section 5.2.

SECTION 5.3 PAYMENT PROCEDURE. The Employer shall establish and maintain an
Account for each Participant and beneficiary who is receiving a Benefit under
the Plan. Immediately prior to any distribution hereunder to any Participant or
beneficiary, the Employer shall credit the amount of such distribution to such
Account and then immediately distribute or commence to distribute the amount so
credited to the Participant, or as applicable, to his beneficiary. Neither the
Participant nor his beneficiary(s) shall have any interest or right in any such
Account at any time. All amounts credited to the Accounts established under the
Plan shall be credited solely for the purpose of effecting distributions
hereunder and shall remain assets of the Employer subject to the claims of such
Employer's general creditors.

SECTION 5.4 SPECIAL DISTRIBUTIONS. Notwithstanding Section 5.2, to the extent a
Benefit is being paid to a Participant under Section 5.1 (other than in a lump
sum), a Participant may elect to receive all or a portion of the then balance of
such Benefit in the form of a single lump sum distribution that is Actuarially
Equivalent to the then value of the benefit form pursuant to which such Benefit
is being paid if (and only if) the Actuarially Equivalent value (as so computed)
of the balance of such Benefit is reduced by ten percent (10%). Any distribution
made pursuant to such an election shall be made within 30 days of the date such
election is submitted to the Administrator. The remaining ten percent (10%) of
the portion of the electing Participant's Benefit subject to such distribution
shall be forfeited.

                                   ARTICLE VI
               PAYMENT OF BENEFIT ON OR AFTER DEATH OR DISABILITY

SECTION 6.1 COMMENCEMENT OF BENEFIT PAYMENTS BEFORE VESTING. If a Participant
dies or becomes Disabled while employed by his Employer but prior to becoming
entitled to a Retirement Benefit under Section 5.1, the Committee may provide
that the Participant or his surviving Spouse shall receive a Benefit computed
under Section 4.2, as if the Participant had retired immediately prior to his
death or Disability and, if such death or Disability occurred prior to his
attainment of age fifty-five (55), as if he had attained such age.

SECTION 6.2 COMMENCEMENT OF BENEFIT PAYMENTS AFTER VESTING. If a Participant
dies or becomes Disabled while employed by his Employer after becoming entitled
to a Retirement Benefit under Section 5.1 but prior to commencing the receipt of
his Benefit, he or his surviving Spouse shall receive a Benefit computed under
Section 4.2 as if the Participant had retired immediately prior to his death or
Disability at his then attained age.

SECTION 6.3 FORM OF PAYMENT. Any Benefit payable under this Article VI to a
Participant who is Disabled shall be paid in any form permitted under and
determined in accordance with Section 5.2. Any Benefit payable under this
Article to the Spouse of a Participant who has died prior to commencing the
receipt of his Benefit shall be paid in the form of a 100% pre-retirement spouse
annuity based upon the Participant's Benefit as though he had retired the day
before his death and elected a 100% joint and survivor annuity form of benefit
with his Spouse as the survivor beneficiary and determined in accordance with
Section 5.2.





                                       8


SECTION 6.4 COMMITTEE ACTION. The Committee may, in its sole discretion, provide
that the amount of the Retirement Benefit payable on death or Disability shall
be enhanced (including, but limited to, an enhancement that takes into account
projected additional Years of Service or increases in Compensation that would
have occurred absent the Participant's death or Disability).

                                  ARTICLE VII
                                 ADMINISTRATION

SECTION 7.1 GENERAL. The Company shall appoint the Administrator, consisting of
two or more individuals who have accepted appointment thereto. The members of
the Administrator shall serve at the discretion of the Company and may resign by
written notice to the Company. Vacancies in the Administrator shall be filled by
the Company. Except as otherwise specifically provided in the Plan, the
Administrator shall be responsible for administration of the Plan. The
Administrator shall be the "named fiduciary" within the meaning of Section
402(c)(2) of ERISA.

SECTION 7.2 ADMINISTRATIVE RULES. The Administrator may adopt such rules of
procedure as it deems desirable for the conduct of its affairs, except to the
extent that such rules conflict with the provisions of the Plan.

SECTION 7.3 DUTIES. The Administrator shall have the following rights, powers
and duties:

       (a)    The decision of the Administrator in matters within its
              jurisdiction shall be final, binding and conclusive upon the
              Employers and upon any other person affected by such decision,
              subject to the claims procedure hereinafter set forth.

       (b)    The Administrator shall have the sole and absolute duty and
              authority to interpret and construe the provisions of the Plan, to
              determine eligibility for Benefits and the appropriate amount of
              any Benefits, to decide any question (including any factual
              question) which may arise regarding the rights of employees,
              Participants and beneficiaries and the amounts of their respective
              interests, to construe any ambiguous provision of the Plan, to
              correct any defect, supply any omission or reconcile any
              inconsistency, to adopt such rules and to exercise such powers as
              the Administrator may deem necessary for the administration of the
              Plan, and to exercise any other rights, powers or privileges
              granted to the Administrator by the terms of the Plan.

       (c)    The Administrator may appoint such agents, counsel, accountants,
              consultants and other persons as it deems necessary to assist in
              the administration of the Plan, including, without limitation,
              employees of an Employer.

       (d)    The Administrator shall periodically report to the Board with
              respect to the status of the Plan.

SECTION 7.4 FEES. No fee or compensation shall be paid to any person for
services as the Administrator.






                                       9


SECTION 7.5 LIMITATION OF ACTIONS. No individual acting on behalf of the
Administrator pursuant to this Article shall have any right to vote upon or
decide any matters relating solely to his own rights under the Plan.

                                  ARTICLE VIII
                                CLAIMS PROCEDURE

SECTION 8.1 GENERAL. Any claim for Benefits under the Plan shall be filed by the
Participant or beneficiary ("claimant") on the form prescribed for such purpose
with the Administrator. A decision on a claim shall be made within ninety (90)
days after receipt of the claim by the Administrator, unless special
circumstances require an extension of time for processing, in which case a
decision shall be rendered within a reasonable period of time, but not later
than one hundred and eighty (180) days after receipt of the claim.

SECTION 8.2 DENIALS. If a claim under the Plan is wholly or partially denied,
written notice of the decision shall be furnished to the claimant by the
Administrator. Such notice shall be written in a manner calculated to be
understood by the claimant and shall set forth:

       (a)    the specific reason or reasons for the denial;

       (b)    specific reference to the pertinent provision of the Plan upon
              which the denial is based;

       (c)    a description of any additional material or information necessary
              for the claimant to perfect the claim; and

       (d)    an explanation of the claim review procedure under Sections 8.3
              and 8.4.

SECTION 8.3 APPEALS PROCEDURE. In order that a claimant may appeal a denial of a
claim, the claimant or the claimant's duly authorized representative may:

       (a)    request a review by written application to the Administrator, or
              its designate, no later than sixty (60) days after receipt by the
              claimant of written notification of denial of a claim;

       (b)    review pertinent documents; and

       (c)    submit issues and comments in writing.

SECTION 8.4 REVIEW. A decision on review of a denied claim shall be made not
later than sixty (60) days after receipt of a request for review, unless special
circumstances require an extension of time for processing, in which case a
decision shall be rendered within a reasonable period of time, but not later
than one hundred and twenty (120) days after receipt of a request for review.
The decision on review shall be in writing, shall be written in a manner
calculated to be understood by the claimant, shall include the specific
reason(s) for the decision and the specific reference(s) to the pertinent
provisions of the Plan on which the decision is based and shall, to the extent
permitted by law, be final and binding on all interested persons.







                                       10


                                   ARTICLE IX
                            MISCELLANEOUS PROVISIONS

SECTION 9.1 AMENDMENT AND TERMINATION. The Company reserves the right to amend
or terminate the Plan in any manner that it deems advisable and at any time, by
a resolution of the Board. Notwithstanding the preceding, no amendment or
termination of the Plan shall reduce the accrued Benefit of any Participant
determined as of the day immediately preceding the effective date of such
amendment or termination.

SECTION 9.2 NO ASSIGNMENT. A Participant shall not have the power, without the
consent of the Administrator, to pledge, transfer, assign, anticipate, mortgage
or otherwise encumber or dispose of in advance any interest in amounts payable
hereunder or any of the payments provided for herein, nor shall any interest in
amounts payable hereunder or in any payments be subject to seizure for payments
of any debts, judgments, alimony or separate maintenance, or be reached or
transferred by operation of law in the event of bankruptcy, insolvency or
otherwise. If a Participant (or beneficiary) attempts to pledge, transfer,
assign, anticipate, mortgage or otherwise encumber or dispose of in advance any
interest in a Participant's (or beneficiary's) Benefit, or if by reason of his
bankruptcy or other event that would permit any other individual to obtain his
right to his Benefit, he would not be able to enjoy his Benefit, the
Administrator may, in its sole discretion, terminate the Participant's (or
beneficiary's) interest in any Benefit to the extent the Administrator considers
it necessary or advisable to prevent or limit the effects of such occurrence.
Such termination shall be effected by filing a declaration with the Company and
delivering a copy of such declaration to the Participant (or beneficiary).

Any Benefit affected by such termination of interests shall be retained by the
Company and, in the Administrator's sole discretion, may be paid or expended for
the benefit of the affected Participant (or beneficiary), his spouse, his
children or any other person dependent upon him, in such manner as the
Administrator determines is proper.

SECTION 9.3 SUCCESSORS AND ASSIGNS. The provisions of the Plan are binding upon
and inure to the benefit of each Employer, its successors and assigns, and the
Participant, his beneficiaries, heirs, legal representatives and assigns.

SECTION 9.4 GOVERNING LAW. The Plan shall be subject to and construed in
accordance with the laws of the State of Ohio, except to the extent pre-empted
by applicable Federal law.

SECTION 9.5 NO GUARANTEE OF EMPLOYMENT. Nothing contained in the Plan shall be
construed as a contract of employment or deemed to give any Participant the
right to be retained in the employ of any Controlled Group Member or any equity
or other interest in the assets, business or affairs of a Controlled Group
Member. No Participant hereunder shall have a security interest in assets of an
Employer used to make contributions or pay benefits.

SECTION 9.6 SEVERABILITY. If any provision of the Plan shall be held illegal or
invalid for any reason, such illegality or invalidity shall not affect the
remaining provisions of the Plan, but the Plan shall be construed and enforced
as if such illegal or invalid provision had never been included herein.






                                       11


SECTION 9.7 NOTIFICATION OF ADDRESSES. Each Participant and each beneficiary
shall file with the Administrator, from time to time, in writing, the post
office address of the Participant, the post office address of each beneficiary,
and each change of post office address. Any communication, statement or notice
addressed to the last post office address filed with the Administrator (or if no
address was filed, then to the last post office address of the Participant or
beneficiary as shown on the Employer's records) shall be binding on the
Participant and each beneficiary for all purposes of the Plan and neither the
Administrator nor any Employer shall be obligated to search for or ascertain the
whereabouts of any Participant or beneficiary.

SECTION 9.8 BONDING. The Administrator and all agents and advisors employed by
it shall not be required to be bonded.

SECTION 9.9 WITHDRAWAL OF EMPLOYER. An Employer (other than the Company) may
withdraw from participation in the Plan and such withdrawal shall constitute a
termination of the Plan as to that Employer; provided, however, that the
Employer shall continue to be treated as an Employer under the Plan with respect
to those Participants (and beneficiaries) to whom the Employer owes a continuing
obligation under the Plan. An Employer may withdraw by executing a written
instrument of withdrawal, approved by its board of directors, and such
withdrawal shall be effective on the date designated in the instrument or, if no
date is specified, on the date of execution of the instrument.

SECTION 9.10 COORDINATION WITH OTHER BENEFITS. Except as provided in Section
9.11, the benefits provided for a Participant and Participant's Spouse under the
Plan are in addition to any other benefits available to such Participant under
any other plan or program for employees of the Participant's Employer. The Plan
shall supplement and shall not supersede, modify or amend any other plan or
program except as may otherwise be expressly provided.

SECTION 9.11 OFFSET. In the event a Participant receives or becomes entitled to
receive a benefit under The Lincoln Electric Company Executive Benefit Plan, as
it may be amended from time to time ("EBP"), the Benefits to be received under
this Plan shall be offset and reduced dollar for dollar (but not below zero) by
the benefits paid under the EBP and not otherwise the subject of an offset
pursuant to Section 6.10 of The Lincoln Electric Holdings, Inc. Deferred
Compensation Plan ("DCP"). In determining the amount that should offset and
reduce Benefits under this Plan, the Participant's (or Spouse's) Benefit
hereunder at the time of distribution commencement shall be reduced by an amount
Actuarially Equivalent to the amount paid or to be paid under the EBP and not
otherwise the subject of an offset pursuant to Section 6.10 of the DCP,
increased by interest on such amount, if any, accruing from the time of
distribution from the EBP through the time of the commencement of distribution
hereunder at an interest rate of four percent (4%).

                                   ARTICLE X
                                     FUNDING

The entire cost of this Plan shall be paid from the general assets of the
Employer. No liability for the payment of benefits under the Plan shall be
imposed upon any officer, trustee, employee, or agent of an Employer.

                                  ************





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         IN WITNESS WHEREOF, Lincoln Electric Holdings, Inc. has caused this
amendment and restatement of the Lincoln Electric Holdings, Inc. Supplemental
Executive Retirement Plan to be executed in its name as of March 1, 2002.

                                      LINCOLN ELECTRIC HOLDINGS, INC.


                                      By:_____________________________________
                                      Its:  Chairman, Chief Executive Officer

Date:______________, 2002



























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