EX-10.6






Exhibit 10.6




AMENDMENT NO. 2




TO


SEVERANCE AGREEMENT



     THIS AMENDMENT NO. 2 TO LINCOLN ELECTRIC HOLDINGS, INC. SEVERANCE AGREEMENT (this “Amendment”)
is dated as of December ___, 2008, by and between Lincoln Electric Holdings, Inc. (the “Company”)
and [                     ] (the “Executive”).



     WHEREAS, the Executive and the Company are party to a Severance Agreement dated as of
[                    , ___], (as amended, the “Existing Agreement”);



     WHEREAS, the Executive and the Company desire to amend the Existing Agreement to make changes
to comply with the requirements of Section 409A of the Internal Revenue Code of 1986, as amended
(“Section 409A”) (the “Code”).



     NOW, THEREFORE, in consideration of the mutual promises set forth herein and for other good
and valuable consideration, the sufficiency and receipt of which are hereby acknowledged, the
Executive and the Company agree as follows:




	1.	 	Section 3(b) of the Existing Agreement is hereby replaced in its entirety with the following:
	 
	 	 	If the Executive terminates his employment with the Company and its Subsidiaries for Good
Reason during the Severance Period, the Executive shall be entitled to the benefits provided
by Section 4. For purposes of this Section 3(b), Good Reason means the occurrence of one or
more of the following events:






(i) A material diminution in the Executive’s base compensation;




(ii) A material diminution in the Executive’s authority, duties, or
responsibilities;




(iii) A material diminution in the authority, duties, or responsibilities of the
supervisor to whom the Executive is required to report, including a requirement that
the Executive report to a corporate officer or employee instead of reporting
directly to the Board;




(iv) A material diminution in the budget over which the Executive retains authority;




(v) A material change in the geographic location at which the Executive must perform
the services; and



 









 






(vi) Any other action or inaction that constitutes a material breach by the Company
of the Executive’s employment agreement, if any, or this Agreement.




	 	 	Notwithstanding the above, a termination of employment by the Executive for one of the
reasons set forth in clauses (i) — (vi), above, will not constitute Good Reason unless the
Executive provides, within 90 days of the initial existence of the condition described in
clauses (i) — (vi), above, written notice to the Company of the existence of the condition
and the Company has not remedied such condition within 30 days of the receipt of such
notice.
	 
	2.	 	Section 4(a) of the Existing Agreement is hereby amended by replacing the second sentence in
Section 4(a) with the following:
	 
	 	 	The Company will pay to the Executive the amounts described in Paragraphs (1) and (2) of
Annex A within five business days after the Termination Date or, if later, in accordance
with Section 11.
	 
	3.	 	Section 4(a) of the Existing Agreement is hereby amended by adding the following proviso at
the end of the third sentence:
	 
	 	 	; provided, however, that no payment of deferred compensation within the meaning of Section
409A that would otherwise be made and no benefit that constitutes deferred compensation that
would otherwise be provided upon a termination of employment shall be made or provided, as
the case may be, unless and until such termination of employment also constitutes a
separation from service (within the meaning of Section 409A).
	 
	4.	 	Section 5 of the Existing Agreement is hereby amended by adding the following additional
language as a new Section 5(h):
	 
	 	 	Any Gross-Up Payment, as determined pursuant to this Section 5, shall be paid by the Company
as contemplated by Section 5(b); provided that, the Gross-Up Payment shall in all events be
paid no later than the end of the Executive’s taxable year next following the Executive’s
taxable year in which the Excise Tax (and any income or other related taxes or interest or
penalties thereon) on a Payment are remitted to the Internal Revenue Service or any other
applicable taxing authority or, in the case of amounts relating to a claim described in
Section 5(f) that does not result in the remittance of any federal, state, local and foreign
income, excise, social security and other taxes, the calendar year in which the claim is
finally settled or otherwise resolved. The Gross-Up Payment shall be paid to the Executive;
provided that, the Company, in its sole discretion, may withhold and pay over to the
Internal Revenue Service or any other applicable taxing authority, for the benefit of the
Executive, all or any portion of any Gross-Up Payment, and the Executive hereby consents to
such withholding. The Company’s obligation to make Gross-Up Payments under this Section 8
shall not be conditioned upon the Executive’s termination of employment. With respect to
any amount of expenses eligible for reimbursement under this Agreement, including this
Section 5, to the extent such payment is required to be included in the Executive’s gross
income for federal income tax




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	 	 	purposes, such expenses shall be reimbursed by the Company no later than December 31st of
the year following the year in which Executive incurs the related expenses and in no event
shall the reimbursements or in-kind benefits to be provided by the Company in one taxable
year affect the amount of reimbursements or in-kind benefits to be provided in any other
taxable year, nor shall Executive’s right to reimbursement or in-kind benefits be subject to
liquidation or exchange for another benefit.
	 
	5.	 	Section 7 of the Existing Agreement is hereby replaced in its entirety with the following:
	 
	 	 	Coordination with Other Payments. A termination by the Company pursuant to Section
3(a) or by the Executive pursuant to Section 3(b) will not affect any rights that the
Executive may have pursuant to any agreement, policy, plan, program or arrangement of the
Company or any Subsidiary providing Employee Benefits, which rights shall be governed by the
terms thereof; provided that the Executive shall not be entitled to a severance payment or
benefit under any other agreement with the Company, including, without limitation, any
employment agreement, if the Executive is entitled to a comparable payment or benefit
hereunder.
	 
	6.	 	Section 8(a) of the Existing Agreement is hereby amended by adding the following additional
language at the end of Section 8(a):
	 
	 	 	Such payments will be made within five business days (but in any event no later than the
last day of the Executive’s tax year following the Executive’s tax year in which the
Executive incurs the expense) after delivery of the Executive’s written requests for
payment, accompanied by such evidence of fees and expenses incurred as the Company may
reasonably require, provided that (a) the reimbursements or in-kind benefits to be provided
by the Company in one taxable year will not affect the reimbursement or in-kind benefits
that the Company is obligated to pay in any other taxable year and (b) the Executive’s right
to reimbursement or in-kind benefits will not be subject to liquidation or exchange for
another benefit.
	 
	7.	 	Section 8(b) of the Existing Agreement is hereby amended by adding the following additional
language at the end of Section 8(b):
	 
	 	 	Notwithstanding anything contained in this Agreement to the contrary, in no event will any
amount be transferred to a trust described in this Section 8(b) during a “restricted period”
within the meaning of Section 409A(b)(3)(A) of the Code.
	 
	8.	 	Section 11 of the Existing Agreement is hereby amended by adding the following additional
language at the end of Section 11:
	 
	 	 	The Release must be signed no later than 45 days after the Termination Date, unless an
earlier deadline is allowed by law in accordance with Section 4(d) of Annex C (the date on
which the Release becomes effective, the “Release Effective Date”). The amounts described
in Paragraphs (1) and (2) of Annex A will be made not later than the fifth day following the
Release Effective Date; provided, however, that if the maximum period in which the Release
may be revoked ends in the year following the year in which the Executive incurs a
separation from service (within the meaning of Section 409A), then





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	 	 	the Release Effective Date shall be deemed to be the later of (A) the first business day in
the year following the year in which the Executive incurs the separation from service or (B)
the Release Effective Date (without regard to this proviso).
	 
	9.	 	Section 12 of the Existing Agreement is hereby replaced in its entirety with the following:
	 
	 	 	Withholding of Taxes; Compliance with Section 409A of the Code.






     (a) The Company may withhold from any amounts payable under this Agreement all federal,
state, city or other taxes as the Company is required to withhold pursuant to any law or
government regulation or ruling.




     (b) To the extent applicable, it is intended that this Agreement comply with the
provisions of Section 409A. This Agreement will be administered in a manner consistent with
this intent. To the extent that there is a material risk that any payments under this
Agreement may result in the imposition of an additional tax to the Executive under Section
409A, the Company will reasonably cooperate with the Executive to amend this Agreement such
that payments hereunder comply with Section 409A without materially changing the economic
value of this Agreement to either party.




     (c) Notwithstanding any provisions of Section 4 and Annex A to the contrary, if the
Executive is a “specified employee” (within the meaning of Section 409A and determined
pursuant to policies adopted by the Company) on his Termination Date and if any portion of
the payments or benefits to be received by Executive upon separation from service would be
considered deferred compensation under Section 409A, amounts of deferred compensation that
would otherwise be payable pursuant to this Agreement during the six-month period
immediately following the Termination Date (the “Delayed Payments”) and benefits that
constitute deferred compensation that would otherwise be provided pursuant to this Agreement
(except for the benefits described in Paragraph 4 of Annex A) (the “Delayed Benefits”)
during the six-month period immediately following the Executive’s Termination Date will
instead be paid or made available on the earlier of (i) the first day of the seventh month
following the date of the Executive’s Termination Date and (ii) the Executive’s death. The
Company will pay interest on the Delayed Payments and the value of the Delayed Benefits at
the rate specified in Section 4(b).




     (d) Each payment to be made to the Executive under the provisions of Section 4 or Annex
A will be considered to be a separate payment and not one of a series of payments for
purposes of Section 409A. Further, coverages provided during one taxable year will not
affect the degree to which coverages will be provided in any other taxable year.




	10.	 	Paragraph 4 of Annex A to the Existing Agreement is hereby amended by replacing the last
sentence in Paragraph 4 with the following:






	 	 	The cost of Employee Benefits provided pursuant to this Paragraph will be paid by the
Executive. During the Continuation Period, the Company will reimburse the Executive on an
after-tax basis for the cost of the Employee Benefits. Such reimbursements will be





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	 	 	subject to Section 12 and will be made within 30 days following the date on which the
Executive incurs the expense but no later than December 31st of the year
following the year in which the Executive incurs the related expense; provided, that in no
event shall the reimbursements or in-kind benefits to be provided by the Company in one
taxable year affect the amount of reimbursements or in-kind benefits to be provided in any
other taxable year, nor shall the Executive’s right to reimbursement or in-kind benefits be
subject to liquidation or exchange for another benefit.





	 	 	 	 	 
	 	 	 
	 	
 	 
	 	Executive:                                                                    	 
	 	 	 



	 	 	 	 	 
	 	LINCOLN ELECTRIC HOLDINGS, INC.

 	 
	 	
 
	 
	 	Name:  		 
	 	 	 	 
	 




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